POOLING AND SERVICING AGREEMENT
among
TRANS LEASING INTERNATIONAL, INC.,
as initial Servicer
TL LEASE FUNDING CORP. IV,
as Seller
and
TLFC IV EQUIPMENT LEASE TRUST 1995-1
Dated as of
October 6, 1995
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . .1
1.2 Other Definitional Provisions . . . . . . . . . . . . 17
ARTICLE II CONVEYANCE OF ASSETS. . . . . . . . . . . . . . . . 18
2.1 Conveyance of the Assets. . . . . . . . . . . . . . . 18
2.2 Marking of Lease Management System. . . . . . . . . . 20
2.3 Acceptance by Issuer. . . . . . . . . . . . . . . . . 20
2.4 Representations and Warranties of the Seller. . . . . 20
2.5 Notice of Breach. . . . . . . . . . . . . . . . . . . 23
2.6 Mandatory Purchase of Leases and Indemnification Upon
Breach of Warranty. . . . . . . . . . . . . . . . . . 23
2.7 Covenants of the Seller . . . . . . . . . . . . . . . 25
2.8 Release of Lien on Equipment. . . . . . . . . . . . . 28
ARTICLE III ADMINISTRATION AND SERVICING OF LEASES. . . . . 29
3.1 Appointment and Acceptance; Duties. . . . . . . . . . 29
3.2 Collection of Payments. . . . . . . . . . . . . . . . 31
3.3 Servicer Advances . . . . . . . . . . . . . . . . . . 32
3.4 Realization Upon Defaulted Leases . . . . . . . . . . 33
3.5 Maintenance of Insurance Policies . . . . . . . . . . 33
3.6 Representations and Warranties of Servicer. . . . . . 34
3.7 Covenants of Servicer . . . . . . . . . . . . . . . . 35
3.8 Servicer Compensation . . . . . . . . . . . . . . . . 37
3.9 Payment of Certain Expenses by Servicer . . . . . . . 37
3.10 Monthly Statement; Annual Report. . . . . . . . . . . 37
3.11 Annual Statement as to Compliance . . . . . . . . . . 38
3.12 Annual Independent Public Accountants'
Servicing Statements. . . . . . . . . . . . . . . . . 38
ARTICLE IV RIGHTS OF HOLDERS; ACCOUNTS; ALLOCATION
AND APPLICATION OF THE TRUST ESTATE . . . . . . . . . 39
4.1 Rights of Holders . . . . . . . . . . . . . . . . . . 39
4.2 Establishment of the Collection Account . . . . . . . 39
4.3 Establishment of Note Distribution Account. . . . . . 39
4.4 Investment of Accounts. . . . . . . . . . . . . . . . 39
4.5 Control; Replacement of Trust Accounts. . . . . . . . 40
4.6 Identification of Accounts. . . . . . . . . . . . . . 40
4.7 Deposit of Collections and Other Amounts. . . . . . . 41
4.8 Payments on Payment Dates . . . . . . . . . . . . . . 41
ARTICLE V OTHER MATTERS RELATING TO THE SELLER. . . . . . . . 43
5.1 Substitution of Leases. . . . . . . . . . . . . . . . 43
5.2 Merger or Consolidation of the Seller; Assumption
of the Seller's Obligations . . . . . . . . . . . . . 45
5.3 Compliance with Certificate of Incorporation. . . . . 46
5.4 Limitation of Liability of Seller and Others. . . . . 46
ARTICLE VI OTHER MATTERS RELATING TO THE SERVICER. . . . . . . 46
6.1 Liability of the Servicer and Others. . . . . . . . . 46
6.2 Indemnification by the Servicer . . . . . . . . . . . 48
6.3 Merger or Consolidation of Servicer;
Assumption of Servicer's Obligations. . . . . . . . . 49
6.4 The Servicer Not to Resign. . . . . . . . . . . . . . 50
ARTICLE VII SERVICER DEFAULTS. . . . . . . . . . . . . . . . 50
7.1 Servicer Defaults . . . . . . . . . . . . . . . . . . 50
7.2 Indenture Trustee to Act; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . . 53
7.3 Notification. . . . . . . . . . . . . . . . . . . . . 54
7.4 Waiver of Past Defaults . . . . . . . . . . . . . . . 54
7.5 Lease Schedule. . . . . . . . . . . . . . . . . . . . 55
ARTICLE VIII TERMINATION. . . . . . . . . . . . . . . . . . . 55
8.1 Termination . . . . . . . . . . . . . . . . . . . . . 55
8.2 Notice of Final Payment . . . . . . . . . . . . . . . 56
8.3 Optional Purchase . . . . . . . . . . . . . . . . . . 56
ARTICLE IX MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . 57
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . 57
9.2 Evidence of Filings . . . . . . . . . . . . . . . . . 59
9.3 Governing Law . . . . . . . . . . . . . . . . . . . . 59
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . 59
9.5 Severability of Provisions. . . . . . . . . . . . . . 62
9.6 Assignment. . . . . . . . . . . . . . . . . . . . . . 62
9.7 Schedules and Exhibits. . . . . . . . . . . . . . . . 62
9.8 No Waiver; Cumulative Remedies. . . . . . . . . . . . 62
9.9 Counterparts. . . . . . . . . . . . . . . . . . . . . 62
9.10 Binding Effect; Third-Party Beneficiaries . . . . . . 63
9.11 Merger and Integration. . . . . . . . . . . . . . . . 63
9.12 Headings. . . . . . . . . . . . . . . . . . . . . . . 63
9.13 Certificates and Opinions of Counsel. . . . . . . . . 63
9.14 Assignment to Indenture Trustee . . . . . . . . . . . 63
9.15 No Petition Covenants . . . . . . . . . . . . . . . . 64
9.16 Limitation of Liability of Indenture Trustee and
Owner Trustee . . . . . . . . . . . . . . . . . . . . 64
9.17 Confidential Information. . . . . . . . . . . . . . . 65
9.18 Available Information . . . . . . . . . . . . . . . . 65
LIST OF EXHIBITS
Exhibit A List of Leases
Exhibit B Form of Monthly Statement
Exhibit C Identification of Accounts
Exhibit D Substitute Lease Transfer Agreement
POOLING AND SERVICING AGREEMENT
THIS POOLING AND SERVICING AGREEMENT, is made and
entered into as of October 6, 1995 (this "Agreement"), among
Trans Leasing International, Inc., a Delaware corporation ("Trans
Leasing"), as Servicer, TL Lease Funding Corp. IV, a Delaware
corporation (the "Seller"), and the TLFC IV Equipment Lease Trust
1995-1, a Delaware business trust (the "Issuer" or the "Trust").
Other capitalized terms used in this Agreement are defined in
Section 1.1.
Trans Leasing in the ordinary course of its business
originates equipment leases in the United States;
Pursuant to the Contribution and Sale Agreement,
Trans Leasing has sold and contributed the Leases and interests
in the related Equipment, to the Seller upon the terms and
conditions set forth therein;
Pursuant to this Agreement, the Seller will sell and
convey to the Issuer the Leases and the interests in the related
Equipment it received pursuant to the Contribution and Sale
Agreement and certain of its rights under the Contribution and
Sale Agreement;
The Issuer will pledge its rights in the Leases,
related Equipment and other property received from the Seller to
the Indenture Trustee to secure payments due under the Notes; and
Trans Leasing intends to continue administering and
servicing the Leases and the related Equipment in its capacity as
Servicer pursuant to this Agreement.
In consideration of the mutual agreements contained
in this Agreement, each party agrees as follows for the benefit
of the other Parties and the Holders.
ARTICLE I
DEFINITIONS
1.1 Definitions. Whenever used in this
Agreement, the following words and phrases have the following
respective meanings:
"Administrator" means, Trans Leasing, as
Administrator under the Administration Agreement dated as of the
date hereof among Trans Leasing, as Administrator, and the Trust.
"Affiliate" means, with respect to any Person, each
Person that controls, is controlled by or is under common control
with such Person or any Affiliate of such Person; provided,
however, that in no event shall the Trust be deemed to be an
Affiliate of the Seller for purposes of this Agreement. For the
purpose of this definition, "control" of a Person shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or
otherwise.
"Aggregate Discounted Lease Balance" means at any
time of determination, an amount equal to the sum of the
Discounted Lease Balances of the Leases.
"Aggregate Discounted Lease and Residual Balance"
means at any time of determination, an amount equal to the sum of
the Discounted Lease and Residual Balances of the Leases.
"Available Amount" means, for any Payment Date, all
amounts on deposit in the Collection Account on such Payment Date
representing (i) Collections received during the related
Collection Period, (ii) Investment Earnings on the Trust Accounts
and (iii) Servicer Advances.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in Chicago,
Illinois, or New York, New York, are authorized or obligated by
any law or regulation to be closed.
"Casualty Loss" means, with respect to any item of
Equipment, the loss, theft, damage beyond repair or governmental
condemnation or seizure of such item of Equipment.
"Casualty Payment" means any payment under a Lease in
connection with a Casualty Loss.
"Certificateholders" means the holders of the Trust
Certificate.
"Class A Interest Arrearage" means, for any Payment
Date, any Class A Interest Payments or portions thereof that were
due on preceding Payment Dates, but remain unpaid as of such
Payment Date.
"Class A Interest Payment Amount" means (i) for the
initial Payment Date, the product of (a) one-twelfth of the Class
A Interest Rate and (b) the Initial Class A Principal Balance and
(ii) for any subsequent Payment Date, (a) the product of one-twelfth
of the Class A Interest Rate and (b) the Outstanding
Class A Principal Balance as of the related Determination Date.
"Class A Interest Rate" means 6.40% per annum.
"Class A Notes" means the Class A 6.40% Lease Backed
Notes in the aggregate principal amount of $89,658,869 issued by
the Issuer pursuant to the Indenture.
"Class A Percentage" means 89.25%.
"Class A Principal Arrearage" means, for any Payment
Date, any Class A Principal Payment Amounts or portions thereof
that were due on preceding Payment Dates, but remain unpaid as of
such Payment Date.
"Class A Principal Payment Amount" means, for any
Payment Date, the sum of (i) the product of (A) the Class A
Percentage and (B) the excess of (1) the Aggregate Discounted
Lease Balance of all Leases as of the last day of the Collection
Period immediately preceding the Collection Period to which such
Payment Date relates (or, in the case of the initial Payment
Date, as of the Cut-Off Date) over (2) the Aggregate Discounted
Lease Balance of all Leases as of the last day of the Collection
Period to which such Payment Date relates (in each case,
calculated after giving effect to all Leases that became
Defaulted Leases or Early Termination Leases or were the subject
of a Warranty Event during such related Collection Period and all
substitutions of Substitute Leases therefor) and (ii) the Class A
Principal Arrearage for such Payment Date; provided, that on the
Stated Final Maturity Date, on the Redemption Date and on each
Payment Date from and after the date on which the Indenture
Trustee or the Holders of the Notes shall have declared the Notes
to be immediately due and payable following the occurrence of an
Event of Default pursuant to the Indenture (unless such
declaration has been rescinded and annulled), the Class A
Principal Payment Amount shall equal the Outstanding Class A
Principal Balance; and provided further, that the Class A
Principal Payment Amount shall never exceed the Outstanding Class
A Principal Balance.
"Class B Interest Arrearage" means, for any Payment
Date, any Class B Interest Payment Amounts or portions thereof
that were due on preceding Payment Dates, but remain unpaid as of
such Payment Date.
"Class B Interest Payment Amount" means (i) for the
initial Payment Date, the product of (a) one-twelfth of the Class
B Interest Rate and (b) the Initial Class B Principal Balance and
(ii) for any subsequent Payment Date, the product of (a) one-twelfth
of the Class B Interest Rate and (b) the Outstanding
Class B Principal Balance as of the related Determination Date.
"Class B Interest Rate" means 7.55% per annum.
"Class B Notes" means the Class B 7.55% Lease Backed
Notes in the aggregate principal amount of $10,802,273 issued by
the Issuer pursuant to the Indenture.
"Class B Percentage" means 10.75%.
"Class B Principal Arrearage" means, for any Payment
Date, any Class B Principal Payment Amounts or portions thereof
that were due on preceding Payment Dates, but remain unpaid as of
such Payment Date.
"Class B Principal Payment Amount" means, for any
Payment Date, the sum of (i) the product of (A) the Class B
Percentage and (B) the excess of (1) the Aggregate Discounted
Lease Balance of all Leases as of the last day of the Collection
Period immediately preceding the Collection Period to which such
Payment Date relates (or, in the case of the initial Payment
Date, as of the Cut-Off Date) over (2) the Aggregate Discounted
Lease Balance of all Leases as of the last day of the Collection
Period to which such Payment Date relates (in each case,
calculated after giving effect to all Leases that became
Defaulted Leases or Early Termination Leases or were the subject
of a Warranty Event during such related Collection Period and all
substitutions of Substitute Leases therefor) and (ii) the Class B
Principal Arrearage for such Payment Date; provided, that, on the
Stated Final Maturity Date, on the Redemption Date and on each
Payment Date from and after the date on which the Indenture
Trustee or the Holders of the Notes shall have declared the Notes
to be immediately due and payable following the occurrence of an
Event of Default pursuant to the Indenture (unless such
declaration has been rescinded and annulled), the Class B
Principal Payment Amount shall equal the Outstanding Class B
Principal Balance; and provided, further, that the Class B
Principal Payment Amount shall never exceed the Outstanding Class
B Principal Balance.
"Closing Date" means October 6, 1995.
"Collection Account" means the collection account
established pursuant to Section 4.2.
"Collection Period" means, with respect to any
Payment Date, the immediately preceding calendar month.
"Collections" means all payments received on or with
respect to the Leases or the related Equipment, including,
without limitation, Scheduled Lease Payments, Liquidation
Proceeds, Warranty Purchase Prices, Insurance Proceeds, Early
Termination Lease Proceeds and Expired Lease Proceeds, all as
related to amounts attributable to the Equipment and the Leases,
but excluding any Excluded Amounts.
"Contribution and Sale Agreement" means the Amended
and Restated Contribution and Sale Agreement dated as of the date
hereof between the Originator and the Seller, together with all
amendments, restatements, supplements and modifications thereof
or thereto.
"Corporate Office" means, at any time, the office of
the Indenture Trustee from which its corporate trust business is
principally administered, which office at the date of this
Agreement is located at Xxx X&X Xxxxx, Xxxxxxx, Xxx Xxxx 00000.
"Credit Agreement" means the Revolving Credit and
Term Loan and Security Agreement between Seller and First Union
Nation Bank of North Carolina, dated as of April 18, 1995, as
amended, together with all amendments, restatements, supplements
and modifications thereof or thereto.
"Cut-Off Date" means, with respect to each Original
Lease, August 31, 1995, and with respect to each Substitute
Lease, the related Substitution Cut-Off Date.
"Defaulted Lease" means a Lease as to which (i) the
Servicer has determined in its sole discretion, in accordance
with its customary servicing procedures, that such Lease is not
collectible, or (ii) all or part of a Scheduled Lease Payment
thereunder (other than a Skipped Payment) is more than 180 days
delinquent.
"Determination Date" means, with respect to a
Collection Period and the related Payment Date, the close of
business on the last Business Day of such Collection Period.
"Discount Rate" means 7.524% per annum.
"Discounted Lease and Residual Balance" means, with
respect to any Lease, at any time of determination, the sum of
(i) the Discounted Lease Balance plus (ii) the Equipment Residual
Value for the related Equipment; provided, however, that the
Discounted Lease and Residual Balance of any Defaulted Lease,
Early Termination Lease or Expired Lease or Lease purchased by
the Originator shall be equal to zero.
"Discounted Lease Balance" means, with respect to any
Lease, at any time of determination, the sum of (i) the present
value of all of the remaining Scheduled Lease Payments becoming
due under such Lease after such date of determination and unpaid
as of such date of determination, discounted monthly at the
Discount Rate in the manner described below and (ii) the
aggregate amount of all Scheduled Lease Payments (due after the
Cut-Off Date) then due and payable under such Lease which have
not been received by the Servicer; provided, however, that the
Discounted Lease Balance of any Defaulted Lease, Early
Termination Lease or Expired Lease or Lease purchased by the
Originator shall be equal to zero.
In connection with all calculations required to be
made pursuant to this Agreement with respect to the determination
of Discounted Lease Balances, for any date of determination the
"Discounted Lease Balance" for each Lease shall be calculated
assuming:
(i) all payments due in any Collection Period
are due on the last day of such Collection
Period;
(ii) payments are discounted on a monthly basis
using a 30 day month and a 360 day year;
(iii) payments are discounted to the last day of
the Collection Period in which the date of
determination falls.
"Early Termination Lease" means any Lease that has
terminated prior to its scheduled expiration date (including
because of a Casualty Loss), other than a Defaulted Lease.
"Early Termination Lease Proceeds" means any and all
cash proceeds or rents realized from the sale or re-lease of
Equipment under an Early Termination Lease (net of Liquidation
Expenses).
"Eligible Deposit Account" means either (i) a
segregated account with an Eligible Institution or (ii) a
segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United
States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank),
having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of
such depository institution have a credit rating from the Rating
Agency in a rating category which signifies investment grade or
is otherwise acceptable to the Rating Agency.
"Eligible Institution" means either (a) the corporate
trust department of the Indenture Trustee or the Owner Trustee or
(b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank),
which (iA) has either (1)(A) a long-term unsecured debt rating
acceptable to the Rating Agency or (2) a short-term unsecured
debt rating or certificate of deposit rating acceptable to the
Rating Agency, (B) the parent corporation of which has either (1)
a long-term unsecured debt rating acceptable to the Rating Agency
or (2) a short-term unsecured debt rating or certificate of
deposit rating acceptable to the Rating Agency or (C) is
otherwise acceptable to the Rating Agency and (ii) whose deposits
are insured by the FDIC.
"Eligible Investments" means any of the following, in
each case as determined at the time of the investment or
contractual commitment to invest therein:
(a) investments in commercial paper maturing in
270 days or less from the date of issuance which is accorded the
highest rating by the Rating Agency;
(b) investments in direct obligations of the
United States of America, or any agency thereof, or obligations
guaranteed by the full faith and credit of the United States of
America, provided that all such obligations mature in twelve
months or less from the date of acquisition thereof;
(c) investments in certificates of deposit
maturing within one year from the date of origin, rated A-1+ (or
a comparable rating) by the Rating Agency, issued by a bank or
trust company organized under the laws of the United States or
any state thereof, having capital, surplus and undivided profits
aggregating at least $100,000,000;
(d) investments in debt obligations of
corporations organized and existing under the laws of the United
States, any state or the District of Columbia maturing in 12
months or less from the date of acquisition thereof, and rated
AAA (or a comparable rating) by the Rating Agency; and
(e) any other investment with respect to which
the Rating Agency Condition has been satisfied which, as a result
of the ownership thereof, would not cause the Trust to register
as an "investment company" under the Investment Company Act of
1940, as amended.
"Equipment" means the assets leased to a Lessee
pursuant to a Lease and/or, unless the context otherwise
requires, a security interest in such assets.
"Equipment Residual Value" means the anticipated
residual value of the Equipment related to a Lease upon the
expiration of such Lease in accordance with its terms (as such
residual value is estimated by Trans Leasing on or about the date
on which such Lease was created in accordance with its normal
valuation procedures), but not in excess of any purchase option
price with respect thereto.
"Excluded Amounts" means any payments received from a
Lessee in connection with any Late Fees, any taxes, fees or other
charges imposed by any Governmental Authority, any insurance
premiums or fees, any indemnity payments made by a Lessee for the
benefit of the Lessor under the related Lease or any payments
collected from a Lessee relating to servicing and/or maintenance
payments pursuant to the related Lease or maintenance agreement,
as applicable.
"Expired Lease" means any Lease that has terminated
on its scheduled expiration date.
"Expired Lease Proceeds" means any and all cash
proceeds or rents realized from the sale or re-lease of Equipment
under an Expired Lease (net of Liquidation Expenses) and, with
respect to a Lease for a motor vehicle, payments received from
the Lessee as a result of excessive wear and tear on or damage to
such motor vehicle or driving such motor vehicle in excess of the
maximum mileage set forth in such Lease.
"FDIC" means the Federal Deposit Insurance
Corporation, or its successors and assigns.
"Filing Locations" means the states of Alabama,
Arizona, California, Delaware, Florida, Georgia, Illinois,
Indiana, Maryland, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, Texas and Virginia.
"Governmental Authority" means (a) any federal,
state, county, municipal or foreign government, or political
subdivision thereof, (b) any governmental or quasi-governmental
agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative
tribunal or (d) with respect to any Person, any arbitration
tribunal or other non-governmental authority to the jurisdiction
of which such Person has consented.
"Holder" means, with respect to any Note, the Person
in whose name a Note is registered on the Note Register and, with
respect to the Trust Certificate, the Certificateholders.
"Indenture" means that certain Indenture, dated as of
the date hereof, among the Issuer and the Indenture Trustee,
together with all amendments, restatements, supplements and
modifications thereof or thereto.
"Indenture Trustee" means initially, Manufacturers
and Traders Trust Company or its successor in interest, and
thereafter any successor indenture trustee appointed pursuant to
the Indenture, in each case in its capacity as the Indenture
Trustee pursuant to the Indenture.
"Indenture Trust Estate" has the meaning set forth in
the Indenture.
"Initial Class A Principal Balance" means
$89,658,869.
"Initial Class B Principal Balance" means
$10,802,273.
"Insurance Policy" means, with respect to any Lease,
an insurance policy covering physical damage to or loss of the
related Equipment.
"Insurance Proceeds" means, depending on the context,
any amounts payable or any payments made, to the Servicer under
any Insurance Policy.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended from time to time, and any successor
thereto, in each case including all regulations promulgated
thereunder.
"Investment Earnings" means with respect to any Trust
Account, the investment earnings net of losses and investment
expenses on such Trust Account.
"Late Fees" means any amounts assessed by the
Originator and paid by a Lessee in excess of the Scheduled Lease
Payment due to the delinquency of a Lease payment.
"Lease" means each agreement, including, as
applicable, schedules, subschedules, supplements and amendments
to a master lease, pursuant to which Trans Leasing, as lessor,
leases specified assets to a Lessee at a specified monthly or
quarterly rental, and which is identified in the List of Leases,
including all Original Leases and Substitute Leases; provided,
that, from and after the date on which a Lease is purchased by
Trans Leasing pursuant to Section 3.03 of the Contribution and
Sale Agreement or a Lease is replaced with a Substitute Lease
pursuant to Section 5.1 hereof, such Lease will no longer be a
Lease for purposes of this Agreement.
"Lease File" means, with respect to each Lease, the
Lease and all other documents relating to such Lease held by the
Servicer pursuant to this Agreement.
"Lease Management System" means the computerized
electronic lease management system maintained by the Originator
for all Leases and other agreements similar to the Leases.
"Lease Number" means, with respect to each Lease, the
identifying number assigned to such Lease by the Originator.
"Lessee" means, with respect to any Lease, the Person
or Persons obligated to make payments with respect to such Lease,
including any guarantor thereof.
"Lien" means any mortgage, pledge, hypothecation,
assignment for security, security interest, encumbrance, xxxx,
xxxx or charge of any kind, whether voluntarily incurred or
arising by operation of law or otherwise, affecting any Property,
including any agreement to grant any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature of a security interest, and the filing of or agreement
to file or deliver any financing statement (other than a
precautionary financing statement with respect to a lease that is
not in the nature of a security interest and, until five (5)
Business Days after the Closing Date, financing statements filed
in connection with the Credit Agreement (as defined in the
Contribution and Sale Agreement), other than those filed in
Delaware, Illinois and New York) under the UCC or comparable law
of any jurisdiction.
"Liquidation Expenses" means, with respect to any
Lease, the aggregate amount of all out-of-pocket expenses
incurred by the Servicer (including any subservicer) in
accordance with the Servicer's customary procedures in connection
with the repossession, refurbishing and disposition of any
related Equipment upon or after the expiration or other
termination of such Lease and other out-of-pocket costs related
to the liquidation of any such Equipment, including the attempted
collection of any amount owing pursuant to such Lease if it is a
Defaulted Lease.
"Liquidation Proceeds" means, with respect to a
Defaulted Lease, proceeds from the sale or other disposition of
the Equipment, proceeds of the related Insurance Policy and any
other recoveries with respect to such Defaulted Lease and the
related Equipment, net of Liquidation Expenses and amounts so
received that are required to be refunded to the Lessee on such
Lease.
"List of Leases" means a list, prepared as of the
Cut-Off Date, of the Original Leases delivered to the Issuer by
the Seller and certified by a Responsible Officer of the Seller
which includes a true and complete list as of the Cut-Off Date,
of all Leases identified by Lease Number, original Equipment
cost, Discounted Lease Balance and Discounted Lease and Residual
Balance as of the Cut-Off Date, effective date and the original
Lease term, in the form attached hereto as Exhibit A, and which
shall have attached to it a list (in printed, microfiche or
computer tape form) showing the Scheduled Lease Payments for each
Original Lease as of the Cut-Off Date. The List of Leases shall
be deemed supplemented and amended to incorporate therein the
amendments delivered in connection with the Substitute Leases
pursuant to Section 5.1 hereof and the deletion of Leases that
are repurchased by Trans Leasing pursuant to Section 3.03 of the
Contribution and Sale Agreement or replaced with a Substitute
Lease pursuant to Section 5.1 hereof or with respect to which all
Liquidation Proceeds or other proceeds from the disposition of
the related Equipment upon expiration or termination thereof have
been deposited in the Collection Account.
"Minimum Required Subordination Amount" means
$4,590,968.
"Monthly Statement" has the meaning set forth in
Section 3.10(a).
"Moody's" means Xxxxx'x Investor Service, Inc. and
its successors and assigns.
"Note" means a Class A Note or a Class B Note;
"Notes" means the Class A Notes and the Class B Notes.
"Note Distribution Account" means the note
distribution account established pursuant to Section 4.3.
"Noteholder" means the Holder of any Note.
"Officer's Certificate" of any Person means a
certificate signed by any Responsible Officer of such Person.
"Opinion of Counsel" means a written opinion of legal
counsel (other than in-house legal counsel), who may be counsel
to Trans Leasing.
"Original Lease" means a Lease that is included in
the Trust Estate on the Closing Date.
"Originator" means Trans Leasing, in its capacity as
the transferor of Leases, Equipment and other assets pursuant to
the Contribution and Sale Agreement.
"Outstanding Class A Principal Balance" means, at any
time, an amount equal to the Initial Class A Principal Balance,
reduced by the aggregate of all amounts with respect to Class A
Principal Payment Amounts or otherwise with respect to principal
on the Class A Notes deposited in the Note Distribution Account
for payment to Holders of Class A Notes prior to such time.
"Outstanding Class B Principal Balance" means, at any
time, an amount equal to the Initial Class B Principal Balance,
reduced by the aggregate of all amounts with respect to Class B
Principal Payment Amounts or otherwise with respect to principal
on the Class B Notes deposited in the Note Distribution Account
for payment to Holders of Class B Notes prior to such time.
"Owner Trustee" has the meaning given to such term in
the Trust Agreement.
"Parties" means the signatories hereto.
"Payment Date" means the fifteenth day of each
calendar month (or, if such fifteenth day is not a Business Day,
the next succeeding Business Day), commencing with October 16,
1995.
"Permitted Liens" means:
(a) Liens granted in favor of the Indenture
Trustee under the Indenture;
(b) Lien constituting the rights of Lessees under
the Leases; and
(c) Liens relating to municipal or other local
taxes and other governmental charges if such taxes or
governmental charges are not at the time due and payable or if
the Issuer or the Servicer is then contesting the validity of any
such taxes or charges in good faith by appropriate proceedings
and there has been set aside on the appropriate entity's books
any reserve which is required under generally accepted accounting
principles with respect to such taxes or charges.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or
Governmental Authority.
"Proceeds" means proceeds, as that term is defined in
the UCC.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, whether tangible or
intangible.
"Purchase Option" has the meaning set forth in
Section 8.3(a).
"Rating Agency" means S&P or such other nationally
recognized statistical rating organization or other comparable
Person requested by the Seller to rate the Notes that are then
rating the Notes, notice of any such request shall be given by
the Seller to the Indenture Trustee, the Owner Trustee and the
Servicer. Any reference herein to a specific rating of S&P shall
apply to (i) if S&P (or its successor) alters its rating system,
the rating designated as the equivalent thereof by S&P (or such
successor) or (ii) if S&P is no longer the Rating Agency, the
equivalent rating of the Person who is then the Rating Agency.
"Rating Agency Condition" means, with respect to any
action and so long as the Class A Notes are outstanding, that the
Rating Agency (if then rating the Class A Notes) has been given
notice of such action and has notified the Servicer and the
Issuer that such action will not result in a reduction or
withdrawal of its then current rating of the Class A Notes, and,
with respect to any action and so long as the Class B Notes are
outstanding, that the Rating Agency (if then rating the Class B
Notes) has been given notice of such action and has notified the
Servicer and the Issuer that such action will not result in a
reduction or withdrawal of its then current rating of the Class B
Notes.
"Receivable" means a Lease together with an interest
in the related Equipment.
"Record Date" means, for any Payment Date, the last
day of the immediately preceding calendar month.
"Redemption Date" has the meaning given to such term
in the Indenture.
"Repurchased Lease" means, at any time, any Lease
which has been purchased by Trans Leasing pursuant to the
Contribution and Sale Agreement or by the Seller pursuant to this
Agreement, in either case, as a result of a Warranty Event.
"Responsible Officer" of any Person means any of the
President, Executive Vice President, Vice President, Assistant
Vice President, Chief Financial Officer, Treasurer, Corporate
Controller or Trust Officer of such Person.
"Restricting Event" shall be deemed to exist on any
Payment Date on which any of the following conditions has
occurred and is continuing: (i) a Servicer Default exists
hereunder, (ii) the average of the sum of the Discounted Lease
Balances of Leases that are more than 90 days delinquent as of
the six (6) preceding Determination Dates exceeds two percent
(2%) of the average of the Aggregate Discounted Lease Balances as
of such six (6) preceding Determination Dates, as reflected on
the most recent Monthly Statement, or (iii) two (2) times the sum
of the Discounted Lease Balances of Leases that became Defaulted
Leases in the six (6) preceding Collection Periods exceeds five
percent (5%) of the average of the Aggregate Discounted Lease
Balances as of the Determination Dates related to such six (6)
preceding Collection Periods, as reflected on the most recent
Monthly Statement.
"S&P" means Standard & Poor's Ratings Services, a
division of McGraw Hill, Inc., and its successors and assigns.
"Scheduled Lease Payment" means, with respect to any
Lease, the monthly or quarterly rent payment to be made by the
related Lessee under the terms of such Lease after the related
Cut-Off Date (it being understood that Scheduled Lease Payments
do not include any Excluded Amounts).
"SEC" means the Securities and Exchange Commission or
any successor thereto.
"Servicer" means initially Trans Leasing and
thereafter any Person appointed as a Successor Servicer pursuant
to this Agreement, in each case, in such Person's capacity as the
Servicer pursuant to this Agreement.
"Servicer Advance" means an advance of Scheduled
Lease Payments made by the Servicer pursuant to Section 3.3.
"Servicer Default" has the meaning set forth in Sec-
tion 7.1(a).
"Servicer's Account" shall mean the account specified
in Exhibit C hereto, or such other account as may be specified
from time to time by the Servicer in writing.
"Servicing Fee" means, for any Payment Date, an
amount equal to the product of (a) one-twelfth of the Servicing
Fee Rate and (b) the Aggregate Discounted Lease Balance on the
first day of the related Collection Period or, in the case of the
October 1995 Payment Date, the Cut-Off Date.
"Servicing Fee Arrearage" means, for any Payment
Date, any Servicing Fee for a prior Payment Date remaining unpaid
as of such Payment Date.
"Servicing Fee Rate" means 1.0% per annum.
"Skipped Payment" has the meaning set forth in
Section 3.2(a).
"Specified Portfolio Characteristics" means the
criteria set forth in the specified Portfolio Characteristics
Schedule attached to the Contribution and Sale Agreement.
"Stated Final Maturity Date" means the Payment Date
in September 2001.
"Subordination Amount" means, for any Payment Date,
(A) the Aggregate Discounted Lease Balance as of the related
Determination Date plus (B) the Available Amount for such Payment
Date minus (C) the Outstanding Class A Principal Balance on such
Payment Date (all calculated after giving effect to all payments
and transfers made or to be made on such Payment Date pursuant to
clauses (a) through (i) of Section 4.8 hereof (but without giving
effect to the provisos in such clause (i)).
"Substitute Lease" means a Lease that is added to the
Trust Estate pursuant to Section 5.1(a).
"Substitute Lease Transfer Agreement" means an
Assignment for Substitute Leases and related Equipment in the
form of Exhibit D to this Agreement pursuant to which Substitute
Leases are transferred to the Issuer by the Seller.
"Substitution Cut-Off Date" means, with respect to a
Substitute Lease, the close of business on the last day of the
month preceding the related Substitution Date.
"Substitution Date" means the date on which a
Substitute Lease is added to the Trust Estate pursuant to Section
5.1 hereof.
"Successor Servicer" means any Person appointed as a
successor to the Servicer pursuant to Section 6.4 or 7.2.
"Tax" means, with respect to any Person, each tax,
assessment or other governmental charge or levy imposed upon such
Person, its income, or any of its properties, franchises or
assets.
"Taxing Authority" means any Governmental Entity
which imposes or collects any Tax.
"Termination Date" means the earliest to occur of
(a) the September 2001 Payment Date, (b) the day after the date
on which the Outstanding Class A Principal Balance and the
Outstanding Class B Principal Balance are first reduced to zero
and (c) the Payment Date related to the first Collection Period
in which all Leases are expired or all Leases and Equipment have
otherwise been liquidated (including as described in Section 9.2
of the Trust Agreement).
"Termination Notice" has the meaning set forth in
Section 7.1(b).
"Transaction Year" means the twelve-month period
ending on June 30 of each year; provided that the initial
Transaction Year will be the period commencing on the Closing
Date and ending on June 30, 1996.
"Trust Accounts" means the Collection Account and the
Note Distribution Account.
"Trust Agreement" means that certain Trust Agreement,
dated as of the date hereof, between the Seller and the Owner
Trustee together with all amendments, restatements, supplements
and modifications thereof or thereto.
"Trust Certificate" means the Trust Certificate (as
defined in the Trust Agreement).
"Trust Estate" means the property transferred by the
Seller to the Issuer pursuant to Section 2.1(a) and any other
property acquired by the Issuer from time to time.
"UCC" means the Uniform Commercial Code, as amended
from time to time, as in effect in the relevant jurisdiction.
"Underwriting Agreement" means that certain
Underwriting Agreement, dated as of September 27, 1995, among the
Seller, Trans Leasing, First Union Capital Markets Corp. and
Prudential Securities Incorporated.
"Unreimbursed Servicer Advances" means, at any time,
the amount of all previous Servicer Advances (or portions
thereof) as to which the Servicer has not been reimbursed as of
such time pursuant to Section 4.7(c) or 4.8 and which the
Servicer has determined in its sole discretion will not be
recoverable from Scheduled Lease Payments with respect to the
related Leases.
"Warranty Event" means, with respect to any Lease,
that either (a) the Originator is obligated to repurchase such
Lease pursuant to the Contribution and Sale Agreement or (b) the
Seller is obligated to repurchase such Lease pursuant to this
Agreement.
"Warranty Purchase Price" means, with respect to a
Lease and date of determination, an amount equal to the
Discounted Lease and Residual Balance as of the preceding
Determination Date, plus one month's interest thereon at the
Discount Rate, but in no event greater than the Discounted Lease
and Residual Balance of such Lease as of the Cut-Off Date or the
Substitution Cut-Off Date, as applicable.
1.2 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term
defined in this Agreement will have the meaning assigned to such
term in this Agreement when used in any certificate or other
document made or delivered pursuant to this Agreement, unless
such term is otherwise defined therein.
(b) Accounting Terms. As used in this Agreement,
accounting terms which are not defined in Section 1.1 have the
respective meanings given to them under generally accepted
accounting principles, as in effect on the date of this
Agreement. To the extent that the definitions of accounting
terms in this Agreement are inconsistent with the meanings of
such terms under generally accepted accounting principles, the
definitions contained in this Agreement will control.
(c) "Hereof," etc. The words "hereof," "herein"
and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, Schedule and
Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement, unless
otherwise specified.
(d) Reference to Payment Date. With respect to
any Payment Date, the "related Determination Date," the "related
Record Date," and the "related Collection Period," will mean the
Determination Date, Record Date, and Collection Period,
respectively, immediately preceding such Payment Date, and the
relationships among Determination Dates, Record Dates, and
Collection Periods will be correlative to the foregoing
relationships.
(e) Number and Gender. Each defined term used in
this Agreement has a comparable meaning when used in its plural
or singular form. Each gender-specific term used in this
Agreement has a comparable meaning whether used in a masculine,
feminine or gender-neutral form.
(f) Including. Whenever the term "including"
(whether or not that term is followed by the phrase "but not
limited to" or "without limitation" or words of similar effect)
is used in this Agreement in connection with a listing of items
within a particular classification, that listing will be
interpreted to be illustrative only and will not be interpreted
as a limitation on, or exclusive listing of, the items within
that classification.
(g) "Receipt" of Funds. For purposes of this
Agreement, funds constituting Collections will be deemed to be
"received" by the Servicer when such funds have been deposited in
a lock-box account maintained by the Servicer or on its behalf
(or, if earlier, when such funds come into the Servicer's actual
possession).
ARTICLE II
CONVEYANCE OF ASSETS
2.1 Conveyance of the Assets.
(a) Conveyance. In consideration of the Issuer's
delivery of the Notes and the Trust Certificate to, or upon the
order of the Seller, the Seller does hereby enter into this
Agreement and agree to fulfill all of its obligations hereunder
and hereby sells, transfers, assigns and otherwise conveys to the
Issuer, without recourse, all right, title and interest of the
Seller in, to and under, the following property, whether now
existing or hereafter arising:
(i) the Leases and all monies due or to become
due thereunder after the related Cut-Off Date and all
Collections;
(ii) its interests in the related Equipment (other
than any licensed products that may accompany any of the
Equipment);
(iii)the related Lease Files;
(iv) the Contribution and Sale Agreement,
including, but not limited to the obligation of Trans
Leasing to repurchase Leases under certain circumstances as
specified therein but excluding the rights of
indemnification from Trans Leasing to Seller under Section
3.04 thereof and rights of the Seller to purchase additional
Receivables thereunder;
(v) the Insurance Policies and any Insurance
Proceeds related to the Leases; and
(vi) all income or proceeds of the foregoing or
relating thereto.
The foregoing sale, transfer, assignment and
conveyance does not constitute, and is not intended to result in,
an assumption by the Issuer, the Owner Trustee, the Indenture
Trustee or any Holder of any obligation of the Originator, the
Seller or any other Person in connection with the Leases or under
any agreement or instrument relating to the Leases.
It is the intention of the Seller and the Issuer that
the transfer and assignment contemplated by this Agreement shall
constitute a sale of the Leases and its interests in the related
Equipment from the Seller to the Issuer (except and to the extent
where applicable law in any jurisdiction requires title to be
vested in a trustee, in which case, to the Owner Trustee) and the
beneficial interest in and title to the Leases and the related
Equipment shall not be a part of the Seller's estate in the event
of the filing of a bankruptcy petition by or against the Seller
under any bankruptcy law. Notwithstanding the foregoing, in the
event a court of competent jurisdiction determines that the
transfer and assignment contemplated by this Agreement did not
constitute such a sale or that such beneficial interest is a part
of the Seller's estate, then the Seller shall be deemed to have
granted to the Issuer a first priority perfected security
interest in all of the Seller's right, title and interest in, to
and under the Leases and its interests in the related Equipment,
and the Seller hereby grants such security interest. For
purposes of such grant, this Agreement shall constitute a
security agreement under the UCC.
(b) Recording and Filings. In connection with
the transfer of the Trust Estate to the Issuer, the Servicer
agrees to record and file, on behalf of the Seller and at the
Servicer's expense, financing statements and continuation
statements with respect to the Trust Estate meeting the
requirements of the UCC in such manner and in such jurisdictions
as are necessary to perfect and maintain the perfection of the
transfer of the Trust Estate to the Issuer. Notwithstanding the
foregoing, the Parties acknowledge and agree that (i) financing
statements will not be recorded or filed with respect to the
Equipment other than in the Filing Locations, (ii) the Lease
Files will not be physically delivered to the Owner Trustee or
the Indenture Trustee but instead will be held by the Servicer as
custodian for the Owner Trustee or the Indenture Trustee in
accordance with the provisions hereof, (iii) the financing
statements to be filed in the Filing Locations other than the
States of Delaware, Illinois and New York will not be filed until
after the Closing Date (and the Servicer, on behalf of the Seller
and at the Servicer's expense) agrees to make such filings within
5 Business Days after the Closing Date), and (iv) Trans Leasing
will not be required to cause the certificate of title or other
title document to any Equipment consisting of motor vehicles to
be transferred to the Seller or transferred from the Seller to
the Owner Trust pursuant to this Agreement or the security
interest of the Indenture Trustee granted pursuant to the
Indenture marked on such certificate of title or other title
document.
2.2 Marking of Lease Management System. The
Servicer will xxxx the Lease Management System, on behalf of the
Seller at the Servicer's expense, on or prior to the Closing Date
in a manner which indicates that the Leases and related Equipment
have been transferred to the Issuer and pledged to the Indenture
Trustee for the benefit of the Holders.
2.3 Acceptance by Issuer. The Owner Trustee on
behalf of the Issuer does hereby accept all consideration
conveyed by the Seller pursuant to Section 2.1(a) and declares
that the Issuer shall hold such consideration upon the trust set
forth in the Trust Agreement for the benefit of the
Certificateholders, subject to the terms and conditions of the
Indenture and this Agreement.
2.4 Representations and Warranties of the Seller.
The Seller hereby makes the following representations and
warranties which, unless otherwise indicated, speak as of the
Closing Date.
(a) Representations and Warranties with respect
to the Assets. As to the Assets:
(i) no Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person (except
pursuant to the Credit Agreement), and immediately prior to
the sale and assignment of such Receivable to the Issuer
hereunder, the Seller is the sole owner of, and holder of
title to, the Leases and the Equipment (or a security
interest therein) free and clear of any Liens (except for
Permitted Liens, and immediately following the transfer by
the Seller to the Issuer of the Receivables, the Receivables
will be free and clear of all Liens (except for Permitted
Liens); and
(ii) except as described in the provisos contained
in Section 2.1(b), all filings necessary to evidence the
sale and assignment of the Receivables to the Issuer
hereunder have been made in all appropriate jurisdictions.
(b) Representations and Warranties as to the
Seller. As to the Seller:
(i) Organization and Good Standing. The Seller
is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with
all requisite corporate power and authority to own its
properties and to conduct its business as presently
conducted;
(ii) Due Qualification. The Seller is qualified
to do business as a foreign corporation, is in good
standing, and has obtained all licenses and approvals
required under the laws of, all states in which the
ownership of its property or the conduct of its business
requires such qualification, standing, license or approval,
except to the extent that the failure to so qualify,
maintain such standing or be so licensed or approved, would
not, in the aggregate, materially and adversely affect the
ability of the Seller to perform its obligations under this
Agreement and the Contribution and Sale Agreement;
(iii) Power and Authority. The Seller has the
corporate power and authority to execute and deliver this
Agreement and the Contribution and Sale Agreement and to
carry out the terms hereof and thereof, and the Seller has
duly authorized the execution, delivery and performance of
this Agreement and the Contribution and Sale Agreement by
all requisite corporate action;
(iv) Valid Transfer and Sale; Binding Obligations.
The sale of the Leases and related Equipment described in
Section 2.1(a) constitutes, and each sale of any Substitute
Leases and related Equipment will constitute, a legal and
valid sale, assignment, transfer and conveyance to the
Issuer of all right, title, and interest of the Seller in,
to and under such Leases and the related Equipment, or the
Issuer has (or will have with respect to Substitute Leases
and the related Equipment) a first priority perfected
security interest in all of the Seller's right, title and
interests in, to and under such Leases and the related
Equipment (subject to the matters set forth in the provisos
contained in Section 2.1(b)); such Leases and the related
Equipment will be held by the Issuer free and clear of any
Lien of any Person claiming through or under the Seller,
except for Permitted Liens; and each of this Agreement and
the Contribution and Sale Agreement constitutes a legal,
valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except as
such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the
enforcement of creditors' rights generally and (ii) general
principles of equity (whether considered in a suit at law or
in equity);
(v) No Violation. The consummation of the
transactions contemplated by, and the performance of the
terms of, this Agreement and the Contribution and Sale
Agreement by the Seller (with or without the giving of any
notice or the lapse of time) will not (after giving effect
to all consents and waivers received on or prior to the date
hereof) (i) conflict with, result in any breach of any of
the terms or provisions of or constitute a default under the
certificate of incorporation or by-laws of the Seller or any
material term of any material indenture, agreement,
mortgage, deed of trust or other instrument to which the
Seller is a party or by which it is bound; (ii) result in
the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument
(other than this Agreement and the Contribution and Sale
Agreement); or (iii) violate any law or regulation
applicable to the Seller or any of its properties in any
manner; which conflict, breach, default, Lien or violation
would have a material and adverse effect on the ability of
the Seller to comply with this Agreement or the Contribution
and Sale Agreement;
(vi) No Consent. No consent, approval, authoriza-
tion, order, registration, filing, qualification, license or
permit of or with any Governmental Authority having
jurisdiction over the Seller or any of its properties or
assets is required to be obtained by or with respect to the
Seller in connection with the execution, delivery and
performance by the Seller of this Agreement and the
Contribution and Sale Agreement and the consummation of the
transactions contemplated herein and therein;
(vii) No Proceedings. There are no proceedings or
investigations pending or, to the best of the Seller's
knowledge, threatened before any Governmental Authority
(A) asserting the invalidity of this Agreement or the
Contribution and Sale Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement or the Contribution and Sale Agreement, or
(C) seeking any determination or ruling that might
materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforce-
ability of, this Agreement or the Contribution and Sale
Agreement;
(viii) Insolvency. The Seller is not insolvent and
will not be rendered insolvent by the consummation of the
transactions contemplated by this Agreement and the
Contribution and Sale Agreement and has an adequate amount
of capital to conduct its business in the ordinary course
and to carry out its obligations under this Agreement and
the Contribution and Sale Agreement;
(ix) Places of Business and Offices. The Seller's
sole places of business and offices are located in
Northbrook, Illinois, and Wilmington, Delaware; and
(x) Ability to Perform. As of the date hereof,
the Seller does not believe, nor does it have any reasonable
cause to believe, that it cannot perform each and every
covenant contained in this Agreement and the Contribution
and Sale Agreement.
2.5 Notice of Breach. The representations and
warranties set forth in Section 2.4 will survive the transfer of
the Leases to the Issuer. Upon discovery by the Seller, the
Servicer, the Issuer or the Indenture Trustee of a breach of any
of the representations and warranties set forth in Section 2.4,
the Person discovering such breach will give prompt written
notice to each of the other Parties and the Rating Agency;
provided that no failure to give such notice (or to give such
notice in a prompt manner) will constitute a waiver of such
breach. Each Party will cooperate with the other Parties in
attempting to cure any such breach.
2.6 Mandatory Purchase of Leases and
Indemnification Upon Breach of Warranty.
(a) Representations and Warranties as to the
Leases. Pursuant to Section 2.1(a), the Seller assigned to the
Issuer all of its rights, title and interest in, to and under the
Contribution and Sale Agreement, including the representations
and warranties of the Originator made to the Seller pursuant to
Section 3.01(a) of the Contribution and Sale Agreement, but
excluding the rights of indemnification from the Originator to
Seller under Section 3.04 thereof and rights of the Seller to
purchase additional Receivables thereunder. The Seller hereby
represents and warrants to the Issuer that the Seller has taken
no action which would cause such representations and warranties
of the Originator to be false in any material respect as of the
Closing Date. The Seller further acknowledges that the Issuer
relies on the representations and warranties of the Seller under
this Agreement and the Originator under the Contribution and Sale
Agreement in accepting the Leases in trust and executing and
delivering the Notes and the Trust Certificate. The foregoing
representation and warranty speaks as of the Closing Date (unless
otherwise specified in the Contribution and Sale Agreement), but
shall survive the sale, transfer and assignment of the Leases to
the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(b) Purchase of Leases and Equipment by Seller.
In the event that the Indenture Trustee or the Servicer discovers
or by written notice is informed at any time that a
representation or warranty of the Seller set forth in Section
2.6(a) is untrue in any respect, such Party shall give written
notice to the other Parties and the Seller. The Seller hereby
agrees to purchase each Lease materially and adversely affected
by such untruth (to the extent that such Lease constitutes a part
of the Trust Estate) together with all related Equipment on or
prior to the thirtieth day after such notice (or such later date
as the Seller and the Indenture Trustee may agree), and the
Seller will purchase each such Lease and the related Equipment,
for the Warranty Purchase Price, on or prior to such thirtieth
(or later) day; provided that the Seller will not be required to
purchase any such Lease or the related Equipment if, prior to
such thirtieth (or later) day, either (i)(A) such untruth has
been cured with respect to such Lease in all material respects
and (B) the Seller delivers to the Indenture Trustee a
certificate of a Responsible Officer to that effect or (ii) such
Lease is replaced with a Substitute Lease under Section 5.1
hereof or purchased by the Originator under Section 2.6(c)
hereof. In consideration for the purchase of any such Lease and
the related Equipment, the Seller will remit the Warranty
Purchase Price therefor to the Servicer for deposit into the
Collection Account. It is understood and agreed that in the
event that any representation or warranty of the Seller set forth
in Section 2.6(a) is untrue, the purchase of any affected Lease
and the related Equipment as provided in this Section 2.6(b) will
constitute the only remedies available to the Indenture Trustee,
the Owner Trustee and the Holders in respect of such untruth.
(c) Breach by Originator. In the event that the
Indenture Trustee or the Servicer discovers or by written notice
is informed that any representation or warranty of the Originator
set forth in Section 3.01(a) of the Contribution and Sale
Agreement is untrue in any respect, such Party shall give written
notice to the other Parties, and the Servicer and the Indenture
Trustee will enforce the obligation of the Originator pursuant to
Section 3.03 of the Contribution and Sale Agreement to purchase
each Lease materially and adversely affected by such untruth (to
the extent that such Lease constitutes a part of the Trust
Estate), together with all related Equipment on or prior to the
thirtieth day after such notice (or such later date as the
Originator and the Indenture Trustee may agree); provided that
the Originator will not be required to purchase any such Lease or
related Equipment if, prior to such thirtieth (or later) day,
either (i) the Servicer delivers to the Indenture Trustee an
Officer's Certificate which states that such untruth has been
cured with respect to such Lease and the related Equipment in all
material respects or (ii) such Lease is replaced with a
Substitute Lease under Section 5.1 hereof or purchased by the
Seller under Section 2.6(b) hereof. In consideration of the
purchase of a Lease and related Equipment pursuant to this
Section 2.6(c) by the Originator, the Originator will remit the
Warranty Purchase Price therefor to the Servicer for deposit into
the Collection Account. The Parties understand and agree that in
the event that any representation or warranty set forth in
Section 3.01(a) of the Contribution and Sale Agreement is untrue,
the purchase of any affected Lease and the related Equipment
pursuant to this Section 2.6(c) of this Agreement will constitute
the sole remedy available to the Indenture Trustee, the Owner
Trustee and the Holders in respect of such untruth.
2.7 Covenants of the Seller. The Seller
covenants that:
(a) Security Interests. Except for the
conveyances in accordance with this Agreement and the Indenture
and except for rights and claims relating to the interest of the
Certificateholders, the Seller will not sell, pledge, assign or
transfer to any other Person or grant, create, incur, assume or
suffer to exist any Lien on the Trust Estate (or any interest
therein), and the Seller will defend all right, title and
interest of the Issuer and the Indenture Trustee in, to and under
the Trust Estate against all claims of third parties claiming
through or under the Seller; provided that nothing in this
Section 2.7(a) will prevent or be deemed to prohibit the Seller
from allowing to exist upon the Trust Estate any Permitted Liens.
(b) Delivery of Collections. The Seller agrees
to pay to the Servicer for deposit into the Collection Account
all amounts (if any) received by the Seller in respect of the
Trust Estate as soon as practicable after receipt thereof by the
Seller but, in no event later than two Business Days following
the date thereof.
(c) Obligations with Respect to Leases. The
Seller will duly fulfill all obligations (if any) on its part to
be fulfilled under or in connection with each Lease and will do
nothing to impair the rights of the Issuer, the Owner Trustee,
the Indenture Trustee or the Holders in the Trust Estate.
(d) Compliance with Law. The Seller will comply,
in all material respects, with all laws and regulations of any
Governmental Authority (including the observance of corporate
formalities) applicable to the Seller or the Trust Estate;
provided that the Seller may contest any such laws or regulations
in any reasonable manner which will not materially and adversely
affect (i) the value of (or the rights of the Issuer, the Owner
Trustee, the Indenture Trustee or the Holders with respect to)
the Trust Estate, or the performance by the Seller of its
obligations under this Agreement or the Contribution and Sale
Agreement or (ii) the validity or enforceability of this
Agreement or the Contribution and Sale Agreement.
(e) Preservation of Security Interest. The
Seller will execute and file such financing and continuation
statements and any other documents which are reasonably requested
by the Servicer or the Indenture Trustee to be filed or which may
be required to be filed by any laws and regulations of any
Governmental Authority to preserve and protect fully the interest
of the Issuer, the Indenture Trustee and the Holders in, to and
under the Trust Estate; provided that (i) the Seller will not be
required to file financing or continuation statements with
respect to the Equipment in any jurisdiction other than in the
Filing Locations, (ii) the Lease Files for the Leases will not be
physically delivered to the Owner Trustee or the Indenture
Trustee but will remain in the possession of Trans Leasing, in
its capacity as the Servicer, or any Successor Servicer and (iii)
the Seller will not be required to cause the certificate of title
or other title document to any Equipment consisting of motor
vehicles to be transferred to the Owner Trustee or the security
interest of the Indenture Trustee granted pursuant to the
Indenture to be marked on such certificate of title or other
title document. Upon the appointment of a subservicer other than
Nuvotron, Inc. or any other Affiliate of the Servicer, the
Servicer shall give written notice thereof to the Rating Agency.
(f) Maintenance of Office, etc. Unless the
Seller provides not less than thirty days prior written notice to
the Servicer and the Issuer and files such financing statements
and amendments to financing statements as the Servicer or the
Indenture Trustee may reasonably require, the Seller will not
(i) change the location of its principal executive office or
(ii) change its name, identity or corporate structure in any
manner which would make any financing statement or continuation
statement filed by or on behalf of the Seller in accordance with
this Agreement seriously misleading within the meaning of Article
9-402(7) of the UCC.
(g) Further Assurances. Except as provided in
the final sentence of Section 2.1(b), the Seller from time to
time will make, execute or endorse, acknowledge and file or
deliver to the Indenture Trustee and the Servicer, as
appropriate, such schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments, and
take such further steps relating to the Trust Estate, as the
Indenture Trustee or the Servicer may request and reasonably
require.
(h) Notice of Liens. The Seller will notify the
Servicer and the Indenture Trustee of any Lien on any of the
Trust Estate (other than Permitted Liens) promptly after the
Seller becomes aware of such Lien.
(i) Amendments to Certificate of Incorporation.
The Seller shall not amend its certificate of incorporation
unless the Rating Agency Condition with respect to such amendment
has been satisfied.
(j) Corporate Existence. The Seller will keep in
full effect its existence and good standing as a corporation
under the laws of the State of Delaware, and will obtain and
preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is
required by applicable law, except to the extent that the failure
to so qualify would not, in the aggregate, materially and
adversely affect (i) the Seller, (ii) the value of (or the rights
of the Issuer, the Owner Trustee, the Indenture Trustee or the
Holders with respect to) the Trust Estate, or (iii) the ability
of the Seller to comply with this Agreement or the Contribution
and Sale Agreement.
(k) Independent Directors. The Seller will not
permit an Independent Director (as defined in the certificate of
incorporation of the Seller) to be any person who (i) owns more
than 1% of the outstanding shares of Trans Leasing, (ii) provides
personal services to Trans Leasing or any of its subsidiaries or
affiliates or (iii) is affiliated with a tax-exempt entity that
receives contributions from Trans Leasing or any of its
subsidiaries or affiliates.
(l) Indebtedness. Except for the Notes, the
Seller shall not issue or, if issued by any trust formed by the
Seller, sell any notes, debentures, trust certificates or other
instruments representing indebtedness or enter into any
agreements for borrowed money unless the indebtedness represented
thereby or outstanding thereunder (i) (A) will be rated by the
Rating Agency not lower than the highest rating on the Notes
(prior to giving effect to the incurrence of such indebtedness),
(B) is fully subordinated to the Notes and the documentation
pursuant to which such indebtedness is incurred provides that
such indebtedness does not constitute a claim against the Seller
or any of its assets (other than the assets pledged to secure
such indebtedness) in the event that such pledged assets are
insufficient to satisfy such indebtedness or (C) is nonrecourse
to the Seller and its assets (other than the assets pledged to
secure such indebtedness) and the documentation pursuant to which
such indebtedness is incurred provides that such indebtedness
does not constitute a claim against the Seller or any of its
assets (other than the assets pledged to secure such
indebtedness) in the event that such pledged assets are
insufficient to satisfy such indebtedness and (ii) the holder of
such indebtedness covenants and agrees in the documentation
pursuant to which such indebtedness is incurred not, prior to the
date which is one year and one day after the final distribution
with respect to the Notes, acquiesce, petition or otherwise
involve or cause the Seller to invoke the process of any court or
governmental authority for the purpose of commencing or
sustaining a case against the seller under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequester or other
similar official of the Seller or any substantial part of its
Property, or ordering the winding up or liquidation of the
affairs of the Seller.
2.8 Release of Lien on Equipment. At the same
time as (i) any Lease becomes an Expired Lease and the Equipment
related to such Lease is sold, (ii) any Lease becomes an Early-Termination
Lease and the Equipment related to such Early-Termination Lease is sold,
(iii) the Servicer substitutes or
replaces any unit of Equipment as contemplated in Section 3.1(c)
or (iv) any Lease and related Equipment is substituted as
contemplated in Section 5.1, the Issuer will to the extent
requested by the Servicer release its interest in the Equipment
relating to such Expired Lease or Early-Termination Lease or such
substituted or replaced Equipment or Lease and related Equipment,
as the case may be; provided that such release will not
constitute a release of the Issuer's interest in the proceeds of
such sale (other than with respect to Equipment or Lease and
related Equipment that is replaced pursuant to Section 3.1(c) or
5.1, as the case may be). In connection with any sale of such
Equipment, the Issuer and the Seller will execute and deliver to
the Servicer any assignments, bills of sale, termination
statements and any other releases and instruments as the Servicer
may request in order to effect such release and transfer;
provided that the Issuer and the Seller will make no express
representation or warranty with respect to any such Equipment in
connection with such sale or transfer and assignment other than
with respect to its interest in such Equipment or the absence of
any such interest. Nothing in this Section 2.8 shall diminish
the Servicer's obligations pursuant to Section 3.1(d) with
respect to the proceeds of any such sale.
ARTICLE III
ADMINISTRATION AND SERVICING OF LEASES
3.1 Appointment and Acceptance; Duties.
(a) Appointment of Initial Servicer. Trans
Leasing is hereby appointed as Servicer pursuant to this
Agreement. Trans Leasing accepts the appointment and agrees to
act as the Servicer pursuant to this Agreement.
(b) General Duties. The Servicer will service,
administer and enforce the Leases on behalf of the Issuer and
will have full power and authority to do any and all things in
connection with such servicing and administration which it deems
necessary or desirable. The Servicer will manage, service,
administer and make collections on the Leases with reasonable
care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable equipment leases that it
services for itself or others. The Servicer's duties will
include collection and posting of all payments, responding to
inquiries of Lessees regarding the Leases, investigating
delinquencies, accounting for collections, furnishing monthly and
annual statements with respect to collections and payments in
accordance with Section 3.10, making Servicer Advances in its
discretion, enforcing the Contribution and Sale Agreement and
using its best efforts to maintain the perfected first priority
security interest of the Indenture Trustee in the Leases and the
related Equipment (subject to the matters set forth in the
provisos contained in Section 2.1(b)). The Servicer will follow
its customary standards, policies, and procedures and will have
full power and authority, acting alone, to do any and all things
in connection with such managing, servicing, administration, and
collection that it deems necessary or desirable. If the Servicer
commences a legal proceeding to enforce a Defaulted Lease
pursuant to Section 3.4 or commences or participates in a legal
proceeding (including a bankruptcy proceeding) relating to or
involving a Lease, the Issuer will be deemed to have
automatically assigned such Lease to the Servicer for purposes of
commencing or participating in any such proceeding as a party or
claimant, and the Servicer is authorized and empowered by the
Issuer, pursuant to this Section 3.1(b), to execute and deliver,
on behalf of itself, the Holders, the Issuer and the Indenture
Trustee, any and all instruments of satisfaction or cancellation,
or partial or full release or discharge, and all other notices,
demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceedings.
If in any enforcement suit or legal proceeding it is held that
the Servicer may not enforce a Lease on the ground that it is not
a real party in interest or a holder entitled to enforce the
Lease, then the Issuer will, at the Servicer's expense and
direction, take steps to enforce the Lease, including bringing
suit in its name.
(c) Consent to Assignment or Replacement. At the
request of a Lessee, the Servicer may in its sole discretion
consent to the assignment of the related Lease or the sublease of
a unit of the related Equipment, so long as such Lessee remains
liable for all of its obligations under such Lease. Upon the
request of any Lessee, the Servicer may, in its sole discretion,
provide for the substitution or replacement of any unit of
Equipment for a substantially similar unit of equipment.
(d) Disposition Upon Termination of Lease. Upon
the expiration or termination of a Lease the Servicer will use
commercially reasonable efforts to dispose of any related Equip-
ment. Without limiting the generality of the foregoing, the
Servicer may dispose of any such Equipment by selling such
Equipment to Trans Leasing for a purchase price equal to the fair
market value thereof. The Servicer will deposit any and all
proceeds realized from the sale or other disposition of Equipment
in accordance with Section 4.7.
(e) Subservicers. The Servicer may enter into
servicing agreements with one or more subservicers (including
Nuvotron, Inc. or any other Affiliate of any Servicer) to perform
all or a portion of the servicing functions on behalf of the
Servicer; provided that the Servicer will remain obligated and be
liable to the Issuer and the Holders for servicing and
administering the Leases in accordance with the provisions of
this Agreement without diminution of such obligation and
liability by virtue of the appointment of such subservicer, to
the same extent and under the same terms and conditions as if the
Servicer alone were servicing and administering the Leases. The
fees and expenses of the subservicer (if any) will be as agreed
between the Servicer and its subservicer and neither the Issuer,
the Owner Trustee, the Indenture Trustee nor the Holders will
have any responsibility therefor. All actions of a subservicer
taken pursuant to such a subservicer agreement will be taken as
an agent of the Servicer with the same force and effect as though
performed by the Servicer.
(f) Further Assurances. The Issuer will furnish
the Servicer, and the Servicer will furnish any subservicer, with
any powers of attorney and other documents necessary or
appropriate to enable the Servicer or a subservicer, as
applicable, to carry out its servicing and administrative duties
under this Agreement.
(g) Notice to Lessees. The Servicer will not be
required to notify any Lessee that such Lessee's Lease or related
Equipment has been sold, transferred, assigned or conveyed to the
Seller pursuant to the Contribution and Sale Agreement or to the
Issuer pursuant to this Agreement or pledged to the Indenture
Trustee pursuant to the Indenture; provided that, in the event
that any Servicer resigns or is replaced, then if the place for
payment pursuant to any Lease is changed, the Successor Servicer
shall prior to such change give each related Lessee prompt
written notice of the appointment of the Successor Servicer and
the place to which such Lessee should make payments pursuant to
each such Lease, and the Servicer that resigned or has otherwise
been replaced shall promptly transfer to the Successor Servicer
any payments it receives after such resignation or replacement.
3.2 Collection of Payments.
(a) Collection Efforts. The Servicer will make
reasonable efforts to collect all payments called for under the
terms and provisions of the Leases as and when the same become
due and will follow those collection procedures which it follows
with respect to all comparable equipment leases that it services
for itself or others. To the extent consistent with the
Originator's past practices, the Servicer may grant extensions,
rebates, or adjustments on a Lease which will not, for purposes
of this Agreement, extend the original due dates or the number of
Scheduled Lease Payments or reduce the amount of any Scheduled
Lease Payment; provided that on only one occasion with respect to
any Lease not more than three consecutive Scheduled Lease
Payments (collectively, a "Skipped Payment") under such Lease may
be deferred to the end of the term of such Lease so long as the
sum of the Discounted Lease Balances of all Leases with respect
to which there has been a Skipped Payment as of a Determination
Date does not exceed 5% of the Aggregate Discounted Lease Balance
as of the Cut-Off Date and such Skipped Payment is deferred to no
later than the last day of the Collection Period related to the
Payment Date that is the Stated Final Maturity Date. No Skipped
Payment shall be considered delinquent for purposes of this
Agreement and no Servicer Advance will be required with respect
thereto. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the
ordinary course of servicing any Lease.
(b) Early Termination Leases. The Servicer may,
in its sole discretion, permit a Lease to become an Early
Termination Lease (which shall not include a Lease that becomes
an Early Termination Lease due to a Casualty Loss), so long as,
unless another Lease is substituted therefor as described in
Section 5.1 herein, (i) the Servicer deposits in the Collection
Account, not later than the second Business Day after receipt
thereof by the Servicer, the sum of (A) the Discounted Lease
Balance of such Lease as of the Determination Date in the month
prior to the month in which such Lease becomes an Early
Termination Lease, and (B) one month's interest thereon at the
Discount Rate and (ii) at the time the Servicer permits a Lease
to become an Early Termination Lease the aggregate principal
amount of all Leases which have become Early Termination Leases
since the Closing Date does not exceed 3% of the Aggregate
Discounted Lease and Residual Balance as of the Cut-Off Date.
(c) Acceleration. The Servicer, in its sole
discretion, may accelerate (or elect not to accelerate) the
maturity of all or any Scheduled Lease Payments under any Lease
under which a default under the terms thereof has occurred and is
continuing (after the lapse of any applicable grace period);
provided that the Servicer is required to accelerate the
Scheduled Lease Payments due under any Lease (and take other
action in accordance with the Servicer's past practice, including
repossessing or otherwise converting the related Equipment, to
realize upon the value of such Lease and the related Equipment)
to the fullest extent permitted by the terms of such Lease
promptly after such Lease becomes a Defaulted Lease.
(d) Taxes and Other Amounts. To the extent
provided for in any Lease, the Servicer will make reasonable
efforts to collect all payments with respect to amounts due for
taxes, assessments and insurance premiums relating to the Leases
or the related Equipment and remit such amounts to the
appropriate Governmental Entity or insurer on or prior to the
date such payments are due.
3.3 Servicer Advances. For each Collection
Period, if the Servicer determines that any Scheduled Lease
Payment (or portion thereof) which was due and payable pursuant
to a Lease during such Collection Period was not received prior
to the end of such Collection Period, the Servicer shall make a
Servicer Advance in an amount up to the amount of such delinquent
Scheduled Lease Payment (or portion thereof), to the extent that
in its sole discretion it determines that it can recoup such
amount from subsequent collections under the related Lease. The
Servicer will deposit any Servicer Advances into the Collection
Account on or prior to 10:00 a.m. (Chicago time) on the related
Payment Date, in immediately available funds. The Servicer will
be entitled to be reimbursed for Servicer Advances pursuant to
Sections 4.7(c), 4.8(b) and 4.8(c).
3.4 Realization Upon Defaulted Leases. The
Servicer will use its best efforts consistent with its customary
and usual practices and procedures in its servicing of equipment
leases to repossess or otherwise comparably convert the ownership
of any Equipment relating to a Defaulted Lease and will act as
sales and processing agent for Equipment which it repossesses.
The Servicer will follow such other practices and procedures as
it deems necessary or advisable and as are customary and usual in
its servicing of equipment leases and other actions by the
Servicer in order to realize upon such Equipment, which practices
and procedures may include reasonable efforts to enforce all
obligations of Lessees and repossessing and selling such
Equipment at public or private sale in circumstances other than
those described in the preceding sentence. Without limiting the
generality of the foregoing, the Servicer may sell any such
Equipment to Trans Leasing for a purchase price equal to the fair
market value thereof. In any case in which any such Equipment
has suffered damage, the Servicer will not expend funds in
connection with any repair or towards the repossession of such
Equipment unless it determines in its discretion that such repair
and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses. The Servicer
will remit to the Collection Account the Liquidation Proceeds
received in connection with the sale or disposition of Equipment
relating to a Defaulted Lease in accordance with Section 4.7(b).
3.5 Maintenance of Insurance Policies. The
Servicer will use its best efforts to ensure that each Lessee
maintains an Insurance Policy with respect to the related
Equipment in an amount at least equal to the sum of the
Discounted Lease and Residual Balance of the related Lease;
provided that the Servicer, in accordance with its customary
servicing procedures, may allow Lessees to self-insure.
Additionally, the Servicer will require that each Lessee maintain
property damage liability insurance during the term of each Lease
in amounts and against risks customarily insured against by the
Lessee on equipment owned by it. If a Lessee fails to maintain
property damage insurance, the Servicer may purchase and maintain
such insurance on behalf of, and at the expense of, the Lessee.
In connection with its activities as Servicer of the Leases, the
Servicer agrees to present, on behalf of itself, the Issuer and
the Holders, claims to the insurer under each Insurance Policy
and any such liability policy and to settle, adjust and
compromise such claims, in each case, consistent with the terms
of each Lease.
3.6 Representations and Warranties of Servicer.
The Servicer represents and warrants to the Issuer (for the
benefit of all Persons who are or may become Holders) that, as of
the Closing Date, insofar as any of the following affects the
Servicer's ability to perform its obligations pursuant to this
Agreement in any material respect:
(a) Organization and Good Standing. The Servicer
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all
requisite corporate power and authority to own its properties and
to conduct its business as presently conducted and to enter into
and perform its obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is qualified
to do business as a foreign corporation, is in good standing, and
has obtained all licenses and approvals as required under the
laws of, all states in which the ownership or lease of its
property, the performance of its obligations pursuant to this
Agreement or the other conduct of its business requires such
qualification, standing, license or approval, except to the
extent that the failure to so qualify, maintain such standing or
be so licensed or approved would not, in the aggregate,
materially and adversely affect the ability of the Servicer to
comply with this Agreement.
(c) Power and Authority. The Servicer has the
corporate power and authority to execute and deliver this
Agreement and to carry out its terms. The Servicer has duly
authorized the execution, delivery and performance of this
Agreement by all requisite corporate action.
(d) No Violation. The consummation of the
transactions contemplated by, and the fulfillment of the terms
of, this Agreement by the Servicer (with or without notice or
lapse of time) will not (i) conflict with, result in any breach
of any of the terms or provisions of or constitute a default
under the certificate of incorporation or by-laws of the Servicer
or any material term of any material indenture, agreement,
mortgage, deed of trust or other instrument to which the Servicer
is a party or by which it is bound, (ii) result in the creation
or imposition of any Lien upon any of its Properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, or (iii) violate any law, regulation,
order, writ, judgment, injunction, decree, determination or award
of any Governmental Authority applicable to the Servicer or any
of its Properties.
(e) No Consent. No consent, approval,
authorization, order, registration, filing, qualification,
license or permit of or with any Governmental Authority having
jurisdiction over the Servicer or any of its Properties or assets
is required to be obtained by or with respect to the Servicer in
connection with the execution, delivery and performance by the
Servicer of this Agreement and the consummation of the
transactions contemplated herein.
(f) Binding Obligation. This Agreement
constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its
terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the
enforcement of creditors' rights generally and (ii) general
principles of equity (whether considered in a suit at law or in
equity).
(g) No Proceedings. To the best of the
Servicer's knowledge, there are no proceedings or investigations
pending or threatened against the Servicer before any
Governmental Authority (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might (in the reasonable judgment of
the Servicer) materially and adversely affect the performance by
the Servicer of its obligations under, or the validity or
enforceability of, this Agreement.
(h) Location of Lease Files. The Lease Files for
all Leases are located at the Servicer's office at 0000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx, and the Lease Files have not been
located at any other address during the four-month period prior
to the date hereof. No Person other than the Seller, the Issuer,
the Indenture Trustee and the Servicer has possession of, or any
Lien upon, any Lease Files.
3.7 Covenants of Servicer. The Servicer
covenants that:
(a) Lease Files. The Servicer will, at its own
cost and expense, maintain all Lease Files, as custodian for the
Issuer and the Indenture Trustee and for the benefit of the
Noteholders. Without limiting the generality of the preceding
sentence, the Servicer (i) will not dispose of any documents
constituting the Lease Files in any manner which is inconsistent
with the performance of its obligations as the Servicer pursuant
to this Agreement and will not dispose of any Original Lease
except as contemplated by this Agreement, (ii) will maintain the
Lease Files in a manner which, with the assistance of the
information set forth in the List of Leases, will permit the
Lease Files to be identified and segregated from other documents
in the Servicer's possession which relate to leases or other
contracts or property which are not Leases or Equipment and (iii)
will not permit any Person other than the Issuer, the Indenture
Trustee and the Servicer to maintain possession of, or any Lien
upon, any Lease Files (other than any Lease Files which relate
solely to an Early-Termination Lease, an Expired Lease or a
Repurchased Lease and/or the related Equipment).
(b) Compliance with Law. The Servicer will
comply, in all material respects, with all laws and regulations
of any Governmental Authority applicable to the Servicer or the
Leases and related Equipment and Lease Files or any part thereof;
provided that the Servicer may contest any such law or regulation
in any reasonable manner which will not materially and adversely
affect the value of (or the rights of the Issuer or the Indenture
Trustee on behalf of the Holders, with respect to) the Trust
Estate.
(c) Preservation of Security Interest. The
Servicer will execute and file such financing and continuation
statements and any other documents reasonably requested by the
Issuer or the Indenture Trustee to be filed or which may be
required by any law or regulation of any Governmental Authority
to preserve and protect fully the interest of the Issuer and the
Indenture Trustee in, to and under the Trust Estate; provided
that the Servicer will not be required (i) to file any financing
or continuation statements with respect to the Equipment in any
jurisdiction other than in the Filing Locations, (ii) except as
provided in Article VII, to deliver physical possession of the
Lease Files to the Indenture Trustee (and may permit the Lease
Files to remain in the possession of Trans Leasing, in its
capacity as the Servicer, or any Successor Servicer) or (iii) the
Servicer will not be required to cause the certificate of title
or other title document to any Equipment consisting of motor
vehicles to be transferred to the Seller or transferred to the
Owner Trustee or the security interest of the Indenture Trustee
granted pursuant to the Indenture marked on such certificate of
title or other title document.
(d) Obligations with Respect to Leases. The
Servicer will duly fulfill and comply with, in all material
respects, all obligations on the part of the "lessor" to be
fulfilled or complied with under or in connection with each Lease
and will do nothing to impair the rights of the Issuer, the
Indenture Trustee and the Holders in, to and under the Trust
Estate. The Servicer will perform such obligations under the
Leases and will not change or modify the Leases, except as
otherwise provided herein and except insofar as any such failure
to perform, change or modification would not materially and
adversely affect the value of (or the rights of the Indenture
Trustee, on behalf of the Holders, with respect to) the Leases or
the Equipment.
(e) Location of Lease Files. The Servicer will
not change the location of any material portion of the Lease
Files (other than any Lease Files which relate solely to an
Early-Termination Lease, an Expired Lease or a Repurchased Lease
and/or related Equipment) unless the Servicer gives the Issuer,
the Indenture Trustee and the Owner Trustee notice of such change
not less than ten days prior to such change; provided that at all
times the Lease Files shall remain under the care, custody and
control of the Servicer.
(f) No Bankruptcy Petition. The Servicer agrees
that, prior to the date that is one year and one day after the
payment in full of all amounts owing in respect of the Class A
Notes and the Class B Notes pursuant to this Agreement, it will
not institute against the Issuer or the Seller or join any other
Person in instituting against the Issuer or the Seller any
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the
laws of the United States or any state of the United States.
This Section 3.7(f) will survive the termination of this
Agreement.
3.8 Servicer Compensation. The Servicer will be
entitled to receive the Servicing Fee to the extent provided in
Section 4.8. As additional compensation for its services and
duties hereunder (including paying the fees and expenses
described in Section 3.9 below), the Servicer will also be
entitled to retain all Excluded Amounts collected with respect to
the Receivables.
3.9 Payment of Certain Expenses by Servicer. The
Servicer shall pay all expenses incurred by it in connection with
its activities under this Agreement, including fees and
disbursements of independent accountants, the Owner Trustee (in
accordance with Section 7.1 of the Trust Agreement) and the
Indenture Trustee, the fee of the Administrator, taxes imposed on
the Servicer, expenses incurred in connection with payments and
reports pursuant to this Agreement, and all other fees and
expenses not expressly stated under this Agreement for the
account of the Issuer, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 3.4.
The Servicer shall pay all reasonable fees and expenses owing to
the Indenture Trustee in connection with the maintenance of the
Trust Accounts.
3.10 Monthly Statement; Annual Report.
(a) Monthly Statement. With respect to each
Payment Date and the related Collection Period, the Servicer will
provide to the Owner Trustee, the Indenture Trustee, the
Certificateholders, the Rating Agency, (unless Definitive Notes
have been issued for the Class A Notes as described in the
Indenture) the Clearing Agency (as defined in the Indenture) and
each Holder of any Class B Note, not less than two Business Days
prior to such Payment Date, a monthly statement (a "Monthly
Statement"), signed by a Responsible Officer of the Servicer and
substantially in the form of Exhibit B.
(b) Annual Statement. The Servicer will provide
to the Owner Trustee, the Indenture Trustee, the
Certificateholders, the Rating Agency and each Holder of any
Note, on or prior to October 31 of each year, commencing October
31, 1996, a cumulative summary of the information required to be
included in the Monthly Statements for the Collection Periods
ending during the immediately preceding Transaction Year.
3.11 Annual Statement as to Compliance. The
Servicer will provide to the Owner Trustee and the Indenture
Trustee on or prior to October 31 of each year, commencing
October 31, 1996, a certificate signed by a Responsible Officer
of the Servicer stating that (a) a review of the activities of
the Servicer, and the Servicer's performance pursuant to this
Agreement, for the period ending on the last day of the
immediately preceding Transaction Year has been made under such
Person's supervision and (b) to the best of such Person's
knowledge, based on such review, the Servicer has performed or
has caused to be performed in all material respects all of its
obligations under this Agreement throughout such Transaction Year
and no Servicer Default has occurred and is continuing (or, if a
Servicer Default has so occurred and is continuing, specifying
each such event, the nature and status thereof and the steps
necessary to remedy such event, and, if a Servicer Default
occurred during such Transaction Year and no notice thereof has
been given to the Indenture Trustee and the Owner Trustee,
specifying such Servicer Default and the steps taken to remedy
such event).
3.12 Annual Independent Public Accountants'
Servicing Statements. The Servicer will cause a firm of
nationally recognized independent public accountants (who may
also render other services to the Servicer) to furnish to each
Holder of any Class B Note, the Owner Trustee and the Indenture
Trustee on or prior to October 31 of each year, commencing
October 31, 1996, a statement relating to the previous
Transaction Year to the effect that (a) such firm has reviewed
certain documents and records relating to the servicing of the
Leases, and (b) based on such examination, such firm is of the
opinion that the Monthly Statements for such Transaction Year
were prepared in compliance with this Agreement, except for such
exceptions as it believes to be immaterial and such other excep-
tions as will be set forth in such firm's report.
ARTICLE IV
RIGHTS OF HOLDERS; ACCOUNTS; ALLOCATION
AND APPLICATION OF THE TRUST ESTATE
4.1 Rights of Holders. The Notes and the Trust
Certificate represent the right to receive payments in respect of
the Trust Estate and other amounts at the times and in the
amounts specified in this Article IV and Article VIII to be paid
to the respective Holders thereof; provided that the right to
such payments shall not exceed (i) for the Holders of the Class A
Notes, in the aggregate, the Outstanding Class A Principal
Balance plus accrued interest thereon calculated at the Class A
Interest Rate in accordance with the provisions of the Indenture
and this Agreement and (ii) for the Holders of the Class B Notes,
in the aggregate, the Outstanding Class B Principal Balance plus
accrued interest thereon calculated at the Class B Interest Rate
in accordance with the provisions of the Indenture and this
Agreement.
4.2 Establishment of the Collection Account. The
Servicer, on behalf of the Issuer and the Indenture Trustee (for
the benefit of the Holders), will establish and maintain or cause
to be so established and maintained, in the name of the Indenture
Trustee, an Eligible Deposit Account (the "Collection Account")
bearing designations clearly indicating that the funds deposited
in such account are held in trust for the benefit of the Holders.
The Collection Account will be established and maintained with
the Indenture Trustee.
4.3 Establishment of Note Distribution Account.
The Servicer, on behalf of the Issuer and the Indenture Trustee
(for the benefit of the Noteholders), will establish and maintain
or cause to be established and maintained, in the name of the
Indenture Trustee, an Eligible Deposit Account (the "Note
Distribution Account") bearing a designation clearly indicating
that the funds deposited in such account are held in trust for
the benefit of the Noteholders. The Note Distribution Account
will be established and maintained with the Indenture Trustee.
4.4 Investment of Accounts. Funds on deposit in
each Trust Account will be invested in Eligible Investments;
provided that all related funds will be available for withdrawal
without loss of principal or interest on the succeeding Payment
Date (except with respect to the Collections received by the
Servicer after the end of the immediately preceding Collection
Period, the proceeds of investments of which need not be
available until the next succeeding Payment Date). Subject to
the restrictions set forth below, the Servicer will have the
authority to instruct the Indenture Trustee in writing with
respect to the investment of funds on deposit in the Trust
Accounts. Receipt of such written instructions by the Indenture
Trustee will be a condition precedent to any investment pursuant
to this Section 4.4. Such instructions will relate to specified
investments which constitute Eligible Investments. None of the
Issuer, the Indenture Trustee, the Owner Trustee or the Servicer
will be liable for any loss incurred in connection with any
investment made pursuant to this Section 4.4 except with respect
to any investment issued or guaranteed by the Indenture Trustee
or the Owner Trustee in its individual capacity. The Indenture
Trustee may make any investments pursuant to this Section 4.4
through its own investment department, in accordance with any
such instructions received from the Servicer. For purposes of
determining the availability of funds in any Trust Account for
any reason under this Agreement, all Investment Earnings
available to be withdrawn from such Trust Account will be deemed
to be available from or on deposit in such Trust Account. All
Eligible Investments which have a specified maturity date will be
held to maturity. The Indenture Trustee will maintain (for the
benefit of the Holders, the Issuer and the Servicer) possession
of all negotiable instruments or securities evidencing the
Eligible Investments from the time of purchase thereof until the
time of sale or maturity.
4.5 Control; Replacement of Trust Accounts. The
Indenture Trustee (for the benefit of the Holders) will possess
all right, title and interest in all funds on deposit from time
to time in the Trust Accounts and in all proceeds thereof. The
Trust Accounts will be under the sole dominion and control of the
Indenture Trustee (for the benefit of the Holders). If, at any
time, the institution holding a Trust Account ceases to be an
Eligible Institution or a Trust Account otherwise ceases to be an
Eligible Deposit Account, the Servicer will, not later than the
thirtieth Business Day after such cessation, establish a new
account that is an Eligible Deposit Account with respect to such
Trust Account and transfer or cause to be transferred any cash
and/or investments in the existing Trust Account to such new
account. From the date such new account is established, it will
constitute the "Collection Account" or "Note Distribution
Account" as the case may be, pursuant to this Agreement.
4.6 Identification of Accounts. Exhibit C
identifies each of the Trust Accounts by its account number,
account designation and the name of the institution with which it
has been established. The Servicer or the Indenture Trustee may
amend or modify Exhibit C from time to time as may be necessary
to reflect any changes in such information.
4.7 Deposit of Collections and Other Amounts.
(a) Initial Deposit. Not later than the second
Business Day after the Closing Date, the Servicer will deposit
(in immediately available funds) into the Collection Account all
Collections received after the Cut-Off Date and through and
including the Closing Date.
(b) Subsequent Deposits. From time to time after
the Closing Date, the Servicer will deposit (in immediately
available funds) all Collections in the Collection Account, as
promptly as possible after the date upon which such Collections
or payments are received (but in no event later than the second
Business Day after such date).
(c) Amounts Exempt from Deposit. Notwithstanding
Sections 4.7(a) and 4.7(b), the following Collections (or
portions thereof) are not required to be deposited into the
Collection Account and, if any such amounts are deposited into
the Collection Account, such amounts may be withdrawn and paid to
the Servicer:
(i) Collections on any Leases on which (and to
the extent that) the Servicer has previously made a Servicer
Advance which has not been reimbursed pursuant to this
Section 4.7(c)(i) or Section 4.8(a), which amounts the
Servicer may retain (as a reimbursement of such Servicer
Advance); and
(ii) Collections from any Repurchased Lease or any
Lease for which a Lease has been substituted as described in
Section 5.1 hereof, which amounts the Servicer may retain to
the extent necessary to reimburse the Servicer for any
related Servicer Advance which has not been reimbursed
pursuant to this Section 4.7(c)(ii) or Section 4.8(a), and
the remainder of which amounts the Servicer will pay to the
Originator or the Seller, as the case may be.
4.8 Payments on Payment Dates. On each Payment
Date (based on information contained in (and in sole reliance on)
the related Monthly Statement delivered pursuant to Section
3.10(a)), the Indenture Trustee will cause the following payments
and transfers to be made from the Available Amount for such
Payment Date (in each case, such payment or transfer to be made
only to the extent of the Available Amount remaining after all
prior payments and transfers for such Payment Date have been
made), in the following order of priority:
(a) to the Servicer by wire transfer to the
Servicer Account, the amount of any Unreimbursed Servicer
Advance;
(b) to the Servicer by wire transfer to the
Servicer Account, any Servicing Fee Arrearage for such Payment
Date;
(c) to the Servicer by wire transfer to the
Servicer Account, the Servicing Fee for such Payment Date;
(d) to the Holders of the Class A Notes by
deposit to the Note Distribution Account, any Class A Interest
Arrearage for such Payment Date;
(e) to the Holders of the Class A Notes by
deposit to the Note Distribution Account, the Class A Interest
Payment Amount for such Payment Date;
(f) to the Holders of the Class B Notes by
deposit to the Note Distribution Account, any Class B Interest
Arrearage for such Payment Date;
(g) to the Holders of the Class B Notes by
deposit to the Note Distribution Account, the Class B Interest
Payment Amount for such Payment Date;
(h) to the Holders of the Class A Notes by
deposit to the Note Distribution Account, the Class A Principal
Payment Amount for such Payment Date;
(i) to the Holders of the Class B Notes by
deposit to the Note Distribution Account, the Class B Principal
Payment Amount for such Payment Date; provided that if the
Outstanding Class A Principal Balance on such Payment Date (after
giving effect to the payments to the Holders of the Class A Notes
of the amount described in (h) above) exceeds zero and the
Subordination Amount would be less than the Minimum Required
Subordination Amount (such difference, the "Subordination Short-
fall"), an amount equal to the least of (x) the Subordination
Shortfall, (y) such Outstanding Class A Principal Balance and (z)
the Class B Principal Payment Amount for such Payment Date shall
be paid to the Holders of the Class A Notes rather than to the
Holders of the Class B Notes; and provided, further, that if a
Restricting Event exists on such Payment Date and the Outstanding
Class A Principal Balance on such Payment Date (after giving
effect to the payments to the Holders of the Class A Notes
described in clause (h) above and in this clause (i) on such
Payment Date) exceeds zero, the amount otherwise required to be
paid to the Holders of the Class B Notes under this clause (i)
(including any amounts otherwise payable to the Holders of the
Class B Notes as described in clause (j)) up to the amount of
such Outstanding Class A Principal Balance shall be paid to the
Holders of the Class A Notes rather than to the Holders of the
Class B Notes;
(j) if a Restricting Event exists on such Payment
Date and the Outstanding Class B Principal Balance on such
Payment Date (after giving effect to the payment to the Holders
of the Class B Notes of the amount described in (i) above on such
Payment Date) exceeds zero, the remaining Available Amount to
Holders of the Class B Notes up to the amount of such Outstanding
Class B Principal Balance; and
(k) to the Certificateholders (pro rata according
to the outstanding balance of the Trust Certificates), any
remaining Available Amount (such amount to be paid as described
on Exhibit C).
Prior to the Stated Final Maturity Date, no principal amount
shall be considered due and payable under this Section 4.8
(including for purposes of Section 5.1 of the Indenture) unless
and to the extent funds are available in the Collection Account
for the payment therefor.
ARTICLE V
OTHER MATTERS RELATING
TO THE SELLER
5.1 Substitution of Leases.
(a) Subject to the provisions of Section 5.1(b)
through (d) hereof, the Seller, upon notice from the Servicer,
may substitute a Lease and the related Equipment for and replace
a Lease and the related Equipment that (i) becomes a Defaulted
Lease or an Early Termination Lease or (ii) is the subject of a
Warranty Event.
(b) Each Substitute Lease shall be a Lease, with
respect to which all of the representations and warranties set
forth in subsections (i) through (xix) of Section 3.01(a) of the
Contribution and Sale Agreement were true as of the related
Substitution Cut-Off Date. No substitution pursuant to Section
5.1(a) hereof shall cause any of the Specified Portfolio
Characteristics to be untrue as of such Substitution Cut-Off
Date, or if any of the Specified Portfolio Characteristics is
untrue as of immediately prior to such Substitution Cut-Off Date,
increase the amount by which any Specified Portfolio
Characteristic is untrue.
(c) Prior to any substitution pursuant to Section
5.1(a) hereof, the Issuer shall have received a Substitute Lease
Transfer Agreement providing for the unconditional sale and
transfer of the Substitute Leases and related Equipment by the
Seller to the Issuer and an amended List of Leases reflecting the
substitution.
(d) The Servicer shall not permit any
substitution under Section 5.1(a) hereof on any Substitution Date
if:
(i) on a cumulative basis from the Closing Date,
the sum of the Discounted Lease Balances (as of the related
Substitution Cut-Off Date) of Leases substituted for
Defaulted Leases would exceed six percent (6%) of the
Aggregate Discounted Lease Balance as of the Closing Date;
(ii) on a cumulative basis from the Closing
Date, the sum of the Discounted Lease Balances (as of the
related Substitution Cut-Off Date) of Leases substituted for
Leases that are the subject of a Warranty Event would exceed
five percent (5%) of the Aggregate Discounted Lease Balance
as of the Closing Date;
(iii) on a cumulative basis from the Closing
Date, the sum of the Discounted Lease Balances (as of the
related Substitution Cut-Off Date) of Leases substituted for
Leases would exceed ten percent (10%) of the Aggregate
Discounted Lease Balance as of the Closing Date;
(iv) as of the related Substitution Cut-Off
Date, each Substitute Lease and the related Equipment has a
Discounted Lease Balance and Discounted Lease and Residual
Balance not less than the Discounted Lease Balance and
Discounted Lease and Residual Balance, respectively, of the
Lease being replaced;
(v) as a result of all substitutions to be made
on such Substitution Date, the sum of the Scheduled Lease
Payments on all Leases due in any Collection Period prior to
the April 1999 Collection Period would be less than the sum
of all Scheduled Lease Payments on the Leases subject to
this Agreement on the Closing Date becoming due during such
Collection Period (a "Payment Deficiency"), or increase the
amount of any Payment Deficiency; and
(vi) with respect to a Lease that has become an
Early Termination Lease or is the subject of a Warranty
Event if either:
(A) a Restricting Event has occurred and is
continuing; or
(B) the amount calculated as (1) the
Aggregate Discounted Lease Balance as of the
Determination Date immediately preceding such
Substitution Date minus (2) the outstanding principal
balance of the Class A Notes on such Substitution
Date is less than the greater of (1) the Minimum
Required Subordination Amount and (2) 17% of the
Aggregate Discounted Lease Balance on the
Determination Date immediately preceding such
Substitution Date.
(e) The Seller shall also have the right to
substitute Equipment under any Lease for comparable Equipment so
long as there is no change in the amount, number or time of the
Scheduled Lease Payments with respect to such Lease and the
present value of the estimated residual value (the "Residual
Value") of the substitute Equipment is not less than the Residual
Value of the original Equipment.
(f) Upon the replacement of a Lease and/or the
Equipment with a Substitute Lease and/or Equipment as described
above, the interest of the Owner Trustee and the Indenture
Trustee in such replaced Lease and/or Equipment and all proceeds
thereon shall be terminated and such replaced Lease and/or
Equipment shall be released to the Seller.
5.2 Merger or Consolidation of the Seller;
Assumption of the Seller's Obligations.
(a) General Prohibition. The Seller will not
consolidate with, merge into, convey or transfer a substantial
part of its Properties to any Person (other than the sale,
transfer, assignment and conveyances described in this
Agreement), unless (i) the Person formed by such consolidation or
merger or which acquires by conveyance or transfer a substantial
part of the properties and assets of the Seller will be organized
and existing under the laws of the United States of America or
any state thereof or the District of Columbia, and is a special
purpose corporation, (ii) such action would not result in a
withdrawal or reduction of the rating then in effect of the Class
A Notes or of the Class B Notes, so long as in each case such
class of Notes is outstanding, by the Rating Agency (as confirmed
by the Rating Agency in writing), (iii) the Person expressly
assumes (by an agreement executed and delivered to the Issuer,
which supplements this Agreement and is in a form satisfactory to
the Issuer) the performance of every covenant and obligation of
the Seller pursuant to this Agreement, as applicable, and (iv)
the Seller has delivered to the Issuer and the Indenture Trustee
an Officer's Certificate of the Seller and an Opinion of Counsel
each to the effect that such consolidation, merger, conveyance or
transfer and such supplemental agreements comply with this
Section 5.4 and that all conditions precedent relating to such
transaction pursuant to this Agreement have been met.
Notwithstanding the preceding sentence, to the extent that any
right, covenant or obligation of the Seller is inapplicable to
the successor entity, such successor entity will be subject to
such covenant, obligation, or benefit from such right, as would
apply, to the extent practicable, to such successor entity.
(b) Assignability of Obligations. The
obligations of the Seller pursuant to this Agreement are not
assignable, and no Person will succeed to the obligations of the
Seller pursuant to this Agreement, except in each case in
accordance with the provisions of this Section 5.2.
5.3 Compliance with Certificate of Incorporation.
The Seller will comply with the provisions of its Certificate of
Incorporation and will not amend its Certificate of
Incorporation, except as provided therein.
5.4 Limitation of Liability of Seller and Others.
The Seller and any director, officer, employee or agent of the
Seller may rely in good faith on any document of any kind
submitted by any Person respecting any matters arising under this
Agreement as being prima facie properly executed. The Seller
will not be under any obligation to appear in, prosecute, or
defend any legal action in any way relating to the Receivables
that is not incidental to its obligations as the seller of the
Receivables under this Agreement and that in its opinion may
cause it to incur any expense or liability.
ARTICLE VI
OTHER MATTERS RELATING
TO THE SERVICER
6.1 Liability of the Servicer and Others.
(a) The Servicer will be liable in accordance
with this Agreement only to the extent of the obligations
specifically undertaken by the Servicer in such capacity. Except
as provided in Section 6.2, the Servicer or any of its respective
directors, officers, employees or agents will not be under any
liability to the Seller, the Issuer, the Owner Trustee, the
Indenture Trustee, the Holders or any other Person for any action
taken or for refraining from the taking of any action in its
capacity as Servicer pursuant to this Agreement whether arising
from express or implied duties under this Agreement; provided,
that this provision will not protect the Servicer against any
liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties
or by reason of reckless disregard of obligations and duties
under this Agreement. The Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted
by any other Person respecting any matters arising hereunder.
The Servicer will not be under any obligation to appear in,
prosecute or defend any legal action which is not related to its
duties to service the Leases in accordance with this Agreement
which in its reasonable opinion may involve it in any expense or
liability. No director, officer, employee or agent of the
Servicer will be under any liability to the Owner Trustee, the
Indenture Trustee, the Holders, the Issuer, the Seller or any
other Person pursuant to this Agreement or pursuant to any
document delivered hereunder. It is expressly understood that
all such liability is expressly waived and released as a
condition of, and as consideration for, the execution of this
Agreement and the issuance of the Notes and the Trust
Certificate.
(b) The Servicer and any director or officer or
employee or agent of the Servicer shall be reimbursed by the
Indenture Trustee or the Owner Trustee, as applicable, for any
actual and direct (and not consequential) contractual damages,
liability or expense (including, without limitation, any
obligation of the Servicer to the Indenture Trustee or the Owner
Trustee, as applicable, pursuant to subsection 6.2(c)(x) or (y))
incurred by reason of such trustee's willful misfeasance, bad
faith or gross negligence (except errors in judgment) in the
performance of such trustee's duties under this Agreement, the
Indenture or the Trust Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
(c) Except as provided in this Agreement, the
Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to
its duties to service the Leases 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
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
and the Certificateholders under this Agreement and the interests
of the Noteholders under the Indenture and the interests of the
Certificateholders under the Trust Agreement. In such event, the
legal expenses and costs for such action and any liability
resulting therefrom shall be expenses, costs for such action and
liability resulting therefrom shall be expenses, costs and
liabilities of the Trust and the Servicer shall be entitled to be
reimbursed therefor from any amounts recovered in such action.
(d) The Indenture Trustee shall distribute out of
the Collection Account on a Payment Date any amounts permitted
for reimbursement pursuant to subsection 6.1(c) not therefor
reimbursed prior to making the other payments and transfers to be
made under Section 4.8 on such Payment Date.
6.2 Indemnification by the Servicer.
(a) The Servicer shall indemnify, defend and hold
harmless the Indenture Trustee, the Owner Trustee and the Issuer
(and their respective directors, officers, stockholders, agents
and servants) and the Noteholders from and against any taxes that
may at any time be asserted against any such Person with respect
to the transactions contemplated in this Agreement, including,
without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege or license
taxes (but not including any taxes asserted with respect to, and
as of the date of, the sale of any Leases to the Issuer hereunder
or the issuance and original sale of the Notes or the Trust
Certificate, or asserted with respect to ownership or sale of any
Leases or federal or other income taxes arising out of
distributions or receipt of payment on the Notes or the Trust
Certificate, or any fees or other compensation payable to any
such Person) and costs and expenses in defending against the
same.
(b) The Servicer shall indemnify, defend and hold
harmless the Indenture Trustee, the Owner Trustee and the Issuer
(and their respective directors, officers, stockholders, agents
and servants) and the Holders from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent
that such cost, expense, loss, claim, damage or liability arose
out of, or was imposed upon the Indenture Trustee, the Owner
Trustee, the Issuer or the Holders through the negligence,
willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement, the Indenture or
the Trust Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement, the Indenture or the
Trust Agreement.
(c) The Servicer shall indemnify, defend and hold
harmless the Indenture Trustee and the Owner Trustee, and their
respective directors, officers, stockholders, agents and
servants, from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection
with (x) in the case of the Owner Trustee, the Indenture
Trustee's performance of its duties under the Indenture, (y) in
the case of the Indenture Trustee, the Owner Trustee's
performance of its duties under the Trust Agreement or (z) the
acceptance, administration or performance by, or action or
inaction of, the Indenture Trustee or the Owner Trustee, as
applicable, of the trusts and duties contained in this Agreement,
the Indenture (in the case of the Indenture Trustee), including
the administration of the Indenture Trust Estate, and the Trust
Agreement (in case of the Owner Trustee), including the
administration of the Trust Estate, except in each case to the
extent that such cost, expense, loss, claim, damage or liability:
(A) is due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Person seeking to be
indemnified, (B) to the extent otherwise payable to the Indenture
Trustee in its individual capacity, arises from the Indenture
Trustee's breach of any of its representations or warranties in
Section 6.13 of the Indenture, (C) to the extent otherwise
payable to the Owner Trustee, arises from the Owner Trustee's
breach of any of its representations or warranties set forth in
Section 6.3 of the Trust Agreement or (D) shall arise out of or
be incurred in connection with the performance by the Indenture
Trustee of the duties of successor Servicer hereunder.
(d) Indemnification under this Section 6.2 shall
include any reasonable judgment, award, settlement, reasonable
attorneys' fees and other reasonable costs or expenses incurred
in connection with the defense of any actual or threatened
action, proceeding or claim. Any such indemnification will not
be payable from the assets of the Issuer. The provisions of this
Section 6.2 will run directly to and be enforceable by an injured
party, subject to the limitations set forth in this Section 6.2.
The obligations of the Servicer pursuant Section 3.9 and to this
Section 6.2 will survive the termination of this Agreement and of
the Trust Agreement.
(e) If the Servicer has made any indemnity
payments pursuant to this Section 6.2 and the recipient
thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts collected to the
Servicer, without interest.
6.3 Merger or Consolidation of Servicer;
Assumption of Servicer's Obligations. The Servicer will not
consolidate with or merge into, convey or transfer all or
substantially all of its Properties to any Person (which shall
not include the contributions and sales pursuant to the
Contribution and Sale Agreement in the Servicer's capacity as the
Originator) unless (i) the Person formed by such consolidation,
merger or which acquires by conveyance or transfer all or
substantially all of the Properties of the Servicer is organized
and existing under the laws of the United States of America or
any state thereof or the District of Columbia, (ii) such Person
expressly assumes (by an agreement, executed and delivered to the
Issuer, which supplements this Agreement and is in a form
reasonably satisfactory to the Indenture Trustee) the performance
of every covenant and obligation of the Servicer pursuant to this
Agreement, and (iii) the Servicer has delivered to the Issuer and
the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel, each to the effect that such consolidation, merger,
conveyance or transfer and such supplemental agreements comply
with this Section 6.3 and that all conditions precedent relating
to such transaction pursuant to this Agreement have been met.
6.4 The Servicer Not to Resign. The Servicer
will not resign from the obligations and duties imposed on it
pursuant to this Agreement except (a) upon a determination that
(i) the performance of its duties pursuant to this Agreement is
impermissible under applicable law and (ii) there is no
reasonable action which the Servicer could take to make the
performance of its duties pursuant to this Agreement permissible
under applicable law. Any determination pursuant to clause (i)
above will be evidenced by an Opinion of Counsel to such effect
and any determination pursuant to clause (ii) above will be
evidenced by an Officer's Certificate, in each case delivered to
the Indenture Trustee. No Servicer resignation will become
effective until the Indenture Trustee or a Successor Servicer has
assumed the responsibilities and obligations of the Servicer in
accordance with Section 7.2. If within 120 days of the date of
any determination described in this Section 6.4, the Indenture
Trustee is unable to appoint a Successor Servicer, the Indenture
Trustee will without further action be appointed a Successor
Servicer. The provisions of Section 7.1 with respect to the
duties of the Servicer in effecting the termination of its
servicing responsibilities and the transfer of such responsibili-
ties to a Successor Servicer will apply to any resignation
pursuant to this Section 6.4.
ARTICLE VII
SERVICER DEFAULTS
7.1 Servicer Defaults.
(a) Definition. Any of the following events will
constitute a "Servicer Default" pursuant to this Agreement:
(i) any failure by the Servicer to make any pay-
ment, transfer or deposit or deliver any Monthly Statement
or Annual Statement which continues beyond the second
Business Day after the date upon which such payment,
transfer, or delivery is required to be made pursuant to
this Agreement;
(ii) any failure by the Servicer to observe
or perform in any material respect any other covenant or
agreement of the Servicer pursuant to this Agreement, if
such failure materially and adversely affects the rights of
the Noteholders and continues unremedied for a period of
thirty days after the earlier of (a) the date on which
written demand that such failure be remedied is given to the
Servicer by the Indenture Trustee, the Holders of Notes
evidencing, in the aggregate, more than 50% of the sum of
the then Outstanding Class A Principal Balance and the then
Outstanding Class B Principal Balance) or (b) the date on
which a Responsible Officer of the Servicer becomes aware of
such failure;
(iii) any delegation of the Servicer's duties
pursuant to this Agreement, except as permitted pursuant to
Section 9.6;
(iv) any representation, warranty or
certification made by the Servicer in this Agreement or in
any certificate delivered pursuant to this Agreement proves
to have been incorrect in any material respect when made and
such incorrect statement has a material and adverse effect
on the rights of the Holders and continues to be incorrect
in any material respect for a period of thirty days after
the earlier of (a) the date on which written demand that
such incorrect statement be remedied is given to the
Servicer by the Indenture Trustee, Holders of Notes
evidencing, in the aggregate, more than 50% of the sum of
the then Outstanding Class A Principal Balance and the then
Outstanding Class B Principal Balance or (b) the date on
which a Responsible Officer of the Servicer becomes aware of
such incorrect statement; or
(v) (A) the Servicer consents to the appointment
of a conservator or receiver or liquidator in any insol-
vency, readjustment of debt, marshalling of assets and
liabilities or similar proceeding of or relating to the
Servicer or all or substantially all of its Property, (B) a
decree or order of a court or agency or supervisory
authority having proper jurisdiction for the appointment of
a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities
or similar proceeding, or for the winding-up or liquidation
of the Servicer's affairs, is entered against the Servicer
and such decree or order remains in force undischarged or
unstayed for a period of 60 days, or (C) the Servicer admits
in writing its inability to pay, or fails to pay, its debts
generally as they become due, files a petition or commences
any case or proceeding to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, makes any
assignment for the benefit of its creditors or voluntarily
suspends payment of its obligations.
(b) Consequences of Servicer Default. If any
Servicer Default occurs, then, so long as such Servicer Default
is continuing, the Indenture Trustee and the Holders of Notes
evidencing, in the aggregate, more than 50% of the sum of the
then Outstanding Class A Principal Balance and the then
Outstanding Class B Principal Balance, by written notice (a
"Termination Notice") to the Servicer (and to the Indenture
Trustee and the Owner Trustee), may terminate all of the rights
and obligations of the Servicer pursuant to this Agreement and
in, to and under the Trust Estate. After the Servicer receives a
Termination Notice, and on the date that a Successor Servicer is
appointed pursuant to Section 7.2, all authority and power of the
Servicer pursuant to this Agreement will pass to and be vested in
the Successor Servicer. The Indenture Trustee is hereby
authorized and empowered (upon the failure of the Servicer to
cooperate) to execute and deliver, on behalf of the Servicer as
attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things,
which are necessary or appropriate to effect the transfer of the
servicing function pursuant to this Agreement. The Servicer
agrees to cooperate with the Indenture Trustee and such Successor
Servicer in effecting the termination of the Servicer's responsi-
bilities and rights pursuant to this Agreement. The Servicer
will promptly transfer the information contained in the Lease
Management System relating to the Leases to the Successor
Servicer in such form as the Successor Servicer may reasonably
request, and will promptly transfer to the Successor Servicer
possession of the Lease Files and all other records,
correspondence and documents necessary for the continued
servicing of the Leases in the manner and at such times as the
Successor Servicer will reasonably request. To the extent that
compliance with this Section 7.1(b) requires the Servicer to
disclose to the Successor Servicer information of any kind which
the Servicer reasonably deems to be confidential, the Servicer
may require the Successor Servicer to enter into such customary
licensing and confidentiality agreements as the Servicer
reasonably deems necessary to protect its interests.
(c) Actions Beyond Servicer's Control.
Notwithstanding the foregoing, any delay in or failure of
performance referred to in Section 7.1(a)(i) for a period not in
excess of five Business Days or under Section 7.1(a)(ii), (iii)
or (iv) for a period not in excess of sixty Business Days (in
each case, without giving effect to any grace period described in
such Section) will not constitute a Servicer Default if such
delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure
was caused by an act of God or the public enemy, acts of declared
or undeclared war, public disorder, rebellion or sabotage,
epidemics, landslides, lightning, fire, hurricanes, earthquakes,
floods or similar causes. The preceding sentence will not
relieve the Servicer of the obligation to use its best efforts to
perform its obligations in a timely manner in accordance with the
terms of this Agreement, and the Servicer will provide the
Indenture Trustee, the Issuer, and the Noteholders with an
Officer's Certificate giving prompt notice of such failure or
delay by it, together with a description of its efforts to
perform its obligations.
7.2 Indenture Trustee to Act; Appointment of
Successor.
(a) Servicer's Continued Performance. On and
after the Servicer's receipt of a Termination Notice pursuant to
Section 7.1(b), the Servicer will continue to perform all
servicing functions pursuant to this Agreement until the date
specified by the Indenture Trustee in such Termination Notice or,
if no such date is specified, until a date mutually agreed upon
by the Servicer and the Indenture Trustee.
(b) Appointment; Inability to Appoint. As
promptly as possible after delivery of a Termination Notice the
Indenture Trustee, pursuant to the Indenture, will appoint a
successor to the Servicer. No Person shall act as the Successor
Servicer until such Person accepts its appointment by a written
assumption in a form reasonably acceptable to the Indenture
Trustee. The Indenture Trustee may obtain bids from potential
Successor Servicers. If no Successor Servicer has been appointed
and accepted its appointment at the time when the Servicer ceases
to act as Servicer, the Indenture Trustee, without further
action, will automatically be appointed the Successor Servicer,
unless the Indenture Trustee is legally unable so to act, in
which case the Indenture Trustee will petition a court of
competent jurisdiction to appoint an established servicing entity
having a net worth of not less than $25,000,000 and whose regular
business includes the servicing of leases of equipment which is
of a type or types similar to the Equipment.
(c) Successor's Rights, Duties and Liabilities.
Upon its appointment, the Successor Servicer will be the
successor with respect to servicing functions pursuant to this
Agreement and will be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the
terms and provisions of this Agreement, and all references in
this Agreement to the Servicer will be deemed to refer to the
Successor Servicer.
(d) Compensation. In connection with such
appointment and assumption, the Indenture Trustee will be
entitled to such compensation, or may make such arrangements for
the compensation of the Successor Servicer out of collections, as
it and such Successor Servicer agree; provided that no such
compensation will be in excess of the Servicing Fee permitted to
be paid to the Servicer pursuant to this Agreement.
(e) Cessation of Successor's Authority. All
authority and power granted to a Successor Servicer pursuant to
this Agreement will automatically cease and terminate upon
termination of this Agreement pursuant to Section 8.1 and will
pass to and be vested in the Seller (or Person designated by the
Seller) and the Seller (or Person designated by the Seller) are
hereby authorized and empowered to execute and deliver, on behalf
of such Successor Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all
other acts or things, which are necessary or appropriate to
effect the purposes of such transfer of the servicing function
pursuant to this Agreement. The Successor Servicer agrees to
cooperate with the Seller (or Person designated by the Seller) in
effecting the termination of such Successor Servicer's
responsibilities and rights. The Successor Servicer will
transfer its electronic records relating to the Leases to the
Seller (or Person designated by the Seller) in such electronic
form as the Seller (or Person designated by the Seller) may
reasonably request and will transfer all other records,
correspondence and documents to the Seller (or Person designated
by the Seller) in the manner and at such times as the Seller (or
Person designated by the Seller) will reasonably request. To the
extent that compliance with this Section 7.2(e) requires the
Successor Servicer to disclose to the Seller (or Person
designated by the Seller) information of any kind which the
Successor Servicer deems to be reasonably confidential, the
Successor Servicer may require the Seller (or Person designated
by the Seller) to enter into such customary licensing and
confidentiality agreements as the Successor Servicer reasonably
deems necessary to protect the Successor Servicer's interests.
7.3 Notification. Promptly upon the occurrence
of any Servicer Default (and, in any event, within two Business
Days after the Servicer becomes aware thereof), the Servicer will
give the Indenture Trustee, the Owner Trustee, the Rating Agency
and the Issuer written notice of such Servicer Default, and the
Indenture Trustee thereupon will give written notice of such
Servicer Default to each Noteholder. The Indenture Trustee
promptly will give written notice of any termination or
appointment of a Successor Servicer pursuant to this Article VII
to each Noteholder and the Rating Agency.
7.4 Waiver of Past Defaults. The Holders of
Notes evidencing, in the aggregate, more than 50% of the sum of
the then Outstanding Class A Principal Balance and the then
Outstanding Class B Principal Balance may, on behalf of all
Holders, waive any default by the Servicer or the Seller in the
performance of their respective obligations under this Agreement
and the consequences of any such default, other than a default in
the failure to make any required deposits, transfers or payments
in accordance with Section 4.8. Upon any such waiver of a past
default, such default will cease to exist, and any default
arising from or relating to such default will be deemed to have
been remedied and cured for all purposes under this Agreement.
No such waiver will extend to any subsequent or other default or
impair any right upon any such subsequent default except to the
extent expressly so waived.
7.5 Lease Schedule. The Servicer will maintain
true, correct and complete copies of the List of Leases and the
Lease Schedule (as defined in the Contribution and Sale
Agreement). Each time the List of Leases or the Lease Schedule
is amended, the Servicer shall promptly forward to the Indenture
Trustee such List of Leases or Lease Schedule as so amended (or
an amendment to be attached to the previous List of Leases or
Lease Schedule so delivered to the Indenture Trustee). The
Indenture Trustee shall maintain (and make available to
interested parties during normal business hours) at its Corporate
Office such List of Leases and Lease Schedule as so amended (or
previous List of Leases and Lease Schedule together with all
amendments), which shall constitute the List of Leases and the
Lease Schedule referred to in the UCC financing statements filed
pursuant to the Contribution and Sale Agreement, this Agreement
or the Indenture, as applicable.
ARTICLE VIII
TERMINATION
8.1 Termination.
(a) If the Termination Date occurs as described
in clause (a) of the definition of Termination Date and at such
time, after giving effect to all payments to be made under
Section 4.8 on such Termination Date, there is any Class A
Interest Arrearage or Class B Interest Arrearage or the
Outstanding Class A Principal Balance or Outstanding Class B
Principal Balance is not zero, then the Indenture Trustee will
sell, dispose of or otherwise liquidate the remaining Leases and
Equipment (or, if applicable, a portion of the remaining Leases
and Equipment to the extent necessary to provide proceeds suffi-
cient to pay any such unpaid amounts (and any accrued interest on
any Outstanding Class A Principal Balance or Outstanding Class B
Principal Balance at the Class A Interest Rate or Class B
Interest Rate, as the case may be)) in a commercially reasonable
manner and on commercially reasonable terms. The proceeds of
such sale, disposition or liquidation will be treated as
Collections, and deposited into the Collection Account and paid
and distributed in accordance with Section 4.8 on the next
Payment Date.
(b) On the date after the Termination Date (or,
if the Termination Date occurs as described in clause (a) of the
definitions of Termination Date, on the day after the proceeds of
the sale, disposition or liquidation described in Section 8.1(a)
are paid and distributed as described in Section 8.1(a)), after
the payment to the Indenture Trustee, the Owner Trustee, the
Servicer and the Noteholders of all amounts required to be paid
under this Agreement, the Indenture and the Trust Agreement, all
amounts on deposit in the Trust Accounts (other than, in the case
of the Note Distribution Account, amounts to be paid to the Note-
holders) shall be paid to the Certificateholders (as described on
Exhibit C) and all other assets of the Issuer shall be
transferred to the Certificateholders, in each case pro rata
according to the outstanding balance of the Trust Certificates as
a distribution on the Trust Certificates.
(c) This Agreement and the respective obligations
and responsibilities of the Issuer, the Seller, the Servicer and
the Indenture Trustee created pursuant to this Agreement (other
than the obligations of the Indenture Trustee under this Article
VIII) will terminate, except with respect to the duties described
in Section 6.2, upon the payment and transfer to the
Certificateholders described in Section 8.1(b).
8.2 Notice of Final Payment. As promptly as
practicable the Servicer, on behalf of the Issuer, will give
written notice to the Indenture Trustee and the Owner Trustee
that the final payment of principal and interest on the Class A
Notes or the Class B Notes will be made on a Payment Date. Such
notice will be accompanied by an Officer's Certificate setting
forth the information which would be specified in a statement
given pursuant to Section 3.10(b) relating to the period during
the then current Transaction Year through the final Payment Date
specified in such notice.
8.3 Optional Purchase.
(a) Requirements. The Servicer will have the
option (but not the obligation) (the "Purchase Option") to
purchase all of the assets of the Issuer (other than the Trust
Accounts) on any Payment Date (i) if on such Payment Date (after
giving effect to the transfers and payments otherwise to be made
pursuant to Section 4.8 on such Payment Date) the sum of the
Outstanding Class A Principal Balance and the Outstanding Class B
Principal Balance is or would be less than 10% of the sum of the
Initial Class A Principal Balance and the Initial Class B
Principal Balance and (ii) the Servicer Purchase Price (as
defined in (b) below) together with the other amounts on deposit
or to be on deposit in the Note Distribution Account on the
Redemption Date equals or exceeds the amount required to pay in
full the principal amount of the Notes together with accrued
interest thereon through the Redemption Date at the Class A
Interest Rate or the Class B Interest Rate, as applicable.
(b) Exercise of Purchase Option. To exercise the
Purchase Option as of any Payment Date, the Servicer shall
deposit in the Collection Account on or prior to such Payment
Date an amount (the "Servicer Purchase Price") equal to the
Aggregate Discounted Lease and Residual Balances as of the
related Determination Date plus the appraised value of any other
property (other than the Trust Accounts) held by the Trust (such
value to be mutually agreed upon (or determined by an appraiser
mutually agreed upon) by the Servicer, the Owner Trustee and the
Indenture Trustee). Upon such deposit, the Servicer shall
succeed to all interests in and to the Trust (other than the
Trust Accounts). The amount so deposited shall be included in
the Available Amount on such Payment Date.
(c) Notice of Exercise. The Servicer shall
timely provide to the Issuer and the Indenture Trustee and the
Owner Trustee notice of the Servicer's election to exercise the
Purchase Option.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Amendment.
(a) This Agreement may be amended by the Seller,
the Servicer and the Issuer with the consent of the Indenture
Trustee and the Owner Trustee, but without the consent of any of
the Noteholders or the Certificateholders, (i) to cure any
ambiguity, (ii) to correct or supplement any provision in this
Agreement that may be defective or inconsistent with any other
provision in this Agreement, (iii) to add or supplement any
credit enhancement for the benefit of the Noteholders (provided
that if any such addition shall affect any class of Noteholders
differently than any other class of Noteholders then such
addition shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
class of Noteholders), (iv) add to the covenants, restrictions or
obligations of the Seller, the Servicer, the Issuer, the Owner
Trustee or the Indenture Trustee or (v) add, change or eliminate
any other provision of this Agreement in any manner that shall
not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of the Noteholders.
(b) This Agreement may also be amended from time
to time by the Seller, the Servicer and the Issuer with the
consent of the Indenture Trustee and the Owner Trustee, and the
consent of Noteholders whose Notes evidence, in the aggregate,
more than 50% of the sum of the then Outstanding Class A
Principal Balance and the then Outstanding Class B Principal
Balance, in each case as of the preceding Payment Date (which
consent, shall be conclusive and binding on such Person and on
all future Noteholders and holders of any Note issued upon the
transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Note)
and the consent of the Certificateholders 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 Noteholders or the Certificateholders;
provided, however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or payments
that shall be required to be made on any Note or the interest
rate for any class of Notes, or (ii) reduce the aforesaid
percentage required to consent to any such amendment, without the
consent of all of the Noteholders.
(c) Prior to the execution of any such amendment
or consent, the Indenture Trustee shall furnish written
notification of the substance of such amendment or consent to the
Rating Agency.
(d) Promptly after the execution of any such
amendment or consent, the Indenture Trustee shall furnish written
notification of the substance of such amendment or consent or a
true copy thereof to each Noteholder and Certificateholder.
(e) It shall not be necessary for the consent of
Noteholders or the Certificateholders pursuant to subsection
9.1(b) to approve the particular form of any proposed amendment
or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such
consents (and any other consents of Noteholders or the
Certificateholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by
Noteholders and the Certificateholders shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe,
including the establishment of record dates.
(f) Prior to the execution of any amendment to
this Agreement, the Indenture Trustee and the Owner Trustee shall
be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or
permitted by this Agreement. The Indenture Trustee may, but
shall not be obligated to, enter into any such amendment which
affects the Indenture Trustee's or the Owner Trustee's,
respectively, own rights, duties or immunities under this
Agreement or otherwise.
(g) Each of Trans Leasing and the Seller agrees
that it shall not amend or agree to any amendment of the
Contribution and Sale Agreement unless such amendment would be
permissible under the terms of this Section 9.1, as if this
Section 9.1 were contained in the Contribution and Sale
Agreement.
9.2 Evidence of Filings. Subject to the provisos
in Section 2.1(b), the Servicer will cause this Agreement, all
amendments to this Agreement, and all financing statements and
continuation statements and any other necessary documents
relating to the Indenture Trustee's right, title and interest to
the Trust Estate, to be promptly recorded, registered and filed
(and at all times to be kept recorded, registered and filed) all
in such manner and in such places as may be required by law to
preserve and protect fully the right, title and interest of the
Indenture Trustee to all property comprising the Trust Estate,
all as provided in, and subject to, Sections 2.1(b) and 3.7(c).
The Servicer will deliver to the Indenture Trustee a file-stamped
copy of, or filing receipt for, any document recorded, registered
or filed as provided in Section 2.1(b) or 3.7(c), promptly after
such copy or receipt becomes available. The Seller will
cooperate fully with the Servicer in connection with the perfor-
xxxxx of such Sections and will execute any and all documents
reasonably required to fulfill the intent of such Sections.
9.3 Governing Law. THIS AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS CONFLICT OF
LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
9.4 Notices. Except as otherwise provided in
this Agreement, any notice or other communication herein required
or permitted to be given shall be in writing and may be delivered
in person, with receipt acknowledged, or sent by United States
mail, registered or certified, postage prepaid and return receipt
requested, or by Federal Express or other nationally recognized
overnight courier service, postage prepaid and confirmation of
receipt requested, and addressed as follows (or at such other
address as may be substituted by notice given as herein
provided):
If to the Seller:
TL Lease Funding Corp. IV
c/o The Corporation Trust Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
with a copy (which copy will not constitute
notice to Seller) to each of:
Trans Leasing International, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Sugar
If to the Issuer:
Bankers Trust (Delaware)
0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy (which copy will not constitute
notice to the Transferor) to each of:
Bankers Trust Company
0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust & Agency Group -
Structured Finance
Trans Leasing International, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Sugar
If to the Servicer:
Trans Leasing International, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy (which copy will not constitute
notice to the Servicer) to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Sugar
If to the Indenture Trustee:
Manufacturers and Traders Trust Company
Xxx X&X Xxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Assistant Vice
President, Corporate Trust
Administration
If to the Owner Trustee:
Bankers Trust (Delaware)
0000 Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
with a copy to:
Bankers Trust Company
0 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust & Agency Group
- Structured Finance
If to the Rating Agency:
Standard & Poor's Ratings Services
00 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Asset Backed Surveillance
Every notice, demand, request, consent, approval, declaration or
other communication hereunder shall be deemed to have been duly
given or served on the date on which the same shall have been
personally delivered, with receipt acknowledged, three (3)
Business Days after the same shall have been deposited in the
United States mail or on the next succeeding Business Day if the
same has been sent by Federal Express or other nationally
recognized overnight courier service. Failure or delay in
delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the Persons
designated above to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
9.5 Severability of Provisions. If any covenant,
agreement, provision or term of this Agreement is held invalid
for any reason whatsoever, then such covenant, agreement,
provision or term will be deemed severable from the remaining
covenants, agreements, provisions and terms of this Agreement and
will in no way affect the validity or enforceability of the other
provisions of this Agreement or of the Notes or the Trust
Certificate or rights of the Noteholders or the
Certificateholders.
9.6 Assignment. This Agreement may not be
assigned by the Servicer, except as provided in Sections 3.1(e),
6.3, 6.4 or 7.2, without the prior consent of Holders of Notes
evidencing not less than 50% of the sum of the then Outstanding
Class A Principal and the then Outstanding Class B Principal
Balance, and the Certificateholders.
9.7 Schedules and Exhibits. The Schedules and
Exhibits constitute a part of this Agreement and are incorporated
into this Agreement for all purposes.
9.8 No Waiver; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of the
Seller, the Servicer, the Indenture Trustee, the Owner Trustee or
any Holder, of any right, remedy, power or privilege under this
Agreement, will operate as a waiver of such right, remedy, power
or privilege; nor will any single or partial exercise of any
right, remedy, power or privilege under this Agreement preclude
any other or further exercise of such right, remedy, power or
privilege or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided
under this Agreement are cumulative and not exhaustive of any
other rights, remedies, powers and privileges which may be
provided by law.
9.9 Counterparts. This Agreement may be executed
in two or more counterparts (and by different parties on separate
counterparts), each of which will be an original, but all of
which together will constitute one and the same instrument.
9.10 Binding Effect; Third-Party Beneficiaries.
This Agreement will inure to the benefit of and be binding upon
the Parties, the Holders and their respective successors and
permitted assigns. Except as otherwise provided in this
Agreement, no other Person will have any right or obligation
pursuant to this Agreement.
9.11 Merger and Integration. Except as
specifically stated otherwise in this Agreement, this Agreement
sets forth the entire understanding of the Parties relating to
the subject matter hereof, and all prior understandings, written
or oral, are superseded by this Agreement. This Agreement may
not be modified, amended, waived or supplemented except as
expressly provided in this Agreement.
9.12 Headings. The headings used in this
Agreement are for the purpose of reference only and will not
otherwise affect the meaning or interpretation of any provision
of this Agreement.
9.13 Certificates and Opinions of Counsel. Any
certificate delivered by any Person in connection with this
Agreement or the transactions contemplated hereby may be based,
insofar as it relates to legal matters, upon an Opinion of
Counsel, unless the Person delivering such certificate knows, or
in the exercise of reasonable care should know, that such Opinion
of Counsel is erroneous. Any Opinion of Counsel or certificate
delivered under this Agreement may be based, insofar as it
relates to factual matters, upon a certificate of, or
representations by, a Responsible Officer or Responsible Officers
of the Servicer or the Originator, as the case may be, stating
that the information with respect to such factual matters is in
the possession of the Servicer or the Originator, as the case may
be, unless the Person delivering such Opinion of Counsel or
certificate knows, or in the exercise of reasonable care should
know, that such certificate, opinion or representations with
respect to such matters are erroneous. Any exception or
qualification contained in any Opinion of Counsel delivered in
connection with this Agreement or the transactions contemplated
hereby must be reasonably satisfactory to the Indenture Trustee
and the Owner Trustee. Any such Opinion of Counsel or
certificate may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by
an independent public accountant or firm of accountants, unless
such counsel or the Person delivering such Opinion of Counsel or
certificate knows, or in the exercise of reasonable care should
know, that the certificate, opinions or representations with
respect to the accounting matters are erroneous.
9.14 Assignment to Indenture Trustee. The Seller
hereby acknowledges and consents to any mortgage, pledge, assign-
ment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders and (only to the extent expressly provided in the
Indenture) the Certificateholders of all right, title and
interest of the Issuer in, to and under the Receivables and/or
the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
9.15 No Petition Covenants. Notwithstanding any
prior termination of this Agreement, the Servicer and the Seller
shall not, prior to the date which is one year and one day after
the final distribution with respect to the Notes and the Trust
Certificate, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the
Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its Property, or ordering the
winding up or liquidation of the affairs of the Issuer.
9.16 Limitation of Liability of Indenture Trustee
and Owner Trustee.
(a) Notwithstanding anything contained herein to
the contrary, this Agreement has been acknowledged and accepted
by Manufacturers and Traders Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall
Manufacturers and Traders Trust Company have any liability for
the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as
to all of which recourse shall be had solely to the assets of the
Issuer. For all purposes of this Agreement, in the performance
of any duties or obligations of the Issuer hereunder, the
Indenture Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of the Indenture.
(b) Notwithstanding anything contained herein to
the contrary, this Agreement has been executed by Bankers Trust
(Delaware) not in its individual capacity but solely in its
capacity as Owner Trustee of the Issuer and in no event shall
Bankers Trust (Delaware) in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee of
the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all
purposes of this Agreement, in the performance of its duties or
obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.
9.17 Confidential Information. Each of the Issuer
and the Indenture Trustee hereby agrees that it shall neither use
nor disclose to any Person the names and addresses of the Lessees
or the vendors of the Equipment, except in connection with the
enforcement of the Issuer's rights hereunder, under the Indenture
or under the Receivables or as required by law.
9.18 Available Information. So long as the Class
B Notes are outstanding and are "restricted securities" within
the meaning of Rule 144 (a)(3) under the Securities Act, the
Seller shall provide to any Holder of Class B Notes and to any
prospective purchase of Class B Notes designated by a Holder of
Class B Notes, upon request of such Holder or prospective
purchaser, the information required to be delivered pursuant to
Rule 144A under the Securities Act to permit compliance with Rule
144A under the Securities Act in connection with transfers of the
Class B Notes.
* * * *
IN WITNESS WHEREOF, the Seller, the Servicer and the
Trust have caused this Pooling and Servicing Agreement to be duly
executed by their respective officers as of the day and year
written above.
TRANS LEASING INTERNATIONAL, INC.,
as Servicer
By:________________________________
Name:
Title:
TL LEASE FUNDING CORP. IV
By:________________________________
Name:
Title:
TLFC IV EQUIPMENT LEASE TRUST 1995-1
By: BANKERS TRUST (DELAWARE)
not in its individual capacity
but solely as Owner Trustee of
the Trust
By:________________________________
Name:
Title:
Acknowledged and Accepted:
MANUFACTURERS AND TRADERS TRUST COMPANY,
not in its individual capacity but solely
as Indenture Trustee
By:________________________________
Name:
Title:
Exhibit C
COLLECTION ACCOUNT
No. 185258167
Designation: MANUFACTURERS AND TRADERS TRUST
COMPANY, FOR THE BENEFIT OF TL
LEASE FUNDING CORP. IV
Where established: MANUFACTURERS AND TRADERS TRUST
COMPANY (ABA #000000000)
SERVICER ACCOUNT
No. 7804563
Designation: TRANS LEASING INTERNATIONAL, INC.
Where established: BANK OF AMERICA ILLINOIS (ABA
#000000000)
NOTE DISTRIBUTION ACCOUNT
No. 185258175
Designation: MANUFACTURERS AND TRADERS TRUST
COMPANY, FOR THE BENEFIT OF TL
LEASE FUNDING CORP. IV
Where established: MANUFACTURERS AND TRADERS TRUST
COMPANY (ABA #000000000)
Payments to the
Certificateholders
shall be made by
deposit into
the Servicer Account
or as otherwise
directed by the
Certificateholders
