1
EXHIBIT 10.7
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Insurer
T & W FINANCIAL CORPORATION,
as Company
T & W FINANCIAL CORPORATION,
as Servicer
T & W FUNDING COMPANY I, L.L.C.,
as Transferor
K & P FINANCE CORP. I
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Back-up Servicer
INSURANCE AGREEMENT
T & W LEASE-BACKED TRUST
8.275% LEASE-BACKED CERTIFICATES
Dated as of February 1, 1997
2
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall not
be deemed to be a part of this Insurance Agreement. All capitalized terms used
in this Agreement and not otherwise defined shall have the meanings set forth in
Article I of this Agreement.)
ARTICLE I
DEFINITIONS
Page
----
Section 1.01. General Definitions....................................................... 1
Section 1.02. Generic Terms............................................................. 4
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Company, the Transferor and
the Servicer............................................................ 4
Section 2.02. Affirmative Covenants of the Company, the Transferor and the
Servicer ................................................................. 6
Section 2.03. Negative Covenants of the Company, the Servicer and the
Transferor.............................................................. 11
ARTICLE III
THE CERTIFICATE INSURANCE POLICY; SECURITY
Section 3.01. Agreement To Issue the Certificate Insurance Policy. ..................... 11
Section 3.02. Conditions Precedent to Issuance of the Certificate Insurance
Policy.................................................................. 11
Section 3.03. Premium................................................................... 13
Section 3.04. Indemnification........................................................... 13
Section 3.05. Payment Procedure......................................................... 15
Section 3.06. Subrogation............................................................... 15
Section 3.07. Reimbursement and Additional Payment Obligation........................... 15
Section 3.08. Reimbursement of Insurer Following Redemption
at the Option of the Transferor......................................... 16
3
ARTICLE IV
FURTHER AGREEMENTS
Page
----
Section 4.01. Effective Date; Term of Agreement......................................... 17
Section 4.02. Waiver of Rights; Further Assurances and Corrective Instruments........... 17
Section 4.03. Obligations Absolute...................................................... 17
Section 4.04. Assignments; Reinsurance; Third-Party Rights.............................. 17
Section 4.05. Liability of Insurer...................................................... 18
Section 4.06. Control by Insurer........................................................ 18
Section 4.07. Representations, Warranties and Covenants of the Trustee and
Back-up Servicer........................................................ 19
Section 4.08. Covenants of K & P Finance Corp. I........................................ 20
Section 4.09. Trustee, Back-up Servicer, Transferor, Company and Servicer To
Join in Enforcement Action.............................................. 21
ARTICLE V
DEFAULTS, REMEDIES
Section 5.01. Defaults.................................................................. 21
Section 5.02. Remedies; No Remedy Exclusive............................................. 22
Section 5.03. Waivers................................................................... 23
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Changes and Modifications..................................... 23
Section 6.02. Notices................................................................... 24
Section 6.03. Severability.............................................................. 25
Section 6.04. Governing Law............................................................. 25
Section 6.05. Consent to Jurisdiction and Venue, Etc.................................... 25
Section 6.06. Consent of Insurer ....................................................... 26
Section 6.07. Counterparts.............................................................. 26
Section 6.08. Recitals.................................................................. 26
Section 6.09. Headings.................................................................. 26
Section 6.10. Parties Not To Institute Insolvency Proceedings........................... 27
Section 6.11. Trial by Jury Waived...................................................... 27
Section 6.12. Entire Agreement.......................................................... 27
TESTIMONIUM............................................................................... 25
SIGNATURES................................................................................ 25
ii
4
INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT is made as of February 1, 1997 by and among MBIA
INSURANCE CORPORATION (the "Insurer"), T & W FINANCIAL CORPORATION, in its
capacity as Company (the "Company"), T & W FINANCIAL CORPORATION, in its
capacity as Servicer (the "Servicer"), T & W FUNDING COMPANY I, L.L.C., in its
capacity as Transferor (the "Transferor"), K & P FINANCE CORP. I and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, in its capacities as Trustee (the
"Trustee") and Back-up Servicer (the "Back-up Servicer") under the Trust and
Security Agreement (as defined below).
RECITALS:
1. The Trustee is authenticating up to $100,000,000 aggregate principal
amount of 8.275% Lease-Backed Certificates (the "Certificates"), provided that
the terms and conditions of this Agreement and the other Transaction Documents
have been satisfied, pursuant to a trust and security agreement (the "Trust and
Security Agreement"), as more specifically defined below, The Certificates will
be secured by the Trust Property pledged pursuant to the Trust and Security
Agreement.
2. The Company and the Transferor have requested that the Insurer issue a
Certificate Insurance Policy to guarantee payment of Insured Payments (as
defined in the Certificate Insurance Policy), upon such terms and conditions as
were mutually agreed upon by the parties and subject to the terms and conditions
of the Certificate Insurance Policy.
3. The parties hereto desire to specify the conditions precedent to the
issuance of the Certificate Insurance Policy by the Insurer, the indemnity and
reimbursement to be provided by the Company and the Transferor in respect of
amounts paid by the Insurer under the Certificate Insurance Policy, the security
to be provided to the Insurer by the Company as an inducement for the Insurer to
deliver the Certificate Insurance Policy and to provide for certain other
matters.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, the Insurer, the Company, the Transferor, the Servicer, the
Back-up Servicer, K & P Finance Corp. I and the Trustee agree as follows
ARTICLE I
DEFINITIONS
Section 1.0 1. GENERAL DEFINITIONS. The terms defined in this Article I
shall have the meanings provided herein for all purposes of this Agreement,
unless the context clearly requires otherwise, in both singular and plural form,
as appropriate. Capitalized terms used in this Agreement but not otherwise
defined herein will have the meanings ascribed to such terms in the Trust and
Security Agreement.
"Adverse Selection Procedure" means any method of selecting or identifying
Lease Contracts eligible to be included in the Trust Property for inclusion
therein, other than as outlined in the
5
Commitment, that materially and adversely affects the representative nature of
the sample of Lease Contracts so selected and decreases the probability that the
Trustee will receive an uninterrupted flow of payments of principal and interest
under the Lease Contracts.
"Agreement" means this Insurance Agreement dated as of February 1, 1997,
including any amendments or any supplements hereto as herein permitted.
"Bond Insurer Premium" means the amount set forth in the first paragraph
of Paragraph 1(a) of the Commitment.
"Bond Insurer Premium Rate" means the rate set forth in the second
paragraph of Paragraph 1(a) of the Commitment.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which the Insurer or banking institutions in New York City or in the city in
which the Corporate Trust Office of the Trustee is located, are authorized or
obligated by law or executive order to close.
"Certificate Insurance Policy" means the financial guaranty insurance
policy issued with respect to the Certificates, and any endorsement thereto
issued by the Insurer to the Trustee.
"Closing Date" means February 7, 1997.
"Commitment" means the Commitment Letter dated as of February 7, 1997
between the Company and the Insurer.
"Contribution Agreement" means the Contribution Agreement dated as of
February 1, 1997 among the Transferor, the Contributors and the Company, as the
same may be amended or supplemented from time to time in accordance with the
terms thereof.
"Contributor" means each of T & W Funding Company V, L.L.C. and T & W
Funding Company VI, L.L.C.
"Event of Default" means any event of default set forth in Section 5.01
hereof.
"Initial Premium" means the amount set forth in the first paragraph of
Paragraph 1(a) of the Commitment.
"Insurer" means MBIA Insurance Corporation.
"Insurer Default" means the occurrence and continuance of any failure of
the Insurer to make payments under the Certificate Insurance Policy in
accordance with its terms.
"Insurer Insolvency" means (i) the entry of a decree or order of a court
or agency having jurisdiction in respect of the Insurer in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or appointing a conservator or receiver or liquidator or rehabilitator or
other similar official of the Insurer or of any substantial part of its
property, or the
2
6
entering of an order for the winding up or liquidation of the affairs of the
Insurer and the continuance of any such decree or order undischarged or
unstayed and in force for a period of 90 consecutive days; (ii) the Insurer
shall consent to the appointment of a conservator or receiver or liquidator or
other similar official in any insolvency, readjustment of debt, marshalling of
assets and liabilities, rehabilitation or similar proceedings of or relating to
the Insurer or of or relating to all or substantially all of its property, or
(iii) the Insurer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of or otherwise
voluntarily commence a case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations.
"Late Payment Rate" means the rate of interest equal to the "Prime" rate,
as set forth in The Wall Street Journal, plus 2%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under law applicable to this Agreement limiting interest rates.
"Material Adverse Change" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, limited liability company, trust (including any beneficiary
thereof) unincorporated organization or government or any agency or political
subdivision thereof.
"Reported Company's Financial Statements" shall have the meaning set forth
in the Trust and Security Agreement.
"S&P" means Standard & Poor's Ratings Group, a division of The XxXxxx-Xxxx
Companies, Inc., its successors and their assigns, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Company with the approval of the Insurer.
"State" means the State of New York.
"Term of the Agreement" shall be determined as provided in Section 4.01.
"Transaction" means the transactions contemplated by the Transaction
Documents.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreements, the Trust and Security Agreement, the Servicing
Agreement, the Contribution Agreement, the Certificate Purchase Agreement dated
as of February 7, 1997 among the Company, the Transferor and Centre Square
Funding Corporation, the Certificates and the Certificate Insurance Policy.
"Trust and Security Agreement" means the Trust and Security Agreement
dated as of February 1, 1997 among the Servicer, the Transferor, the Trustee and
the Back-up Servicer, including any amendments and supplements thereto as
therein and herein permitted.
3
7
Section 1.02. GENERIC TERMS. All words used herein shall be construed to
be of such gender or number as the circumstances require. This "Agreement" shall
mean this Agreement as a whole and as the same may, from time to time hereafter,
be amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to
this Agreement as a whole and not to any particular paragraph, clause or other
subdivision hereof, unless otherwise specifically noted.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY, THE
TRANSFEROR AND THE SERVICER. As of the Closing Date, the Company, the Transferor
and the Servicer represent and warrant to, and covenant with, the other parties
hereto (in each case only as to matters concerning itself) as follows:
(a) Representations and Warranties of Company, the Transferor and
Servicer Contained in Other Transaction Documents. All of the
representations and warranties made by the Company, the Transferor or the
Servicer, as the case may be, in any of the Transaction Documents are
incorporated as if fully set forth herein for the benefit of the Insurer
and are true and correct.
(b) Due Qualification. Each of the Company, the Transferor and the
Servicer have obtained all necessary licenses, permits, charters,
registrations and approvals (together, "approvals") required to be
obtained by the Company, the Transferor and the Servicer which failure to
obtain would render any portion of the Transaction Documents unenforceable
by the Company, the Transferor, the Servicer or any other party to the
Transaction Documents, as the case may be, and would have a material
adverse effect on the Insurer or the Certificateholders.
(c) Pending Litigation or Other Proceeding. There is no pending
action, proceeding or investigation before any court, governmental or
administrative agency or arbitrator against or affecting the Company, the
Transferor or the Servicer or, to the Company's, the Transferor's or the
Servicer's knowledge, any threatened action or proceeding before any of
the foregoing, which, if decided adversely to the Company, the Transferor
or the Servicer, would materially and adversely affect the ability of the
Company, the Transferor or the Servicer to perform their respective
obligations under the Transaction Documents or would have a materially
adverse effect on the Insurer or the Certificateholders.
(d) Valid and Binding Agreement. The Transaction Documents to which
the Company, the Transferor or the Servicer, respectively, is a party
constitute, and when executed (if not previously) will constitute, the
legal, valid and binding agreements of the Company, the Transferor and the
Servicer, respectively, enforceable against the Company, the Transferor
and the Servicer in accordance with their respective terms, except as the
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or limiting creditors' rights
generally or general equitable principles, as such relate to the
4
8
Company, the Transferor or the Servicer. The Company, the Transferor and
the Servicer hereby agree and covenant that each will not at any time in
the future deny that the Transaction Documents to which the Company, the
Transferor or the Servicer, respectively, is a party constitute the valid,
legal and binding agreements of the Company, the Transferor and the
Servicer, respectively, except to the extent that the Company, the
Transferor or the Servicer is compelled to do so by law or regulation.
(e) Financial Statements. The Reported Company's Financial
Statements, copies of which have been furnished to the Insurer, (i) are,
as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of the companies reported therein as
of the dates and for the periods indicated and (iii) have been prepared in
accordance with generally accepted accounting principles consistently
applied, except as noted therein and subject to year-end adjustments with
respect to interim statements. Since the date of the most recent Reported
Company's Financial Statements, there has been no Material Adverse Change
in such condition or operations.
(f) Compliance With Law, Regulations, Etc. None of the Company, the
Transferor or the Servicer has notice or any reason to believe that any
practice, procedure or policy employed by the Company, the Transferor or
the Servicer in the conduct of its business violates any law, regulation,
judgment or agreement applicable to the Company, the Transferor or the
Servicer which, if enforced, would have a material adverse effect on the
ability of the Servicer, the Company or the Transferor, as the case may
be, to perform its respective obligations under the Transaction Documents.
None of the Transferor, the Company and the Servicer is in breach of or in
default under any applicable law or administrative regulation of the State
of Washington or Delaware or any department, division, agency or
instrumentality thereof or of the United States or any applicable Judgment
or decree or any loan agreement, note, resolution, certificate, agreement
or other instrument to which the Company, the Transferor or the Servicer,
as the case may be, is a party or is otherwise subject which, if enforced,
would have a material adverse effect on the ability of the Servicer, the
Company or the Transferor, as the case may be, to perform its respective
obligations under the Transaction Documents.
(g) Delivery of Information. The Company alone represents and
warrants that none of the Transaction Documents nor any other information
furnished to the Insurer by or on behalf of the Company contain any
statement of a material fact by the Company which was untrue or misleading
in any material respect when made. Since the furnishing of such
information, there has been no change nor any development or event
involving a prospective change which would render any of the Transaction
Documents or other information furnished to the Insurer untrue or
misleading in a material respect.
(h) Securities Laws Compliance. The Company, the Servicer and the
Transferor represent and warrant that neither the offer nor the sale of
the Certificates has been or will be in violation of the Securities Act of
1933, and none of the Company, the Transferor or the
5
9
Servicer is required to be registered as an "investment company" under the
Investment Company Act of 1940, as amended.
(i) Federal Reserve Board Regulations. No part of the proceeds of
the Certificates will be used by the Company or the Transferor to purchase
or carry any "margin stock" within the meaning of Regulation G of the
Board of Governors of the Federal Reserve System.
(j) Transferor Activity. From the date of its formation until the
date of this Agreement, the Transferor has not conducted any business or
trade, has not entered into any contracts, written or oral, has not had
any employees, has no liabilities or creditors, and no liens or
encumbrances have existed or exist with respect to the Transferor or its
assets.
Section 2.02. Affirmative Covenants of the Company, the Transferor and the
Servicer. The Company, the Transferor and the Servicer hereby covenant and agree
that during the term of this Agreement:
(a) Compliance With Agreements. The Company, the Transferor and the
Servicer shall comply in all material respects with the terms and
conditions of the Transaction Documents to which each, respectively, is a
party and, unless the Insurer shall otherwise consent, none of the
Company, the Transferor or the Servicer shall agree to any waiver,
amendment to or modification of the terms of any of the Transaction
Documents to which each, respectively, is a party.
(b) Corporate Existence. The Company, the Transferor and the
Servicer shall maintain their respective existences and continue to be
duly organized, duly qualified and duly authorized.
(c) The Company To Provide Financial Statements; Accountants'
Reports; Other information. The Company and the Servicer shall keep or
cause to be kept in reasonable detail books and records of account of the
Company's or the Servicer's books and records relating to its obligations
assumed under the Transaction Documents, in accordance with its operating
rules and procedures. The Company and the Servicer shall each furnish or
cause to be furnished to the insurer:
(i) Financial Statements. All reports required to be furnished
under Section 4.02(a) of the Servicing Agreement.
(ii) Initial and Monthly Reports. On or before the Closing
Date, the Company will provide the Insurer with the initial Lease
Schedule for the Certificates. Thereafter, not later than 12:00 noon
New York City time on each Determination Date, the Servicer shall
deliver to the Insurer the report required by Section 4.01 of the
Servicing Agreement setting forth, among other things, (A) the
outstanding Aggregate Implicit Principal Balance of all Lease
Contracts, (B) the Required Collateralization Amount and (C) the
Outstanding Principal Balance of the Certificates.
6
10
(iii) Other Reports and Information. The Company shall also
furnish, with reasonable promptness, such other financial data,
financial reports relating to the Company prepared by third parties
and other data relating to the Company which are commonly prepared
and can be provided without undue effort, as the Insurer may
reasonably request. Unless an Event of Default, a Trigger Event or a
Funding Period Trigger Event has occurred, costs associated with
providing such information shall, if requested by the Company, be
paid by the Insurer.
(iv) Computer Diskette. Beginning in June 1997, the Servicer
will deliver to the Insurer, at its request, on a quarterly basis, a
computer diskette containing a quarterly summary of the information
provided to the Insurer pursuant to clause (ii) of this subsection
2.02(c) and also containing information similar to the information
provided in the Lease Schedule.
(d) The Transferor Member Meetings. The Transferor shall have annual
meetings of its members and shall prepare income and franchise tax returns
as appropriate. The Transferor shall deliver to the Insurer copies of the
minutes of such meetings no later than April 30 of each year and such tax
returns promptly upon filing but in no event later than August 31 of each
year, beginning in 1997.
(e) Certificate of Compliance. The Servicer shall deliver to the
Insurer concurrently with the delivery of the financial statements
required pursuant to paragraph (c) above the reports to the Trustee and
other statements required to be delivered under Sections 4.02, 4.03 and
4.05 of the Servicing Agreement.
(f) Access to Records: Discussions With Officers and Accountants.
The Company, the Transferor and the Servicer shall, upon the request of
the Insurer, permit the Insurer, or its authorized agent, at reasonable
times and upon reasonable notice:
(i) to inspect such books and records of the Company, the
Transferor or the Servicer, as the case may be, as may relate to the
Certificates, the Lease Contracts, the obligations of the Company,
the Transferor or the Servicer, as the case may be, under the
Transaction Documents and the transactions consummated in connection
herewith;
(ii) to discuss the affairs, finances and accounts of the
Company, the Transferor or the Servicer as such relate to the
performance by it of its obligations under the Transaction Documents
with an appropriate officer of the Company, the Transferor or the
Servicer, as the case may be; and
(iii) to discuss the affairs, finances and accounts of the
Company, the Transferor or the Servicer as such relate to the
performance by it of its obligations under the Transaction Documents
with the Company's, the Transferor's or the Servicer's independent
public accountants, as the case may be, provided that an appropriate
officer of the Company, the Transferor or the Servicer, as the case
may be,
7
11
shall have the right to be present during such discussions and,
provided further, that, unless an Event of Default, a Trigger Event
or a Funding Period Trigger Event has occurred, the Insurer shall
pay any fees of such accountants associated with such discussions.
Such inspections and discussions shall be conducted during normal business
hours and shall not unreasonably disrupt the business of the Company, the
Transferor or the Servicer. The books and records of the Company will be
maintained at the address of the Company designated herein for receipt of
notices, unless the Company shall otherwise advise the parties hereto in
writing, the books and records of the Transferor will be maintained at the
address of the Transferor designated herein for receipt of notices, unless the
Transferor shall otherwise advise the parties hereto in writing, and the books
and records of the Servicer will be maintained at the address of the Servicer
designated herein for receipt of notices, unless the Servicer shall otherwise
advise the parties hereto in writing.
The Insurer shall keep confidential any matter of which it becomes aware
through such inspections or discussions (unless readily available from public
sources), except as may be otherwise required by regulation, law or court order
or requested by appropriate governmental authorities or as necessary to preserve
its rights or security under or to enforce any of the provisions of the
Transaction Documents, provided that the foregoing shall not limit the right of
the Insurer to make such information available to its regulators, securities
rating agencies, reinsurers, credit and liquidity providers, counsel and
accountants.
(g) Inform Insurer of Material Events. Each of the Company, the
Transferor and the Servicer shall promptly inform the Insurer and the
Trustee in writing of the following:
(i) any default or any fact or event which results, or which
with notice or the passage of time, or both, would result in an
Event of Default, Funding Period Trigger Event, Trigger Event or
Servicer Event of Default under any Transaction Document or would
constitute a material breach of a representation, warranty or
covenant by it under any Transaction Document;
(ii) the submission of any claim or the initiation of any
legal process, litigation or administrative or Judicial
investigation against it in any federal, state or local court or
before any governmental body or agency, or before any arbitration
board, or any such proceedings threatened by any governmental
agency, which, if adversely determined, would have a material
adverse effect upon its ability to perform its obligations under any
Transaction Document;
(iii) the submission of any claim or the initiation of any
legal process, litigation or administrative or judicial
investigation in any federal, state or local court or before any
arbitration board, or any such proceeding threatened by any
governmental agency, which, if adversely determined, would have a
material adverse effect on the Trust Property;
8
12
(iv) the commencement of any proceedings under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar
law now or hereafter in effect or of any proceeding in which a
receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested; and
(v) the receipt of notice from any agency or governmental body
having authority over the conduct of its business that it is to
cease and desist, or to undertake any practice, program, procedure
or policy employed by it in the conduct of the business of any of
them, and such cessation or undertaking will materially adversely
affect its ability to perform its obligations under the Transaction
Documents.
(h) Further Assurances. The parties hereto agree to reasonably
cooperate with S&P and Moody's in connection with any review which may be
undertaken by S&P and Moody's after the date hereof and to provide all
information reasonably requested by S&P or Moody's.
(i) Redemption of Certificates. The Transferor shall, on or before
the fifteenth day preceding the date on which any party exercises its
right to cause the redemption of all Certificates pursuant to Section
10.01 of the Trust and Security Agreement, deliver written notice to the
Insurer of such election containing the information required to be
delivered to the Certificateholders pursuant to Section 10.03 of the Trust
and Security Agreement.
(j) Servicing of Lease Contracts. The Servicer shall perform such
actions with respect to the Lease Contracts as are provided in Articles
III and IV of the Servicing Agreement. The parties hereto, with the
exception of the Trustee and the Back-up Servicer, will provide the
Insurer with written notice of any change or amendment to any Transaction
Document as currently in effect and agree not to make any change or
amendment to any Transaction Document without the prior written consent of
the Insurer.
(k) Third-Party Rights. Subject to the prior rights of the
Certificateholders, the Company agrees that the Insurer shall have all of
the rights of a third-party beneficiary of, and pursuant to, the
Company's agreements under the Contribution Agreement, and the Servicer
and Transferor agree that the Insurer shall have all of the rights of a
third-party beneficiary of, and pursuant to, the Servicer's and the
Transferor's agreements under the Trust and Security Agreement and the
Servicing Agreement.
(l) Maintenance of Trust Property. On or before each April 15, so
long as any of the Certificates are outstanding, the Servicer shall
furnish to the Insurer and the Trustee an officer's certificate either
stating that such action has been taken with respect to the recording,
filing, rerecording and refiling of any financing statements and
continuation statements as is necessary to maintain the interest of the
Trustee created by the Trust and Security Agreement with respect to the
Trust Property and reciting the details of such action or stating that no
such action is necessary to maintain such interests. Such officer's
certificate shall also describe the recording, filing, rerecording and
refiling of any financing statements and continuation statements that will
be required to maintain the interest of the Trustee in the Trust Property
9
13
until the date such next officer's certificate is due. The Servicer will
use its best efforts to cause any necessary recordings or filings to be
made with respect to the Trust Property.
(m) Servicer's Indemnity. Notwithstanding anything in
subsection 3.07(a) hereof, the Servicer shall pay to the Insurer an
amount equal to any amount paid by the Insurer because of the Servicer's
failure to deposit into the Collection Account any amount required to be
so deposited by it pursuant to the Trust and Security Agreement or the
Servicing Agreement, together with interest on any and all amounts
remaining unreimbursed (to the extent permitted by law, if in respect to
any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before judgment)
at a rate of interest equal to the Late Payment Rate.
(n) Maintenance of Licenses. The Servicer, the Company and the
Transferor, respectively, or any successors thereof shall maintain all
licenses, permits, charters and registrations which are material to the
conduct of its business.
(o) Closing Documents. The Servicer, the Company and the
Transferor shall provide or cause to be provided to the Insurer an
executed original of each document executed in connection with the
Transaction with 30 days after the Closing Date.
(p) Preference Payments. With respect to any Preference Amount
(as defined in the Certificate Insurance Policy), the Servicer shall
provide to the Insurer upon the request of the Insurer:
(i) a certified copy of the final nonappealable order
of a court having competent jurisdiction ordering the recovery
by a trustee in bankruptcy as voidable preference amounts
included in previous distributions under Section 12.02(d) of the
Trust and Security Agreement to any Holder pursuant to the
United States Bankruptcy Code, 11 U.S.C. Sections 101 et seq.,
as amended (the "Bankruptcy Code");
(ii) an opinion of counsel satisfactory to the Insurer,
and upon which the Insurer shall be entitled to rely, stating
that such order is final and is not subject to appeal;
(iii) an assignment in such form as reasonably required
by the Insurer, irrevocably assigning to the Insurer all rights
and claims of the Servicer, the Trustee and any Holder relating
to or arising under the Lease Contract against the debtor which
made such preference payment or otherwise with respect to such
preference amount; and
(iv) appropriate instruments to effect (when executed
by the affected party) the appointment of the Insurer as agent
for the Trustee and any Holder in any legal proceeding relating
to such preference payment being in a form satisfactory to the
Insurer.
10
14
Section 2.03. Negative Covenants of the Company, the Servicer and the
Transferor. The Company, the Servicer and the Transferor agree and covenant with
the Insurer that at all times during the Term of the Agreement:
(a) Adverse Selection Procedure. The Company and the Transferor will
not use any Adverse Selection Procedure in selecting the Lease Contracts
to be pledged to the Trustee from the outstanding Lease Contracts that
qualify under the Trust and Security Agreement for inclusion in the Trust
Property.
(b) Impairment of Rights. The Company, the Servicer and the
Transferor each agree and covenant with the Insurer that at all times
during the Term of the Agreement the Company, the Servicer and the
Transferor shall not take any action, or decline to take any action if
reasonably requested by the Insurer, if such action or failure to take
action will interfere with the enforcement of any rights under any of the
Transaction Documents.
(c) Limited Liability Company Agreement. The Transferor shall not
amend its limited liability company agreement without the Insurer's prior
written consent.
(d) Lease Contracts: Charge-off Policy. Except as otherwise
permitted in the Servicing Agreement, the Servicer, the Company and the
Transferor shall not alter or amend any Lease Contract, their respective
collection policies or their respective charge-off policies in a manner
that materially adversely affects the Insurer unless the Insurer shall
have previously given its prior written consent.
ARTICLE III
THE CERTIFICATE INSURANCE POLICY; SECURITY
Section 3.01. AGREEMENT TO ISSUE THE CERTIFICATE INSURANCE POLICY. The
Insurer agrees, subject to the conditions set forth in Section 3.02 hereof, to
issue the Certificate Insurance Policy on the Closing Date.
Section 3.02. CONDITIONS PRECEDENT TO ISSUANCE OF THE CERTIFICATE
INSURANCE POLICY. The Company and the Transferor shall have complied with the
terms and satisfied the conditions precedent set forth below.
(i) Payment of the premium in accordance with Section 3.03 hereof;
(ii) Payment of or satisfactory arrangements for payment by the
Company or the Transferor of (a) rating agency fees of S&P and Moody's;
and (b) the fees and expenses incurred by the Insurer in connection with
the issuance of the Certificate Insurance Policy and the offer and sale of
the Certificates, including fees and expenses of counsel to the Insurer
and accountants for the Insurer, all in accordance with the terms of the
Commitment. The fees for any other rating agency shall be paid by the
party requesting such other agency's rating, unless such other agency is a
substitute for S&P or Moody's in the event that S&P or Xxxxx'x is no
11
15
longer rating securities, in which case the cost for such agency shall be
paid by the Company or the Transferor,
(iii) Receipt by the Insurer of a fully executed copy of the
Transaction Documents;
(iv) Receipt by the Insurer of certified copies of the resolutions
of the board of directors of the Company authorizing the execution and
delivery and performance of the Transaction Documents and the other
matters contemplated thereby, and of all other documents evidencing any
other action of the Company necessary to enter into the Transaction
Documents, all in form and substance acceptable to the Insurer and its
counsel,
(v) Receipt by the Insurer of certified copies of the resolutions of
the board of directors of the Transferor authorizing the execution and
delivery and performance of the Transaction Documents and the other
matters contemplated thereby, and of all other documents evidencing any
other action of the Transferor necessary to enter into the Transaction
Documents, all in form and substance acceptable to the Insurer and its
counsel;
(vi) Receipt by the Insurer of favorable opinions of counsel,
including counsel to the Company, the Transferor, the Trustee and
transaction counsel, addressed to the Insurer in form and substance
reasonably acceptable to the Insurer and its counsel;
(vii) Receipt by the Insurer of true and correct copies of any
governmental approvals necessary for the transactions contemplated by the
Transaction Documents;
(viii) The Insurer shall have received a certificate of an
authorized officer of the Company certifying the name and true signatures
of the officers of the Company executing the Transaction Documents;
(ix) The Insurer shall have received a certificate of an authorized
officer of the Transferor certifying the name and true signatures of the
officers of the Transferor executing the Transaction Documents;
(x) The Insurer shall have received a certificate of the Company to
the effect that (i) the Reported Company's Financial Statements which have
been furnished to the Insurer are, as of the date thereof, complete and
correct in all material respects; present fairly the financial condition
of the Company, as of the date thereof, and have been prepared in
accordance with generally accepted accounting principles consistently
applied (except as noted therein and subject to year-end adjustments for
interim statements) and (ii) there has been no material adverse change in
such conditions or operations;
(xi) The Insurer shall have received copies of any agreements
relating to the placement of the Certificates and specifically be entitled
to rely on such agreements;
(xii) The Insurer shall have received copies of each of the
documents, and specifically be entitled to rely on the documents, required
to be delivered to the Trustee pursuant to Section 4.01 of the Trust and
Security Agreement, except that the Insurer shall not
12
16
receive copies of the original executed counterparts of each Lease
Contract or the related Lease Contract File;
(xiii) Delivery of such other documents, customary closing
certificates, instruments, approvals or opinions as are reasonably
requested by the Insurer;
(xiv) Compliance with all other terms, conditions and requirements
of the Commitment;
(xv) The Insurer and its counsel shall have determined that all the
Lease Contracts, documents, certificates and opinions to be delivered in
connection with the Certificates conform to the terms of the Trust and
Security Agreement, the Commitment and this Agreement; and
(xvi) Each of Moody's and S&P shall have informed the Insurer that
the risk to the Insurer in insuring the Certificates is of at least
investment-grade quality.
Issuance of the Certificate Insurance Policy will be conclusive evidence
of satisfaction or waiver of any of the conditions set forth in this
Section 3.02.
Section 3.03. PREMIUM. In consideration of the issuance by the Insurer of
the Certificate Insurance Policy, the Transferor shall pay to the Insurer on the
Closing Date the Initial Premium. The Bond Insurer Premium shall be payable in
accordance with Section 12.02(d)(iv) of the Trust and Security Agreement
commencing on the applicable dates set forth in the Commitment. The Initial
Premium and the Bond Insurer Premium shall be nonrefundable without regard to
whether the Insurer makes any payment under the Certificate Insurance Policy or
any other circumstances relating to the Certificates or provision being made for
payment of the Certificates prior to maturity.
Section 3.04. INDEMNIFICATION. (a) In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, the Company, the Sevicer and the Transferor agree to pay, and to
protect, indemnify and save harmless, the Insurer and its officers, directors,
shareholders, employees, agents, including each person, if any, who controls the
Insurer within the meaning of either Section 15 of the Securities Act of 1933,
as amended, or Section 20 of the Securities and Exchange Act of 1934, as
amended, from and against any and all claims, losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs or reasonable
expenses (including, without limitation, reasonable fees and expenses of
attorneys, consultants and auditors and reasonable costs of investigations) or
obligations whatsoever (herein collectively referred to as "Liabilities") of any
nature arising out of or relating to the transactions contemplated by the
Transaction Documents by reason of
(i) any act or omission of the Company, the Servicer or the
Transferor in connection with the offering, issuance, sale or delivery of
the Certificates other than by reason of false or misleading information
provided by the Insurer in writing in connection with such offering;
13
17
(ii) the misfeasance or malfeasance of, or negligence or theft
committed by, any director, officer, employee or agent of the Company, the
Servicer or the Transferor;
(iii) the violation by the Company, the Servicer or the Transferor
of any federal or state securities, banking or antitrust laws, rules or
regulations in connection with the issuance, offer and sale of the
Certificates or the transactions contemplated by the Transaction
Documents;
(iv) the violation by the Company, the Servicer or the Transferor of
any federal or state laws, rules or regulations relating to the maximum
amount of interest permitted to be received on account of the loan of
money or with respect to the Lease Contracts;
(v) the breach by the Company, the Servicer or the Transferor of any
of its obligations under this Agreement or any of the Transaction
Documents; and
(vi) the breach by the Company, the Servicer or the Transferor of
any representation or warranty on the part of the Company, the Servicer or
the Transferor contained in the Transaction Documents or in any
certificate furnished or delivered to the Insurer thereunder.
This indemnity provision shall survive the termination of this Agreement and
shall survive until the statute of limitations has run on any causes of action
which arise from one of these reasons and until all suits filed as a result
thereof have been finally concluded.
Notwithstanding any provision or obligation to the contrary set forth in
this Agreement or any instrument now or hereafter securing, affecting or
relating to any obligation of the Company, the Servicer or the Transferor under
this Agreement, including, without limitation, the Trust and Security Agreement,
no individual representative of the Company, the Servicer or the Transferor
(including, without limitation, employees, officers, directors and shareholders
thereof) shall have any personal liability under this Agreement, including,
without limitation, any liability for the performance or observance or
nonperformance or nonobservance of any covenant or obligation of the Company,
the Servicer or the Transferor or for breach of any representation or warranty
contained in this Agreement.
(b) Any party which proposes to assert the right to be indemnified under
this Section 3.04 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against the Company, the Servicer or the Transferor under this Section
3.04, notify the Company, the Servicer or the Transferor of the commencement of
such action, suit or proceeding, enclosing a copy of all papers served. In case
any action, suit or proceeding shall be brought against any indemnified party
and it shall notify the Company, the Servicer or the Transferor of the
commencement thereof, the Company, the Servicer or the Transferor shall be
entitled to participate in, and, to the extent that it shall wish, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and after
notice from the Company, the Servicer or the Transferor to such indemnified
party of its election so to assume the defense thereof, the Company, the
Servicer or the Transferor shall not be liable to such indemnified party for any
legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in
14
18
connection with the defense thereof The indemnified party shall have the right
to employ its counsel in any such action the defense of which is assumed by the
Company, the Servicer or the Transferor in accordance with the terms of this
subsection (b), but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of counsel by such
indemnified party has been authorized by the Company, the Servicer or the
Transferor. The Company, the Servicer or the Transferor shall not be liable for
any settlement of any action or claim effected without its consent.
Section 3.05. PAYMENT PROCEDURE. If the Insurer makes any payment under
the Certificate Insurance Policy, the Company, the Servicer and the Trustee
shall accept, except in the case of manifest error, a voucher or other evidence
of payment as prima facie evidence that such payment was properly made. In the
event of any payment by the Insurer, the Company, the Servicer and the Trustee
agree to accept a voucher or other evidence of payment complete on its face as
prima facie evidence of the propriety thereof and the liability therefor of the
Insurer except in the case of manifest error. All payments to be made to the
Insurer under this Agreement shall be made to the Insurer in lawful currency of
the United States of America in immediately available funds at the notice
address for the Insurer as specified in the Trust and Security Agreement on the
date when due. Payments to be made to the Insurer under this Agreement shall
bear interest payable to the extent provided in this Agreement at the Late
Payment Rate from the date when due to the date paid.
Section 3.06. SUBROGATION. Upon any payment by the Insurer pursuant to the
Certificate Insurance Policy, the Insurer shall be fully subrogated to the
rights of the Certificateholders to the extent of such payment, pursuant to the
priority set forth in Section 12.02(d) of the Trust and Security Agreement. The
Trustee acknowledges such subrogation and, further, agrees to execute such
instruments prepared by the Insurer and to take such reasonable actions as, in
the sole judgment of the Insurer, are necessary to evidence such subrogation and
to perfect the rights of the Insurer to receive any moneys paid or payable under
the Trust and Security Agreement, provided that the Trustee can legally take
such action consistent with its obligations under the Trust and Security
Agreement, and the Trustee shall be indemnified by the Insurer for any
reasonable expense that results from such action.
Section 3.07. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. (a) To the
extent provided in Section 12.02(d) of the Trust and Security Agreement, after
the required payment of the Bond Insurer Premium therefrom, the Insurer shall be
entitled to reimbursement for any payment made by the Insurer under the
Certificate Insurance Policy, in an amount equal to the amount so paid and all
amounts previously paid that remain unreimbursed, together with interest on any
and all amounts remaining unreimbursed (to the extent permitted by law, if in
respect of any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before judgment), at a
rate of interest equal to the Late Payment Rate, provided that the sole source
of reimbursement for payments made by the Insurer under the Certificate
Insurance Policy shall be pursuant to Section 12.02(d) of the Trust and Security
Agreement and no person or entity shall be personally liable for the payment of
such amounts.
(b) The Company and the Transferor agree to pay to the Insurer as follows:
anything in subsection 3.07(a) hereof to the contrary notwithstanding, the
Insurer shall be entitled to reimbursement from the Company for payments made
under the Certificate Insurance Policy arising as a result of the Company's or
the Transferor's, as the case may be, failure to repurchase any Lease
15
19
Contract if it is not repurchased when required to be repurchased by it pursuant
to Section 4.04 of the Trust and Security Agreement, Section 3.03 of the
Contribution Agreement or Section 3.10 of the Servicing Agreement, together
with interest on any-and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect of any unreimbursed amounts representing
interest) from the date such amounts became due until paid in full (after as
well as before judgment), at a rate of interest equal to the Late Payment Rate.
(c) The Company, the Transferor and the Servicer agree to pay to the
Insurer as follows: any and all charges, fees, costs and expenses that the
Insurer may reasonably pay or incur, including, but not limited to, attorneys'
and accountants' fees and expenses, in connection with (i) any accounts
established to facilitate payments under the Certificate Insurance Policy to the
extent the Insurer has not been immediately reimbursed on the date that any
amount is paid by the Insurer under the Certificate Insurance Policy, (ii) the
enforcement, defense or preservation of any rights in respect of any of the
Transaction Documents, including defending, monitoring or participating in any
litigation or proceeding (including any insolvency or bankruptcy proceeding in
respect of the Company, the Transferor or the Servicer or any affiliate of any
of them) relating to any of the Transaction Documents or any party to any of the
Transaction Documents in its capacity as such a party, or (iii) any amendment,
waiver or other action with respect to, or related to, any Transaction Document,
whether or not executed or completed; costs and expenses shall include a
reasonable allocation of compensation and overhead attributable to the time of
employees of the Insurer spent in connection with the actions described in
clause (ii) above, and the Insurer reserves the right to charge a reasonable fee
as a condition to executing any waiver or consent proposed in respect of any of
the Transaction Documents.
(d) All amounts to be paid pursuant to subsection (a) above shall be due
and payable without demand, and all amounts to be paid pursuant to subsection
(b) above shall be due and payable upon demand. All such amounts shall be
payable in the priority and in the manner provided in the Transaction Documents
relating thereto, provided that upon the occurrence of any Servicer Event of
Default under the Servicing Agreement, the Insurer shall have the rights
provided for herein and therein.
Section 3.08. REIMBURSEMENT OF INSURER FOLLOWING REDEMPTION AT THE OPTION
OF THE TRANSFEROR. Following termination of the Trust and Security Agreement
pursuant to Section 10.01 of the Trust and Security Agreement, the Transferor
agrees to reimburse the Insurer for any Insured Payments required to be made
pursuant to the Certificate Insurance Policy subsequent to the date of such
termination.
16
20
ARTICLE IV
FURTHER AGREEMENTS
Section 4. 0 1. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall
take effect on the Closing Date and shall remain in effect until such time as
the Insurer is no longer subject to a claim under the Certificate Insurance
Policy, the Certificate Insurance Policy has been surrendered to the Insurer for
cancellation, and all amounts payable by the Company, the Transferor or the
Servicer or from any other source under the Transaction Documents and under the
Certificates have been paid in full; provided, however, that the provisions of
Sections 3.03, 3.04 and 3.07 hereof shall survive any termination of this
Agreement.
Section 4.02. WAIVER OF RIGHTS; FURTHER ASSURANCES AND CORRECTIVE
INSTRUMENTS. (a) Excepting at such times as an Insurer Insolvency or default in
payment under the Certificate Insurance Policy shall exist or shall have
occurred and be continuing, none of the Company, the Transferor, the Servicer or
the Trustee shall grant any waiver of rights under any of the Transaction
Documents to which any of them is a party without the prior written consent of
the Insurer, and any amendment or supplement to the Transaction Documents
without the written consent of the Insurer shall be null and void and of no
force or effect.
(b) Each of the Company, the Transferor, the Servicer and the Trustee
agrees that it will, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements hereto and
such further instruments as the Insurer may reasonably request and as may
reasonably be required to effectuate the intention of or facilitate the
performance of this Agreement, provided that the Company, the Trustee
(consistent with its obligations under the Trust and Security Agreement), the
Transferor or the Servicer, as the case may be, can legally take such action and
the Company, the Transferor, the Trustee or the Servicer, as the case may be,
shall be indemnified by the Insurer for any reasonable expenses resulting from
such action if such action was directed by the Insurer.
Section 4.03. OBLIGATIONS ABSOLUTE. The obligations of the Company, the
Transferor and the Servicer hereunder shall be absolute and unconditional, and
shall not be subject to, and the Company, the Transferor and the Servicer hereby
waive any of their rights of, abatement, diminution, postponement or deduction,
or to any defense other than payment, or to any night of setoff or recoupment
arising out of any breach under any of the Transaction Documents, by any party
thereto or any beneficiary thereof, or out of any obligation at any time owing
to the Company, the Transferor or the Servicer. Nothing herein shall be
construed as prohibiting the Company, the Transferor or the Servicer from
pursuing any rights or remedies they may have against any other person or entity
in a separate legal proceeding. The obligations of the Company, the Transferor
and the Servicer hereunder are absolute and unconditional and will be paid or
performed strictly in accordance with this Agreement.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS. (a) This
Agreement shall be a continuing obligation of the Company, the Transferor and
the Servicer and shall (i) be binding upon the Company, the Transferor and the
Servicer and their respective successors and assigns and (ii) inure to
17
21
the benefit of and be enforceable by the Insurer and its successors, transferees
and assigns. None of the Company, the Transferor or the Servicer may assign this
Agreement, or delegate any of its duties hereunder, without the prior written
consent of the Insurer.
(b) The Insurer shall have the right to give participations in its rights
under this Agreement and to enter into contracts of reinsurance with respect to
the Certificate Insurance Policy and each such participant or reinsurer shall be
entitled to the benefit of any representation, warranty, covenant and obligation
of the Company, the Transferor and the Servicer hereunder as if such participant
or reinsurer was a party hereto, provided that no such grant of participation
shall operate to relieve the Insurer of liability on any Certificate Insurance
Policy, and provided further that no such participation or contract of
reinsurance shall require the Servicer, the Trustee, the Company or the
Transferor to deal with any person other than the Insurer.
(c) In addition, the Insurer shall be entitled to assign or pledge to any
bank or other lender providing liquidity or credit with respect to the
Transaction or the obligations of the Insurer in connection therewith any rights
of the Insurer under the Transaction Documents or with respect to any real or
personal property or other interests pledged to the Insurer, or in which the
Insurer has a security interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and reinsurers,
nothing in this Agreement shall confer any night, remedy or claim, express or
implied, upon any person, including particularly, any Certificateholder, other
than the Insurer, against the Company, the Transferor or the Servicer, and all
the terms, covenants, conditions, promises and agreements contained herein shall
be for the sole and exclusive benefit of the parties hereto and their
successors. Neither the Trustee nor any Certificateholder shall have any right
to payment from the premium paid pursuant to Section 3.03 hereof or under the
Trust and Security Agreement or from any other amounts paid by the Servicer, the
Company or the Transferor pursuant to Section 3.03, 3.04 or 3.07 hereof.
Section 4.05 LIABILITY OF INSURER. The Insurer shall not be responsible
for any act or omission of the Trustee with respect to its use of the
Certificate Insurance Policy. Neither the Insurer nor any of its officers,
directors or employees shall be liable or responsible for (a) the use which may
be made of the Certificate Insurance Policy by or for any acts or omissions of
the Trustee in connection therewith; or (b) the validity, sufficiency, accuracy
or genuineness of documents, or of any endorsement(s) thereon, submitted by any
person in connection with a claim under the Certificate Insurance Policy, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged. In furtherance and not in limitation of the
foregoing, the Insurer may accept documents that appear on their face to be in
order, without responsibility for further investigation.
Section 4.06. CONTROL BY INSURER. So long as an Insurer Insolvency or
default in payment under the Certificate Insurance Policy is not continuing,
upon the occurrence and during the continuation of any Servicer Event of Default
described in Section 6.01 of the Servicing Agreement, the Insurer shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, provided that such direction shall not be in
conflict with any rule of law or with any provision of this Agreement or the
Trust and Security Agreement.
18
22
Section 4.07. REPRESENTATIONS, WARRANTIES AND COVENANTS of THE TRUSTEE AND
BACK-UP SERVICER.
(a) Compliance and Amendments. The Trustee and the Back-up Servicer
shall comply in all material respects with the terms and conditions of the
Transaction Documents to which each, respectively, is a party, and,
provided there does not exist an Insurer Insolvency or insurer Default,
neither the Trustee nor the Back-up Servicer shall agree to any amendment
to or modification of the terms of any of the Transaction Documents to
which each, respectively, is a party unless the Insurer shall otherwise
consent.
(b) Due Organization and Qualification. The Trustee is a
corporation, duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. The Trustee is duly
qualified to do business, is in good standing and has obtained all
licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and the performance of its obligations under the Transaction
Documents, in each Jurisdiction in which the failure to be so qualified or
to obtain such approvals would render any Transaction Document
unenforceable in any respect or would have a material adverse effect upon
the Transaction, the Holders or the Insurer.
(c) Due Authorization. The execution, delivery and performance of
the Transaction Documents by the Trustee have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents, or other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity or the Trustee's
stockholders, which have not previously been obtained or given by the
Trustee.
(d) Noncontravention. Neither the execution and delivery of the
Transaction Documents by the Trustee, the consummation of the transactions
contemplated thereby nor the satisfaction of the terms and conditions of
the Transaction Documents:
(i) conflicts with or results in any breach or violation of
any provision of the certificate or articles of incorporation or
bylaws of the Trustee or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Trustee or any of their material
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over the
Trustee;
(ii) constitutes a default by the Trustee under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Trustee is a party or by which
any of its or their respective properties, which are individually or
in the aggregate material to the Trustee, is or may be bound or
affected; or
19
23
(iii) results in or requires the creation of any lien upon or
in respect of any assets of the Trustee, except as contemplated by
the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Trustee, or any of its
subsidiaries, or any properties or rights of the Trustee, or any of its
subsidiaries, pending or, to the Trustee's knowledge after reasonable
inquiry, threatened, which, in any case, could reasonably be expected to
result in a Material Adverse Change with respect to the Trustee.
(f) Valid and Binding Obligations and Agreements. The Transaction
Documents, when executed and delivered by the Trustee, will constitute the
legal, valid and binding obligations of the Trustee, enforceable in
accordance with their respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or the rights of
creditors of National Banks. The Trustee shall not at any time in the
future deny that the Transaction Documents constitute the legal, valid and
binding obligations of the Trustee
(g) Compliance With Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by the Trustee or the Back-up
Servicer in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to any of them that, if
enforced, could reasonably be expected to result in a Material Adverse
Change with respect to the Trustee or the Back-up Servicer. Neither the
Trustee nor the Back-up Servicer is in breach of or in default under any
applicable law or administrative regulation of its respective jurisdiction
of incorporation, or any department, division, agency or instrumentality
thereof or of the United States or any applicable judgment or decree or
any loan agreement, note, resolution, certificate, agreement or other
instrument to which the Trustee or the Back-up Servicer is a party or is
otherwise subject which, if enforced, would have a material adverse effect
on the ability of the Trustee or the Back-up Servicer, as the case may be
to perform its respective obligations under the Transaction Documents.
(h) Transaction Documents. Each of the representations and
warranties of the Trustee and the Back-up Servicer contained in the
Transaction Documents is true and correct in all material respects, and
the Trustee and the Back-up Servicer hereby make each such representation
and warranty to and for the benefit of, the Insurer as if the same were
set forth in full herein; provided that the remedy for any breach of this
paragraph shall be limited to the remedies specified in the related
Transaction Document.
(i) Maintenance of Licenses. The Trustee and the Back-up Servicer,
respectively, or any successors thereof, shall maintain all licenses,
permits, charters and registrations which are material to the conduct of
its business.
Section 4.08 Covenants of K & P Finance Corp. I
20
24
(a) Meetings. K & P Finance Corp. I shall have annual meetings of
its shareholders and shall prepare income and franchise tax returns as
appropriate. The Transferor shall deliver to the Insurer copies of the
minutes of such meetings no later than April 30 of each year and such tax
returns promptly upon filing but in no event later than August 31 of each
year, beginning in 1997.
(b) Amendment to Certificate of Incorporation. K & P Finance Corp. I
shall not amend its certificate of incorporation without the Insurer's
prior written consent.
Section 4.09. TRUSTEE, BACK-UP SERVICER, TRANSFEROR, COMPANY AND SERVICER
TO JOIN IN ENFORCEMENT ACTION. To the extent necessary to enforce any right of
the Insurer in or remedy of the Insurer under any Lease Contract, the Trustee,
the Transferor, the Company, the Back-up Servicer and the Servicer agree to join
in any action initiated by the Insurer for the protection of such right or
exercise of such remedy; provided, however, that the Trustee and Back-up
Servicer may decline to join in any action, take any other action or refrain
from taking any action unless offered indemnity reasonably satisfactory to it by
the Insurer.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default:
(a) Any representation or warranty made by the Company, the
Transferor or the Servicer hereunder or under the Transaction Documents,
or in any certificate furnished hereunder or under the Transaction
Documents, shall prove to be untrue or incomplete in any material respect;
(b)(i) The Company or the Transferor shall fail to pay when due any
amount payable by the Company or the Transferor hereunder or (ii) a
legislative body has enacted any law that declares or a court of competent
jurisdiction shall find or rule that any of the Transaction Documents are
not valid and binding on the Company, the Servicer or the Transferor to
which it is a party;
(c) The occurrence and continuance of a "Servicer Event of Default"
under the Servicing Agreement (as defined therein) or of an "Event of
Default" under the Trust and Security Agreement (as defined therein);
(d) Any failure on the part of the Company, the Transferor or the
Servicer duly to observe or perform in any material respect any other of
the covenants or agreements on the part of the Company, the Transferor or
the Servicer contained in this Agreement or in any other Transaction
Document which continues unremedied for a period of 45 days after the date
21
25
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Company, the Transferor or the
Servicer, as the case may be, by the Insurer (with a copy to Trustee) or
by the Trustee (with a copy to the Insurer);
(e) Any material party thereto shall breach any material
representation or warranty or fail to observe any material covenant or
agreement contained in any Transaction Document (except for the
obligations described under paragraph (a) or (c) above), and such failure
shall continue for a period of 45 days after written notice given to the
Company or such other party, provided that, if such failure shall be of a
nature that it cannot be cured within 45 days, such failure shall not
constitute an Event of Default hereunder if within such 45-day period the
Company or such other party shall have given notice to the Insurer of
corrective action it proposes to take, which corrective action is agreed
in writing by the Insurer to be satisfactory and the Company or such other
party shall thereafter pursue such corrective action diligently until such
default is cured;
(f) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law
or the appointment of a conservator or receiver or liquidator or other
similar official in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Company,
the Transferor or the Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 90 consecutive
days;
(g) The Company, the Transferor or the Servicer shall consent to the
appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Company, the
Transferor or the Servicer or of or relating to all or substantially all
of the property of either; or
(h) The Company, the Transferor or the Servicer shall admit in
writing its inability to pay its debts generally as they become due, file
a petition to take advantage of or otherwise voluntarily commence a case
or proceeding under any applicable bankruptcy, insolvency, reorganization
or other similar statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE (a) Upon the occurrence of an
Event of Default, the Insurer may exercise any one or more of the rights and
remedies set forth below against the party in default:
(i) declare all indebtedness of every type or description owed by
such party to the Insurer to be immediately due and payable, and the same
shall thereupon be immediately due and payable;
22
26
(ii) exercise any rights and remedies under any of the Transaction
Documents in accordance with the terms of such Transaction Document or
direct the Trustee to exercise such remedies in accordance with the terms
of the Transaction Documents; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due and
thereafter to become due under any of the Transaction Documents or to
enforce performance and observance of any obligation, agreement or
covenant of the Company, the Transferor or the Servicer under any of the
Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred upon
or reserved to the Insurer is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under any of the Transaction Documents or existing at law or in
equity. No delay or omission to exercise any right or power accruing under any
of the Transaction Documents upon the happening of any event set forth in
Section 5.01 hereof shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Insurer
to exercise any remedy reserved to the Insurer in this Article, it shall not be
necessary to give any notice, other than such notice as may be required in this
Article.
Section 5.03 WAIVERS. (a) No failure by the Insurer to exercise, and no
delay by the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein to
the Insurer are declared in every case to be cumulative and not exclusive of any
remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Insurer and
delivered to the Trustee, the Company and the Servicer. Unless such writing
expressly provides to the contrary, any waiver so granted shall extend only to
the specific event or occurrence which gave rise to the Event of Default so
waived and not to any other similar event or occurrence which occurs subsequent
to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may be
amended, changed, modified, altered or terminated only by written instrument or
written instruments signed by the parties hereto. The Company hereby agrees to
promptly provide a copy of any amendment to this Agreement to the Trustee. The
Company and the Insurer also agree to provide prior written notification to both
Xxxxx'x and S&P of any amendment to this Agreement.
23
27
Section 6.02. NOTICES. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered or
telexed or telecopied to the recipient as follows:
To the Insurers: MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Insured Portfolio
Management - Structured Finance (IPM-SF)
Telecopy No.: (000)000-0000
Confirmation: (000) 000-0000
To the Company: T & W Financial Corporation
0000 Xxxxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
To the Transferor: T & W Funding Company I, L.L.C.
0000 Xxxxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
To the Servicer: T & W Financial Corporation
0000 Xxxxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
To K & P Finance Corp. I K & P Finance Corp. I
0000 Xxxxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxx
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
24
28
To the Back-up Servicer: Norwest Bank Minnesota,
National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust
Services/Asset-Backed
Administration
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
To the Trustee: Norwest Bank Minnesota,
National Association
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust
Services/Asset-Backed
Administration
Telecopy No.: (000)000-0000
Confirmation: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon delivery, except when telexed
or telecopied, in which case, effective upon telex or telecopy against receipt
of answerback or written confirmation.
An affidavit by any Person representing or acting on behalf of any party
hereto, as to such mailing having the registry receipt attached, shall be
conclusive evidence of the mailing of such demand, notice or communication.
Section 6.03. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
the parties hereto agree that such holding shall not invalidate or render
unenforceable any other provision hereof. The parties hereto further agree that
the holding by any court of competent jurisdiction that any remedy pursued by
the Insurer hereunder is unavailable or unenforceable shall not affect in any
way the ability of the Insurer to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. This Agreement shall be construed, and the
obligations, rights and remedies of the parties hereunder shall be determined,
in accordance with the laws of the State of New York.
Section 6.05. CONSENT TO JURISDICTION AND VENUE, ETC. The Company, the
Transferor, the Servicer, the Trustee and the Back-up Servicer each irrevocably
(a) agrees that any suit, action or other legal proceeding arising out of or
relating to this Agreement, the Trust and Security Agreement or any of the other
Transaction Documents may be brought in a court of record in the State of New
York or in the Courts of the United States of America located in such state, (b)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (c) waives any objection which they may have to the laying of
venue of any such suit, action or proceeding in any of such courts and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Company, the Transferor, the Servicer, the Trustee and the Back-up
Servicer each hereby irrevocably appoint CT
25
29
Corporation System, Suite 1301, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as
their agent to receive on behalf of the Company, the Transferor, the Servicer,
the Trustee and the Back-up Servicer, as the case may be, and their respective
properties service of copies of the summons and complaint and other process
which may be served in any such suit, action or proceeding (the "Process
Agent"). Such service may be made by mailing or delivering a copy of such
process to the Company, the Transferor, the Servicer, the Trustee or the Back-up
Servicer, as the case may be, in care of the Process Agent at the Process
Agent's above address, and the Company, the Transferor, the Servicer, the
Trustee and the Back-up Servicer each hereby irrevocably authorize and direct
the Process Agent to accept such service on their behalf. The Insurer agrees to
mail to the Company, the Transferor, the Servicer, the Trustee or the Back-up
Servicer, as the case may be, at its address provided in Section 6.02 hereof a
copy of any summons, complaint or other process mailed or delivered by it to the
Process Agent. As an alternative method of service, the Company, the Transferor,
the Servicer, the Trustee and the Back-up Servicer each also irrevocably consent
to the service of any and all process in any such action or proceeding by
mailing of copies of such process to the Company, the Transferor, the Servicer,
the Trustee or the Back-up Servicer, as the case may be, at its address provided
in Section 6.02 hereof. The Company, the Transferor, the Servicer, the Trustee
and the Back-up Servicer each agree that a final, nonappealable judgment in any
such suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by execution on the judgment or in any other manner provided by
law. All mailings under this Section 6.05 shall be by certified mail, return
receipt requested.
Nothing in this Section 6.05 shall affect the right of the Insurer to
serve legal process in any other manner permitted by law or affect the right of
the Insurer to bring any suit, action or proceeding against the Company, the
Transferor, the Servicer, the Trustee or the Back-up Servicer or their
respective property in the courts of any other jurisdiction
Section 6.06. CONSENT OF INSURER. In the event that the Insurer's consent
is required under the terms hereof or any term of any other Transaction
Document, it is understood and agreed that the determination whether to grant or
withhold such consent shall be made solely by the Insurer in its absolute
discretion. The Insurer hereby agrees that it shall respond to any request for
consent in a timely manner, taking into consideration the business of the
Company, the Transferor and the Servicer, provided that the Insurer has been
provided in full with any information requested by the Insurer and has fully
completed any due diligence that the Insurer has determined, in its sole
discretion, may be necessary in connection with such consent.
Section 6.07. COUNTERPARTS. This Agreement may be executed in counterparts
by the parties hereto, and each such counterpart shall be considered an original
and all such counterparts shall constitute one and the same instrument.
Section 6.08. RECITALS. All of the recitals hereinabove set forth are
incorporated in this Agreement by reference.
Section 6.09. HEADINGS. The headings of sections contained in this
Agreement are provided for convenience only. They form no part of this Agreement
and shall not affect its construction or interpretation. All references to
sections or subsections of this Agreement refer to the corresponding sections or
subsections of this Agreement.
26
30
Section 6. 1 0. PARTIES NOT TO INSTITUTE INSOLVENCY PROCEEDINGS. So long
as this Agreement is in effect, and for one year following its termination, none
of the parties hereto will file any involuntary petition or otherwise institute
any bankruptcy, reorganization, moratorium, insolvency or liquidation proceeding
or other proceeding under any federal or state bankruptcy or similar law against
the Transferor.
Section 6.1 1. TRIAL BY JURY WAIVED. Each party hereto hereby waives, to
the fullest extent permitted by law, any right to a trial by jury in respect of
any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the transactions contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(B) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.
Section 6.12. ENTIRE AGREEMENT. This Agreement and the Certificate
Insurance Policy set forth the entire agreement between the parties with respect
to the subject matter thereof, and this Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
27
31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all
as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By /s/ [SIG]
--------------------------------------
Assistant Secretary
T & W FINANCIAL CORPORATION, as Company
By /s/ XXXXXX X. XXXXX
--------------------------------------
Title President
-----------------------------------
T & W FINANCIAL CORPORATION, as Servicer
By /s/ XXXXXX X. XXXXX
--------------------------------------
Title President
-----------------------------------
T & W FUNDING COMPANY I, L.L.C.,
as Transferor
By /s/ XXXXXXX X. PRICE
--------------------------------------
Title President
-----------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By /s/ XXXXXX X. XXXXXXXX
--------------------------------------
Title Corporate Trust Officer
-----------------------------------
