Exhibit 4.2
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DVI FINANCIAL SERVICES INC.,
CONTRIBUTOR AND SERVICER
AND
DVI RECEIVABLES CORP. XVI
CONTRIBUTION AND SERVICING AGREEMENT
Dated as of November 1, 2001
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ALL RIGHTS IN AND TO THIS AGREEMENT ON THE PART OF DVI RECEIVABLES CORP. XVI
HAVE BEEN ASSIGNED TO DVI RECEIVABLES XVI 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 INDENTURE DATED AS OF NOVEMBER 1, 2001 FOR THE BENEFIT OF THE
PERSONS REFERRED TO THEREIN.
TABLE OF CONTENTS
Page
SECTION 1. CAPITAL CONTRIBUTION................................................3
1.01 Contribution........................................................3
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE CONTRIBUTOR.......................................5
2.01 Corporate Organization and Authority................................6
2.02 Business and Property...............................................6
2.03 Equipment and Contracts.............................................6
2.04 Contract Schedule..................................................11
2.05 Pending Litigation.................................................11
2.06 No Material Event..................................................12
2.07 Transactions Legal and Authorized..................................12
2.08 Governmental Consent...............................................12
2.09 Compliance with Law................................................12
2.10 Ordinary Course; No Insolvency.....................................13
2.11 Assets and Liabilities.............................................13
2.12 Fair Consideration; Valid Sale.....................................13
2.13 Ability to Pay Debts...............................................13
2.14 Bulk Transfer Provisions...........................................14
2.15 Tax Returns........................................................14
2.16 Transfer Taxes.....................................................14
2.17 Principal Executive Office.........................................14
2.18 Legal Name.........................................................15
2.19 Servicing Provisions Customary.....................................15
2.20 Defaults...........................................................15
2.21 ERISA..............................................................15
2.22 All Filings Made...................................................15
2.23 Nonconsolidation...................................................15
2.24 All Representations and Warranties True............................16
2.25 Prospectus Supplement..............................................17
2.26 Insurance..........................................................17
2.27 No Bankruptcy Petition Against the Transferor, the Managing Member
or the Issuer......................................................17
2.28 Delivery of Obligor Contact Information............................17
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE TRANSFEROR.......................................17
3.01 Transferor Organization and Authority; Subsidiaries................17
3.02 Due Authorization and No Violation.................................18
3.03 No Litigation......................................................18
3.04 Principal Office...................................................18
3.05 Tax Returns........................................................18
3.06 Solvency...........................................................18
3.07 Approvals..........................................................19
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TABLE OF CONTENTS
(continued)
Page
3.08 Nonconsolidation...................................................19
SECTION 4. ADMINISTRATION OF CONTRACTS........................................19
4.01 Servicer to Act....................................................19
4.02 Contract Amendments and Modifications; Repurchase of Contracts by
Servicer...........................................................21
4.03 Contract Defaults; Residual Realizations...........................22
4.04 Costs of Servicing; Servicer's Fee.................................22
4.05 Other Transactions.................................................24
4.06 Collection of Moneys...............................................24
4.07 Voluntary Termination..............................................24
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS.........................24
5.01 Servicer Advances..................................................24
5.02 Indemnification....................................................25
5.03 Repurchase and Substitution of Contracts; Other Payments...........25
SECTION 6. INFORMATION TO BE PROVIDED.........................................27
6.01 Monthly Servicer Report............................................27
6.02 Tax Reporting and Treatment........................................27
6.03 Other Information..................................................27
6.04 Annual Independent Certified Public Accountant's Report............27
6.05 Payment Advices....................................................28
SECTION 7. SUBSTITUTION OF CONTRACTS..........................................28
7.01 Substitution.......................................................28
7.02 Notice of Substitution.............................................30
7.03 Contributor's and Servicer's Subsequent Obligations................31
7.04 Usage of Predecessor Contracts in Calculations.....................31
SECTION 8. THE SERVICER.......................................................31
8.01 Corporate Existence of the Servicer................................31
8.02 Limitation on Liability of the Servicer and Others.................31
8.03 Servicer Not to Resign or be Removed...............................32
8.04 Financial and Business Information.................................32
8.05 Officer's Certificates.............................................33
8.06 Inspection.........................................................33
8.07 Servicer Records...................................................34
8.08 Insurance..........................................................34
8.09 No Bankruptcy Petition Against the Transferor, the Managing Member
or the Issuer......................................................34
8.10 Fidelity Bond and Errors and Omissions Insurance...................34
SECTION 9. THE CONTRIBUTOR....................................................34
9.01 Corporate Existence of the Contributor.............................34
9.02 Financial and Business Information.................................35
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TABLE OF CONTENTS
(continued)
Page
9.03 Inspection.........................................................36
9.04 No Bankruptcy Petition Against the Managing Member, the Transferor
or the Issuer......................................................36
9.05 Accounts, Books and Records........................................36
9.06 Tax Returns........................................................37
9.07 Insurance..........................................................37
9.08 Protection of Right, Title and Interest............................37
9.09 Other Liens or Interests...........................................37
9.10 Costs and Expenses.................................................38
SECTION 00.XXXXXX OF DEFAULT..................................................38
10.01 Servicer Events of Default.........................................38
10.02 Termination........................................................40
10.03 Trustee to Act; Appointment of Successor...........................40
10.04 Servicer to Cooperate..............................................41
10.05 Remedies Not Exclusive.............................................41
10.06 Waiver of Past Defaults............................................41
SECTION 11.ASSIGNMENT.........................................................42
11.01 Assignment to Trustee..............................................42
11.02 Assignment by Contributor or Servicer..............................42
SECTION 12.NATURE OF CONTRIBUTOR'S OBLIGATIONS AND SECURITY THEREFOR..........42
12.01 Contributor's Obligations Absolute.................................42
12.02 Power of Attorney..................................................43
SECTION 13.MISCELLANEOUS PROVISIONS...........................................43
13.01 Sale...............................................................43
13.02 Amendment..........................................................44
13.03 Waivers............................................................44
13.04 Notices............................................................44
13.05 Costs and Expenses.................................................45
13.06 Third Party Beneficiaries..........................................46
13.07 Survival of Representations........................................46
13.08 Confidential Information...........................................46
13.09 Headings and Cross-References......................................46
13.10 GOVERNING LAW......................................................46
13.11 Consent to Jurisdiction............................................46
13.12 Counterparts.......................................................46
13.13 Statutory References...............................................46
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CONTRIBUTION AND SERVICING AGREEMENT
This Agreement is made and dated as of November 1, 2001, 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. XVI, 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 (ii) certain
payments and proceeds received relating to the Contracts that are payable after
the Cut-Off Date and (iii) an interest in each item of underlying Equipment that
is subject to each Contract described in Exhibit A hereto. 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 Subsequent Contract Transfer Agreement (the "SCTA"),
dated as of November 1, 2001, 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 Sale Agreement (the "DVI Funding Sale Agreement") dated
as of November 1, 2001, among the Issuer, the Transferor, DVI Funding
Corporation, DVI Funding, L.L.C., and DVI Financial Services Inc., DVI Funding
L.L.C. will transfer to the Issuer all of its right, title and interest in, to
and under the Contracts listed on Exhibit A thereto and the other Sold Borrower
Property (as defined in the DVI Funding Sale Agreement) and DVI Funding
Corporation will transfer to the Transferor (all of its right, title and
interest in, to and under the Sold Company (as defined in the funding Sale
Agreement). Pursuant to the Sale Agreement (the "DVI XV Sale Agreement), dated
as of November 1, 2001, among the Issuer, the Transferor, DVI Receivables XV
Corp., DVI Receivables XV, L.L.C., and DVI Financial Services Inc., DVI
Receivables XV, L.L.C., will transfer to the Issuer all of its right, title and
interest in, to and under the Contracts listed on Exhibit A thereto and the
other Sold Trust Property (as defined in the DVI XV Sale Agreement) and DVI
Receivables XV Corp. will transfer to the Transferor all of its right, title and
interest in, to and under the Sold Company Assets (as defined in the DVI XV Sale
Agreement). The Contracts transferred to the Issuer pursuant to the Funding Sale
Agreement and the DVI XV Sale Agreement (each a "Sale Agreement" and together
the "Sale Agreements") were originated by DVI.
D. Pursuant to the Indenture (the "DVI XVI Indenture"), dated as of
November 1, 2001, the Issuer is issuing its Asset-Backed Securities (the
"Notes"). Pursuant to the 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, DVI Funding LLC, and DVI Receivables XV, LLC in,
to and under the Contracts, the Equipment and this Agreement.
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E. 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.
F. 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.
G. Capitalized terms used but not defined herein shall have the respective
meanings set forth in Appendix I hereto.
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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 (or, in case of any Substitute Contracts, the related Substitution Date),
without recourse except as set forth herein, all right, title and interest in
and to the Contributed Property. The Transferor assumes all of the obligations
under the Contracts arising after the related Cut-Off Date. All funds which are
part of the Conveyed Property and which are received by DVI Receivables Corp.
XV, DVI Receivables XV, LLC, DVI Funding Corporation DVI Funding LLC or the
Contributor under or in connection with the Contracts that are payable after the
applicable Cut-Off Date shall be received, held and applied by such Person 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 (and the Issuer as its assignee). 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 (and to not permit
DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding LLC or any of its subsidiaries to take any) action inconsistent with the
ownership (by the Transferee and the Issuer, as its assignee) 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 transferred and assigned to the Transferor (and the Issuer as its assignee)
and to claim no ownership interest in the Contracts and the other Contributed
Property. Nothing contained in this Agreement shall affect in any respect the
rights of the Contributor, its successors and assigns, to deal in any Unrelated
Property.
(c) The Servicer 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 Trust 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 debtor's principal place of business and the jurisdiction in which the
Contributor is "located" (as defined in the UCC), (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 debtor's
principal place of business and jurisdiction in which the principal place of
business of the Transferor is "located" (as defined in the UCC), (C) filing
UCC-1 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" (as defined in the UCC), and (D) filing UCC-3
termination statements or releases from lenders, if any, with liens on the
Contracts; (ii) in the
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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), 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, (B) with respect to the Transferor's interest
in the Equipment related to DVI Fair Market Value Leases, filing precautionary
UCC-1 financing statements (i) naming the Contributor, DVI Funding Corporation
or DVI Receivables Corp, XV, as the case may be, 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, (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 (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, (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, DVI Funding Corporation or DVI
Receivables Corp, XV, as the case may be, 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 and its state of incorporation, (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 and its state of incorporation, (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, DVI
Funding Corporation or DVI Receivables Corp, XV, as the case may be, 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 for which the Original Equipment Cost is less than $25,000), in the
appropriate filing offices (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, DVI Funding Corporation or DVI Receivables
Corp, XV, as the case may be, 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, (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 from a third party,
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naming such person as debtor/seller, the Contributor, DVI Funding LLC or DVI
Receivables XV LLC, as the case may be, 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, DVI
Funding LLC or DVI Receivables XV LLC, as the case may be, 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
and (2) the filing of the UCC financing statements required under the Sale
Agreements. Thereafter, the Contributor promptly shall file such additional UCC
financing statements, continuation statements and assignments and cause to be
made such 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 any of the Contributor's name, structure or the
location of its jurisdiction of organization, 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) 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):
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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 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 and each Transaction Document to which it is a
party 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 November 5, 2001, 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 Finance
Lease, Leveraged Lease Loan, Secured Equipment Note 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 and (with respect to each Fair Market Value
Lease) a valid first priority ownership interest in such Contract and the
related equipment subject thereto; (B) immediately prior to the transfers
and conveyances set forth herein, the Contributor will
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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 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 for which the Original Equipment Cost is
less than $25,000), or, with respect to 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;
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(vi) as of the Cut-Off Date, (A) no Contract had a remaining term of
more than 85 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;
(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;
8
(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;
(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 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
9
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
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
(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 $429,583,246.18; 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 $4,625,790.18; (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 October
31, 2008; (G) as of the Cut-Off Date, (i) the Discounted Contract Balance
of Contracts that have Balloon Payments constitute not more than 7.18% 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 37.13% of, with respect to the Initial
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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 15.94% 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 1.70% 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 7.50% 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 $142,000,000 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 7.0% of the Aggregate Discounted Contract Balance as
of the Closing Date which Contracts provide for the related initial
Contract Payment to be due within 120 days of the Payment Date occurring on
December 11, 2001; (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 and, (L) no Balloon Payment is more than six and a half times
larger than the average Contract payment related to such Contract.
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.
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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 of all right, title and interest in and to each Contract and a
security interest in each item of Equipment at any time transferred hereunder
and under the Sale Agreement and compliance by the Contributor and the Servicer
with all of the provisions of this Agreement and the Sale Agreement:
(a) have been duly authorized by all necessary corporate action and do
not and will not require any stockholder approval, or approval or consent
of any trustee or holders of any indebtedness or obligations ;
(b) are within the corporate powers of the respective parties thereto;
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 respective parties thereto, under the
provisions of, any agreement, charter instrument, by-law or other
instrument to which such parties, is or will be a party or by which such
parties it or its property may be bound or result in the violation of any
law, regulation, rule, order or judgment applicable to the respective
parties thereto, or its properties, or any order to which such parties, or
its properties is subject, of or by any government or governmental agency
or authority.
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 DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC or the Contributor in connection with the
execution and delivery of this Agreement or the Sale Agreements or the
assignment, transfer and contribution of the Contracts and the Equipment
hereunder or under the Sale Agreements.
2.09 Compliance with Law. Each of DVI Receivables Corp. XV, DVI Receivables
XV, LLC, DVI Funding Corporation, DVI Funding, LLC., 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.
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2.10 Ordinary Course; No Insolvency. The transactions contemplated by this
Agreement and the Sale Agreements are being consummated by DVI Receivables Corp.
XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI Funding, LLC, the
Contributor and the Servicer, respectively, in furtherance of the their ordinary
business purposes and constitute a practical and reasonable course of action by
designed to improve their financial position 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 or the Sale Agreements, nor immediately before or after such
transactions, will DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC., the Contributor or the Servicer be
insolvent, and each of DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC., 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 respective assets of DVI Receivables Corp. XV, DVI
Receivables XV, LLC, DVI Funding Corporation, DVI Funding, LLC, and the
Contributor will be in excess of the amount that will be required to pay the
respective probable liabilities of DVI Receivables Corp. XV, DVI Receivables XV,
LLC, DVI Funding Corporation, DVI Funding, LLC, and the Contributor as such
liabilties 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 respective DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC., and the Contributor's assets will be greater than the sum of DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC., and the Contributor's debts, respectively, valuing the
Contributor's assets at a fair salable value.
2.12 Fair Consideration; Valid Sale. The consideration received and to be
received by DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding
Corporation, DVI Funding, LLC, and 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 and the
Sale Agreements effect a valid assignment, transfer and contribution of the
Contracts and the other Contributed Property, enforceable against creditors of
and purchasers from DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC, and the Contributor.
2.13 Ability to Pay Debts. Neither as a result of the transactions
contemplated by this Agreement or the Sale Agreements nor otherwise does the
Contributor believe that DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC, or it will incur debts beyond its ability
to pay or which would be prohibited by their respective charter documents or
by-laws. The respective assets and cash flow of DVI Receivables Corp. XV, DVI
Receivables XV, LLC, DVI Funding Corporation, DVI Funding,
13
LLC or the Contributor enable it to meet its respective 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 or the Sale
Agreements is subject to or will result in any tax, fee or governmental charge
payable by DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding
Corporation, DVI Funding, LLC, or the Contributor or the Transferor to any
federal, state or local government ("Transfer Taxes"). In the event that DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, or 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 DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, or the Transferor, or upon the Contributor otherwise being given
notice thereof, the Contributor shall pay, and otherwise indemnify and DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, or 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 is located at 0000
Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, and has been located in the same county
and state for at least four months prior to the date of execution and delivery
of this Agreement.
14
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 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, the other Contributed Property and the assets transferred to
it under the Sale Agreement, 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 DVI Receivables Corp. XV, DVI
Receivables XV, LLC, DVI Funding Corporation, DVI Funding, LLC, the Transferor
or the Issuer would not be disregarded in the event of a bankruptcy or
insolvency of the Contributor or DVI Receivables Corp. XV, DVI Receivables XV,
LLC, DVI Funding Corporation, DVI Funding, LLC, 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;
15
(b) the Contributor maintains separate corporate records and books of
account from DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding
Corporation, DVI Funding, LLC, the Transferor and the Issuer and otherwise
observes corporate formalities and has a separate business office from DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, the Transferor and the Issuer;
(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 DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, Transferor and the Issuer;
(d) the Contributor maintains its assets separately from the assets of
DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation,
DVI Funding, LLC, 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 DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC, the Transferor or the Issuer and the
separate creditors of DVI Receivables Corp. XV, DVI Receivables XV, LLC,
DVI Funding Corporation, DVI Funding, LLC, the Transferor and the Issuer
will be entitled to be satisfied out of the respective assets of DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, the Transferor or the Issuer prior to any value in DVI
Receivables Corp. XV, DVI Receivables XV, LLC, DVI Funding Corporation, DVI
Funding, LLC, or the Transferor becoming available to their respective
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) none of DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC, the Transferor and the Issuer do act
as an agent of the Contributor in any capacity and the Contributor does not
act as agent for DVI Receivables Corp. XV, DVI Receivables XV, LLC, DVI
Funding Corporation, DVI Funding, LLC, 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 under certain other agreements between the Contribution and
such entities; 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.
16
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 Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx 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.
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.
2.28 Delivery of Obligor Contact Information. With respect to each Initial
Contract and each Contract contributed by the Contributor to Transferor on each
Contribution Date, the Contributor shall, on or before such Contribution Date,
provide the Trustee, in writing and in a form reasonably acceptable to the
Trustee, contact information of the related Obligor, including the name, phone
number, facsimile number and address of each key contact individual.
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.
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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 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 0000 Xxxx Xxxx, Xxxxxxx, 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.
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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 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
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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 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
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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.
(f) The Servicer will notify the Trustee, in writing and in a form
reasonably acceptable to the Trustee, of any change in the contact information
of any Obligor, including the name, phone number, facsimile number and address
of each key contact individual, within 30 days following the discovery or
receipt of notice of such change.
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.
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
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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 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 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
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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 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 Indenture (including the reasonable compensation and the expenses
and disbursements of its 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 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.
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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. 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 Aggregate Discounted Contract Balance
is less than 10% of the Initial Aggregate Discounted Contract Balance so long as
the Servicer deposits or causes to be deposited into the Collection Account the
Repurchase Amount for each Contract.
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
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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 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 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
25
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 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 Indenture with respect to any Contract or (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.
(d) The Servicer shall have the right, but not the obligation, to
repurchase a Delinquent Contract in order to more effectively service such
Delinquent Contract and to enforce the obligations of the obligor under such
Delinquent Contract; provided that the Servicer will not repurchase more than
fifteen percent (15%) of the Initial Aggregate Discounted Contract Balance of
the Contracts. In the event of a repurchase of a Delinquent Contract, the
Servicer shall remit to the Trustee (upon written notice to the Trustee thereof)
for deposit into the Collection Account the Repurchase Amount of each such
Delinquent 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
26
following the date when the Servicer desires to repurchase such Delinquent
Contract. In connection with such repurchase, the Servicer shall be reimbursed
in accordance with Section 3.04(b) of the Indenture for all amounts, if any,
theretofore advanced by the Servicer pursuant to Section 5.01 with respect to
such Delinquent 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.
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 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 the performance of the Trustee's duties as
set forth in the 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, 2002, 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
27
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 or the other Transaction Documents,
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;
provided, however, that if the Predecessor Contract included an
ownership interest of the Transferor, and a first priority perfected
security interest of the Issuer, in Equipment related to a Fair Market
Value Lease, then the related Substitute Contract, if related to a
Fair Market Value Lease, shall also include a valid ownership interest
in the Transfer and a first priority perfected security interest in
favor of the Issuer, 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
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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.
(3) 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 the Eligible Contract being substituted and a security interest in the
related Equipment subject thereto (except in the case of Fair Market Value
Leases where the Contributor or the Servicer, as the case may be, transfers a
valid ownership interest to the Transferor in the related Equipment subject
thereto and the Issuer, pursuant to the SCTA is granted 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 subject thereto,
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(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; (v) in accordance with the Servicer's standard credit
evaluation policies, be of equal or better credit quality than the Contract
being replaced; and (vi) with respect to a substitution of a Contract that was
originated by DVI Financial Services, Inc., be a Contract that was originated by
DVI Financial Services, Inc. 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
31
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 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
32
any securities exchange, the Securities and Exchange Commission or any
successor agencies, in each case relating to the Transferor or the Notes;
(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
33
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 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,
34
and enforceability of any of the Contracts or to permit performance of the
Contributor's duties under this Agreement.
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
(iii) any proposed or pending investigation of it by any
governmental authority or agency, or
(iv) 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.
35
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 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 fight
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 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 sale 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 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.
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9.06 Tax Returns. (a) At all times, so long as any of the Notes or the
other obligations secured by the Indenture remain outstanding, the Contributor,
the Managing Member and the Transferor shall be members of the same affiliated
group within the 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. 9-507 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
37
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
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 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
38
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, 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;
39
(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).
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
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
40
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 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
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
41
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 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, DVI Funding Corporation, DVI Funding, LLC,
DVI Receivables Corp. XV, DVI Receivables XV, LLC, 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 DVI Funding
Corporation, DVI Funding, LLC, DVI Receivables Corp. XV, DVI Receivables XV,
LLC, the Transferor, the Issuer, the Managing Member, the Servicer, the Trustee
or any holder of the Notes to the Contributor or any other
42
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 DVI
Funding Corporation, DVI Funding, LLC, DVI Receivables Corp. XV, DVI Receivables
XV, LLC 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 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 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, and that the Contributed Property shall be removed
from the Contributor's estate in connection with an asset-backed transaction. In
that regard, each of the Contributor and the Company each intend that each
transfer of Contributed Property pursuant to this Agreement be treated as a
"transfer" of an "eligible asset" (or proceeds thereof) to an "eligible entity"
in connection with an "asset-backed securitization", all within the meaning of
Section 541 of the Bankruptcy Code and any successor section thereto. 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
43
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 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:
0000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
44
(b) in the case of the Transferor:
0000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(c) in the case of the Managing Member:
0000 Xxxx Xxxx
Xxxxxxx, 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, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Asset-Backed Monitoring (Equipment Leases)
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
E-Mail: XxxxxxxxXxxxxxx@xxxxxx.xxx
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
45
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 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 CONFLICT
OF LAWS 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.
46
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.
[SIGNATURE PAGE FOLLOWS]
47
Contribution and Servicing Agreement
Dated as of November 1, 2001
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:
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
DVI RECEIVABLES CORP. XIV
By:
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Vice President
EXHIBIT A
CONTRACT SCHEDULE
See Schedule 1 to the Indenture.
EXHIBIT B
MONTHLY SERVICER REPORT
SEE ATTACHED
EXHIBIT C
RESERVED
EXHIBIT D
SUBSTITUTE CONTRACT TRANSFER FORM
DVI Financial Services Inc. (the "Contributor") and DVI Receivables Corp.
XV (the "Transferor"), pursuant to the Contribution and Servicing Agreement,
dated as of November 1, 2001 (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;
(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 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. XIV
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXHIBIT E
FORM OF RE-ASSIGNMENT BY TRANSFEROR PURSUANT TO SECTION 5.03(b) OR
7.01(c) OF THE CONTRIBUTION AND SERVICING AGREEMENT
DVI Receivables Corp. XV (the "Transferor") pursuant to the Contribution
and Servicing Agreement, dated as of November 1, 2001, 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. XV
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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
Contribution and Servicing Agreement (the "Agreement") dated as of November 1,
2001, between the Contributor and DVI Receivables Corp. XV (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:
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Name:
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Title:
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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.
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.
APPENDIX I
See copy of Appendix I following the Indenture
