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EXHIBIT 10.15
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CONTRIBUTION AGREEMENT
between
T & W LEASING, INC.
("Company")
T & W FINANCE CORP. III
("Contributor")
T & W FINANCE CORP. IV
("Contributor")
T & W FINANCE COMPANY V, L.L.C.
("Contributor")
and
T & W FUNDING COMPANY IV, L.L.C.
("Issuer")
Dated as of July 1, 1995
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TABLE OF CONTENTS
SECTION HEADING PAGE
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ARTICLE 1 DEFINITIONS .......................................................... 2
Section 1.01. Defined Terms .................................................... 2
ARTICLE 2 DISPOSITION OF LEASE ASSETS .......................................... 3
Section 2.01. Lease Disposition ................................................ 3
Section 2.02. Delivery of Lease Contracts; Filing of Financing
Statements ....................................................... 3
Section 2.03. Servicing of Lease Contracts and Equipment ....................... 3
Section 2.04. Review of Lease Contracts ........................................ 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES ....................................... 4
Section 3.01. Representations and Warranties of the Company and the
Contributors ..................................................... 4
Section 3.02. Representations and Warranties of the Issuer ..................... 12
Section 3.03. Purchase or Substitution Required upon Breach of
Certain Representations and Warranties ........................... 14
Section 3.04. Requirements for Purchase or Substitution of Lease
Contracts ........................................................ 15
ARTICLE 4 COVENANTS OF THE COMPANY AND THE CONTRIBUTORS ........................ 16
Section 4.01. Company and Contributor Covenants ................................ 16
Section 4.02. Issuer Covenants ................................................. 20
Section 4.03. Assignment of Lease Assets ....................................... 21
ARTICLE 5 CONDITIONS PRECEDENT ................................................. 21
Section 5.01. Conditions to the Issuer's Obligations ........................... 21
Section 5.02. Conditions to the Company's and the Contributors'
Obligations ...................................................... 22
ARTICLE 6 TERM AND TERMINATION ................................................. 22
Section 6.01. Term ............................................................. 22
Section 6.02. Default by the Company or the Contributors ....................... 22
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ARTICLE 7 MISCELLANEOUS ........................................................ 23
Section 7.01. Amendments ....................................................... 23
Section 7.02. Governing Law .................................................... 23
Section 7.03. Notices .......................................................... 23
Section 7.04. Separability Clause .............................................. 23
Section 7.05. Assignment ....................................................... 23
Section 7.06. Further Assurances ............................................... 23
Section 7.07. No Waivers; Cumulative Remedies .................................. 24
Section 7.08. Binding Effect ................................................... 24
Section 7.09. Set-Off .......................................................... 24
Section 7.10. Counterparts ..................................................... 24
EXHIBIT A
Form of Supplement for Substitute Lease Contracts
EXHIBIT B
Form of Lease Contract
EXHIBIT C
Form of Assignment and Assumption Agreement
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This CONTRIBUTION AGREEMENT (herein, as supplemented and amended from
time to time as permitted hereby, this "Agreement"), dated as of July 1, 1995,
is entered into by T & W LEASING, INC., a Washington corporation (herein,
together with its permitted successors and assigns, the "Company"), T & W
FINANCE CORP. III, a Delaware corporation, T & W FINANCE CORP. IV, a Delaware
corporation, and T & W FINANCE COMPANY V, L.L.C, a Delaware limited liability
company (herein, each together with its permitted successors and assigns, a
"Contributor" and, collectively, the "Contributors") and T & W FUNDING COMPANY
IV, L.L.C., a Delaware limited liability company (herein, together with its
permitted successors and assigns, the "Issuer").
PRELIMINARY STATEMENT
The Issuer has entered into an Indenture dated as of July 1, 1995 (the
"Indenture"), with Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") and as back-up servicer (the "Back-up Servicer") and T & W Leasing,
Inc., as servicer (the "Servicer"), pursuant to which the Issuer intends to
issue from time to time its Lease-Backed Notes (the "Notes").
In furtherance thereof, the Issuer, the Contributors and Company have
entered into this Agreement to provide for, among other things, an agreement as
to the terms of the contribution by the Contributors of certain of their right,
title and interest in and to certain Lease Assets which the Issuer is and will
be pledging with the Trustee; in addition, the Company is herein making certain
covenants, representations and warranties with respect to Lease Contracts that
it originated on behalf of the Contributors. The Issuer will be granting to the
Trustee a security interest in such Lease Assets and Lease Contracts, as
security for the Notes. As a precondition to the effectiveness of this
Agreement, the Issuer, the Trustee, the Back-up Servicer and the Servicer will
enter into the Servicing Agreement to provide for the servicing of the Lease
Assets. In connection with the issuance of the initial Tranche of Notes, each of
the Contributors will contribute certain Lease Assets to the Issuer in exchange
for a membership interest in the Issuer and the assumption by the Issuer of
certain debt of each Contributor pursuant to a separate Assignment and
Assumption Agreement entered into between the Issuer and each Contributor. In
connection with the issuance of each subsequent Tranche of Notes and pursuant to
this Agreement, T & W Finance Corp. V, L.L.C. will contribute additional Lease
Assets to the Issuer in return for cash and an increase, as necessary, of such
Contributor's membership interest in the Issuer. The list of leases transferred
in accordance with this Agreement shall be listed on Schedule II of each such
Assignment and Assumption Agreement.
In order to further secure the Notes, the Issuer is granting to the
Trustee a security interest in, among other things, the rights of the Issuer
derived under this Agreement and the Servicing
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Agreement, and each of the Contributors and the Company agrees that all
covenants and agreements made by it in this Agreement with respect to the Lease
Assets shall also be for the benefit and security of the Trustee, the Bond
Insurer and all holders from time to time of the Notes.
ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms. For purposes of this Agreement, the
following terms shall have the meanings specified herein. Capitalized terms used
herein but not otherwise defined shall have the respective meanings assigned to
such terms in the Indenture, or if not defined there, in the Servicing
Agreement.
"Company Address" shall mean 0000 00xx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx
00000.
"Contributor Address" for each Contributor, shall mean 0000 00xx Xxxxxx
Xxxx, Xxxxxx, Xxxxxxxxxx 00000.
"Eligible Lease Contract" shall mean a Lease Contract that satisfies the
selection criteria set forth in Section 3.01(a) hereof, provided that with
respect to any Substitute Lease Contract, any reference in such Section to
Cut-Off Date shall be deemed to refer to the date as of which such Eligible
Lease Contract becomes a Substitute Lease Contract.
"Issuer Address" shall mean 0000 00xx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxx
00000.
"Lease Assets" shall mean with respect to Lease Contracts originated by
the Company on behalf of the Contributors the interest in (a) the Lease
Contracts and the Lease Receivables, including the proceeds of the Lease
Contracts and all payments received on or with respect to the Lease Contracts
after the related Cut-Off Date, other than payments of principal and interest
due on the Lease Contracts on or before the related Cut-Off Date, (b) the Lease
Contract Files, (c) the Equipment (or a security interest in Equipment which is
the subject of a Loan Contract), (d) the Insurance Policies and (e) all income
and proceeds of the foregoing or relating thereto.
"Lease Contract File" shall mean, with respect to each Lease Contract,
the following documents:
(i) a copy of the Lease Contract;
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(ii) any evidence of insurance and any other documents
evidencing or related to any Insurance Policy;
(iii) copies of such documents, if any, that the Company keeps
on file indicating that the Equipment is owned by the lessor in
accordance with its customary procedures relating to an individual Lease
Contract, Customer or Equipment; and
(iv) evidence that the Customer received the Equipment and that
the Equipment was in good working order and acceptable to the Customer
at the time of receipt by the Customer.
"Substitute Lease Contract" shall have the meaning set forth in Section
3.04(b) hereof.
"Substitution Criterion" shall have the meaning set forth in Section
3.04(b).
ARTICLE 2
DISPOSITION OF LEASE ASSETS
Section 2.01. Lease Disposition. In reliance upon the representations,
warranties and covenants set forth in this Agreement and in accordance with the
Indenture, the Issuer will grant a security interest the Lease Assets to the
Indenture Trustee.
Section 2.02. Delivery of Lease Contracts; Filing of Financing
Statements. (a) In connection with the Issuer's disposition of the Lease Assets,
the Company, on behalf of the Issuer and the Contributors, shall deliver the
original Lease Contracts to the Indenture Trustee so that the Indenture Trustee
may retain possession thereof as provided in the Transaction Documents. In
addition, the Company agrees to record and file, at its own expense, financing
statements (and thereafter timely continuation statements with respect to such
financing statements) with respect to the Lease Assets, meeting the timing and
filing requirements of the Transaction Documents.
(b) In connection with such acquisition, the Company shall promptly, at
its own expense, cause any Electronic Ledger maintained by it to be marked to
show that the Lease Assets have been acquired by the Issuer in accordance with
this Agreement and transferred by the Issuer to the Indenture Trustee in
accordance with the Transaction Documents.
Section 2.03. Servicing of Lease Contracts and Equipment. The Servicer
shall service the Lease Contracts and the related Lease Receivables and
Equipment for the benefit of the Issuer (and its successors and assigns) in
accordance with the terms and conditions of the
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Transaction Documents. Notwithstanding the foregoing, the Company acknowledges
and agrees that its obligations under this Agreement are independent of any
obligations it may have as Servicer and that its obligations under this
Agreement will continue in full force and effect, whether or not it is acting as
Servicer, until termination of this Agreement in accordance with Section 6.01
hereof.
Section 2.04. Review of Lease Contracts. If the Company, any of the
Contributors, the Issuer or the Indenture Trustee (who shall thereupon notify
the Company) discovers that any Lease Contracts are missing or defective (that
is, mutilated, damaged, defaced, incomplete, improperly dated, clearly forged or
otherwise physically altered) in any material respect, the Company or the
applicable Contributor shall correct or cure such omission, defect or other
irregularity within 30 days from the date the Company or the applicable
Contributor discovered, or is notified by the Indenture Trustee, the Bond
Insurer or the Issuer of, such omission or defect within such period. Otherwise,
the Company or the applicable Contributor shall purchase or replace such Lease
Contract from the Issuer in accordance with Section 3.03 hereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Company and the
Contributors. Each of the Contributors and the Company hereby makes the
following representations and warranties to the Issuer and for the benefit of
the Bond Insurer, the Indenture Trustee and Holders of the Notes, on which the
Issuer relies in acquiring the Lease Assets. Such representations and warranties
speak as of the related Cut-Off Date unless otherwise indicated, but shall
survive any subsequent transfer, assignment, contribution or conveyance of the
Lease Contracts and related Lease Receivables and Equipment. Each of the
Contributors makes the following representations and warranties only with
respect to Lease Assets that it is transferring to the Issuer in accordance with
this Agreement. The Company makes these representations and warranties with
respect to all Lease Contracts, whether transferred to the Issuer in accordance
with this Agreement or originated by the Company on behalf of the Issuer or an
affiliate thereof.
(a) As to each Lease Contract:
(i) The information set forth in the related Lease Schedule is
true and correct as of the related Cut-off Date.
(ii) Such Lease Contract is pursuant to its terms an absolute
and unconditional obligation of the Customer, non-cancellable and
non-prepayable prior to the expiration of the initial term of such Lease
Contract; it does not provide for the substitution, exchange
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or addition of any other items of Equipment pursuant to such Lease
Contract; and the rights with respect to such Lease Contract are
assignable by the lessor thereunder without the consent of any Person.
Such Lease Contract is net to the lessor of any maintenance, taxes,
insurance or other expenses and contains provisions requiring the
Customer to assume all risk of loss or malfunction of the related
Equipment, except as set forth in Section 3.01(b)(xii).
(iii) Either the Company or one of the Contributors has
heretofore provided to the Indenture Trustee the sole original
counterpart of such Lease Contract previously in its possession, as
amended, and the terms of such Lease Contract has not been amended,
waived or modified subsequent to the above being provided to the
Indenture Trustee, and, if another original counterpart of such Lease
Contract should subsequently come into the possession of such party
hereto, it will also be so provided to the Indenture Trustee.
(iv) There is only one original executed counterpart of such
Lease Contract that constitutes "chattel paper" for purposes of Section
9-105(l)(b) and 9-308 of the UCC, and the Electronic Ledgers have been
marked as provided in Section 2.02(b) hereof.
(v) Such Lease Contract was not originated in, nor is it subject
to the laws of, any jurisdiction, the laws of which would make unlawful
the sale, transfer or assignment of such document under any of the
Transaction Documents, including any repurchase in accordance with
Transaction Documents.
(vi) Such Lease Contract is, and on the related Delivery Date
will be, in full force and effect in accordance with its respective
terms, and neither the Company, any of the Contributors nor any Customer
has or will have suspended or reduced any payments or obligations due or
to become due thereunder by reason of a default by the other party to
such Lease Contract; as of the related Cut-Off Date, the Customer has
not been delinquent in making payments due under such Customer's Lease
Contract for a period in excess of 30 days (without regard to advances,
if any, made by the Servicer), and there are no proceedings pending, or
to the best of the knowledge of the parties hereto, threatened asserting
insolvency of such Customer; there has been no other default, breach or
violation and no event permitting acceleration under such Lease
Contract; there are no proceedings pending, or to the best of the
knowledge of the parties hereto, threatened, wherein such Customer or
any governmental agency has alleged that such Lease Contract is illegal
or unenforceable; and none of the Scheduled Payments are subject to any
set-off or credit of any kind.
(vii) Such Lease Contract is the valid, binding and legally
enforceable obligation of the parties thereto enforceable in accordance
with its terms, subject, as to
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enforcement, to applicable bankruptcy, insolvency, reorganization and
other similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a court of law or equity.
(viii) All filings (including Uniform Commercial Code filings)
and recordings as may be necessary to perfect the interest of the
Indenture Trustee in such Lease Contract and the related Lease
Receivable have been accomplished and are in full force and effect. All
filings and recordings required to perfect the interest of the Issuer
and the Indenture Trustee in the Equipment underlying such Lease
Contract have been or will be, within 30 days of the related Delivery
Date, accomplished in accordance with the Transaction Documents and are
or will be in full force and effect.
(ix) Such Lease Contract is identical to one of the form lease
contracts attached as Exhibit A hereto, except for such immaterial
modifications or deviations from such form lease contracts which appear
in certain Lease Contracts or which may appear in the future form Lease
Contracts of the Company or any of the Contributors; any such
modifications or deviations from the form lease contracts will not have
a material adverse effect on the Holders of the Notes or the Bond
Insurer and will not reduce the Scheduled Payments or other payments due
under such Lease Contract.
(x) Such Lease Contract was originated by the Company on behalf
of one of the Contributors in the ordinary course of business and meets
the Company's rating system. The origination and collection practices
used by the Company with respect to such Lease Contract have been in all
respects legal, proper, prudent and customary in the equipment financing
and servicing business; and no Customer has been involved as a debtor in
any bankruptcy or insolvency proceeding during the term of the Lease
Contract.
(xi) Any payment required to be made by a Customer subject to a
PUT ("Purchase Upon Termination") clause does not exceed five times the
largest regular rental payment due under such Lease Contract. In
determining whether to lease Equipment to any particular Customer, the
Company considered each Customer's ability to pay any PUT payments
included in the terms of such Lease Contract.
(xii) The related Lease Receivable is under a Lease Contract
that has an original stated term of at least 6 months and not more than
84 months. Such Lease Contract is within its original term and has not
had any extensions or modifications. Such Lease Contract has a remaining
term of not more than 84 months.
(xiii) The Equipment related to such Lease Contract was properly
delivered to
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the Customer in good repair, without defects and in satisfactory order
and is in proper working order as of the related Cut-off Date. The
Customer has accepted such Equipment leased to it and, after reasonable
opportunity to inspect and test such Equipment, has not notified the
Company or any of the Contributors of any defects therein.
(xiv) With the exception of the Loan Contracts, such Lease
Contract constitutes a "true lease" for federal income tax purposes.
Such Lease Contract or Loan Contract satisfies such other ratios and tax
related criteria as maybe set forth herein.
(xv) The related Customer will have made at least one lease
payment with respect to such Lease Contract, including any security
deposit or advance payment made by the lessee upon the execution of such
Lease Contract or the delivery of the Equipment. Such Lease Contract
obligates the related Customer to make all Scheduled Payments thereunder
in full notwithstanding the collection by the lessor of a security
deposit with respect thereto. The calculation of the Implicit Principal
Balance of the related Lease Receivable does not include any security
deposits or advance payments collected by or on behalf of the lessor
which are applied to Scheduled Payments.
(xvi) The related Customer is not a lessee that is a merchant
with respect to the Equipment leased under such Lease Contract.
(xvii) All requirements of applicable federal, State and local
laws, and regulations thereunder, including, without limitation, usury
laws, if any, in respect of such Lease Contract have been complied with
in all material respects, and such Lease Contract complied in all
material respects at the time it was originated or made and now complies
in all material respects with all legal requirements of the jurisdiction
in which it was originated.
(xviii) With the sole exception of the related Customer's right
to quiet enjoyment, such Lease Contract is not and will not be subject
to any right of rescission, set-off, counterclaim or defense, including
the defense of usury, whether arising out of transactions concerning
such Lease Contract or otherwise, and the operation of any of the terms
of such Lease Contract or the exercise by the Issuer or such Customer of
any right under such Lease Contract will not render such Lease Contract
unenforceable in whole or in part, and no such right of rescission,
set-off, counterclaim or defense, including a defense arising out of a
breach of such Customer's right of quiet enjoyment of the related
Equipment, has been asserted with respect thereto, except that certain
rights or defenses may exist under applicable law which, individually or
in the aggregate, do not make the
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remedies available to the Company, the Contributor or the Issuer with
respect to such Lease Contract inadequate for the practical realization
of the benefits provided thereby.
(xix) The Company or one of the Contributors has duly fulfilled
all obligations on the lessor's part to be fulfilled under or in
connection with such Lease Contract, including, without limitation,
giving any notices or consents necessary to effect the acquisition of
the Lease Assets by the Issuer and has done nothing to impair the rights
of the Trust and the Noteholders in the Lease Contract or payments with
respect thereto.
(xx) The Lease Contract and the Equipment have not been sold,
transferred, assigned or pledged by the Company or any of the
Contributors to any person other than the Issuer (except for security
interests in the Lease Assets which shall be terminated on or prior to
the Delivery Date), and the Issuer has all of the right, title and
interest in and to the Lease Contract, the Lease Receivables and the
related Equipment, free and clear of all liens and encumbrances, except
for the interests of the Customer pursuant to the Lease Contract.
(xxi) Each Lease Contract requires that the Customer maintain
the Equipment in good and workable order and that the Customer obtain
and maintain physical damage insurance, or provide self-insurance or
purchase insurance from the Issuer (which may be self-insured) covering
the Equipment. Insurance coverage required to be maintained by the
Customer under each Lease Contract is of a type customary for the
equipment covered thereby and consistent with industry practice for
monitoring compliance thereof; such insurance coverage is in full force
and effect.
(xxii) The related Equipment is not subject to any titling
requirements unless such Equipment is a Leased Vehicle.
(b) As to the Pool of Leases as of each Cut-Off Date:
(i) Customers located in any single State are obligated with
respect to Lease Contracts accounting for no more than 15% of the
Aggregate Implicit Principal Balance except for one State; Customers
located in such State are obligated with respect to Lease Contracts
accounting for no more than 50% of the Aggregate Implicit Principal
Balance. Up to 5% of the Aggregate Implicit Principal Balance of Lease
Contracts may be with Customers located in Canada, so long as such
Customers are obligated to pay any withholding taxes over and above net
rental payments.
(ii) Lease Contracts with Customers located in a particular zip
code do not account for more than 3% of the Aggregate Implicit Principal
Balance, except for zip
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code 98032, which accounts for no more than 4% of the Aggregate Implicit
Principal Balance.
(iii) No single Customer accounts for more than 2.0% of the
Aggregate Implicit Principal Balance.
(iv) Lease Contracts with rental payments that are not fixed for
the remaining term do not exceed 10% of the Aggregate Implicit Principal
Balance.
(v) The Computer Tape, from which the selection of the Lease
Contracts was made, was made available to the Issuer's accountants who
are providing a comfort letter to the Bond Insurer, the initial holders
of the Certificates and the Coordinator with respect to certain
information and such information was complete and accurate as of its
date and includes a description of the same Lease Contracts that are
described in the Lease Schedule and the payments due thereunder as of
the related Cut-Off Date.
(vi) The Company used no selection procedures that identified
the Lease Contracts as being less desirable or valuable than other
comparable equipment leases owned by the Company. (vii) No more than 1%
of the Aggregate Implicit Principal Balance are Lease Contracts made to
a lessee who is an individual and who takes under the lease primarily
for a personal, family, or household purpose.
(viii) Lease Contracts containing a PUT clause account for no
more than 10% of the Aggregate Implicit Principal Balance.
(ix) The aggregate Implicit Principal Balance of the Loan
Contracts do not exceed 20% of the aggregate Implicit Principal Balance
of the Lease Contracts.
(x) Lease Contracts with a remaining term exceeding 60 months do
not account for more than 5% of the Aggregate Implicit Principal Balance
(except with respect to the initial Delivery Date, for which the
percentage may 7%).
(xi) At least 85% of the Aggregate Implicit Principal Balance is
attributable to Lease Contracts that provide that payment of the
Scheduled Payments due thereon are to be made monthly.
(xii) All Lease Contracts are denominated in U.S. dollars.
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(c) As to each of the Company and the Contributors:
(i) Each of the Company and the Contributors has been duly
organized and is validly existing and in good standing as a corporation
under the laws of its jurisdiction of incorporation with corporate power
and authority to own its properties and to transact the business in
which it is now engaged, and each is duly qualified to do business in
and is in good standing under the laws of each State in which any
Equipment or any Customer is located or is not required under applicable
law to effect such qualification, except where failure to so qualify
would not have a material adverse effect on the ability of such entity
to perform its obligations under the Transaction Documents or on any of
the Lease Contracts, the Lease Receivables or the Equipment.
(ii) The performance of the obligations of each of the Company
and the Contributors under this Agreement and the other Transaction
Documents and the consummation of the transactions herein and therein
contemplated will not conflict with or result in any breach of any of
the terms or provisions of, or constitute with or without notice, lapse
of time or both, a default under the Certificate of Incorporation or
Bylaws of such entity, or any material indenture, agreement, mortgage,
deed of trust or other instrument to which such entity is a party or by
which it is bound, or result in the creation or imposition of any lien,
charge or encumbrance (except the lien created by the Transaction
Documents) upon any of the property or assets of such entity pursuant to
the terms of such indenture, mortgage, deed of trust, or other agreement
or instrument to which such entity is a party or by which such entity is
bound or to which any of such entity's property or assets is subject,
nor will such action result in any violation of the provisions of such
entity's Certificate of Incorporation or By-laws or any statute or any
order, rule or regulation of any court or any regulatory authority or
other governmental agency or body having jurisdiction over such entity
or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with or other action of any
court, or any such regulatory authority or other governmental agency or
body is required for consummation of the transactions contemplated by
this Agreement and the other Transaction Documents except such consents,
approvals and authorizations which have been obtained or such
registrations or qualifications which have been made.
(iii) This Agreement, the Insurance Agreement (with respect to
the Company only) and any other Transaction Document to which each of
the Company and the Contributors is a party have been duly authorized,
executed and delivered by such entity by all necessary corporate action
and such agreements are the valid and legally binding obligations of
such entity, enforceable against such entity in accordance with their
respective terms, subject as to enforcement to applicable bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or affecting
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creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a court of law or equity.
(iv) The Company Address is the chief executive office, chief
place of business and the office where the Company keeps its records
concerning the Lease Contracts, Lease Receivables and the Equipment.
(v) The Contributor Address for each of the Contributors is the
chief executive office, chief place of business and the office where
each of the Contributors keeps its records concerning the Lease
Contracts, the Lease Receivables and the Equipment.
(vi) Each of the Company and the Contributors does not believe,
nor does it have any reasonable cause to believe, that it cannot perform
each and every covenant contained in this Agreement.
(vii) The transactions contemplated by the Transaction Documents
are being consummated by each of the Company and the Contributors in
furtherance of its ordinary business purposes, with no contemplation of
insolvency and with no intent to hinder, delay or defraud any of its
present or future creditors.
(viii) Neither on the date of the transactions contemplated by
the Transaction Documents or immediately before or after such
transactions, nor as a result of the transactions, will any of the
Company or the Contributors:
(A) be insolvent such that the sum of its debts is
greater than all of its respective property, at a fair
valuation;
(B) be engaged in or about to engage in, business or a
transaction for which any property remaining with the Company or
any of the Contributors will be an unreasonably small capital or
the remaining assets of any of the Company or the Contributors
will be unreasonably small in relation to its respective
business or the transaction; and
(C) have intended to incur or believed it would incur,
debts that would be beyond its respective ability to pay as such
debts mature or become due. The Company's or each Contributor's
assets and cash flow enable it to meet its present obligations
in the ordinary course of business as they become due.
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(ix) Both immediately before and after the transactions
contemplated by the Transaction Documents (a) the present fair salable
value of each of the Company's and each Contributor's assets,
respectively, was or will be in excess of the amount that will be
required to pay its probable liabilities as they then exist and as they
become absolute and matured; and (b) the sum of each of the Company's
and each Contributor's assets, respectively, was or will be greater than
the sum of its debts, valuing its assets at a fair salable value.
(x) There are no proceedings or investigations pending, or to
the knowledge of either the Company or any of the Contributors,
threatened, against or affecting any of the Company or the Contributors
in or before any court, governmental authority or agency or arbitration
board or tribunal (including, but not limited to any such proceeding or
investigation with respect to any environmental or other liability
resulting from the ownership or use of any of the Equipment) which,
individually or in the aggregate, involve the possibility of materially
and adversely affecting the properties, business, prospects, profits or
condition (financial or otherwise) of either the Company or the
Contributors, or the ability of either the Company or any of the
Contributors to perform its obligations under this Agreement. Neither
the Company nor any of the Contributors is in default with respect to
any order of any court, governmental authority or agency or arbitration
board or tribunal.
(xi) All tax returns or extensions required to be filed by each
of the Company and the Contributors in any jurisdiction have in fact
been filed, and all taxes, assessments, fees and other governmental
charges upon each entity, or upon any of the respective properties,
income or franchises shown to be due and payable on such returns have
been, or will be, paid. To the best of the knowledge of the Company and
each of the Contributors, all such tax returns are true and correct and
each entity has no knowledge of any proposed additional tax assessment
against it in any material amount nor of any basis therefor. The
provisions for taxes on the books of each of the Company and the
Contributors are in accordance with generally accepted accounting
principles.
(xii) Neither the Company nor any of the Contributors (i) is in
violation of any laws, ordinances, governmental rules or regulations to
which it is subject, (ii) has failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business, and (iii)
is in violation in any material respect of any term of any agreement,
charter instrument, bylaw or instrument to which it is a party or by
which it may be bound which violation or failure to obtain might
materially adversely affect the business or condition (financial or
otherwise) of the Company or any of the Contributors.
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(xiii) This Agreement does not contain any untrue statement of
material fact or omit to state a material fact necessary to make the
statements contained herein and therein not misleading.
(xiv) The Company, each of the Contributors and the Issuer are
members of an affiliated group within the meaning of Section 1504 of the
Internal Revenue Code which has filed and will continue to file a
consolidated federal income tax return at all times until termination of
the Transaction Documents.
(xv) It is the intention of the Company and each of the
Contributors that the Lease Assets are owned by the Issuer and that the
beneficial interest in and title to the Lease Assets are not part of the
Company's or any of the Contributors' estate in the event of the filing
of a bankruptcy petition by or against the Company or any of the
Contributors under any bankruptcy law.
(xvi) Immediately prior to the pledge and grant to the Indenture
Trustee of a security interest in the Lease Contracts by the Issuer
pursuant to the Indenture, the Issuer was the sole owner of the Lease
Contracts and the related Equipment (with the exception of Equipment
which is the subject of a Loan Contract, as to which the Issuer has a
valid security interest in the related Equipment, and certain Equipment
which is being retained by affiliates of the Issuer other than the
Company), the Issuer had good and marketable title thereto, free and
clear of all liens, claims and encumbrances (except for the security
interests in the Lease Assets which shall be terminated on or prior to
the related Delivery Date) and as of such time the Issuer owned no other
assets other than the Lease Assets and the accounts established under
the Indenture.
(xvii) The Contributors and K & P Finance Corp. are the
registered owners of all of the membership interests of the Issuer, all
of which are fully paid and nonassessable and owned of record, free and
clear of all mortgages, assignments, pledges, security interest,
warrants, options and rights to purchase.
(xviii) Each of the Company, the Contributors, the Issuer and
their shareholders and members shall treat the Lease Contracts as owned
by the Issuer for Federal, State and local income tax purposes, shall
include in the computation of the Issuer's gross income for such
purposes the rental and other income from the Lease Contracts, shall
treat the Notes as debt of the Issuer for such purposes, and shall cause
the Issuer to deduct the interest paid or accrued with respect to the
Notes in accordance with its applicable method of accounting for such
purposes.
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(xix) Each of the Company and the Contributors are in compliance
with the Employee Retirement Income Security Act of 1974, as amended.
(xx) None of the Contributors will incur any indebtedness or
transact any business other than that contemplated by the Transaction
Documents.
Section 3.02. Representations and Warranties of the Issuer. The Issuer
hereby represents and warrants to, and agrees with the Company and the
Contributors for the benefit of the Bond Insurer, the Indenture Trustee and
Holders of the Notes, on which each of the Company and the Contributors relies
in entering into this Agreement with the Issuer. Such representations and
warranties speak as of the related Cut-Off Date unless otherwise indicated, but
shall survive any subsequent transfer, assignment, contribution or conveyance of
the Lease Contracts and related Lease Receivables and Equipment.
(a) The Issuer has been duly organized and is validly existing in good
standing as a special purpose limited liability company under the laws of the
Issuer State of Formation, with power and authority to own its properties,
perform its obligations under the Transaction Documents and to transact the
business in which it is now engaged or in which it proposes to engage; the
Issuer is duly qualified to do business and is in good standing in each State in
which the nature of its business requires it to be so qualified, except where
failure to so qualify would not have a material adverse effect on the ability of
the Issuer to perform its obligations under the Transaction Documents.
(b) The transfer to and receipt by the Issuer of the Lease Contracts and
the related Lease Receivables and the Equipment pursuant to this Agreement and
the consummation of the transactions contemplated herein and in the Transaction
Documents will not conflict with or result in breach of any of the terms or
provisions of, or constitute (with or without notice, lapse of time or both) a
default under the Certificate of Formation or Limited Liability Company
Agreement of the Issuer or any material indenture, agreement, mortgage, deed of
trust or other instrument to which the Issuer is a party or by which it is
bound, or result in the creation or imposition of any lien, charge or
encumbrance (except for the lien created by the Indenture) upon any of the
property or assets of the Issuer pursuant to the terms of, such indenture,
mortgage, deed of trust, or other agreement or instrument to which the Issuer is
a party or by which it is bound or to which any of the property or assets of the
Issuer is subject, nor will such action result in any violation of the
provisions of the Certificate of Formation or Limited Liability Company
Agreement of the Issuer or any statute or any order, rule or regulation of any
court or regulatory authority or other governmental agency or body having
jurisdiction over the Issuer or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with or other action
of any court or any such regulatory authority or other governmental agency or
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body is required for the acquisition of the Lease Contracts and the related
Lease Receivables and the Equipment hereunder.
(c) The Transaction Documents have been duly authorized, executed and
delivered by the Issuer by all necessary action and constitute valid and legally
binding obligations of the Issuer enforceable against the Issuer in accordance
with their terms, subject as to enforcement to bankruptcy, insolvency,
reorganization and other similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of equity
regardless of whether enforcement is sought in a court of equity or law.
(d) There are no proceedings or investigations to which the Issuer is a
party pending or, to the knowledge of the Issuer, threatened, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality (a) asserting the invalidity of this Agreement, (b) seeking to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement, or (c) seeking any determination or ruling that
would materially and adversely affect the performance by the Issuer of its
obligations under, or the validity or enforceability of, this Agreement.
(e) All approvals, authorizations, consents, orders or other actions of
any Person or of any court, governmental agency or body or official, required in
connection with the execution and delivery of this Agreement, have been or will
be taken or obtained on or prior to the related Delivery Date.
(f) The Issuer Address is the principal place of business and chief
executive office of the Issuer.
(g) Since the formation of the Issuer (a) the Issuer has engaged solely
in the acquisition, ownership, leasing, selling and pledging of equipment
pursuant to lease contracts substantially in the form attached hereto as Exhibit
A originated by the Company on behalf of the Issuer and the exercise of any
powers permitted to limited liability companies under the limited liability
company law of the State of Delaware which are incidental to the foregoing or
necessary to accomplish the foregoing; (b) the Issuer has incurred no debt other
than trade payables and expense accruals in connection with its operations in
the normal course of business; (c) the Issuer has maintained its books and
records separate from the books and records of any other entity, has maintained
separate bank accounts and no funds of the Issuer have been commingled with
funds of any other entity; (d) the Issuer has kept in full effect its existence,
rights and franchises as a limited liability company under the laws of the State
of Delaware, and has obtained and preserved its qualification to do business as
a foreign limited liability company in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the Lease Contracts; (e) the Issuer does not own any
subsidiary and has not
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loaned or advanced any moneys to, or made an investment in, any Person; (f) the
Issuer has not made any capital expenditures; (g) the Issuer has not guaranteed
(directly or indirectly), endorsed or is otherwise contingently liable (directly
or indirectly) for the obligations of, or own or purchased any stock,
obligations or securities of or any other interest in, or made any capital
contribution to, any Person; and (h) the Issuer has not engaged in any other
action that bears on whether the separate legal identity of the Issuer will be
respected, including without limitation (1) has not held itself out as being
liable for the debts of any older party, (2) has not acted other than in its
corporate name and through its duly authorized officers or agents, and (3) has
not created, incurred, assumed, or in any manner became liable in respect of any
indebtedness and trade payables and expense accruals incurred in the ordinary
course of business and which are incidental to its business purpose.
Section 3.03. Purchase or Substitution Required upon Breach of Certain
Representations and Warranties. Upon discovery by the Company, any of the
Contributors or the Issuer of the breach of any representations or warranties
set forth in Sections 3.01 and 3.02 hereof which materially and adversely
affects the value of a Lease Contract, the related Equipment, or the interests
of the Holders of the Notes, or a breach of any of the representations and
warranties set forth in Sections 3.01(a)(ii), 3.01(a)(v), 3.01(a)(vii) or
3.01(a)(xx), the party discovering such breach shall give prompt written notice
to the other parties, the Bond Insurer and to the Indenture Trustee. Each of the
Company and the Contributors shall, within 30 days from the date such entity was
notified of, or otherwise discovers, such breach, cure such breach, or, (1) if
the breach relates to a particular Lease Contract and is not cured (as the
liquidated damages remedy therefor), either (a) purchase such Lease Contract and
the related Equipment from the Issuer at the Purchase Price or (b) provide a
Substitute Lease Contract or (2) if the breach relates to a representation or
warranty regarding the selection criteria of the Lease Contracts as a whole and
is not cured by the Company or the Contributor, either (a) purchase such
non-conforming Lease Contracts and the related Equipment from the Issuer or (b)
provide Substitute Lease Contracts as set forth above, so that the
representations and warranties with respect to the selection criteria are
correct, as evidenced by a certificate of an officer of the Company or the
applicable Contributor to the Indenture Trustee. The Purchase Price for a
purchased Lease Contract and the related Equipment shall be paid, and any
Substitute Lease Contract shall be delivered, by the Company or the applicable
Contributor to the Issuer in accordance with Section 3.04(c) hereof. It is
understood and agreed that the obligation of the Company and the Contributor to
cure or purchase or replace any Lease Contract as to which such a breach has
occurred shall constitute the sole remedy respecting such breach available to
the Issuer, the Holders of Notes or the Indenture Trustee on behalf of such
Holders (except for any indemnities provided under Section 4.0(j) hereof or
under the related Indenture) for any losses, claims, damages and liabilities
arising from the Issuer's ownership of such Lease Contract or the inclusion of
such Lease Contract in the Trust Estate.
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Section 3.04. Requirements for Purchase or Substitution of Lease
Contracts. (a) If the Company or any of the Contributors is required to purchase
any Lease Contract under Section 3.03 or if the Issuer is required or elects to
purchase any Lease Contract under Section 3.10 of the Servicing Agreement, such
Lease Contract shall be purchased by the Company or the applicable Contributor
at the Purchase Price. All purchases shall be accomplished at the times
specified in subsection (c) below.
(b) If the Company or any of the Contributors is required to substitute
any Lease Contract under Section 3.03, or if the Issuer is required or elects to
substitute any Lease Contract under Section 3.10 of the Servicing Agreement (a
"Substitute Lease Contract"), each such Substitute Lease Contract shall (i) be
an Eligible Lease; (ii) be with respect to types of Equipment and types of
Customers represented in the pool of Lease Contracts previously pledged to the
Indenture Trustee pursuant to the Indenture; (iii) be with a Customer whose
credit is equal to or better than that of the Customer under the withdrawn Lease
Contract; (iv) be written on one of the standard lease forms attached as Exhibit
A to this Agreement; (v) be accompanied by (A) a supplement to this Agreement
substantially in the form of Annex A hereto subjecting such Lease Contract to
the provisions hereof and providing with respect to such Substitute Lease
Contract the information required in the Lease Schedule and (B) evidence of the
UCC filings required as set forth in the Indenture; and (vi) not have been
selected using procedures that identified the Lease Contracts as being less
desirable or valuable than other comparable equipment leases owned by the
Company or any of the Contributors. In addition, such Substitute Lease Contracts
shall meet the following substitution criterion (collectively, the "Substitution
Criterion"):
(1) Such Substitute Lease Contracts have an aggregate Implicit
Principal Balance at least equal to the aggregate Implicit Principal
Balance of the Lease Contracts being withdrawn; and
(2) Such Substitute Lease Contracts have a weighted average
remaining term (determined based upon the Implicit Principal Balance of
such Substituted Lease Contracts) that is not more than 33% longer or
shorter than the weighted average remaining term of the Lease Contracts
being withdrawn (determined based upon the Implicit Principal Balance of
such withdrawn Lease Contracts).
A Substitute Lease Contract may have scheduled payments that are due
after the last day of the month preceding the stated maturity of the Notes, but
such payments shall not be counted in any Implicit Principal Balance
computation. Upon a substitution as described in this Section 3.04(b), either
the Company or the Contributor shall also pay any past due lease payments not
received through the Calculation Date preceding the date on which the
substitution occurs. Upon the substitution of any Substitute Lease Contract
pursuant to the provisions of this
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Section 3.04(b), each of the Company and the Contributors hereby agrees that
such Substitute Lease Contract will be subject to all the terms and provisions
of this Agreement, the Servicing Agreement and the Indenture just as if such
Substitute Lease Contract had been one of the original Lease Contracts acquired
on the related Acquisition Date. Upon the substitution of a Substitute Lease
Contract pursuant to this Section 3.04(b), the Issuer, the Contributors and the
Company shall also comply with the provisions and limitations set forth in the
Indenture. All substitutions shall be accomplished at the time specified in
subsection (c) below.
(c) Any purchase or substitution of a Lease Contract by the Company or
any of the Contributors in accordance with Section 3.03 hereof or this Section
3.04 or by the Issuer under Section 3.10 of the Servicing Agreement shall be
made either by remittance of the Purchase Price to the Servicer for deposit into
the Collection Account in accordance with Section 3.03(a) of the Servicing
Agreement or by substitution of a Substitute Lease Contract, as applicable,
following the expiration of the cure period set forth in Section 3.03 hereof.
(d) Any voluntary purchase or substitution of a Lease Contract by the
Issuer pursuant to the terms of a related Servicing Agreement or Indenture in
the event of a default, delinquency or modification with respect to such Lease
Contract shall satisfy the same requirements for a purchase or substitution, as
the case may be, as are set forth in this Section 3.04.
ARTICLE 4
COVENANTS OF THE COMPANY AND THE CONTRIBUTORS
Section 4.01. Company and Contributor Covenants. Each of the Company and
the Contributors hereby covenants and agrees with the Issuer as follows:
(a) Except as hereinafter provided, such entity will keep in
full effect its existence, rights and franchises as a corporation, and
will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this
Agreement or any of the Lease Contracts and to perform its duties
hereunder. Any person into which such entity may be merged or
consolidated, or to whom such entity has sold substantially all of its
assets, or any corporation resulting from any merger, conversion or
consolidation to which such entity shall be a party, or any Person
succeeding to the business of such entity shall be the successor of such
entity hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that (w) immediately
after giving effect to such transaction, no representation or warranty
made pursuant to Section 3.01(c) shall have been breached, (x) such
successor executes
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an agreement or assumption, in form reasonably satisfactory to the
Indenture Trustee, to perform every obligation under this Agreement, (y)
such entity shall have delivered to the Issuer a certificate of an
officer of such entity and an Opinion of Counsel each stating that such
consolidation, merger, or succession and such agreement of assumption
complies with this Section 4.01 and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have
been complied with, and (z) such entity shall have delivered to the
Issuer an Opinion of Counsel either (1) stating that, in the opinion of
such Counsel, 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 Issuer in the Lease
Contracts and reciting the details of such filings, or (2) stating that,
in the opinion of such Counsel, no such action shall be necessary to
preserve and protect such interest.
(b) Neither the Company nor any of the Contributors, nor any of
the directors, officers, employees or agents of any such entity shall be
under any liability to the Issuer, the Indenture Trustee or the Holders
of Notes for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in
judgment not involving recklessness or gross negligence; provided,
however, that this provision shall not protect either such entity
against any breach of warranties or representations made herein, or
failure to perform its obligations in strict compliance with this
Agreement, or any liability which would otherwise be imposed by reason
of any breach of the terms and conditions of this Agreement. The
Company, the Contributors and any director, officer, employee or agent
of any such entity, may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. Neither the Company nor any of the
Contributors shall be under any obligation to appear in, prosecute, or
defend any legal action that is not incidental to its obligations under
this Agreement and that in its opinion may involve it in any expense or
liability.
(c) Each of the Company and the Contributors will from time to
time, at its own expense, execute and file such additional financing
statements (including continuation statements) as may be necessary to
preserve the security interests and liens described in Section
3.01(a)(viii) and are reasonably satisfactory in form and substance to
the Issuer; provided, however, that financing statements with respect to
the Equipment shall be filed only with respect to the Equipment
initially located in the Enumerated States and neither the Company nor
any of the Contributors will be required to file any financing
statements with any Customer as Debtor.
(d) Neither the Company nor any of the Contributors will change
its name, identity or corporate structure in any manner that would,
could, or might make any
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financing statement or continuation statement misleading within the
meaning of Section 9-402 (7) of the UCC, unless it shall have given the
Issuer and the Indenture Trustee at least 10 days' prior written notice
thereof.
(e) Each of the Company and the Contributors will give the
Issuer and the Indenture Trustee at least 10 days' prior written notice
of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement.
(f) Each of the Company and the Contributors will duly fulfill
all obligations on its part to be fulfilled under or in connection with
each Lease Contract, will not change or modify the terms of the Lease
Contracts except as expressly permitted by the terms of the Transaction
Documents and will do nothing to impair the rights of the Issuer or the
Indenture Trustee in the Lease Contracts or the Equipment. In the event
that the rights of the Company or any of the Contributors under any
Lease Contract, any guaranty of the related Customer's obligations under
any Lease Contract, or any Insurance Policy are not assignable to the
Issuer or to the Trust, each of the Company and the Contributors will
enforce such rights on behalf of the Trust.
(g) Each of the Company and the Contributors will comply, in all
material respects, with all material acts, rules, regulations, orders,
decrees and directions of any governmental authority applicable to the
Lease Assets or any part thereof; provided, however, that each of the
Company and the Contributors may contest any act, regulation, order,
decree or direction in any reasonable manner which shall not materially
and adversely affect the rights of the Issuer or the Indenture Trustee
in the Lease Assets.
(h) Each of the Company and the Contributors will advise the
Issuer, the Bond Insurer and the Indenture Trustee promptly, in
reasonable detail, of the occurrence of any breach by the Company or any
of the Contributors following discovery by the Company or any of the
Contributors of such breach of any of its representations, warranties
and covenants contained herein.
(i) Each of the Company and the Contributors will execute or
endorse, acknowledge, and deliver to the Issuer and the Indenture
Trustee from time to time such schedules, confirmatory assignments,
conveyances, and other reassurances or instruments and take such further
similar actions relating to the Lease Contracts, the related Lease
Receivables and Equipment, and the rights covered by the Transaction
Documents, as the Issuer or the Indenture Trustee may reasonably request
to preserve and maintain title to
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the Lease Assets and the rights of the Indenture Trustee and the Holders
of Notes therein against the claims of all persons and parties.
(j) Each of the Company and the Contributors agrees to
indemnify, defend and hold the Issuer harmless from and against any and
all loss, liability, damage, judgment, claim, deficiency or expense
(including interest, penalties, reasonable attorney's fees and amounts
paid in settlement) that is caused by (i) a breach at any time by the
Company or any of the Contributors of its representations, warranties
and covenants contained in Section 3.01 hereof or this Section 4.01 or
(ii) any material information furnished by the Company or any of the
Contributors which is set forth in any Schedule delivered hereunder,
being untrue in any respect when any such representation was made or
schedule delivered, provided that neither the Company nor any of the
Contributors shall have any liability with respect to a representation
or warranty as to any specific Lease Contract, Lease Receivable or
Equipment other than to purchase such Lease Contract or substitute for
such Lease Contract in accordance with Section 3.03 hereof unless such
breach of representation or warranty is the result of the Company's or
the applicable Contributor's fraud, gross negligence, bad faith or
willful misconduct. Each of the Company and the Contributors shall also
indemnify the Indenture Trustee, the Trust, the Servicer and the Bond
Insurer for any cost or expenses incurred by them in the enforcement of
this Agreement. The obligations of the Company and the Contributors
under this Section 4.01(j) shall be considered to have been relied upon
by the Issuer and shall survive the execution, delivery and performance
of this Agreement, regardless of any investigation made by or on behalf
of the Issuer, until termination of the related Indenture. If the
Company or any of the Contributors has made any indemnity payments
pursuant to this Section 4.01(j) and thereafter the recipient collects
any of such amounts from others, such party will promptly repay the
amount collected to the Company or the applicable Contributor, as
applicable, without interest.
(k) Neither the Company nor any of the Contributors will do
anything to disturb or impair the acquisition hereunder by the Issuer of
the Lease Contracts and the related Lease Receivables and Equipment.
(l) Each of the Company and the Contributors (i) will (A)
maintain its books and records separate from the books and records of
the Issuer and (B) maintain bank accounts separate from those of the
Issuer and (ii) will not (x) take any action that would cause the
dissolution or liquidation of the Issuer and (y) guarantee (directly or
indirectly), endorse or otherwise become contingently liable (directly
or indirectly) for the obligations of the Issuer, or (2) institute
against the Issuer, or join any other person in instituting against the
Issuer, any case, proceeding or other action under any existing or
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future bankruptcy, insolvency or similar laws. This subsection (1) shall
survive termination of this Agreement.
(m) Each of the Company and the Contributors shall notify the
Issuer and the Indenture Trustee promptly after becoming aware of any
Lien on any Lease Asset.
(n) On each date as of which the Company or the applicable
Contributor substitutes a Substitute Lease Contract in accordance with
Section 3.03 hereof, the Company shall provide to the Issuer a
supplement to this Agreement substantially in the form of Annex A hereto
subjecting such Lease Contract to the provisions hereof and providing
with respect to such Substitute Lease Contract the information required
in the Lease Schedule.
(o) The annual financial statements of the Company and the
Contributors will disclose the effects of the transactions contemplated
by the Transaction Documents in accordance with generally accepted
accounting principles. The financial statements of the Company, the
Contributors and the Issuer will also disclose that the assets of the
Issuer are not available to pay creditors of the Company or any of the
Contributors, as applicable. The resolutions, agreements and other
instruments underlying the Transaction Documents will be continuously
maintained by each of the Company and the Contributors as official
records.
(p) Each of the Company, the Contributors, the Issuer and their
shareholders and members shall treat the Lease Contracts as owned by the
Issuer for federal, State and local income tax purposes, shall include
in the computation of the Issuer's gross income for such purposes the
rental and other income from the Lease Contracts, shall treat the Notes
as debt of the Issuer for such purposes, and shall cause the Issuer to
deduct the interest paid or accrued with respect to the Notes in
accordance with its applicable method of accounting for such purposes.
(q) The Company will, at its own cost and expense, (i) retain
the Electronic Ledger as a master record of the Lease Contracts and
Equipment and copies of all documents relating to each Lease Contract
(other than the original executed Lease Contracts) as custodian for the
Issuer, the Trust and other Persons, if any, with interests in the Lease
Contracts and Equipment and (ii) xxxx the Lease Contracts and the
Electronic Ledger to the effect that the Lease Contracts and Equipment
have been acquired the Issuer and that they have been transferred and
assigned to the Trust pursuant to the Indenture.
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Section 4.02. Issuer Covenants. The Issuer hereby covenants and agrees
with the Company and the Contributors as follows:
(a) The Issuer hereby acknowledges and agrees that its rights in
the Equipment are expressly subject to the rights of the related
Customers in such Equipment pursuant to the applicable Lease Contract.
The Issuer covenants and agrees that, so long as a Customer shall not be
in default of any of the provisions of the applicable Lease Contract,
neither the Issuer nor any assignee of the Issuer will disturb the
Customer's quiet and peaceful possession of the related Equipment and
the Customer's unrestricted use thereof for its intended purpose.
(b) On each date as of which Lease Contracts and the related
Equipment are to be purchased or replaced by the Company or a
Contributor, as applicable, pursuant to Section 3.03, the Issuer shall
submit to the Company an instrument of assignment assigning such Lease
Contract and Equipment to the Company or a Contributor, as applicable,
signed by the president, senior vice president or any vice president of
the Issuer. Each such assignment shall operate as an assignment, without
recourse, representation, or warranty, to the Company or a Contributor,
as applicable, of all of the Issuer's right, title, and interest in and
to such Lease Contract, Equipment and any security documents relating
thereto, such assignment being an assignment outright and not for
security, and upon payment of the Purchase Price or delivery of a
Substitute Lease Contract, the Company or a Contributor, as applicable,
will thereupon own such Lease Contract and all such security and
documents, free of any further obligation to the Issuer with respect
thereto. If in any enforcement suit or legal proceeding it is held that
the Company or a Contributor, as applicable, may not enforce a Lease
Contract on the ground that it is not a real party in interest or holder
entitled to enforce the Lease Contract, the Issuer shall, at the
Issuer's expense, take such steps as the Issuer deems necessary to
enforce the Contract, including bringing suit in the Issuer's name.
(c) The Issuer warrants that it will own and possess the
Equipment subsequent to its acquisition thereof and that it will warrant
and defend its title to such Equipment against all Persons, claims and
demands whatsoever. The Issuer shall not assign, sell, pledge, or
exchange, or in any way encumber or otherwise dispose of the Equipment,
except as permitted under the Indenture.
(d) Each of the Company, the Contributors, the Issuer and their
shareholders shall treat the Lease Contracts as owned by the Issuer for
federal, State and local income tax purposes, shall include in the
computation of the Issuer's gross income for such purposes the rental
and other income from the Lease Contracts, shall treat the Notes as debt
of the Issuer for such purposes, and shall cause the Issuer to deduct
the interest paid
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or accrued with respect to the Notes in accordance with its applicable
method of accounting for such purposes.
Section 4.03. Assignment of Lease Assets. Each of the Company and the
Contributors understands that the Issuer will assign to and grant to the
Indenture Trustee a security interest in all its right, title and interest to
this Agreement and the Lease Assets. Each of the Company and the Contributors
consents to such assignment and grants and further agrees that all
representations, warranties, covenants and agreements the Company and the
Contributors made herein shall also be for the benefit of and inure to the
Indenture Trustee, the Trustee, the Bond Insurer and all Holders from time to
time of the Notes.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.01. Conditions to the Issuer's Obligations. The obligations of
the Issuer hereunder shall be subject to the satisfaction of the following
conditions:
(a) All representations and warranties of each of the Company
and the Contributors contained in this Agreement and all information
provided in the Lease Schedule shall be true and correct on the related
Delivery Date, and each of the Company and the Contributors shall have
delivered to the Issuer and the Indenture Trustee an officer's
certificate to such effect;
(b) Each of the Company and the Contributors shall have
delivered all other information theretofore required or reasonably
requested by the Issuer to be delivered by the Company and each of the
Contributors hereunder, duly certified by an officer of the Company or
the Contributor, as applicable, and each of the Company and the
Contributors shall have substantially performed all other obligations
required to be performed by the provisions of this Agreement;
(c) On or before the initial Delivery Date, the Issuer, the
Servicer, the Back-Up Servicer and the Indenture Trustee shall have
entered into the Servicing Agreement; and
(d) All of the Notes shall be issued and sold on the related
Delivery Date, and the Issuer shall receive the full consideration due
it upon the issuance of such Notes.
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Section 5.02. Conditions to the Company's and the Contributors'
Obligations. The obligations of the Company and the Contributors to enter into
this Agreement on the initial Delivery Date shall be subject to the satisfaction
of the following conditions:
(a) All representations and warranties of the Issuer contained
in this Agreement shall be true and correct with the same effect as
though such representations and warranties had been made on such date;
and
(b) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement and the
Transaction Documents shall be satisfactory in form and substance to
each of the Company and the Contributors, and each of the Company and
the Contributors shall have received from the Issuer copies of all
documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as each of
the Company and the Contributors may reasonably have requested.
ARTICLE 6
TERM AND TERMINATION
Section 6.01. Term. This Agreement shall commence as of the date of
execution and delivery hereof and, shall continue in full force and effect until
final the later of (i) payment with respect to the last Lease Asset or (ii)
termination of the Indenture.
Section 6.02. Default by the Company or the Contributors. If either of
the Company or any of the Contributors shall be in default under this Agreement
and such default shall not have been cured for a period of 60 days, or if either
of the Company or any of the Contributors shall become insolvent or make an
assignment for the benefit of its creditors or have a receiver appointed for all
or substantially all of its properties, or if any proceedings are commenced, or
consented to, by the Company or any of the Contributors, as applicable, are not
stayed or dismissed within 90 days after being commenced against the Company or
any of the Contributors, as applicable, under any bankruptcy, insolvency or
other law for the relief of debtors, the Issuer shall have the right, in
addition to any other rights it may have under any applicable law, to terminate
this Agreement upon 30 days prior written notice to the Company or any of the
Contributors, as applicable; provided that any termination of this Agreement
shall not release the Company or any of the Contributors from any obligation
under this Agreement.
ARTICLE 7
MISCELLANEOUS
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Section 7.01. Amendments. This Agreement and the rights and obligations
of the parties hereunder may not be changed orally but only by an instrument in
writing signed by the party against which enforcement is sought. This Agreement
may be amended by the Issuer, the Contributors and the Company only with the
prior written consent of the Indenture Trustee.
Section 7.02. Governing Law. This Agreement shall be construed in
accordance with the internal laws of the State of New York, without regard to
choice of law principals.
Section 7.03. Notices. All demands, notices and communications hereunder
shall be in writing and shall be delivered or mailed by registered or certified
United States mail, postage prepaid, and addressed, in the case of the Company,
to the Company Address, in the case of each of the Contributors, to the
Contributor Address, and in the case of the Issuer, to the Issuer Address. All
notices and demands shall be deemed to have been given either at the time of the
delivery thereof to any officer of the Person entitled to receive such notices
and demands at the address of such Person for notices hereunder, or on the third
day after the mailing thereof to such address, as the case may be. Any Person
may change the address for notices hereunder by giving notice of such change to
the other Person.
Section 7.04. Separability Clause. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.05. Assignment. Except as provided in Sections 4.01(a), this
Agreement may not be assigned or delegated by the Company or any of the
Contributors without the prior written consent of the Issuer and the Indenture
Trustee and may not be assigned or delegated by the Issuer without the prior
written consent of the Company, the Contributors and Indenture Trustee.
Section 7.06. Further Assurances. Each of the Company, the Contributors
and the Issuer agrees to do such further acts and things and to execute and
deliver to the Indenture Trustee such additional assignments, agreements, powers
and instruments as are required by the Indenture Trustee to carry into effect
the purposes of this Agreement or to better assure and confirm unto the
Indenture Trustee or the holders of the Notes their rights, powers or remedies
hereunder. If any Customer shall be in default under any Lease Contract, upon
reasonable request from the Servicer, each of the Company and the Contributors
will take all reasonable steps to assist in enforcing such Lease Contract and
preserving and maintaining title to the Lease Assets and the rights of the
Indenture Trustee and the Holders of the Notes therein against the claims of all
persons and parties to the extent such entity is capable of performing such
requested
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steps and the Servicer reasonably determines that the assistance of
the Company or any of the Contributors is necessary to effect the intent and
purposes hereof.
Section 7.07. No Waivers; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Issuer, any of the Contributors
or the Company, any right, remedy, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise of any right, remedy,
or privilege hereunder preclude any other or further exercise hereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privilege provided by law.
Section 7.08. Binding Effect; Third Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto, the Trust,
the Bond Insurer, the Holders of Notes, and their respective successors and
permitted assigns.
Section 7.09. Set-Off. (a) Each of the Company and the Contributors
hereby irrevocably and unconditionally waives all right of set-off that it may
have under contract (including this Agreement), applicable law or otherwise with
respect to any funds or monies of the Issuer at any time held by or in the
possession of the Company.
(b) The Issuer shall have the right to set-off against the
Company or the Contributors any amounts to which the Company or the
applicable Contributor may be entitled and to apply such amounts to any
claims the Issuer may have against the Company or the applicable
Contributor from time to time under this Agreement. Upon any such
set-off the Issuer shall give notice of the amount thereof and the
reasons therefor.
Section 7.10. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall together constitute one original document.
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IN WITNESS WHEREOF, the Company, the Contributors and the Issuer have
caused this Agreement to be duly executed by their respective officers thereunto
duly authorized as of the date and year first above written.
T & W LEASING, INC.,
as Company
By /s/ XXXXXXX X. PRICE
--------------------
Name:
Title:
T & W FINANCE CORP. III,
as Contributor
By /s/ XXXXXXX X. PRICE
--------------------
Name:
Title:
T & W FINANCE CORP. IV,
as Contributor
By /s/ XXXXXXX X. PRICE
--------------------
Name:
Title:
T & W FINANCE COMPANY V, L.L.C.,
as Contributor
By /s/ XXXXXXX X. PRICE
--------------------
Name:
Title:
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T & W FUNDING COMPANY IV, L.L.C.,
as Issuer
By /s/ XXXXXXX X. PRICE
--------------------
Name:
Title:
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EXHIBIT A
FORM OF SUPPLEMENT FOR SUBSTITUTE LEASE CONTRACTS
Pursuant to Section 3.04(b) of the Contribution Agreement dated as of
July 1, 1995 (the "Agreement") between T & W Leasing, Inc. (the "Company"), T &
W Finance Corp. III, T & W Finance Corp. IV, and T & W Finance Company V, L.L.C.
(each, a "Contributor" and collectively, the "Contributors") and T & W Funding
Company IV, L.L.C. (the "Issuer"), attached hereto is a supplement to Schedule I
of the Agreement, which includes information regarding Lease Assets that are
hereby sold, assigned, transferred and delivered by the undersigned Contributor
to the Issuer in accordance with the Agreement.
[CONTRIBUTOR]
By
Name:
Title:
34
SCHEDULE I
SUPPLEMENT FOR SUBSTITUTE LEASE CONTRACTS
35
EXHIBIT B
FORM OF LEASE CONTRACT
