EXHIBIT 4.2
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DVI FINANCIAL SERVICES INC.,
CONTRIBUTOR AND SERVICER
AND
DVI RECEIVABLES CORP. XI
AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
Dated as of December 1, 1999
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ALL RIGHTS IN AND TO THIS AGREEMENT ON THE PART OF DVI RECEIVABLES CORP. XI HAVE
BEEN ASSIGNED TO DVI RECEIVABLES XI, L.L.C. AND REASSIGNED AND ARE SUBJECT TO A
SECURITY INTEREST IN FAVOR OF U.S. BANK TRUST NATIONAL ASSOCIATION, AS TRUSTEE,
UNDER THE AMENDED AND RESTATED INDENTURE DATED AS OF DECEMBER 1, 1999 FOR THE
BENEFIT OF THE PERSONS REFERRED TO THEREIN.
TABLE OF CONTENTS
Page
SECTION 1. CAPITAL CONTRIBUTION...............................................2
1.01 Contribution.......................................................2
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
THE CONTRIBUTOR............................................................4
2.01 Corporate Organization and Authority...............................4
2.02 Business and Property..............................................5
2.03 Equipment and Contracts............................................5
2.04 Contract Schedule.................................................10
2.05 Pending Litigation................................................10
2.06 No Material Event.................................................10
2.07 Transactions Legal and Authorized.................................10
2.08 Governmental Consent..............................................11
2.09 Compliance with Law...............................................11
2.10 Ordinary Course; No Insolvency....................................11
2.11 Assets and Liabilities............................................11
2.12 Fair Consideration; Valid Sale....................................11
2.13 Ability to Pay Debts..............................................12
2.14 Bulk Transfer Provisions..........................................12
2.15 Tax Returns.......................................................12
2.16 Transfer Taxes....................................................12
2.17 Principal Executive Office........................................12
2.18 Legal Name........................................................12
2.19 Servicing Provisions Customary....................................13
2.20 Defaults..........................................................13
2.21 ERISA.............................................................13
2.22 All Filings Made..................................................13
2.23 Nonconsolidation..................................................13
2.24 All Representations and Warranties True...........................14
2.25 Prospectus Supplement. ..........................................14
2.26 Insurance. ......................................................14
2.27 No Bankruptcy Petition Against the Transferor, the Managing
Member or the Issuer 15
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
THE TRANSFEROR....................................................15
3.01 Transferor Organization and Authority; Subsidiaries...............15
3.02 Due Authorization and No Violation................................15
3.03 No Litigation.....................................................15
3.04 Principal Office..................................................16
3.05 Tax Returns.......................................................16
3.06 Solvency..........................................................16
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Page
3.07 Approvals.........................................................16
3.08 Nonconsolidation..................................................16
SECTION 4. ADMINISTRATION OF CONTRACTS.......................................17
4.01 Servicer to Act...................................................17
4.02 Contract Amendments and Modifications; Repurchase of Contracts
by Servicer.......................................................18
4.03 Contract Defaults; Residual Realizations..........................19
4.04 Costs of Servicing; Servicer's Fee................................20
4.05 Other Transactions................................................21
4.06 Collection of Moneys..............................................21
4.07 Voluntary Termination.............................................21
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS........................22
5.01 Servicer Advances.................................................22
5.02 Indemnification...................................................22
5.03 Repurchase and Substitution of Contracts; Other Payments..........23
SECTION 6. INFORMATION TO BE PROVIDED........................................24
6.01 Monthly Servicer Report...........................................24
6.02 Tax Reporting and Treatment.......................................24
6.03 Other Information.................................................24
6.04 Annual Independent Certified Public Accountant's Report...........25
6.05 Payment Advices...................................................25
SECTION 7. SUBSTITUTION OF CONTRACTS.........................................25
7.01 Substitution......................................................25
7.02 Notice of Substitution............................................27
7.03 Contributor's and Servicer's Subsequent Obligations...............28
7.04 Usage of Predecessor Contracts in Calculations....................28
SECTION 8. THE SERVICER......................................................28
8.01 Corporate Existence of the Servicer...............................28
8.02 Limitation on Liability of the Servicer and Others................28
8.03 Servicer Not to Resign or be Removed..............................29
8.04 Financial and Business Information................................29
8.05 Officer's Certificates............................................30
8.06 Inspection........................................................30
8.07 Servicer Records..................................................31
8.08 Insurance.........................................................31
8.09 No Bankruptcy Petition Against the Transferor, the Managing
Member or the Issuer 31
8.10 Fidelity Bond and Errors and Omissions Insurance..................31
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Page
SECTION 9. THE CONTRIBUTOR...................................................31
9.01 Corporate Existence of the Contributor............................31
9.02 Financial and Business Information................................32
9.03 Inspection........................................................32
9.04 No Bankruptcy Petition Against the Managing Member, the Transferor
or the Issuer 33
9.05 Accounts, Books and Records.......................................33
9.06 Tax Returns.......................................................33
9.07 Insurance.........................................................34
9.08 Protection of Right, Title and Interest...........................34
9.09 Other Liens or Interests..........................................34
9.10 Costs and Expenses................................................35
SECTION 10. EVENTS OF DEFAULT.................................................35
10.01 Servicer Events of Default........................................35
10.02 Termination.......................................................37
10.03 Trustee to Act; Appointment of Successor..........................37
10.04 Servicer to Cooperate.............................................38
10.05 Remedies Not Exclusive............................................38
10.06 Waiver of Past Defaults...........................................38
SECTION 11. ASSIGNMENT........................................................38
11.01 Assignment to Trustee.............................................38
11.02 Assignment by Contributor or Servicer.............................39
SECTION 12. NATURE OF CONTRIBUTOR'S OBLIGATIONS AND SECURITY THEREFOR 39
12.01 Contributor's Obligations Absolute................................39
12.02 Power of Attorney.................................................40
SECTION 13. MISCELLANEOUS PROVISIONS..........................................40
13.01 Sale..............................................................40
13.02 Amendment.........................................................40
13.03 Waivers...........................................................41
13.04 Notices...........................................................41
13.05 Costs and Expenses................................................42
13.06 Third Party Beneficiaries.........................................42
13.07 Survival of Representations.......................................42
13.08 Confidential Information..........................................42
13.09 Headings and Cross-References.....................................43
13.10 GOVERNING LAW.....................................................43
13.11 Consent to Jurisdiction...........................................43
13.12 Counterparts......................................................43
13.13 Statutory References..............................................43
EXHIBITS
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Exhibit A Contract Schedule
Exhibit B Monthly Servicer Report
Exhibit C Reserved
Exhibit D Substitute Contract Transfer Form
Exhibit E Form of Re-Assignment
Exhibit F Form of Officer's Certificate for Section 7
Exhibit G Forms of Contracts
Exhibit H Underwriting Guidelines
APPENDICES
Appendix I Defined Terms
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AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
This Agreement is made and dated as of December 1, 1999, by and
between DVI FINANCIAL SERVICES INC., a Delaware corporation ("DVI"), as
contributor (in such capacity, the "CONTRIBUTOR") and servicer (in such
capacity, the "SERVICER") hereunder, and DVI RECEIVABLES CORP. XI, a Delaware
corporation (the "TRANSFEROR").
RECITALS
A. Pursuant to this Agreement, the Contributor is contributing and
assigning to the Transferor, (i) all right, title and interest of the
Contributor in, to and under, INTER ALIA, a pool of non-cancelable Finance
Leases, Fair Market Value Leases, Leveraged Lease Loans, Lease Receivable
Purchases and Secured Equipment Notes described in Exhibit A hereto (the
"INITIAL CONTRACTS"), (ii) certain payments and proceeds received relating to
the Initial Contracts that are payable after the Cut-Off Date and (iii) an
interest in each item of underlying Equipment that is subject to each Initial
Contract. The Contributor may contribute and assign certain Substitute Contracts
and an interest in the Equipment related thereto and certain other related
payments and proceeds in accordance with the terms of this Agreement.
B. Pursuant to the Amended and Restated Subsequent Contract Transfer
Agreement (the "SCTA"), dated as of December 1, 1999 by and between the
Transferor and the Issuer, the Transferor is transferring to the Issuer all of
its right, title and interest in and to the Trust Property.
C. Pursuant to the Amended and Restated Indenture (the "AMENDED AND
RESTATED INDENTURE"), dated as of December 1, 1999, the Issuer is issuing its
Asset-Backed Securities (the "NOTES"). Pursuant to the Amended and Restated
Indenture, the Issuer is granting to the trustee thereunder (the "TRUSTEE"), for
the benefit and security of the holders from time to time of the Notes, a
security interest in the Trust Property, which includes, INTER ALIA, all right,
title (other than ownership of any Equipment) and interest of the Transferor in,
to and under the Contracts, the Equipment and this Agreement.
D. In connection with the contribution and assignment of such
Contracts and the transfer of an interest in the related Equipment, the
Contributor agrees to undertake certain obligations set forth herein.
E. In consideration for the Servicing Fee and other amounts as more
particularly set forth herein, the Servicer agrees to undertake certain
obligations set forth herein.
F. Capitalized terms used but not defined herein shall have the
respective meanings set forth in Appendix I hereto.
AGREEMENTS
SECTION 1. CAPITAL CONTRIBUTION
1.01 CONTRIBUTION.
(a) Upon the terms and conditions herein set forth, the Contributor
hereby agrees to transfer, assign and contribute, on one or more Contract
Transfer Dates, to the Transferor as a capital contribution (or, in case of any
Substitute Contracts, the related Substitution Date), without recourse except as
set forth herein, all of the Contributor's right, title and interest in and to
the Contributed Property. The Transferor assumes all of the Contributor's
obligations under the Contracts arising after the related Cut-Off Date. All
funds received by the Contributor on or in connection with the Contracts that
are payable after the applicable Cut-Off Date shall be received, held and
applied by the Contributor in trust for the benefit of the Transferor as owner
of the Contracts.
(b) After giving effect to such contribution, the ownership of each
Contract will be vested in the Transferor. The Contract Files and any other
documents relating to the Contracts and the other Contributed Property that are
delivered as part of the Contributed Property or as incidental thereto are and
shall be held in trust by the Trustee for the benefit of the Noteholders. The
Contributor agrees to take no action inconsistent with the ownership of the
Contracts and the other Contributed Property, to promptly indicate to all
parties with a valid interest inquiring as to the true ownership of the
Contracts and the other Contributed Property, that the Contracts and the other
Contributed Property have been contributed and assigned to the Transferor and to
claim no ownership interest in the Contracts and the other Contributed Property.
(c) The Contributor shall take, or cause to be taken, such actions and
execute such documents as are necessary to protect the Trustee's interest in the
Contracts, security interest in the Equipment and the other Contributed Property
against all other Persons, including, without limitation, the following: (i) in
the case of the Contracts, on or before the Closing Date (or, in case of any
Substitute Contracts, the related Substitution Date), (A) filing UCC-1 financing
statements naming the Contributor as debtor, the Transferor as secured party,
the Issuer as assignee of the secured party and the Contracts as collateral in
the jurisdiction in which the principal place of business of the Contributor is
located, (B) UCC-1 financing statements naming the Transferor as debtor, the
Issuer as secured party, the Trustee as assignee of the secured party and the
Contracts as collateral in the jurisdiction in which the principal place of
business of the Transferor is located, (C) filing UCC financing statements
naming the Issuer as debtor and the Trustee as secured party in the jurisdiction
in which the principal place of business of the Issuer is located, and (D)
filing UCC-3 termination statements or releases from lenders, if any, with liens
on the Contracts; (ii) in the case of the assignment or grant of its interests
in the Equipment, within thirty days after the Closing Date (or, in case of any
Substitute Contracts, the related Substitution Date), (A) with respect to a
security interest in Equipment (other than Equipment for which the Original
Equipment Cost is less than $25,000 and subject to Finance Leases or Secured
Equipment Notes), filing UCC financing statements naming the Obligor as debtor,
the Contributor as secured party, U.S. Bank Trust National Association, as
custodian or as trustee, as assignee of the secured party and the Equipment as
collateral, in the appropriate filing offices in the jurisdiction in which the
Equipment was located on the date on which the Contract was originated, (B) with
respect to the Transferor's interest in the Equipment related to DVI Fair Market
Value Leases, filing precautionary UCC-1 financing
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statements (i) naming the Contributor as debtor, the Transferor as secured
party, and the Issuer as assignee of secured party, and the Equipment as
Collateral, in the appropriate filing offices in the jurisdiction in which the
Equipment is located on the relevant transfer date, (ii) naming the Transferor
as debtor, the Issuer as secured party, and U.S. Bank Trust National
Association, as trustee or as custodian as assignee of the secured party, and
the Equipment as Collateral, in the appropriate filing offices in the
jurisdiction in which the Equipment is located on the relevant transfer date,
(iii) naming the Issuer as debtor and U.S. Bank Trust National Association, as
trustee or as custodian as secured party, and the Equipment as Collateral, in
the appropriate filing offices in the jurisdiction in which the Equipment is
located on the relevant transfer date, (C) with respect to all Fair Market Value
Leases other than DVI Fair Market Value Leases, filing UCC-1 financing
statements (i) naming the originator as debtor, the Contributor as secured party
and DVI's interest in the Equipment as Collateral, (ii) naming the Contributor
as debtor, the Transferor as secured party, and the Issuer as assignee of the
secured party, and the related Equipment as Collateral, filed in the appropriate
filing offices in the jurisdiction in which the Transferor maintains its chief
executive office, (iii) naming the Transferor as debtor, the Issuer as secured
party, and U.S. Bank Trust National Association, as custodian or as Trustee, as
assignee of the secured party, and the related Equipment as Collateral, filed in
the appropriate filing offices in the jurisdiction in which the Transferor
maintains its chief executive office, (iv) naming the Issuer as debtor, and U.S.
Bank Trust National Association, as custodian or as Trustee, as secured party
and the related Equipment as Collateral, filed in the appropriate filing offices
in the jurisdiction in which the Transferor maintains its chief executive
office, (D) with respect to all Fair Market Value Leases, filing UCC-1 financing
statements naming the Transferor as debtor, U.S. Bank Trust National
Association, as custodian or trustee, as secured party and the Transferor's
security interest in the Equipment as collateral in the appropriate filing
offices in the jurisdiction in which the Transferor maintains its chief
executive office, (E) filing UCC-3 assignments of any "precautionary" filings
naming the Obligor as debtor, the Contributor as secured party, U.S. Bank Trust
National Association, as custodian or as trustee, as assignee of the secured
party and the Equipment as collateral (other than Equipment subject to either
Finance Leases or Secured Equipment Notes and for which the Original Equipment
Cost is less than $25,000), in the appropriate filing offices where the
Equipment was located at the time the Contract was originated, (F) with respect
to Equipment subject to Leveraged Lease Loans or Lease Receivable Purchases,
filing UCC-3 assignments naming the Obligor as debtor, the Contributor as
secured party, U.S. Bank Trust National Association, as custodian or as trustee,
as assignee of the secured party and the Equipment as collateral, in the
appropriate filing offices in the jurisdiction where the Equipment was located
on the date the underlying contract was originated, (G) filing UCC-3 termination
statements or releases from lenders, if any, with liens on the Equipment, (H)
with respect to any Equipment for which a certificate of title has been issued,
making an application for notation of lien on each such certificate of title
indicating the interest of the Trustee, (I) filing UCC assignments with respect
to each Contract acquired by the Contributor from a third party, naming such
person as debtor/seller, the Contributor as secured party/purchaser, the Trustee
as assignee of the secured party and such acquired contracts as collateral, (J)
filing UCC assignments with respect to each Leveraged Lease Loan or Lease
Receivable Purchase, naming the related Obligor as debtor, the Contributor as
secured party, the Trustee as assignee of the secured party and the related
underlying equipment lease as collateral, (K) delivering a certificate
certifying that it has (1) made the filings of UCC financing statements set
forth above and certifying that copies of such UCC financing statements are on
file with the Trustee and (2) made the applications set forth above and
attaching copies of such applications. Thereafter, the Contributor promptly
shall file such additional UCC financing statements, continuation statements and
assignments and cause to be made such
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notations on certificates of title with respect thereto as may be necessary
because of equipment replacements in accordance with the provisions of any
Contract, or otherwise so that the interest of the Trustee in (x) each of the
Contracts, (y) the Equipment which is subject to the Contracts and (z) the
remainder of the Trust Property will be perfected by such filings with the
appropriate UCC filing offices and/or notations on the appropriate certificates
of title.
(d) If (i) any change in either the Contributor's name, structure or
the location of its principal place of business or chief executive office
occurs, then the Contributor shall deliver thirty (30) days' prior written
notice of such change or relocation to the Transferor and the Trustee and (ii)
if the Contributor becomes aware of the change in location of any Equipment,
then, no later than sixty (60) days after the effective date of such change or
relocation, shall file such amendments or statements as may be required to
preserve and protect the Transferor's, the Issuer's and the Trustee's interest
in the Contracts, the Equipment and the other Trust Property. The Contributor
shall pay all filing fees or taxes payable in respect of any UCC financing or
continuation statements required to be filed pursuant to this Section 1.01(d).
(e) On or prior to the Closing Date or the related Substitution Date,
as applicable, the Contributor shall deliver to the Trustee the sole original,
manually executed counterpart of each Contract that constitutes "chattel paper"
(or, if the original Contract is in the form of a schedule or supplement to a
master lease or loan, all original counterparts of such schedule or supplement
previously in the possession of the Contributor or the Transferor together with
a true and correct copy of such master lease or loan) or an "instrument". The
Contributor will cause its accounting records to be clearly and unambiguously
marked to show that such Contract has been transferred by the Contributor to the
Transferor, and by the Transferor to the Issuer, and then pledged by the Issuer
to the Trustee for the benefit of the Noteholders.
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE CONTRIBUTOR
The Contributor (in its capacity as such and as the initial Servicer
under this Agreement) hereby represents and warrants to the Transferor and
covenants and agrees with the Transferor for the benefit of the Transferor, the
Issuer, the Trustee and the Noteholders with respect to the Initial Contracts,
as of the Closing Date and, with respect to any Substitute Contracts (except for
Sections 2.02 and 2.25) as of each Substitution Date (unless otherwise indicated
herein):
2.01 CORPORATE ORGANIZATION AND AUTHORITY. The Contributor (in its
capacity as such and as the initial Servicer under this Agreement):
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business as now conducted (except where the failure to have such licenses
and permits could not individually or in the aggregate have a material
adverse effect on the business or condition (financial or otherwise) of the
Contributor or impair the enforceability of any Contract) and to enter into
and perform
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its obligations under this Agreement and each Transaction Document to which
it is a party and the transactions contemplated hereby, including
performance of the duties of the Servicer and the Contributor hereunder;
(c) has duly qualified and is authorized to do business and is in
good standing as a foreign corporation in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary (except where the failure to be so qualified or in
good standing could not individually or in the aggregate have a material
adverse effect on the Trust Property or the business or condition
(financial or otherwise) of the Contributor or impair the enforceability of
any Contract); and
(d) has duly executed and delivered this Agreement and each
Transaction Document to which it is a party and all other documents
delivered in connection herewith, and this Agreement are each the legal,
valid and binding obligation of the Contributor enforceable in accordance
with the terms hereof except as enforcement of such terms may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors generally and by equitable principles (regardless of
whether such enforceability is in a proceeding in equity or at law).
2.02 BUSINESS AND PROPERTY. The Prospectus Supplement (the "PROSPECTUS
SUPPLEMENT") dated May 8, 2000, to the Prospectus, dated January 12, 2000,
correctly describes in all material respects the Initial Contracts and the
general nature of the business of the Contributor.
2.03 EQUIPMENT AND CONTRACTS.
(a) As to each Contract:
(i) (A) immediately prior to the transfers and conveyances set forth
herein, the Contributor will be the sole owner of, and have good and marketable
title to, the subject Contracts. With respect to any Leveraged Lease Loans, Fair
Market Value Lease or Lease Receivable Purchase, the Contributor will have a
valid first priority security interest in the equipment lease and the Equipment
that has been pledged as collateral security for such Leveraged Lease Loan, Fair
Market Value Lease or Lease Receivable Purchase; (B) immediately prior to the
transfers and conveyances set forth herein, the Contributor will have acquired
either good title to each item of Equipment or, with respect to the Equipment
that is the subject of a Secured Equipment Note, Lease Receivables Purchase,
Finance Lease or a Leveraged Lease Loan, a valid first priority perfected
security interest therein from the related Obligor (except for Equipment
relating to a Secured Equipment Note or Finance Lease and for which the Original
Equipment Cost is less than $25,000). Immediately prior to such date, with
respect to each item of Equipment related to Fair Market Value Leases, the
Contributor will have paid in full to the manufacturer or supplier or Obligor,
as the case may be, the purchase price and any related charges in connection
with the acquisition of such Equipment; (C) upon the transfer to the Transferor
by the Contributor of the Contributor's interest in the Contracts and its
interest in the Equipment pursuant to Section 1 hereof, the Transferor will,
after giving effect to the provisions of Section 1.01(d), have a valid first
priority perfected ownership interest in, and have good title to the Contributed
Property including the Contracts and either a valid first priority security
interest in the Contributor's interest in the Equipment (except for Equipment
relating to a Secured Equipment Note or Finance Lease and for which the Original
Equipment Cost is less than
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$25,000), or, with respect to DVI Fair Market Value Leases, an ownership
interest in the related Equipment subject to any Contract; at such time, the
Contracts and the Transferor's interest in the Equipment will be free and clear
of all Liens other than the rights of each Obligor under the Contract to which
such Obligor is a party and Liens to be discharged on the Closing Date; and
there will be no delinquent taxes or other outstanding charges affecting the
Equipment which are or may be Liens;
(ii) each of the Contracts is a legal, valid and binding full recourse
obligation of the related Obligor, enforceable by the Contributor (and its
designee) against such Obligor in accordance with the terms thereof, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights and by
general equitable principles, and is in full force and effect, and any and all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending and equal credit opportunity laws applicable to the
origination, enforceability or assignment of each Contract have been complied
with; and the Contributor has no knowledge of any challenge, dispute or claim by
the Obligor under or affecting any Contract or of the bankruptcy or the
insolvency of any such Obligor;
(iii) the obligation of each Obligor to pay Contract Payments under
each of its related Contract(s) throughout the term thereof is and will be
unconditional, without any right of set- off by such Obligor and without regard
to any event affecting the Equipment, the obsolescence of any Equipment, any
claim of such Obligor against the Contributor or any change in circumstance of
such Obligor or any other circumstance whatsoever;
(iv) the Contributor has no knowledge that any item of the Equipment
has suffered any loss or damage except for such Equipment that has been restored
to its original condition, ordinary wear and tear excepted;
(v) each Contract requires the Obligor thereunder to either maintain
insurance covering damage to, destruction or theft of the Equipment subject
thereto in an amount at least equal to the remaining Discounted Contract Balance
of such Contract;
(vi) as of the Cut-Off Date, (A) no Contract had a remaining term of
more than 86 months, (B) no Contract Payment under any Contract is delinquent
for more than sixty (60) days and (C) no event of default has occurred and is
continuing under any Contract;
(vii) there will be no facts or circumstances existing as of the time
of the transfer pursuant to this Agreement which give rise, or would give rise
at any time in the future, to any right of rescission, offset, counterclaim or
defense, including the defense of usury, to the obligations of any Obligor,
including the obligation of such Obligor to pay all amounts due with respect to
any Contract and neither the operation of any of the terms of any Contract or
the exercise of any right thereunder will render such Contract unenforceable in
whole or in part or subject to any right of rescission, offset, counterclaim or
defense, including the defense of usury, and no such right of rescission,
offset, counterclaim or defense has been asserted with respect thereto;
(viii) no Contract has been amended, altered or modified in any
respect and no provision of any Contract has been waived, except in writing and
copies of all such writings are attached to the Contract delivered to the
Transferor;
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(ix) no Obligor has been released, in whole or in part, from any of
its obligations in respect of a Contract; no Contract has been satisfied,
cancelled or subordinated, in whole or in part, or rescinded, and no Equipment
has been released from the related Contract, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission;
(x) each Contract is in substantially one of the forms included as
Exhibit G to this Agreement, and no Contract shall have been the subject of any
restructuring of the terms and provisions thereof;
(xi) no Contract permits early termination or voluntary prepayment by
the Obligor;
(xii) no right of the Contributor with respect to an Obligor's failure
to pay all rent due under any Contract has been waived by the Contributor;
(xiii) each Contract is "chattel paper" or an "instrument" under the
UCC as in effect in the applicable jurisdiction; the sole executed counterpart
of each Contract that constitutes chattel paper or an instrument is in the
possession of the Trustee and all of the documents required to be delivered to
the Trustee in connection therewith pursuant to Section 1 have been so
delivered;
(xiv) no Obligor is an Affiliate of the Contributor or the Servicer;
(xv) the Contributor has no knowledge that the obligations of any
Obligor under any Contract will not be paid in full;
(xvi) no Contract will have been originated in or be subject to the
laws of any jurisdiction whose laws would make the assignment and transfer
thereof pursuant to the terms hereof or of the other Transaction Documents
unlawful;
(xvii) in the case of each Contract which consists of a master lease
and one or more exhibits or schedules thereto, (A) the Contributor has not
assigned and will not assign such master lease in its entirety, and has not
delivered and will not deliver physical possession of such master lease, to any
Person other than the Trustee and (B) such exhibits or schedules constitute a
separate contract and are not part of any other contract not sold to the
Transferor;
(xviii) all parties to each Contract had requisite authority and
capacity to execute such Contract;
(xix) prior to the time of assignment, transfer, sale and contribution
to the Transferor, each Contract will have been originated by the Contributor in
the ordinary course of its business, except for certain Contracts which have
been acquired by the Contributor in the ordinary course of its business, and
each Contract shall have been underwritten by the Contributor in accordance with
the standards set forth on Exhibit H hereto;
(xx) the Contributor is not aware of any fact that would prevent or
prohibit Obligors from being reimbursed by Medicare or Medicaid for any services
provided;
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(xxi) the Contract Schedule accurately reflects the information
relating to each Contract;
(xxii) there are no proceedings or investigations pending or, to the
knowledge of the Contributor, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (A)
asserting the invalidity of any of the Contracts, (B) seeking to prevent the
payment and discharge of any of the Contracts or (C) seeking any determination
or ruling that would materially and adversely affect the performance by an
Obligor of its obligations under, or the validity or enforceability of the
Contracts;
(xxiii) each Contract effects either the lease of or the grant of a
perfected first priority security interest in, a specified item of Equipment
(other than Equipment relating to a Secured Equipment Note or Finance Lease and
for which the Original Equipment Cost is less than $25,000) in favor of the
Contributor as lessor, secured party or seller as the case may be, and contains
provisions sufficient for the realization of such leasehold interest, security
interest or ownership interest as the case may be, as against such Equipment,
and is assignable by the Contributor without the consent of any other Person;
(xxiv) each Contract provides that the Contributor has no obligation
to assemble, install, test, adjust or service the Equipment subject to a
Contract. Each Contract provides that the Obligor, at its sole expense, at all
times during the term of the Contract and until return of the Equipment will
maintain the Equipment in good operating order, repair, condition, appearance
and protect the Equipment from deterioration, and provide all accessories,
upgrades, repairs, replacement parts and service required therefor except that
the equipment lease pledged as collateral security for a Leveraged Lease Loan
may in certain instances provide that the related lessor is responsible for
maintaining such Equipment;
(xxv) the Contributor has no knowledge that any Obligor under a
Contract is a Person involved in the business of selling medical equipment of
the same type as the Equipment subject to such Contract;
(xxvi) with respect to each item of Equipment either (A) no such
Equipment has been relocated from the jurisdiction set forth in the Contract or,
(B) if such Equipment has been relocated from the jurisdiction set forth in the
Contract and the Contributor has knowledge of any such relocation, all UCC
filings necessary to continue the first priority security interest in such
Equipment have been made (other than Equipment relating to a Secured Equipment
Note or Finance Lease and for which the Original Equipment Cost is less than
$25,000);
(xxvii)no Contract is a consumer lease as defined in Article 2A of the
UCC;
(xxviii) each Obligor has accepted the related Equipment and, after
reasonable opportunity to inspect and test, has not notified the Contributor of
any defects therein;
(xxix) no Obligor is a government or municipality; and
8
(xxx) no Contract requires the prior written consent of the Obligor or
contains any other restriction relating to the transfer or assignment of such
Contract by the Contributor or the seller except such consent as has been
obtained on or prior to the date of such transfer.
(b) The Contributor represents and warrants, as to the Contracts in
the aggregate:
(i) the Aggregate Discounted Contract Balance of the Contracts as of
the Closing Date is equal to $292,528,909.43; and
(ii) the Contracts have the following characteristics: (A) each
Initial Contract has a Discounted Contract Balance as of the Cut-Off Date
of not more than $4,681,554.10; (B) no Discounted Contract Balance of any
Contract will include an amount attributable to any (i) Purchase Option
Payment for such Contract, (ii) Contract Payment due on or prior to the
Cut-Off Date, (iii) security deposit or (iv) advance payment; (C) as of the
Cut-Off Date, no item of Equipment has been repossessed; (D) as of the
Cut-Off Date no Contract is a refinancing due to delinquencies under a
prior lease, security agreement or loan with the same Obligor relating to
the Equipment; (E) the Obligor with respect to each Contract has a place of
business in, or is organized under, the laws of any state or territory of
the United States of America; (F) with respect to the Initial Contracts,
each Contract will have a Scheduled Termination Date no later than a day in
May, 2007; (G) as of the Cut-Off Date, (i) the Discounted Contract Balance
of Contracts that have Balloon Payments constitute not more than 9.25% of
the Aggregate Discounted Contract Balance, (ii) the Discounted Contract
Balance of Contracts that have non-level payments to the Scheduled
Termination Date (excluding Contracts that have Balloon Payments)
constitutes not more than 40.0% of, with respect to the Initial Contracts,
the Aggregate Discounted Contract Balance of the Initial Contracts as of
the Closing Date; (H) as of the Closing Date, (i) the sum of the Discounted
Contract Balances of all Contracts with Equipment located in any one State
will not exceed 17.0% of, with respect to the Initial Contracts, the
Aggregate Discounted Contract Balance of the Initial Contracts, (ii) no
single Obligor will have a Discounted Contract Balance that exceeds 2.5% of
the Aggregate Discounted Contract Balance on the Closing Date, (iii) the
sum of the Discounted Contract Balances of any five Contracts shall not
exceed 10.71% of the Aggregate Discounted Contract Balance on the Closing
Date and (iv) the sum of the Discounted Contract Balances of all Contracts
for which the related Equipment is magnetic resonance imaging equipment
will not exceed $121,000,000 of the Aggregate Discounted Contract Balance
as of the Closing Date; (I) not more than 10.0% of the Aggregate Discounted
Contract Balance will arise from Contracts which constitute loans to
manufacturers, wholesalers, and retailers; (J) the Obligor under each
Contract has made at least one Contract Payment under such Contract prior
to the first Payment Date occurring after the time such Contract was
executed by the parties thereto in addition to any payment made at the time
of the signing of such Contract except for Contracts representing 3.0% of
the Aggregate Discounted Contract Balance as of the Closing Date which
Contracts provide for the related initial Contract Payment to be due within
30 days of the Payment Date occurring on June, 2000; and (K) the sum of the
Discounted Contract Balance of all Contracts that are Lease Receivable
Purchases shall not exceed, at any time, more than 3.0% of the Aggregate
Discounted Contract Balance as of the Closing Date.
9
2.04 CONTRACT SCHEDULE. The Contract Schedule (i) accurately sets
forth the identifying number of each Contract, the Obligor's name and address,
the original Scheduled Maturity Date of each Contract, the remaining maturity of
each Contract, the Discounted Contract Balance of each Contract as of the
Cut-Off Date, the amount and scheduled due date of each Contract Payment due
under each of the Contracts, and the original amount funded on each Contract,
(ii) accurately sets forth the information with respect to certain other
characteristics of the Contracts and the Equipment described on such list, (iii)
identifies those Contracts which constitute Pool A and those Contracts which
constitute Pool B and (iv) is otherwise true and correct in all material
respects.
2.05 PENDING LITIGATION. There are no actions, suits, proceedings,
investigations or injunctive or other orders pending, or to the knowledge of the
Contributor or Servicer threatened, against or affecting the Contributor or
Servicer or any subsidiary in or before any court, governmental authority or
agency or arbitration board or tribunal, including, but not limited to, any such
actions, suits, proceeding, investigation or order with respect to any
environmental or other liability resulting from the ownership or use of any of
the Equipment which, individually or in the aggregate, involve the possibility
of materially and adversely affecting the properties, business, or condition
(financial or otherwise) of the Contributor or Servicer and its subsidiaries, or
the ability of the Contributor or Servicer to perform its obligations under this
Agreement or the payment or enforceability of any Contract.
2.06 NO MATERIAL EVENT. No event has occurred which materially
adversely affects the Contributor's operations, including, but not limited to,
its ability to perform the transaction contemplated hereunder.
2.07 TRANSACTIONS LEGAL AND AUTHORIZED. This Agreement and all other
documents delivered in connection herewith and the assignment, transfer and
contribution by the Contributor to the Transferor of all of the Contributor's
right, title and interest in and to each Contract and a security interest in
each item of Equipment at any time transferred hereunder and compliance by the
Contributor and the Servicer with all of the provisions of this Agreement:
(a) have been duly authorized by all necessary corporate action
on the part of the Contributor or the Servicer, as the case may be, and do
not and will not require any stockholder approval, or approval or consent
of any trustee or holders of any indebtedness or obligations of the
Contributor or the Servicer, as the case may be;
(b) are within the corporate powers of the Contributor and the
Servicer; and
(c) are legal and will not conflict with, result in any breach in
any of the provisions of, constitute a default under, or result in the
creation of any lien upon any property of the Contributor or the Servicer,
as the case may be, under the provisions of, any agreement, charter
instrument, by-law or other instrument to which the Contributor or the
Servicer, as the case may be, is or will be a party or by which it or its
property may be bound or result in the violation of any law, regulation,
rule, order or judgment applicable to the Contributor or the Servicer, as
the case may be, or its properties, or any order to which the Contributor
or the Servicer, as the case may be, or its properties is subject, of or by
any government or governmental agency or authority.
10
2.08 GOVERNMENTAL CONSENT. Except for the filing of the UCC financing
statements and the making of applications as set forth in Section 1.01(c)
hereof, no consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority is or will be necessary or
required on the part of the Contributor in connection with the execution and
delivery of this Agreement or the assignment, transfer and contribution of the
Contracts and the Equipment hereunder.
2.09 COMPLIANCE WITH LAW. Each of the Contributor and the Servicer:
(a) is not in violation of any laws, ordinances, governmental
rules or regulations or court orders to which it is subject; and
(b) has not failed to obtain any licenses, permits, franchises or
other governmental authorizations necessary to the ownership of its
property or to the conduct of its business.
2.10 ORDINARY COURSE; NO INSOLVENCY. The transactions contemplated by
this Agreement are being consummated by the Contributor and the Servicer,
respectively, in furtherance of the Contributor's and the Servicer's ordinary
business purposes and constitute a practical and reasonable course of action by
the Contributor and the Servicer, respectively, designed to improve the
financial position of the Contributor and the Servicer, respectively, with no
contemplation of insolvency and with no intent to hinder, delay or defraud any
of its present or future creditors. Neither as a result of the transactions
contemplated by this Agreement, nor immediately before or after such
transactions, will the Contributor or the Servicer be insolvent, and both the
Contributor and the Servicer shall have adequate capital for the conduct of its
business and the payment of anticipated obligations.
2.11 ASSETS AND LIABILITIES.
(a) Both immediately before and after the assignment, transfer and
contribution of Contracts (including the right to receive all payments due or to
become due thereunder) and the other Contributed Property, the present fair
salable value of the Contributor's assets will be in excess of the amount that
will be required to pay the Contributor's probable liabilities as they then
exist and as they become absolute and matured.
(b) Both immediately before and after the assignment and transfer of
Contracts and the other Contributed Property, the sum of the Contributor's
assets will be greater than the sum of the Contributor's debts, valuing the
Contributor's assets at a fair salable value.
2.12 FAIR CONSIDERATION; VALID SALE. The consideration received and to
be received by the Contributor in exchange for the assignment, transfer and
contribution of the Contracts and the Contributed Property is fair consideration
having value equivalent to or in excess of the value of the assets being
transferred by the Contributor. This Agreement effects a valid assignment,
transfer and contribution of the Contributor's interest in the Contracts and the
other Contributed Property, enforceable against creditors of and purchasers from
the Contributor.
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2.13 ABILITY TO PAY DEBTS. Neither as a result of the transactions
contemplated by this Agreement nor otherwise does the Contributor believe that
it will incur debts beyond its ability to pay or which would be prohibited by
its charter documents or by-laws. The Contributor's assets and cash flow enable
it to meet its present obligations in the ordinary course of business as they
become due.
2.14 BULK TRANSFER PROVISIONS. No transfer, assignment or conveyance
of Contracts or the other Contributed Property by the Contributor to the
Transferor contemplated by this Agreement will be subject to the bulk transfer
or any similar statutory provisions in effect in any applicable jurisdiction.
2.15 TAX RETURNS.
(a) The provisions for taxes on the books of the Contributor and
each subsidiary are in accordance with generally accepted accounting principles.
(b) The Contributor and the Transferor are members of an
affiliated group, within the meaning of Section 1504 of the Code, that files a
consolidated return for federal income tax purposes, and all of the entities
with which the Contributor is consolidated for federal income tax purposes
(including the Transferor) have timely filed all tax returns required to be
filed in any jurisdiction and have paid all taxes, assessments, fees and other
governmental charges upon them or their properties, income or franchises, shown
to be due and payable on such returns, except to the extent any such entity is
contesting the same in good faith by appropriate proceedings and has set aside
adequate reserves in accordance with generally accepted accounting principles
for the payment thereof. The Contributor does not know of any proposed
additional tax assessment against any such entity in any material amount or of
any basis therefor.
2.16 TRANSFER TAXES. No transfer, assignment or conveyance of
Contracts or the other Contributed Property contemplated by this Agreement is
subject to or will result in any tax, fee or governmental charge payable by the
Contributor or the Transferor to any federal, state or local government
("TRANSFER TAXES"). In the event that the Contributor or the Transferor receives
actual notice of any Transfer Taxes arising out of the transfer, assignment and
conveyance of any Contracts and/or the other Contributed Property, on written
demand by the Transferor, or upon the Contributor otherwise being given notice
thereof, the Contributor shall pay, and otherwise indemnify and hold the
Transferor, the Issuer, the Trustee and the holders of the Notes harmless, on an
after-tax basis, from and against any and all such Transfer Taxes (it being
understood that neither the holders of the Notes nor the Trustee shall have any
obligation to pay such Transfer Taxes).
2.17 PRINCIPAL EXECUTIVE OFFICE. The principal place of business and
chief executive office of each of the Contributor and the Servicer, and has been
for at least four months prior to the date of execution and delivery of this
Amended and Restated Agreement, is located at 000 Xxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000.
2.18 LEGAL NAME. The legal name of the Contributor is as set forth in
this Agreement and the Contributor has not changed its name in the last six
years and does not have any trade names, fictitious names, assumed names or
"doing business as" names except Medical Equipment Finance Xxxxxxx, XXX Xxxxxxx,
XXX Xxxxxx, XXX Strategic Partner Group, DVI Health
12
Services Corp., DVI Finance Inc., DVI Affiliated Capital, Third Coast Capital
and Medical Devices Capital Company.
2.19 SERVICING PROVISIONS CUSTOMARY. The servicing arrangements
hereunder, including, without limitation, the terms and conditions pursuant to
which the Contributor will act as Servicer and the Servicer's Fee and other
amounts to be paid to the Contributor, are consistent with the arrangements and
customary practices of the Contributor when providing comparable services to
nonaffiliated entities and of other services in the equipment leasing industry.
2.20 DEFAULTS. As of the Closing Date, neither the Contributor nor the
Servicer is in default with respect to any debt or obligation.
2.21 ERISA. The Contributor neither maintains, contributes to, nor has
any obligations to contribute to any "employee pension benefit plans," as such
term is defined in Section 3(2) of ERISA (other than the 401(k) Plan of DVI,
Inc.). The execution and delivery of this Agreement and the other applicable
Transaction Documents and the consummation of the transactions contemplated
thereby will neither result in, constitute or otherwise give rise to a
"prohibited transaction" as described in Section 406 of ERISA or Section 4975 of
the Code, with respect to a Contributor Plan. For the purpose of this Section
2.21, the term "CONTRIBUTOR PLAN" shall mean an "employee benefit plan" (as
defined in Section 3 of ERISA) which is or has been established or maintained,
or to which contributions are, have been or are required to be made, by the
Contributor or by any trade or business, whether or not incorporated, which,
together with the Contributor, is under common control, as described in Section
414(b) or (c) of the Code or Section 4001 of ERISA.
2.22 ALL FILINGS MADE. At the Closing Date, no further filings
(including, without limitation, UCC filings) or other actions are necessary in
any jurisdiction to give the Transferor either a security or an ownership
interest in the Contracts and the other Contributed Property, except that with
respect to the Equipment, the Contributor shall, within 30 days of the Closing
Date, file the UCC financing statements and made the necessary applications with
respect to the Equipment that are described in Section 1.01(c) hereof.
2.23 NONCONSOLIDATION. The Contributor is operated in such a manner
that it would not be substantively consolidated with the Transferor or the
Issuer, such that the separate existence of the Contributor and the Transferor
or the Issuer would not be disregarded in the event of a bankruptcy or
insolvency of the Contributor or the Transferor or the Issuer, and in such
regard, among other things:
(a) the Contributor is not involved in the day to day management
of the Transferor or the Issuer;
(b) the Contributor maintains separate corporate records and
books of account from the Transferor and the Issuer and otherwise observes
corporate formalities and has a separate business office from the
Transferor and the Issuer;
13
(c) the financial statements and books and records of the
Contributor prepared after the respective dates of creation of the
Transferor and the Issuer reflect and will reflect the separate existence
of the Transferor and the Issuer;
(d) the Contributor maintains its assets separately from the
assets of the Transferor and the Issuer (including through the maintenance
of a separate bank account), the Contributor's funds and assets, and
records relating thereto, have not been and are not commingled with those
of the Transferor or the Issuer and the separate creditors of the
Transferor and the Issuer will be entitled to be satisfied out of the
Transferor's assets or the Issuer's assets, respectively, prior to any
value in the Transferor becoming available to the Transferor's
equityholders or the Contributor's creditors;
(e) all business correspondence of the Contributor and other
communications are conducted in the Contributor's own name and on its own
stationery;
(f) the Transferor and the Issuer do not act as an agent of the
Contributor in any capacity and the Contributor does not act as agent for
the Transferor or the Issuer, but instead presents itself to the public as
a corporation separate from the Transferor and the Issuer; PROVIDED that
the Contributor is the Servicer hereunder; and
(g) the Transferor is not engaged in any other activities other
than the transactions contemplated by the Transaction Documents.
2.24 ALL REPRESENTATIONS AND WARRANTIES TRUE. All representations and
warranties made by the Contributor in any certificate or other document
delivered at the closing of the transactions contemplated by the applicable
Transaction Document, including all representations and warranties made to
Xxxxxxx Xxxxxxxx & Xxxx in support of their opinions, are true and correct in
all material respects.
2.25 PROSPECTUS SUPPLEMENT. The Prospectus Supplement does not contain
any untrue statement of material fact or omit to state a material fact necessary
to make the statements contained therein not misleading in light of the
circumstances under which they were made; PROVIDED, HOWEVER, the Contributor
makes no representation or warranty as to the information contained in or
omitted from the Prospectus Supplement in reliance upon and in conformity with
information furnished to the Contributor in writing by Xxxxxx Brothers, Inc.,
Prudential Securities Incorporated or Banc One Capital Markets, Inc. or any of
their respective Affiliates (I.E. the paragraphs under the headings "THE
UNDERWRITING" or "PLAN OF DISTRIBUTION") or by the Trustee (under the heading
"THE TRUSTEE").
2.26 INSURANCE. In addition to the insurance maintained by the
Obligors with respect to the Equipment, the Contributor maintains, among other
policies, a general liability insurance policy in the aggregate amount of
$1,000,000 and an excess liability insurance policy in umbrella form in the
aggregate amount of $3,000,000 for a total of $4,000,000 of liability insurance.
Each of such policies is in full force and effect and covers all Equipment owned
by the Contributor and the Transferor. All premiums in respect of such policies
have been paid. Each of the Trustee on behalf of the Noteholders, and the
Transferor is named as additional insureds on such liability policies.
14
2.27 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR, THE MANAGING
MEMBER OR THE ISSUER. The Contributor covenants and agrees it will not, prior to
the date that is one year and one day after the payment in full of all amounts
owing pursuant to the Transaction Documents, institute against, or join any
other Person in instituting against, any of the Transferor, the Managing Member
or the Issuer, any bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings or other similar proceedings under any
federal or state bankruptcy or similar law. This Section 2.27 shall survive the
termination of this Agreement.
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE TRANSFEROR
The Transferor hereby represents to the Contributor as of the Closing
Date and warrants, covenants and agrees as follows:
3.01 TRANSFEROR ORGANIZATION AND AUTHORITY; SUBSIDIARIES. The
Transferor is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, and has full power and
authority to own and convey the Contracts and execute and deliver the
Transaction Documents to which the Transferor is a party (collectively, the
"TRANSFEROR DOCUMENTS") and all related documents, and to perform the terms and
provisions hereof. The Transferor has no subsidiaries, but is the sole
beneficial owner of the Issuer.
3.02 DUE AUTHORIZATION AND NO VIOLATION. Each of the Transferor
Documents and all related documents have been duly authorized, executed and
delivered by the Transferor, and is the legal, valid and binding obligation of
the Transferor enforceable in accordance with its terms, except as the same may
be limited by insolvency, bankruptcy, reorganization or other laws relating to
or affecting the enforcement of creditors' rights or by general equitable
principles. The consummation of the transactions contemplated by the Transferor
Documents and all related documents and the fulfillment of the terms hereof,
will not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the property or assets of the
Transferor pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, guarantee or similar agreement or instrument under which the
Transferor is a debtor or guarantor (other than the liens created pursuant to
the Transaction Documents), nor will such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of the Transferor.
All applicable laws, rules, regulations, and orders with respect to the
Transferor, its business and properties, have been complied with. No consents
and no filings or governmental approvals that have not been made or obtained are
required for due execution, delivery and performance of the agreements by the
Transferor.
3.03 NO LITIGATION. No legal or governmental proceedings are pending
to which the Transferor is a party or of which any property of the Transferor is
the subject, and, to the knowledge of the Transferor, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others
and no injunctions, writs, restraining orders or other orders of any nature are
in effect or, to the knowledge of the Transferor, threatened, other than such
proceedings which will not have a material adverse effect upon the general
affairs, financial position, net worth or results of operations of the
Transferor and will not materially and adversely affect the performance
15
by the Transferor of its obligations under, or the validity and enforceability
of, the Transferor Documents and all related documents.
3.04 PRINCIPAL OFFICE. The Transferor's principal place of business
and chief executive office is located at 000 Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000. The legal name of the Transferor is as set forth herein and the
Transferor has no tradenames, fictitious names, assumed names or "doing
business" names.
3.05 TAX RETURNS. The Transferor has filed on a timely basis all tax
returns required to be filed in any jurisdiction and has paid all taxes,
assessments, fees and other governmental charges upon it or its properties,
income or franchises, shown to be due and payable on such returns, except to the
extent the Transferor is contesting the same in good faith by appropriate
proceedings and has set aside adequate reserves in accordance with generally
accepted accounting principles for the payment thereof. The Transferor does not
know of any proposed additional tax assessment against it in any material amount
or of any basis therefor.
3.06 SOLVENCY. The Transferor is solvent and will not become insolvent
after giving effect to the contemplated transactions. The Transferor is paying
its debts as they become due and will have adequate capital to conduct its
business after giving effect to the contemplated transactions.
3.07 APPROVALS. All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery of the Transferor Documents have been or will be taken or
obtained on or prior to the Closing Date.
3.08 NONCONSOLIDATION. The Transferor is operated in such a manner
that it would not be substantively consolidated with the Contributor, such that
the separate existence of the Transferor and the Contributor would not be
disregarded in the event of a bankruptcy or insolvency of the Transferor or the
Contributor, and in such regard, among other things:
(a) the Transferor is not involved in the day to day management
of the Contributor;
(b) the Transferor maintains separate Transferor records and
books of account from the Contributor and otherwise observes Transferor
formalities and has a separate business office from the Contributor;
(c) the financial statements and books and records of the
Transferor prepared after the date of creation of the Contributor reflect
and will reflect the separate existence of the Contributor;
(d) the Transferor maintains its assets separately from the
assets of the Contributor (including through the maintenance of a separate
bank account), the Transferor's funds and assets, and records relating
thereto, have not been and are not commingled with those of the Contributor
and the separate creditors of the Contributor will be entitled to be
16
satisfied out of the Contributor's assets prior to any value in the
Contributor becoming available to the Contributor's equityholders or the
Transferor's creditors;
(e) all business correspondence of the Transferor and other
communications are conducted in the Transferor's own name and on its own
stationery;
(f) the Contributor does not act as an agent of the Transferor in
any capacity and the Transferor does not act as agent for the Contributor,
but instead presents itself to the public as a corporation separate from
the Contributor; PROVIDED that the Contributor is the Servicer hereunder;
and
(g) the Transferor will at all times maintain two Independent
Directors (as such term is defined in the certificate of incorporation of
the Transferor).
SECTION 4. ADMINISTRATION OF CONTRACTS
4.01 SERVICER TO ACT.
(a) Notwithstanding the transfers and assignments of the Contracts and
the other Contributed Property contemplated hereby, the Servicer, for the
benefit of the Transferor, and, upon assignment of the Transferor's rights
hereunder to the Issuer (and the Issuer's assignment thereof to the Trustee for
the benefit of the Trustee and the Noteholders), will service and administer
each Contract in accordance with the terms thereof and of this Agreement. The
Servicer shall provide the Obligors with appropriate invoices and such other
notices as may be required to ensure that all Contract Payments, Prepayment
Amounts and Partial Prepayment Amounts on or in respect of each Contract are
remitted by the Obligors directly to a Lock-Box Account.
(b) The Servicer shall do, and shall have full power and authority to
do, subject only to the specific requirements and prohibitions of this
Agreement, any and all things in connection with the servicing and
administration of the Contracts and the Equipment which are in the same manner
in which it services contracts and equipment held for its own account
(including, without limitation, servicing and administration of Contracts with
respect to which the related Equipment may be substituted or upgraded) and
consistent with prudent and customary practices of servicers in the industry,
but in performing its duties hereunder, the Servicer will act on behalf and for
the benefit of the Transferor, the Issuer, the Trustee and the Noteholders,
subject at all times to the provisions of the Transaction Documents, without
regard to any relationship which the Servicer or any Affiliate of the Servicer
may otherwise have with an Obligor. Notwithstanding the prior sentence, the
Servicer shall, within ten (10) Business Days after the Closing Date, notify
each Obligor to make all payments with respect to its respective Contracts which
are due after the Cut-Off Date directly to a Lock-Box Account. The Servicer
shall give the Trustee and the Rating Agencies prior written notice of any
change in the location of a Lock-Box Account and the Servicer shall give at
least ten (10) days' prior written notice of the new location to each Obligor.
The Servicer shall at all times act in accordance with the provisions of each
Contract, and shall observe and comply with all requirements of law applicable
to it. Except as permitted by the terms of any Contract following a default
thereunder, the Servicer shall not take any action which would result in the
interference
17
with the Obligor's right to quiet enjoyment of the Equipment subject to the
Contract during the term thereof.
(c) Without limiting the generality of the foregoing, the Servicer
will be responsible, among other duties, to (i) invoice each Obligor for all
Contract Payments required to be paid by such Obligor in such manner and to the
same extent as the Servicer does with respect to similar contracts held for its
own account, (ii) maintain with respect to each Contract and each item of
Equipment, and with respect to each payment by each Obligor and compliance by
each Obligor with the provisions of each Contract, complete and accurate records
in such manner and to the same extent as the Servicer does with respect to
similar contracts held for its own account and (iii) execute, deliver and file
(or cause the same to be done), and the Servicer is hereby authorized and
empowered to execute, deliver, and file on behalf of the Transferor, the Issuer
and the Trustee, any and all tax returns with respect to sales, use, personal
property and other taxes (other than corporate income and franchise tax returns)
and any and all reports or licensing applications required to be filed in any
jurisdiction with respect to any Contract or any item of Equipment and any and
all filings required by Section 4.01(d) below.
(d) The Servicer will file the UCC financing statements as set forth
in Sections 1.01(c) and 7.01(c) hereof within the time frames set forth therein
and thereafter will file such additional UCC financing statements and
continuation statements and assignments in accordance with the provisions of any
Contract and item of Equipment or otherwise so that the security interest in
favor of the Trustee in each of the Contracts and the related Equipment will be
perfected by such filings with the appropriate UCC filing offices. The
Transferor agrees to execute such UCC financing statements and continuation
statements as shall be necessary and shall furnish the Servicer with any powers
of attorney or other documents necessary and appropriate to carry out its
servicing and administration duties hereunder.
(e) The Servicer will maintain, or cause to be maintained, with
respect to the Contracts and the Equipment, liability insurance in amounts at
least as great as those described in Section 2.26.
4.02 CONTRACT AMENDMENTS AND MODIFICATIONS; REPURCHASE OF CONTRACTS BY
SERVICER. (a) In performing its obligations hereunder, the Servicer may, acting
in the name of the Transferor and without the necessity of obtaining the prior
consent of the Transferor or the Trustee, enter into and grant modifications,
waivers and amendments to the terms of any Contract except for modifications,
waivers or amendments that (i) are inconsistent with the servicing standards set
forth in Section 4.01 above, (ii) would extend the date of the final Contract
Payment on any Contract by more than 24 months, (iii) would reduce or adversely
affect, individually or in the aggregate, the Obligor's obligation to maintain,
service, insure and care for the Equipment or would permit the alteration of any
item of Equipment in any way which could adversely affect its present or future
value,(iv) extend the Stated Maturity Date of the Notes, (v) have a material
adverse effect on the weighted average life of any Class of Notes, (vi) be
implemented on more than twenty percent of the Initial Aggregate Discounted
Contract Balance of the Contracts, (vii) be effected on any Contract that is
either 90 days or more delinquent or Defaulted Contract, (viii) PROVIDED that
the Issuer fails to deposit an amount into the Collection Account equal to such
decrease, decrease the Discounted Contract Balance of any Contract or (ix)
otherwise could adversely affect, individually or in the aggregate, the
interests of any of the Transferor, the Issuer, the Trustee or the Noteholders.
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Notwithstanding the provisions of clause (ii) of the preceding sentence, the
Servicer may (1) permit any of the actions set forth in clause (ii) of the
preceding sentence, which in the Servicer's sole discretion, in accordance with
the same manner in which it services contracts and equipment held for its own
account, would maximize Recoveries on any Defaulted Contract, or (2) permit
termination of a Contract which does not otherwise provide for termination by
requiring, in the case of either clause (1) or (2), that the Obligor pay, or, if
the terms of such extension or termination do not provide for such payment by
the Obligor that the Servicer deposit, in lieu of all future Contract Payments
with respect to such Contract, an amount which equals or exceeds the applicable
Prepayment Amount for such Contract as of 11:00 A.M. New York time on the second
Business Day prior to the Payment Date next succeeding the making of such
payment is deposited into the Collection Account; PROVIDED, HOWEVER, that the
Servicer will not be permitted to allow prepayment by an Obligor if there are
any amounts due under the related Contract after such prepayment.
In the event of any modification, waiver or amendment of any Contract
in accordance with this Section 4.02, the Servicer will promptly furnish the
Transferor, the Issuer and the Trustee with a copy thereof, together with a
certificate of the Servicer signed by one of its executive or financial officers
stating that such modification, waiver or amendment is not prohibited by the
provisions of this Section 4.02.
(b) If an Obligor requests either an upgrade or a trade-in of an item
of Equipment, the Servicer may either (x) remove such Contract and the related
Equipment from the Trust Property PROVIDED that the Servicer either (i) subject
to the limitations set forth in Section 7.01(c), transfers a Substitute Contract
and the related Equipment to the Transferor in accordance with Section 7 of this
Agreement or (ii) deposits an amount equal to the Prepayment Amount for such
Contract into the Collection Account or (y) permit such Contract and remaining
related Equipment to remain in the Trust Property, PROVIDED that the Servicer
deposits an amount equal to the Partial Prepayment Amount for such Contract into
the Collection Account.
4.03 CONTRACT DEFAULTS; RESIDUAL REALIZATIONS.
(a) Upon receipt of notice from the Transferor, the Issuer, the
Trustee or any other Person, or if the Servicer otherwise learns that the
Obligor under any Contract is in default thereunder, the Servicer will take such
action as is appropriate, consistent with the Servicer's administration of
contracts held for its own account and consistent with the customary practices
of servicers in the industry, including such action as may be necessary to
cause, or attempt to cause, the Obligor thereunder to cure such default (if the
same may be cured) or to terminate or attempt to terminate such Contract and to
recover, or attempt to recover, all damages resulting from such default.
(b) The Servicer will use its best efforts (i) to sell or re-lease any
Equipment and realize on any other collateral related to a Defaulted Contract in
a timely manner and upon reasonable terms and conditions so as to maximize, to
the extent possible under then prevailing market conditions, as expeditiously as
is consistent with sound commercial practice and the Servicer standard
referenced in Section 4.01, the net proceeds from such Equipment and other
collateral, if any and (ii) to sell or re-lease any Equipment remaining subject
to the lien of the Amended and Restated Indenture upon the expiration of the
Contract to which such Equipment is subject, in a timely manner and in a manner
consistent with that utilized by the Servicer with respect to
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equipment owned by it so as to maximize, to the extent possible under then
prevailing market conditions, the net proceeds from such Equipment.
(c) In the event that the Servicer is required to sell any item of
Equipment pursuant to the provisions of this Section 4.03 at a time when the
Servicer is trying to lease or sell other similar items of equipment, the
Servicer will not favor any such other item in its remarketing efforts.
4.04 COSTS OF SERVICING; SERVICER'S FEE.
(a) All costs of servicing each Contract in the manner required by
this Section 4 shall be borne by the Servicer, but the Servicer shall be
entitled to retain, out of any amounts actually recovered by the Servicer in the
performance of its obligations under Section 4.03 hereof with respect to any
Contract or the Equipment subject thereto, the Servicer's actual out-of-pocket
expenses reasonably incurred in the course of such performance with respect to
such Contract or Equipment (For all purposes of this Section 4, the Servicer's
"out-of-pocket expenses" means only those expenses incurred to non-Affiliated
third parties (E.G., outside counsel in a collection suit) and shall not include
salaries, operating costs, overtime wages and other such "overhead" costs or
expenses of the Servicer or its Affiliates, and shall not include expenses of or
payments to an agent or subservicer allowed under Section 11.02, except that
out-of-pocket expenses for the fees and expenses of an agent used to remarket
Equipment subject to Contracts shall be included as "out-of- pocket expenses").
In addition, the Servicer shall be entitled to receive from the Transferor on
each Payment Date any unreimbursed Nonrecoverable Advances or Servicer Advances
with respect to any Contract (in accordance with Section 5) and a servicing fee
(the "SERVICING FEE") in the amount described in paragraph (b) below.
(b) As compensation to the Servicer for its servicing of the
Contracts, the Servicer will be entitled to receive on each Payment Date from
amounts on deposit in the Collection Account the Servicing Fee in an amount
equal to the product of (i) one-twelfth, (ii) the Servicing Fee Rate and (iii)
the Aggregate Discounted Contract Balance as of the beginning of the related
Collection Period. In addition, the Servicer will be entitled to receive as
additional compensation late payment fees, the penalty portion of interest paid
on past due amounts, origination fees, documentation fees, other administrative
fees or similar charges allowed by applicable law with respect to the Contracts,
and certain other similar fees paid by the Obligors ("SERVICING CHARGES") and
earnings from any Eligible Investments of amounts on deposit in the Collection
Account.
(c) The Servicer hereby agrees:
(i) to pay to the Trustee from time to time such compensation for
all services rendered by it under the Amended and Restated Indenture as the
Servicer and the Trustee have agreed in writing prior to the Closing Date,
such payment to be made independent of the other payment obligations of the
Servicer hereunder;
(ii) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements,
and advances incurred or made by the Trustee in accordance with any
provision of the Amended and Restated Indenture (including the reasonable
compensation and the expenses and disbursements of its
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agents and counsel), except any such expense, disbursement, or advance as
may be attributable to its negligence or bad faith;
(iii) to pay the Trustee its annual administrative fee on the
Closing Date;
(iv) to pay the reasonable fees and expenses of Trustee's
counsel, Xxxxxx and Xxxxxxx, on the Closing Date; and
(v) to pay the reasonable annual administrative fee of each
Lock-Box Bank.
To the extent the Trustee has not been paid pursuant to the Amended
and Restated Indenture, then all of the expenses set forth in this clause (c)
shall be borne by the Servicer, and the Servicer shall not be entitled to
reimbursement of such amounts from the Trust Property.
4.05 OTHER TRANSACTIONS. Nothing in this Agreement shall preclude the
Contributor or the Servicer from entering into other contracts or other
financial transactions with any Obligor or selling or discounting any such
contract with any Person.
4.06 COLLECTION OF MONEYS.
(a) Subject to Section 4.06(b), the Servicer shall remit or cause each
Lock-Box Bank to remit all payments received by it on or in respect of any
Contract or Equipment (including any Residual Payment) during such Collection
Period into the Collection Account (including any such amounts then held by the
Servicer) as soon as practicable, but in any event within two Business Days
after receipt thereof; PROVIDED, HOWEVER, that upon satisfaction of conditions
provided by the Rating Agencies from time to time, the Servicer shall be
permitted to deposit such amounts received during a particular Collection Period
into the Collection Account within two Business Days prior to the related
Payment Date.
(b) Any such amounts remitted to the Collection Account may not
include Excluded Amounts.
(c) Notwithstanding the provisions of paragraph (a) hereof, the
Servicer may retain, or will be entitled to be reimbursed, from amounts
otherwise payable into, or on deposit in, the Collection Account with respect to
a Collection Period, amounts previously deposited in the Collection Account but
later determined to have resulted from mistaken deposits or payments due before
or on the Cut-Off Date or postings of checks returned for insufficient funds
(PROVIDED that the Servicer accounts for such amounts in the Monthly Servicer's
Report for the related Collection Period). The amount to be retained or
reimbursed hereunder shall not be included in funds available for distribution
with respect to the related Payment Date.
(d) Pending their deposit into the Collection Account, all collections
shall be segregated by book-entry or similar form of identification on the
Servicer's books and records and identified as the property of the Transferor.
4.07 VOLUNTARY TERMINATION.
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(a) At the option of the Servicer, the obligations and
responsibilities of the Servicer with respect to all of the Contracts shall
terminate on any Payment Date on which the Pool A Aggregate Discounted Contract
Balance is less than 10% of the Pool A Aggregate Discounted Contract Balance as
of the Closing Date and the Pool B Aggregate Discounted Contract Balance is less
than 20% of the Pool B Aggregate Discounted Contract Balance as of the Closing
Date so long as the Servicer deposits or causes to be deposited into the
Collection Account the Repurchase Amount for each Contract.
(b) At the option of the Servicer, the obligations and
responsibilities of the Servicer with respect to the Contracts in Pool B shall
terminate on any Payment Date on which the Pool B Aggregate Discounted Contract
Balance is less than 20% of the Pool B Aggregate Discounted Contract Balance as
of the Closing Date so long as the Servicer deposits or causes to be deposited
into the Collection Account the Repurchase Amount for each Contract in Pool B.
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS
5.01 SERVICER ADVANCES. Following each Determination Date, the
Servicer shall advance and remit to the Trustee, in such manner as will ensure
that the Trustee will have immediately available funds on account thereof by
11:00 A.M. New York time on the second Business Day prior to the next succeeding
Payment Date, a Servicer Advance equal to an amount sufficient to cover all
amounts due and unpaid on any Delinquent Contract as of the related
Determination Date; PROVIDED, HOWEVER, that the Servicer will not be obligated
to make a Servicer Advance with respect to (a) any Defaulted Contract, (b) any
Contract that was finally liquidated on or prior to such Determination Date or
(c) any Contract if the Servicer, in its good faith judgment, believes that such
Servicer Advance would be a Nonrecoverable Advance. If the Servicer determines
that any Servicer Advance it has made, or is contemplating making, would be a
Nonrecoverable Advance, the Servicer shall deliver to the Trustee an Officer's
Certificate stating the basis for such determination.
The Servicer shall be reimbursed for Servicer Advances on each Payment
Date from amounts on deposit in the Collection Account as follows: (i) for any
Servicer Advance made with respect to a Delinquent Contract, from subsequent
collections of such delinquent Contract Payments, Prepayment Amounts or
Repurchase Amounts and (ii) for any Nonrecoverable Advance, from all collections
received on all of the Contracts.
5.02 INDEMNIFICATION. Each of the Contributor and the Servicer agrees
to indemnify and hold harmless the Transferor, the Issuer, the Managing Member,
the Servicer, the Trustee, (which shall include each of their respective
members, directors, officers, employees and agents), the Contributor and each
Noteholder, as the case may be, (each an "INDEMNIFIED PARTY") against any and
all liabilities, losses, damages, penalties, costs and expenses (including costs
of defense and legal fees and expenses) which may be incurred or suffered by
such Indemnified Party (except to the extent caused by gross negligence or
willful misconduct on the part of the Indemnified Party) as a result of claims,
actions, suits or judgments asserted or imposed against an Indemnified Party and
arising out of the transactions contemplated hereby or by the Amended and
Restated Indenture or arising out of, or based upon, action or inaction by the
Contributor or the Servicer, as the case may be, that is contrary to the terms
of this Agreement or the other Transaction Documents to which it
22
is a party or a breach by the Contributor or the Servicer, as the case may be,
of any of its covenants set forth in any of the Transaction Documents to which
it is a party or any information certified in any schedule delivered by the
Contributor or the Servicer, as the case may be, being untrue in any material
respect as of the date of such Certification, including without limitation, any
claims resulting from any use, operation, maintenance, repair, storage or
transportation of any item of Equipment, whether or not in the Servicer's
possession or under its control pursuant to this Agreement, and any tort claims
and any fines or penalties arising from any violation of the laws or regulations
of the United States or any state or local government or governmental authority,
PROVIDED that the foregoing indemnity shall in no way be deemed to impose on the
Contributor any obligation, other than to the extent specifically set forth in
this Section 5, to make any payment with respect to principal or interest on the
Notes or to reimburse the Transferor for any payments on account of the Notes.
In every circumstance where the Indemnified party seeking indemnity hereunder
for legal fees, counsel fees and related costs and expenses is a Noteholder it
is understood, and the Noteholders by their acceptance of their respective Notes
agree, that such reimbursement, indemnification and holding harmless is limited
to the reasonable fees, related costs and expenses of the Noteholders Counsel
only. The obligations of the Contributor under this Section 5.02 shall survive
the termination of the Agreement the resignation or removal of the Trustee and
the termination of the Servicer pursuant to the terms hereof.
5.03 REPURCHASE AND SUBSTITUTION OF CONTRACTS; OTHER PAYMENTS. (a) The
Contributor or the Servicer, as the case may be, shall inform the Transferor,
the Issuer, the Managing Member and the Trustee promptly, in writing, upon the
discovery of a breach of any of the Contributor's representations and warranties
set forth herein. With respect to any breach of the Contributor's
representations and warranties set forth herein which materially and adversely
affects the interest of the Noteholders in any Contract or Contracts, the
Contributor, unless within 90 days following the discovery or receipt of notice
of such breach such breach has been cured or waived in all respects by the
Noteholders evidencing more than 50% of the Voting Rights, shall either (a)
purchase such Contract and the security interest in the related Equipment from
either the Transferor or the Issuer, as the case may be, or (b) replace such
Contract and the security interest in the related Equipment with a Substitute
Contract in accordance with the provisions of Sections 7.01, 7.02 and 7.03 of
this Agreement. In the event of a repurchase of a Contract, the Contributor
shall remit to the Trustee (upon written notice to the Trustee thereof) for
deposit into the Collection Account the Repurchase Amount of each such Contract
to be repurchased on or prior to 11:00 A.M. New York City time on the second
Business Day prior to the Payment Date immediately following the date when the
Contributor shall become obligated to purchase (or, if such Contract is then a
Defaulted Contract, an amount equal to the Repurchase Amount as of the date such
Contract first became a Defaulted Contract, together with interest thereon at
the Discount Rate from the date such Contract first became a Defaulted Contract
to the end of the month preceding the date of payment). In connection with such
repurchase, the Servicer shall be reimbursed in accordance with Section 3.04(b)
of the Amended and Restated Indenture for all amounts, if any, theretofore
advanced by the Servicer pursuant to Section 5.01 with respect to such Contract.
The Trustee shall deposit such Repurchase Amounts in the Collection Account on
or prior to 11:00 A.M. New York City time on the second Business Day immediately
following the date on which the Trustee receives such Repurchase Amounts.
Without limiting the generality of the foregoing, it is agreed and understood
that for purposes of this Section 5.03, any inaccuracy in any representation or
warranty with respect to (i) the priority of the lien of the Amended and
Restated Indenture with respect to any Contract or
23
(ii) the amount (if less than represented) of the Contract Payments or
Repurchase Amount under any Contract shall be deemed to be material.
(b) With respect to all Predecessor Contracts and the security
interest in the related Equipment purchased or replaced by the Contributor
pursuant to this Section 5 hereof, the Transferor will deliver to the
Contributor, an instrument substantially in the form of Exhibit E hereto,
assigning to the Contributor, without recourse, representation or warranty
(except as to the absence of liens, claims, or encumbrances resulting from
actions taken, or failed to be taken, by the Transferor), all of the
Transferor's right, title and interest in and to such Predecessor Contracts and
the security interest in the related Equipment, and all security and documents
relating thereto.
(c) The Transferor, the Issuer and the Trustee agree that the
obligation of the Contributor to repurchase or substitute any Contract pursuant
to this Section 5.03 shall constitute the sole remedy for any such breach
available against the Contributor by the Transferor, the Issuer, any Noteholder
or the Trustee; PROVIDED, that the limitation contained in this clause (c) shall
not otherwise limit the rights of any such Person under Section 5.02.
SECTION 6. INFORMATION TO BE PROVIDED
6.01 MONTHLY SERVICER REPORT. On or prior to each Determination Date,
the Servicer shall deliver a report in writing substantially in the form of
Exhibit B (the "MONTHLY SERVICER REPORT") to the Trustee and the Rating
Agencies.
6.02 TAX REPORTING AND TREATMENT. (a) The Servicer shall furnish or
cause to be furnished to each Noteholder, within a reasonable time after the end
of each calendar year, to each Noteholder who was a Noteholder at any time
during such year, a report setting forth the amount of principal and interest
paid on the Notes during such year and indicating such other customary factual
information as the Servicer deems necessary, or as any Noteholder reasonably
requests, to enable Noteholders to prepare their respective tax returns. In
addition, the Servicer shall provide, or cause to be provided to the Internal
Revenue Service and each Noteholder, information statements required by the Code
(and the regulations issued thereunder) or as such Noteholders may reasonably
request from time to time with respect to in the case of any class of Notes that
is issued with original issue discount within the meaning of section 1273 of the
Code ("OID"), information statements with respect to OID. For purposes of
consolidated federal and state income and franchise tax reporting, the
Contributor will be treated (i) as the owner of the Contracts and the other
Contributed Property and (ii) as the borrower under the Amended and Restated
Indenture.
(b) The Transferor, the Issuer, the Managing Member, the Contributor,
the Servicer, any subservicer and each Noteholder by acceptance of its Note (and
any Person that is a beneficial owner of any interest in a Note, by virtue of
such Person's acquisition of a beneficial interest therein) agrees to treat the
Notes as indebtedness for purposes of federal, state and local income or
franchise taxes (and any other tax imposed on or measured by income).
6.03 OTHER INFORMATION. The Servicer shall, at the Trustee's request,
furnish to the Trustee from time to time certain information and make various
calculations which are relevant to
24
the performance of the Trustee's duties as set forth in the Amended and Restated
Indenture. Copies of all information furnished pursuant to this Section shall
also be furnished to the Rating Agencies.
6.04 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT. The
Servicer shall cause a firm of independent certified public accountants (who may
also render other services to the Servicer or to the Contributor) to deliver to
the Trustee, the Rating Agencies and each Noteholder within 90 days following
the end of each fiscal year of the Servicer, beginning with June 30, 2001, a
written statement to the effect that such firm has examined in accordance with
generally accepted practices samples of the accounts, records, and computer
systems of the Servicer for the fiscal year ended on the previous June 30
relating to the Contracts (which accounts, records, and computer systems shall
be described in one or more schedules to such statement), that such firm has
compared the information contained in the Servicer's reports delivered in the
relevant period with information contained in the accounts, records, and
computer systems for such period, and that, on the basis of such examination and
comparison, such firm is of the opinion that the Servicer has, during the
relevant period, serviced the Contracts in compliance with such servicing
procedures, manuals, and guides and in the same manner as it services comparable
leases for itself or others, and that such certificates, accounts, records, and
computer systems have been properly prepared and maintained in all material
respects, except in each case for (a) such exceptions as such firm shall believe
to be immaterial and (b) such other exceptions as shall be set forth in such
statement. Copies of all information furnished pursuant to this Section shall
also be furnished to the Rating Agencies.
6.05 PAYMENT ADVICES. Each payment by the Contributor or the
Transferor or the Servicer to the Trustee pursuant to any of the provisions of
the Transaction Documents shall be accompanied by written advice containing
sufficient information to identify the Contract and/or Equipment to which such
payment relates, the Section of the Transaction Documents pursuant to which such
payment is made, and the proper application pursuant to the provisions of the
applicable Transaction Document of the amounts being paid.
SECTION 7. SUBSTITUTION OF CONTRACTS
7.01 SUBSTITUTION. (a) (1) With respect to Pool A, in addition to the
Servicer's other rights of substitution, the Servicer will have the right (but
not the obligation), at any time in connection with exercise by the Transferor
of its rights of substitution under the SCTA, to substitute (a "POOL A
NON-PERFORMING CONTRACT SUBSTITUTION") one or more Eligible Contracts and the
security interest in the related Equipment subject thereto (the foregoing
collectively, a "SUBSTITUTE CONTRACT") for a Contract in Pool A and the security
interest in the related Equipment subject thereto (the foregoing collectively, a
"PREDECESSOR CONTRACT") if:
(i) (A) any Contract Payment on the Predecessor Contract is delinquent
for at least sixty (60) consecutive days as of the most recent
Determination Date; or
(B) a bankruptcy petition has been filed by or against the
Obligor or, with respect to a Leveraged Lease Loan, the related Lessor,
under any Predecessor Contract; or
(C) the Predecessor Contract was initially classified as a
Defaulted Contract during the related Collection Period;
25
PROVIDED, HOWEVER, that if the Predecessor Contract included a first
priority perfected security interest in Equipment related to a Fair Market
Value Lease, the related Substitute Contract, if related to a Fair Market
Value Lease, shall also include a first priority perfected security
interest in the Equipment related thereto; and
(ii) the conditions set forth in Section 7.01(d) have been satisfied
and the sum of (x) the Discounted Contract Balances of all Substitute
Contracts substituted under this Section 7.01(a)(1) and (y) amounts
deposited by the Servicer in the Collection Account in connection with all
such substitutions under this Section 7.01(a)(1) does not exceed 10% of the
Pool A Aggregate Discounted Contract Balance as of the Closing Date.
(2) With respect to Pool A, in addition to the Servicer's other rights
of substitution, the Servicer will have the right (but not the obligation) at
any time in connection with exercise by the Transferor of its rights of
substitution under the SCTA, to substitute (a "POOL A PREPAID CONTRACT
SUBSTITUTION") one or more Substitute Contracts for a Predecessor Contract in
Pool A if (i) the Predecessor Contract has been prepaid and (ii) the conditions
set forth in Section 7.01(d) have been satisfied and the sum of (x) the
Discounted Contract Balance of all Substitute Contracts substituted under this
Section 7.01(a)(2) and Section 4.02(b) and (y) amounts deposited by the Servicer
in the Collection Account in connection with all such substitutions under this
Section 7.01(a)(2) and Section 4.02(b) does not exceed 10% of the Pool A
Aggregate Discounted Contract Balance as of the Closing Date.
(b) (1) With respect to Pool B, in addition to the Servicer's other
rights of substitution, the Servicer will have the right (but not the
obligation), at any time in connection with exercise by the Transferor of its
rights of substitution under the SCTA, to substitute (a "POOL B GENERAL CONTRACT
SUBSTITUTION") one or more Substitute Contracts for a Predecessor Contract in
Pool B if the conditions set forth in Section 7.01(d) have been satisfied and
the sum of (x) the Discounted Contract Balances of all Substitute Contracts
substituted under this Section 7.01(b)(1) and (y) amounts deposited by the
Servicer in the Collection Account in connection with all such substitutions
under this Section 7.01(b)(1) does not exceed 10% of the Pool B Aggregate
Discounted Contract Balance as of the Closing Date.
(2) With respect to Pool B, in addition to the Servicer's other rights
of substitution, the Servicer will have the right (but not the obligation), at
any time in connection with exercise by the Transferor of its rights of
substitution under the SCTA, to substitute (a "POOL B PREPAID CONTRACT
SUBSTITUTION") one or more Substitute Contracts for a Predecessor Contract in
Pool B if (i) the Predecessor Contract has been prepaid and (ii) the conditions
set forth in Section 7.01(d) have been satisfied and the sum of (x) the
Discounted Contract Balance of all Substitute Contracts substituted under this
Section 7.01(b)(2) and Section 4.02(b) and (y) amounts deposited by the Servicer
in the Collection Account in connection with all such substitutions under this
Section 7.01(b)(2) and Section 4.02(b) does not exceed 10% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date; unless the Rating
Agencies have otherwise permitted.
(c) Any substitution pursuant to this Section 7.01 or Section 5.03
shall become effective upon (i) delivery to the Trustee and the Transferor of
the Substitute Contract Contribution Form, substantially in the form of Exhibit
D hereto, transferring to the Transferor (and the Issuer, as assignee of the
Transferor) all right, title and interest of the Contributor or the Servicer in
and to
26
the Eligible Contract being substituted and a security interest in the related
Equipment subject thereto, and granting the Trustee a valid and first priority
security interest in such Substitute Contracts and the related Equipment (other
than with respect to a Secured Equipment Note or Finance Lease and for which the
Original Equipment Cost is less than $25,000) subject thereto, (ii) delivery to
the Trustee of amendments to, or executed originals of, the UCC financing
statements referred to in Section 1.01(c) hereof reflecting the deletion of the
Predecessor Contract and the addition of the Substitute Contract, (iii) delivery
to the Contributor by the Transferor of an instrument, substantially in the form
of Exhibit E hereto, transferring to the Contributor or the Servicer, without
representation or warranty, all of the Transferor's right, title and interest in
and to the Predecessor Contract, (iv) delivery to the Trustee of the sole
original, manually executed counterpart of each Contract that constitutes
"chattel paper" or an "instrument" under the UCC and (v) delivery to the Trustee
of an amendment to the Contract Schedule, reflecting the deletion of the
Predecessor Contract and the addition of the Substitute Contract. Upon delivery
of each Substitute Contract and the Substitute Contract Transfer Form therefor,
the definition of "Contributed Property" will be automatically amended to
include such Substitute Contract and all related property and rights contained
in the definition of Contributed Property.
(d) With respect to a substitution of Contracts in accordance with the
provisions of this Section 7 and Section 5.03 hereof, each proposed Substitute
Contract must (i) be an Eligible Contract; (ii) satisfy all of the
representations and warranties set forth in Section 2.03(a) of this Agreement;
(iii) have a Discounted Contract Balance such that the sum of its Discounted
Contract Balance, including any additional cash delivered by the Servicer into
the Collection Account in connection therewith, is not less than the Discounted
Contract Balance of the Contract(s) being replaced; (iv) not cause the remaining
weighted average life of the Contracts (as calculated based upon the Contract
Payments which constitute the Discounted Contract Balance of the Contracts) to
be materially altered; and (v) in accordance with the Servicer's standard credit
evaluation policies, be of equal or better credit quality than the Contract
being replaced. For purposes of determining compliance with clause (iii) of the
preceding sentence, if more than one Substitute Contract is being provided on
any date, the Discounted Contract Balance of the Substitute Contracts and the
Contracts being replaced shall be determined on an aggregate basis.
7.02 NOTICE OF SUBSTITUTION. In the Monthly Servicer Report to be
delivered on each Determination Date, the Contributor shall give written notice
to the Trustee, each Noteholder, the Rating Agencies and the Servicer of each
substitution of Contracts pursuant to Section 7.01(a) hereof and of any
substitution or repurchase pursuant to Section 5.03 hereof during the preceding
Collection Period. Such Monthly Servicer Report or other written notice shall
(i) specify the amount of each periodic Contract Payment under the Predecessor
Contract and the amount of each periodic Contract Payment under each Eligible
Contract being substituted, (ii) specify the residual values of the Equipment
subject to the Predecessor Contract and the Equipment subject to the Eligible
Contract being substituted, (iii) specify the Discounted Contract Balance of the
Predecessor Contracts, the Discounted Contract Balance of the Substitute
Contracts, any Excess Substituted Discounted Contract Balance, and any amounts
to be deposited in the Collection Account in connection with such Substitute
Contracts and (iv) with respect to a substitution pursuant to Section 7.01(a)
hereof, be accompanied by an Officer's Certificate, substantially in the form of
Exhibit F hereto, certifying as to compliance with the provisions of Section
7.01(a) hereof.
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7.03 CONTRIBUTOR'S AND SERVICER'S SUBSEQUENT OBLIGATIONS. Upon any
substitution of Contracts in accordance with the provisions of this Section 7 or
Section 5.03, the Contributor's and the Servicer's obligations hereunder with
respect to the Predecessor Contract shall cease (except for the Servicer's
obligation as set forth in Section 4.03 hereof to take such action as is
necessary and appropriate to maximize net proceeds to be paid to the Trustee)
but the Contributor and the Servicer shall each thereafter have the same
obligations with respect to the Substitute Contract substituted as it has with
respect to all other Contracts subject to the terms hereof.
7.04 USAGE OF PREDECESSOR CONTRACTS IN CALCULATIONS. After
substitution therefore in accordance with the terms and conditions of the
Transaction Documents, no Predecessor Contract or any other Contract repurchased
or substituted for in accordance with the Transaction Documents, including the
subsequent default, delinquency or breach thereof, shall be included in any
calculation or determination made under the Transaction Documents, including,
without limitation, the calculation of either any Amortization Event or
Indenture Event of Default.
SECTION 8. THE SERVICER
8.01 CORPORATE EXISTENCE OF THE SERVICER. The Servicer will keep in
full force and effect its existence, rights and franchise as a corporation under
the laws of its jurisdiction of incorporation and will preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is necessary to protect the validity and enforceability
of any of the Contracts or to permit performance of the Servicer's duties under
this Agreement.
The Servicer shall not merge or consolidate with any other Person
unless: (i) the entity surviving such merger or consolidation is a corporation
organized under the laws of the United States or any state thereof, (ii) the
surviving entity, if not the Servicer, shall execute and deliver to the
Transferor and the Trustee, in form and substance satisfactory to each of them,
(x) an instrument expressly assuming all of the obligations of the Servicer
hereunder, and (y) an Officer's Certificate to the effect that such Person is a
corporation of the type described in the preceding clause (i), has effectively
assumed the obligations of the Servicer hereunder, that all conditions precedent
provided for in this Agreement relating to such transaction have been complied
with, that all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Transferor, the Issuer and Trustee in the Trust
Property, and reciting the details of such filings, or stating that no such
action shall be necessary to preserve and protect such interest, (iii) the
Servicer shall deliver to the Trustee a letter from each Rating Agency to the
effect that such consolidation, merger or succession will not, in and of itself,
result in a downgrading of the ratings for the Notes and (iv) immediately after
giving effect to such transaction, no Servicer Event of Default, and no event
which, after notice or lapse of time, or both, would become a Servicer Event of
Default shall have occurred and be continuing.
8.02 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. (a) Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall incur any liability to the Transferor, the Issuer, the Trustee or
the holders of the Notes, for any action taken or not taken in good faith
pursuant to the terms of this Agreement with respect to any Contract (including
any Defaulted Contract) or the Equipment subject thereto; PROVIDED, HOWEVER,
that this provision shall not protect the Servicer or any such person against
any breach of representations or warranties made
28
by it herein or in any certificate delivered in conjunction with the purchase of
the Notes or for any liability that would otherwise be imposed by reason of
willful misfeasance or negligence in the performance of its duties hereunder or
by reason of reckless disregard of obligations and duties hereunder.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; PROVIDED, HOWEVER, that the Servicer may undertake, at its expense,
any reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement and the
interests of the Noteholders under this Agreement.
(c) The Servicer, and any director or officer or employee or agent of
the Servicer, may rely in good faith on the advice of counsel selected by it
with due care or on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising hereunder.
8.03 SERVICER NOT TO RESIGN OR BE REMOVED. The Servicer shall not
resign from the servicing obligations and duties hereby imposed on it except in
connection with an assignment permitted by Section 11.02 hereof or upon
determination that such duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of independent counsel, in form and
substance satisfactory to the Noteholders evidencing more than 50% of the Voting
Rights, to such effect delivered to the Trustee.
Except as provided in Section 10.02 hereof, the Servicer shall not be
removed or be replaced as Servicer with respect to any Contract or Equipment;
PROVIDED, HOWEVER, that upon the occurrence of any Amortization Event,
Noteholders evidencing not less than 66-2/3% of the Voting Rights shall have the
right to replace DVI as Servicer with a successor Servicer in accordance with
Section 10.02 hereof.
No resignation or removal of the Servicer shall in any event (i)
become effective until the successor Servicer shall have assumed the Servicer's
servicing responsibilities and obligations in accordance with Section 10.02
hereof, or (ii) affect the Contributor's obligations pursuant to this Agreement.
8.04 FINANCIAL AND BUSINESS INFORMATION. The Servicer will deliver to
the Transferor, the Issuer, the Trustee (who shall forward copies to each
Noteholder) and the Rating Agencies:
(a) promptly upon their becoming available, one copy of each
report (including the Servicer's (or for so long as DVI Financial Services
Inc. is the Servicer, DVI, Inc.'s) annual report to shareholders and
reports on Form 8-K, 10-K, and 10-Q, proxy statement, registration
statement, prospectus and notices filed with or delivered to any securities
exchange, the Securities and Exchange Commission or any successor agencies,
in each case relating to the Transferor or the Notes;
29
(b) immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Event of Default, a written
notice describing its nature and period of existence and what action the
Servicer is taking or proposes to take with respect thereto;
(c) promptly upon the Servicer's becoming aware of:
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any court or administrative proceeding
which individually or in the aggregate involves the possibility of
materially and adversely affecting the properties, business, profits or
conditions (financial or otherwise) of the Servicer, a written notice
specifying the nature of such investigation or proceeding and what action
the Servicer is taking or proposes to take with respect thereto and
evaluating its merits; and
(d) (i) upon request, the Servicer shall furnish to the
Transferor, the Issuer and the Trustee, within ten (10) Business Days, a
list of all Contracts (by contract number and name of Obligor), as of the
end of the most recent Collection Period, held as part of the Trust
Property, together with a reconciliation of such list to the Contract
Schedule and (ii) with reasonable promptness, any other data and
information which may be reasonably requested from time to time.
8.05 OFFICER'S CERTIFICATES. With each set of documents delivered
pursuant to Section 8.04(a), the Servicer will deliver an Officer's Certificate
stating (i) that the officer signing such Certificate have reviewed the relevant
terms of this Agreement and have made, or caused to be made under such officer's
supervision, a review of the activities of the Servicer during the period
covered by the statements then being furnished, (ii) that the review has not
disclosed the existence of any Servicer Event of Default or, if a Servicer Event
of Default exists, describing its nature and what action the Servicer has taken
and is taking with respect thereto and (iii) that on the basis of such review
the officer signing such certificate is of the opinion that during such period
the Servicer has serviced the Contracts in compliance with the procedures hereof
except as described in such certificate.
8.06 INSPECTION. The Servicer shall make available to the Trustee or
its duly authorized representatives, attorneys or auditors, and the Noteholders
or their duly authorized representative attorneys or auditors copies of the
Contract Files and the related accounts, records and computer systems maintained
by the Servicer at such times during normal operating hours as the Trustee shall
reasonably request which does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations. Nothing in this Section
8.06 shall affect the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and the failure of
the Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section 8.06. Any expense incident to the
exercise by the Trustee or any Noteholder during the continuance of a Servicer
Event of Default of any right under this Section 8.06 shall be borne by the
Servicer, but any expense due to the exercise of a right
30
by any such Person prior to the occurrence of a Servicer Event of Default shall
be borne by such Person.
8.07 SERVICER RECORDS. On or before the Closing Date, the Servicer
will indicate in its records that it is servicing and administering each
Contract in its capacity as Servicer hereunder, at the request and for the
benefit of the Transferor (and subject to the provisions of the applicable
Transaction Documents) and its successors and assigns (including the Issuer and
the Trustee).
8.08 INSURANCE. The Servicer will track, on a quarterly basis,
casualty insurance premium payments by Obligors as required by the Contracts, in
the same manner in which the Servicer would service contracts and equipment held
for its own account.
8.09 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR, THE MANAGING
MEMBER OR THE ISSUER. The Servicer covenants and agrees it will not, prior to
the date that is one year and one day after the payment in full of all amounts
owing pursuant to the Transaction Documents, institute against, or join any
other Person in instituting against, any of the Transferor, the Managing Member
or the Issuer, any bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings or other similar proceedings under any
federal or state bankruptcy or similar law. This Section 8.09 shall survive the
termination of this Agreement.
8.10 FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE. The Servicer
shall maintain, at its own expense, a blanket fidelity bond and an errors and
omissions insurance policy, with coverage appropriate and customary in the
industry with responsible companies on all officers, employees or other persons
acting in any capacity with regard to the Contracts to handle funds, money,
documents and papers relating to the Contracts. Any such fidelity bond and
errors and omissions insurance shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons and shall be maintained in a form and amount that
would meet the requirements of a prudent institutional servicer. No provision of
this Section 8.10 requiring such fidelity bond and errors and omissions
insurance shall diminish or relieve the Servicer from its duties and obligations
as set forth in this Agreement. Any such fidelity bond or insurance policy shall
not be cancelled or modified in a materially adverse manner without ten days'
prior written notice to the Rating Agencies. Promptly upon receipt of any notice
from the surety or the insurer that such fidelity bond or insurance policy has
been terminated or materially modified, the Servicer shall notify the Trustee
and the Rating Agency of any such termination or modification.
SECTION 9. THE CONTRIBUTOR
9.01 CORPORATE EXISTENCE OF THE CONTRIBUTOR. The Contributor will keep
in full force and effect its existence, rights and franchise as a corporation
under the laws of its jurisdiction of incorporation and will preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is necessary to protect the validity and enforceability
of any of the Contracts or to permit performance of the Contributor's duties
under this Agreement.
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The Contributor shall not merge or consolidate with any other Person
unless (i) the entity surviving such merger or consolidation is a corporation
organized under the laws of the United States or any jurisdiction thereof, (ii)
the surviving entity, if not the Contributor, shall execute and deliver to the
Transferor, the Servicer and the Trustee, in form and substance satisfactory to
each of them, (x) an instrument expressly assuming all of the obligations of the
Contributor hereunder, and (y) an Officer's Certificate to the effect that such
Person is a corporation of the type described in the preceding clause (i), has
effectively assumed the obligations of the Contributor hereunder, that all
conditions precedent provided for in this Agreement relating to such transaction
have been complied with, and, that all UCC financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Transferor, the
Issuer and Trustee in the Trust Property, and reciting the details of such
filings, or stating that no such action shall be necessary to preserve and
protect such interest, (iii) the Contributor shall deliver to the Trustee a
letter from each Rating Agency to the effect that such consolidation, merger or
succession will not, in and of itself, result in a downgrading of the ratings
for the Notes and (iv) immediately after giving effect to such transaction, no
event of default under any Transaction Document, and no event which, after
notice or lapse of time, or both, would become an event of default shall have
occurred and be continuing.
9.02 FINANCIAL AND BUSINESS INFORMATION. The Contributor will deliver
to the Transferor, the Issuer, the Trustee and the Rating Agencies and, upon
request, to each Noteholder:
(a) promptly upon their becoming available, one copy of each
report (including DVI, Inc.'s annual report to shareholders and reports on
Form 8-K, 10-K, and 10-Q), proxy statement, registration statement,
prospectus and notice filed with or delivered to any securities exchange,
the Securities and Exchange Commission or any successor agencies;
(b) promptly upon the Contributor's becoming aware of
(i) any proposed or pending investigation of it by any
governmental authority or agency, or
(ii) any court or administrative proceedings
which individually or in the aggregate involves or may involve the
possibility of materially and adversely affecting the properties, business,
profits or conditions (financial or otherwise) of the Contributor, a
written notice specifying the nature of such investigation or proceeding
and what action the Contributor is taking or proposes to take with respect
thereto and evaluating its merits; and
(c) with reasonable promptness, any other data and information
which may be reasonably requested from time to time.
9.03 INSPECTION. The Contributor shall make available to the
Transferor, the Managing Member, the Issuer or the Trustee or their respective
duly authorized representatives, attorneys or auditors and the Noteholders or
their duly authorized representatives, attorneys or auditors its accounts,
records and computer systems regarding any Contract maintained by the
32
Contributor at such times during normal operating hours as the Trustee, the
Managing Member, the Issuer or the Transferor shall reasonably instruct which do
not unreasonably interfere with the Contributor's normal operations or customer
or employee relations. Nothing in this Section 9.03 shall affect the obligation
of the Contributor to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Contributor to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 9.03. Any expense incident to the exercise
by the Trustee or any Noteholder during the continuance of a Servicer Event of
Default of any right under this Section 9.03 shall be borne by the Servicer, but
any expense due to the exercise of a right by any such Person prior to the
occurrence of a Servicer Event of Default shall be borne by such Person.
9.04 NO BANKRUPTCY PETITION AGAINST THE MANAGING MEMBER, THE
TRANSFEROR OR THE ISSUER. The Contributor covenants and agrees it will not,
prior to the date that is one year and one day after the payment in full of all
amounts owing pursuant to the Amended and Restated Indenture, institute against,
or join any other Person in instituting against, any of the Managing Member, the
Transferor or the Issuer, any bankruptcy, reorganization, receivership,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under any federal or state bankruptcy or similar law. This Section 9.04 shall
survive the termination of this Agreement.
9.05 ACCOUNTS, BOOKS AND RECORDS.
(a) The Contributor shall maintain accounts and records as to each
Contract accurately and in sufficient detail to permit 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). Prior to the transfer of the
Contracts to the Transferor, the Contributor will clearly xxxx its books and
records and each Contract File (including each Contract) to reflect each sale of
a Contract and the Equipment subject thereto to the Transferor, the resale to
the Issuer and to show that the Issuer owns the Contracts absolutely. The
Contributor or the Transferor, as the case may be, will cause the electronic
ledger, the Contract File (including the Contract), with respect to each
Contract and the related Contract and the Contract Schedule to be clearly and
unambiguously marked to show that such Contract and the related Contract has
been contributed by Contributor to the Transferor, resold by the Transferor to
the Issuer and pledged by the Issuer to the Trustee for the benefit of the
Noteholders pursuant to the Amended and Restated Indenture.
(b) The Contributor shall maintain its computer systems so that, from
and after the time of sale hereunder of the Contracts to the Transferor, the
Contributor's master computer records (including archives) that refer to a
Contract and the related Contract shall indicate clearly the interest of the
Transferor in such Contract and that such Contract has been resold to the Issuer
and pledged by the Issuer to the Trustee for the benefit of the Noteholders.
Indication of the Transferor's ownership of a Contract, the resale to the
Issuer, and the pledge of such Contract by the Issuer to the Trustee for the
benefit of the Noteholders shall be deleted from or modified on the
Contributor's computer systems when, and only when, the Contract shall have been
paid in full or purchased or substituted by the Contributor pursuant to the
terms hereof.
9.06 TAX RETURNS. (a) At all times, so long as any of the Notes or the
other obligations secured by the Amended and Restated Indenture remain
outstanding, the Contributor, the Managing Member and the Transferor shall be
members of the same affiliated group within the
33
meaning of Section 1504 of the Code (the "DVI GROUP") and shall join in the
filing of a consolidated return for federal income tax purposes.
(b) The Contributor shall promptly pay and discharge, or cause the
payment and discharge of, all federal income taxes (and all other material
taxes) when due and payable by Contributor, the DVI Group, the Managing Member,
or the Transferor, except (i) such as may be paid thereafter without penalty or
(ii) such as may be contested in good faith by appropriate proceedings and for
which an adequate reserve has been established and is maintained in accordance
with GAAP. The Contributor shall promptly notify the Transferor, the Trustee,
the Managing Member and the Noteholders of any material challenge, contest or
proceeding pending by or against Contributor, the Managing Member, or the DVI
Group before any taxing authority.
9.07 INSURANCE. The Contributor will at all times maintain general
liability and excess liability insurance policies in at least the amount set
forth in Section 2.26.
9.08 PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) The Contributor shall not change its name, identity, or corporate
structure in any manner that would, could, or might make any UCC financing
statement or continuation statement filed by the Contributor in accordance with
Section 1.01(c) seriously misleading within the meaning of ss. 9-402(7) of the
UCC, unless it shall have given the Transferor at least thirty (30) days' prior
written notice thereof and shall promptly file appropriate amendments to all
previously filed UCC financing statements or continuation statements.
(b) If at any time the Contributor shall propose to sell, grant a
security interest in, or otherwise transfer any interest in contracts to any
prospective purchaser, lender, or other transferee, the Contributor shall give
to such prospective purchaser, lender, or other transferee computer tapes,
records, or print-outs (including any restored from archives) that, if they
shall refer in any manner whatsoever to any Contract, shall indicate clearly
that such Contract has been sold to the Transferor and then resold to the Issuer
and pledged by the Issuer to the Trustee for the benefit of the Noteholders.
(c) The Contributor shall deliver to the Transferor, the Managing
Member, the Rating Agencies and the Trustee promptly after the execution and
delivery of each amendment hereto, an opinion of counsel either (i) stating
that, in the opinion of such counsel, all UCC financing statements and
continuation statements necessary to preserve and protect fully the interest of
the Transferor, the Issuer and the Trustee in the Trust Property have been filed
or, with respect to the Equipment, are required to be filed within thirty (30)
days following the Closing Date or the Substitution Date, as applicable, or (ii)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest.
9.09 OTHER LIENS OR INTERESTS. Except for the conveyances hereunder,
the Contributor will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any lien on the Contracts or
any other Trust Property or any interest therein, and the Contributor shall
defend the right, title, and interest of the Transferor, the Issuer and the
Trustee in, to and under the Contracts and the other Trust Property against all
claims of third parties claiming through or under the Contributor; PROVIDED,
HOWEVER, that the Contributor's obligations to
34
the Trustee under this Section 9.09 shall terminate upon the repayment in full
of the Notes and the expiration of any applicable preference period and, with
respect to any Contract, on the date it is paid in full or purchased by the
Contributor pursuant to Section 5.03 hereof.
9.10 COSTS AND EXPENSES. The Contributor agrees to pay all reasonable
costs and disbursements in connection with the performance of its obligations
hereunder and under the Amended and Restated Indenture.
SECTION 10. EVENTS OF DEFAULT
10.01 SERVICER EVENTS OF DEFAULT. The following events and conditions
shall constitute Servicer Events of Default hereunder:
(i) failure on the part of the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) to (A) remit any payment to
the Trustee within the time period required by Section 4.06 hereof or (B)
make any Servicer Advance required by Section 5.01 hereof;
(ii) failure to pay to the Trustee on or before the date when due
in accordance with the terms hereof, any deposit required to be made by the
Servicer pursuant to Section 4.02 hereof;
(iii) failure on the part of either the Servicer (or for so long
as the Contributor is the Servicer, the Transferor) duly to observe or
perform in any material respect any other of their respective covenants or
agreements in this Agreement (including without limitation, failure of the
Servicer to deliver a Monthly Servicer Report on the date required pursuant
to Section 6.01 or the delivery of a Monthly Servicer Report which is
materially incorrect) which failure materially and adversely affects the
rights of the Noteholders and continues unremedied for a period of 30 days
after the Servicer becomes aware of such failure or the giving of written
notice of such failure (A) to the Servicer (or the Transferor, if
applicable) by the Trustee or (B) to the Servicer (or the Transferor, if
applicable) and the Trustee by Noteholders evidencing not less than 66-2/3%
of the Voting Rights, taken together.
(iv) if any representation or warranty of the Servicer made in
this Agreement or in any certificate or other writing delivered pursuant
hereto or the Transaction Documents or made by any successor Servicer in
connection with such successor Servicer's assumption of the duties of the
Servicer shall prove to be incorrect in any material respect as of the time
when the same shall have been made;
(v) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Servicer (or for so long
as the Contributor is the Servicer, the Transferor) in an involuntary case
or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (B) a decree or order adjudging the
Servicer (or for so long as the Contributor is the Servicer, the
Transferor) bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization,
35
arrangement, adjustment, or composition of or in respect of the Servicer
(or for so long as the Contributor is the Servicer, the Transferor) under
any applicable federal or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator, or other similar official of
the Servicer (or for so long as the Contributor is the Servicer, the
Transferor) or of any substantial part of the property of either, or
ordering the winding up or liquidation of the affairs of either, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 90 consecutive days;
(vi) the commencement by the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by either to the
entry of a decree or order for relief in respect of the Servicer (or for so
long as the Contributor is the Servicer, the Transferor) in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against either, or the
filing by either of a petition or answer or consent seeking reorganization
or relief under any applicable federal or state law, or the consent by
either to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) or of any substantial part of
the property of either, or the making by either of an assignment for the
benefit of creditors, or the failure by the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) to pay its debts generally as
they become due, or the taking of corporate action by the Servicer (or for
so long as the Contributor is the Servicer, the Transferor) in furtherance
of any such action;
(vii) any assignment by the Servicer, or any attempt by the
Servicer to assign its duties or rights hereunder, except as specifically
permitted hereunder;
(viii) (A) the failure of the Servicer to make one or more
payments with respect to aggregate recourse indebtedness for borrowed money
exceeding $2,000,000 or (B) the occurrence of any other event or the
existence of any other condition, the effect of which event or condition is
to cause more than $2,000,000 of aggregate recourse indebtedness for
borrowed money of the Servicer to become due before its (or their) stated
maturity or before its (or their) regularly scheduled dates of payment, so
long as such failure, event or condition specified in either clause (A) or
(B) shall be continuing and shall not have been waived by the Person or
Persons entitled to performance;
(ix) the rendering against the Servicer of a final judgment,
decree or order (all possible appeals having been exhausted) for the
payment of money in excess of $2,000,000 which is uninsured, and the
continuance of such judgment, decree or order unsatisfied and in effect for
any period of 60 consecutive days without a stay of execution; or
(x) the occurrence of an Amortization Event (so long as the
Contributor is the Servicer).
36
10.02 TERMINATION. If a Servicer Event of Default shall have occurred
and be continuing, the Trustee shall, upon the request of Noteholders evidencing
more than 66-2/3% of the Voting Rights, give written notice to the Servicer of
the termination of all of the rights and obligations of the Servicer (but none
of the Contributor's obligations hereunder, which shall survive any such
termination) under this Agreement. On the receipt by the Servicer of such
written notice, all rights and obligations of the Servicer under this Agreement,
including without limitation the Servicer's right hereunder to receive Servicing
Fees accruing subsequent to such termination date, but none of the Contributor's
obligations hereunder, shall cease and the same shall pass to and be vested in,
and assumed by, the Trustee pursuant to and under this Agreement and the Amended
and Restated Indenture subject to the provisions of Section 10.03; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in- fact or otherwise, any and
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and assignment of any
Contract and the related Contract and Equipment or such passing, vesting or
assumption or to cause Obligors to remit all future Contract Payments and other
amounts due under any Contract to such account as shall be specified by the
Trustee. The Servicer may be removed only pursuant to a Servicer Event of
Default.
10.03 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.02 hereof, the Trustee (subject to subsection
(b) hereof) shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement of the Contracts and, to such extent,
shall be subject to all the responsibilities, duties and liabilities (other than
the duty to advance funds and to indemnify) relating thereto placed on the
Servicer by the terms and provisions hereof (but not the obligations of the
Contributor contained herein which shall survive any such termination as above
provided) and shall be entitled to receive from the Transferor the Servicing Fee
and other servicing compensation provided for in Section 4.04 hereof; PROVIDED
that the Trustee shall in no way be responsible or liable for any action or
actions of the Servicer before the time the Servicer receives such a notice of
termination.
(b) The Trustee may, if it is unwilling or unable to act as the
successor Servicer, give notice of such fact to each Noteholder and (i) appoint
a successor Servicer with a net worth of at least $15,000,000 and reasonably
acceptable to Noteholders evidencing more than 50% of the Voting Rights and
whose regular business includes the servicing of receivables arising from
equipment similar to the Equipment, as the successor Servicer hereunder to
assume all of the rights and obligations of the Servicer hereunder, including,
without limitation, the Servicer's right (but not the obligations of the
Contributor contained herein) hereunder to receive the Servicing Fee (PROVIDED
THAT, notwithstanding any other provision to the contrary contained in any
Transaction Document, no increase in the Servicer Fee due to any successor
Servicer shall be made without the consent of the Noteholders that hold, as of
the date of determination, more than 50% of the then-Outstanding Note Balance of
each class of Notes then Outstanding) or, (ii) if no such institution is so
appointed, petition a court of competent jurisdiction to appoint an institution
meeting such criteria as the Servicer hereunder. Pending appointment of a
successor Servicer hereunder, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee shall cause such successor Servicer to enter into a servicing agreement
substantially in the form of this Agreement except that such agreement shall not
include any of the Contributor's representations, warranties or obligations and
the Trustee may make arrangements for the compensation of such
37
successor Servicer out of payments on Contracts and the related Contracts as it
and such successor Servicer shall agree; PROVIDED, HOWEVER, that no such
compensation shall be in excess of that provided in Section 4.04 hereof. Neither
the Trustee nor a Successor Servicer shall be deemed to be in default hereunder
by reason of its failure to make, or its delay in making, any distribution
hereunder or any portion thereof which failure or delay was caused by (i) the
failure of the prior Servicer to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the prior Servicer.
10.04 SERVICER TO COOPERATE. The Servicer hereby agrees to cooperate
with the successor Servicer appointed in accordance with Section 10.02 or 10.03
hereof, as applicable, in effecting the termination and transfer of the
responsibilities and rights of the Servicer hereunder to the successor Servicer,
including, without limitation, the execution and delivery of assignments of UCC
financing statements, and the transfer to the successor Servicer for
administration by it of all cash amounts which shall at the time be held by the
Servicer or thereafter received with respect to the Contracts and the related
Contracts. The Servicer hereby agrees to transfer to any successor Servicer its
electronic records and all other records, correspondence and documents relating
to the Contracts and the related Contracts in the manner and at such times as
the successor Servicer shall reasonably request. The Servicer hereby designates
the successor Servicer its agent and attorney-in-fact to execute transfers of
UCC financing statements (including any and all UCC financing statements naming
an individual Obligor as debtor and the Contributor as secured party) and any
other filings or instruments which may be necessary or advisable to effect such
transfer of the Servicer's responsibilities and rights hereunder. Upon any such
termination or appointment of a successor Servicer, the Trustee shall give
prompt written notice thereof to each Noteholder in the manner provided in the
Amended and Restated Indenture.
10.05 REMEDIES NOT EXCLUSIVE. Nothing in the preceding provisions of
this Section 10 shall be interpreted as limiting or restricting any rights or
remedies which the Transferor, the Issuer, the Trustee, the Noteholders or any
other Person would otherwise have at law or in equity on account of the breach
or violation of any provision of this Agreement by the Servicer, including
without limitation the right to recover full and complete damages on account
thereof to the extent not inconsistent with Section 8.02 hereof.
10.06 WAIVER OF PAST DEFAULTS. Holders of Notes evidencing more than
50% of the Voting Rights may waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
SECTION 11. ASSIGNMENT
11.01 ASSIGNMENT TO TRUSTEE. It is understood that this Agreement and
all rights of the Transferor hereunder and with respect to the Contributed
Property will be assigned by the Transferor to the Issuer, and then assigned by
the Issuer to the Trustee, for the benefit of the Trustee and the Noteholders,
and may be subsequently assigned by the Trustee to any successor Trustee. Each
of the Contributor and the Servicer hereby expressly agrees to each such
assignment and agrees that
38
all of its duties, covenants, obligations, indemnities, representations and
warranties hereunder, and all of the rights and remedies of the Transferor
hereunder, shall be for the benefit of, and may be enforced directly by, the
Issuer, the Trustee, the Noteholders and any successor to or assignee of any
thereof.
11.02 ASSIGNMENT BY CONTRIBUTOR OR SERVICER. None of the respective
rights or obligations of the Contributor and the Servicer hereunder may be
assigned without the prior written consent of the Transferor and the Trustee
(acting upon the instructions of Noteholders evidencing not less than 66-2/3% of
the Voting Rights); PROVIDED that nothing herein shall preclude the Servicer
from performing its duties hereunder through the use of agents to the extent
that such use is consistent with the Servicer's business practices in dealing
with similar contracts and equipment for its own account, and PROVIDED, FURTHER,
that the use of an agent shall not relieve the Servicer from any of its
obligations hereunder.
SECTION 12. NATURE OF CONTRIBUTOR'S OBLIGATIONS AND SECURITY
THEREFOR
12.01 CONTRIBUTOR'S OBLIGATIONS ABSOLUTE. The obligations of the
Contributor hereunder, and the rights of the Issuer and the Trustee, as assignee
of the Transferor, in and to all amounts payable by the Contributor hereunder,
shall be absolute and unconditional and shall not be subject to any abatement,
reduction, setoff, defense, counterclaim or recoupment whatsoever including,
without limitation, abatements, reductions, setoffs, defenses, counterclaims or
recoupments due or alleged to be due to, or by reason of, any past, present or
future claims which the Contributor may have against the Servicer, the Issuer,
the Managing Member, the Transferor, the Trustee, any holder of the Notes or any
other Person for any reason whatsoever; nor, except as otherwise expressly
provided herein, shall this Agreement terminate, or the respective obligations
of the Transferor, the Contributor or the Servicer be otherwise affected, by
reason of any defect in any Contract or in any unit of Equipment or in the
respective rights and interests of the Transferor, the Issuer, the Contributor
and the Trustee in any thereof, or by reason of any liens, encumbrances,
security interests or rights of others with respect to any Contract or any unit
of Equipment, or any failure by the Transferor, or the Servicer to perform any
of its obligations herein contained, or by reason of any other indebtedness or
liability, howsoever and whenever arising, of the Transferor, the Issuer, the
Managing Member, the Servicer, the Trustee or any holder of the Notes to the
Contributor or any other Person or by reason of any insolvency, bankruptcy, or
similar proceedings by or against the Contributor, the Servicer, the Transferor,
the Issuer, the Trustee or any other Person or for any other cause whether
similar or dissimilar to the foregoing, any present or future law to the
contrary notwithstanding, it being the intention of the parties hereto that all
obligations of the Contributor hereunder and all amounts payable by the
Contributor hereunder shall continue to be due and payable in all events and in
the manner and at the times herein provided unless and until the obligation to
perform or pay the same shall be terminated or limited pursuant to the express
provisions of this Agreement; PROVIDED that nothing in this Section 12.01 shall
be interpreted as precluding the Contributor from pursuing independently any
claim it may have against the Transferor, the Servicer, the Issuer, the Managing
Member, any holder of the Notes or any other Person; PROVIDED, FURTHER, that any
claims of the Contributor against the Transferor shall be subordinate in right
of payment to amounts due and owing to the Trustee under the Amended and
Restated Indenture and any amounts received by the Contributor on such claims
shall be held in trust by the Contributor for the Trustee and turned over
39
to the Trustee until such time as all amounts due the Trustee under the
Transaction Document are fully paid.
12.02 POWER OF ATTORNEY. Each of the Contributor and Servicer hereby
grants to each of the Transferor and the Trustee the power as its
attorney-in-fact (i) to file UCC financing statements in the appropriate offices
evidencing the conveyance of the Contracts and other Contributed Property to the
Transferor and (ii) in the event an event of default exists under any
Transaction Document, to do any and all other acts as may be necessary or
appropriate to effect the transaction contemplated herein. The Contributor will
execute any document or instrument deemed necessary by the Transferor or the
Trustee to effect or to evidence this power of attorney. All costs associated
with such filings or instructions shall be paid by the Contributor.
SECTION 13. MISCELLANEOUS PROVISIONS
13.01 SALE. The Contributor agrees to treat the conveyances to the
Transferor of the Contributor's interest in the Contracts and Equipment pursuant
to the terms of this Agreement for all purposes other than taxes measured by
income (including, without limitation, financial accounting purposes of the
Contributor on a stand alone basis) as a sale of the Contributor's interest in
the Contracts and Equipment on all relevant books, records, financial statements
and other applicable documents. The execution and delivery of this Agreement
shall constitute an acknowledgment by the Contributor and the Transferor that
each intends that the assignment and transfer herein contemplated constitutes an
outright sale and assignment to the Transferor by the Contributor of its
interest in the Contracts and the other Contributed Property, and not for
security, conveying good title in such interests free and clear of any liens,
and that such interest shall not be a part of the Contributor's estate in the
event of the bankruptcy or the occurrence of another similar event, of, or with
respect to, the Contributor. In the event that such conveyance is determined to
be made as security for a loan made by the Transferor, the Issuer, the Trust or
the Noteholders to the Contributor, the parties intend that the Contributor
shall have granted to the Transferor, and its successors and assigns, a security
interest in the Contracts and other Contributed Property and that this Agreement
shall constitute a security agreement under applicable law.
The conveyance to the Transferor shall be treated as a sale to the
extent of cash remitted to the Contributor and shall be treated as an additional
contribution to the capital of the Transferor to the extent of the excess of the
Discounted Contract Balances of the Contracts conveyed over the amount of such
cash.
13.02 AMENDMENT. This Agreement may be amended from time to time by
the parties hereto, without the consent of any of the Noteholders, to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be materially inconsistent with the provisions of this Agreement, PROVIDED
that such actions shall not adversely affect in any respect the interests of any
Noteholder.
This Agreement may also be amended from time to time by the parties
hereto with the consent of the Holders of Notes evidencing more than 50% of the
Voting Rights (and with prior written notice to the Rating Agencies) for the
purpose of adding any provisions to or changing in any
40
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of Notes; PROVIDED, HOWEVER, that such
amendment may not, without the consent of all of the Noteholders (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Contracts or distributions that are required to
be made for the benefit of such Noteholders, (ii) reduce the aforesaid
percentage of the Voting Rights which are required to consent to any such
amendment, or (iii) modify this Section 13.02. The Servicer shall deliver copies
of any amendment to this Agreement to each of the Rating Agencies and each
Noteholder.
13.03 WAIVERS. No failure or delay on the part of the Transferor, the
Issuer or the Trustee in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy.
13.04 NOTICES. All communications and notices pursuant hereto to any
party shall be in writing or by telegraph, telex or telecopy and addressed or
delivered to it at its address (or in case of telex or telecopy, at its telex or
telecopy number at such address) as follows or at such other address as may be
designated by it by notice to the other party and, if mailed or sent by
telegraph or telex, shall be deemed given when mailed, communicated to the
telegraph office or transmitted by telex or telecopy:
(a) in the case of the Contributor or Servicer:
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) in the case of the Transferor:
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
41
(c) in the case of the Managing Member:
000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(d) in the case of the Trustee:
000 Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(e) in the case of the Rating Agencies:
Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: ABS Monitoring Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
13.05 COSTS AND EXPENSES. The Contributor will pay all reasonable
expenses incident to the performance of its obligations under this Agreement and
any other Transaction Document and the Contributor agrees to pay all reasonable
out-of-pocket costs and expenses of the Transferor, including fees and expenses
of counsel, in connection with the enforcement of any obligation of the
Contributor hereunder.
13.06 THIRD PARTY BENEFICIARIES. The Issuer, the Trustee and the
Noteholders are express third party beneficiaries to this Agreement.
13.07 SURVIVAL OF REPRESENTATIONS. The respective agreements,
representations, warranties and other statements by the Contributor and the
Transferor set forth in or made pursuant to this Agreement shall remain in full
force and effect and will survive the Closing Date.
13.08 CONFIDENTIAL INFORMATION. The Transferor agrees that it will
neither use nor disclose to any person the names and addresses of the Obligors,
except in connection with the
42
enforcement of the Transferor's rights hereunder, under the Contracts, under the
applicable Transaction Documents or as required by law.
13.09 HEADINGS AND CROSS-REFERENCES. The various headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.
13.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
13.11 CONSENT TO JURISDICTION. Each of the parties hereto irrevocably
submits to the jurisdiction of any New York State or Federal court sitting in
the Borough of Manhattan in the City of New York over any suit, action or
proceeding arising out of or relating to this Agreement. Each of the parties
hereto irrevocably waives, to the fullest extent permitted by law, any objection
which it may have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding brought in such a court has been brought in any inconvenient forum.
Each of the parties hereto agrees that the final judgment in any such suit,
action or proceeding brought in such a court shall be conclusive and binding
upon each of the parties hereto and may be enforced by the courts of New York
(or any other courts to the jurisdiction of which it is subject) by a suit upon
such judgment; PROVIDED that service of process is effected upon it as permitted
by law; PROVIDED, HOWEVER, that each of the parties hereto does not waive, and
the foregoing provisions of this sentence shall not constitute or be deemed to
constitute a waiver of, (i) any right to appeal any such judgment, to seek any
stay or otherwise to seek reconsideration or review of any such judgment or (ii)
any stay of execution or levy pending an appeal from, or a suit, action or
proceeding for reconsideration or review of, any such judgment.
13.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
13.13 STATUTORY REFERENCES. References in this Agreement to any
section of the UCC shall mean, on or after the effective date of adoption of any
revision to the UCC in the applicable jurisdiction, such revised or successor
section thereto.
43
AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
DATED AS OF DECEMBER 1, 1999
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
date first above written.
DVI FINANCIAL SERVICES INC.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
DVI RECEIVABLES CORP. XI
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Vice President
EXHIBIT A
CONTRACT SCHEDULE
-----------------
See Schedule 1 to the Amended and Restated Indenture.
A-1
EXHIBIT B
MONTHLY SERVICER REPORT
-----------------------
B-1
EXHIBIT C
RESERVED
--------
C-1
EXHIBIT D
SUBSTITUTE CONTRACT TRANSFER FORM
---------------------------------
DVI Financial Services Inc. (the "CONTRIBUTOR") and DVI Receivables
Corp. XI (the "TRANSFEROR"), pursuant to the Amended and Restated Contribution
and Servicing Agreement, dated as of December 1, 1999 (the "CONTRIBUTION AND
SERVICING AGREEMENT"), hereby confirm their understanding with respect to the
contribution by the Contributor to the Transferor of those substitute Contracts
listed on the Schedule 1 attached hereto (the "SUBSTITUTE CONTRACTS"), together
with a security interest in all of the Contributor's right, title and interest
in and to the related Equipment and other related property described herein.
CONVEYANCE OF SUBSTITUTE CONTRACTS. The Contributor hereby makes a
capital contribution to the Transferor of all of Contributor's rights, title and
interest in, to, and under (i) the Substitute Contracts listed on Schedule 1
hereto including, without limitation, its interests in the proceeds of such
Substitute Contracts, the right to receive all amounts due or to become due
thereunder after __________ (the "CUT-OFF DATE"), but excluding any Retained
Interest, (ii) the Contract Files relating to such Contracts, (iii) a security
interest in the Equipment subject to such Substitute Contracts, (iv) any
remarketing agreement to the extent specifically relating to a Substitute
Contract, and all guarantees, cash deposits or credit support (other than any
accounts receivable of the related Obligor) supporting or securing payment of
any arrangements with the vendor, dealer or manufacturer of the Equipment to the
extent specifically relating to any Substitute Contract, (v) any insurance
carried by any Obligor under any Substitute Contract (or the related Equipment)
and (vi) all income, payments and proceeds of the foregoing.
The Contributor hereby confirms that:
(1) On or prior to ___________ (the "SUBSTITUTION DATE"), the
Contributor shall have deposited in the Collection Account all collections in
respect of the Substitute Contracts that were due on or after the related
Cut-Off Date;
(2) As of the Substitution Date, the Contributor was not insolvent nor
will it be made insolvent by such transfer nor is any of them aware of any
pending insolvency;
(3) Each Substitute Contract is an Eligible Contract;
(4) On or prior to the Substitution Date, the Contributor shall have
delivered to the Trustee the sole original, manually executed counterpart of
each Substitute Contract that constitutes "chattel paper" or an "instrument", as
such terms are defined in the UCC;
(5) The sum of the Discounted Contract Balances as of the Cut-Off Date
of the Substitute Contracts listed on Schedule 1 attached hereto is $__________;
(6) When the Substitute Contracts are added to the Trust Property, all
representations and warranties will be true and correct as of the Substitution
Date unless any breach of such representations and warranties resulting from the
inclusion of such Substitute Contract shall have been waived in advance by
Noteholders evidencing more than 50% of the Voting Rights;
D-1
(7) The Contributor has delivered to the Trustee evidence of all UCC
filings necessary to give the Trustee a perfected first priority security
interest in the Substitute Contract and the related Equipment (other than
Equipment relating to a Secured Equipment Note or Finance Lease and for which
the Original Equipment Cost is less than $25,000);
(8) Such Substitute Contract(s) shall be added to, and constitute a
part of, [Pool A] [Pool B]; and
(9) Such Substitute Contract(s) is/are being substituted pursuant to
[Section 5.03 of the Agreement] [Section 7.01(a)(1) of the Agreement] [Section
7.01(a)(2) of the Agreement] [Section 7.01(b)(1) of the Agreement] [Section
7.01(b)(2) of the Agreement].
All terms and conditions of the Contribution and Servicing Agreement
and the other Transaction Documents with respect to the Contributor and the
Substitute Contracts have been complied with and are hereby ratified, confirmed
and incorporated herein; PROVIDED THAT in the event of any conflict, the
provisions of this Substitute Contract Transfer Form shall control over the
conflicting provisions of the Contribution and Servicing Agreement.
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Contribution and Servicing Agreement.
DVI FINANCIAL SERVICES INC.
By:_____________________________
Name:___________________________
Title:__________________________
DVI RECEIVABLES CORP. XI
By:_____________________________
Name:___________________________
Title:__________________________
D-2
EXHIBIT E
FORM OF RE-ASSIGNMENT BY TRANSFEROR
PURSUANT TO SECTION 5.03(b) OR 7.01(c) OF THE
AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
DVI Receivables Corp. XI (the "TRANSFEROR") pursuant to the Amended
and Restated Contribution and Servicing Agreement, dated as of December 1, 1999,
between the Transferor and DVI Financial Services Inc. (the "CONTRIBUTOR") does
hereby sell, transfer, assign, deliver and otherwise convey to Contributor,
without recourse, representation or warranty, all of the Transferor's right,
title and interest in and to all of the Predecessor Contracts listed on Schedule
A hereto and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ______ day of
___________.
DVI RECEIVABLES CORP. XI
By:_____________________________
Name:___________________________
Title:__________________________
E-1
EXHIBIT F
FORM OF OFFICER'S CERTIFICATE PURSUANT TO SECTION 7
---------------------------------------------------
The undersigned certifies that the undersigned is a duly authorized
officer of DVI Financial Services Inc. (the "CONTRIBUTOR"), and that, as such
the undersigned is authorized to execute and deliver this certificate on behalf
of the Contributor, and further certifies pursuant to Section 7.02 of the
Amended and Restated Contribution and Servicing Agreement (the "AGREEMENT")
dated as of December 1, 1999, between the Contributor and DVI Receivables Corp.
XI (the "TRANSFEROR"), that to his or her knowledge, the Contributor's
contribution to the Transferor of those Substitute Contracts listed in Schedule
1 attached hereto, together with all of the Contributor's right, title and
interest in and to the related Contracts and the related Contributed Property,
is in compliance with Section 7 of the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Date:
DVI FINANCIAL SERVICES INC.
By:_____________________________
Name:___________________________
Title:__________________________
F-1
EXHIBIT G
FORMS OF CONTRACTS
------------------
Copies are on file at the offices of U.S. Bank Trust National Association,
as Indenture Trustee, and are available upon request.
G-1
EXHIBIT H
UNDERWRITING GUIDELINES
-----------------------
Copies are on file at the offices of U.S. Bank Trust National Association,
as Indenture Trustee, and are available upon request.
H-1
APPENDIX I
----------
See copy of Appendix I following
the Amended and Restated Indenture
