Exhibit 4.3
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POOLING AND SERVICING AGREEMENT
among
CIT EQUIPMENT COLLATERAL 2005-EF1,
as Trust,
CIT FUNDING COMPANY, LLC,
as Depositor,
CIT FINANCIAL USA, INC.,
in its individual capacity, and
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Servicer
Dated as of July 1, 2005
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................................1
Section 1.01 Definitions.......................................................................1
Section 1.02 Usage of Terms...................................................................37
Section 1.03 Section References...............................................................37
Section 1.04 Accounting Terms.................................................................37
ARTICLE II FUNDINGS OF TRUST; TRANSFERS OF CONTRACTS.................................................37
Section 2.01 Creation and Funding of Trust; Transfer of Transferred Assets to Trust...........37
Section 2.02 Acceptance by Trust..............................................................38
Section 2.03 Conveyance of Substitute Contracts...............................................39
Section 2.04 Release of Excluded Amounts......................................................40
Section 2.05 Waiver...........................................................................41
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................................41
Section 3.01 Representations and Warranties of CFUSA..........................................41
Section 3.02 Representations and Warranties of the Depositor..................................41
Section 3.03 Representations and Warranties of the Servicer...................................44
ARTICLE IV PERFECTION OF TRANSFERS AND PROTECTION OF SECURITY INTERESTS..............................46
Section 4.01 Custody of Contracts.............................................................46
Section 4.02 Filings..........................................................................47
Section 4.03 Name Change or Relocation........................................................47
Section 4.04 Maintenance of Security Interests in Vehicles; Retitling.........................48
ARTICLE V SERVICING OF CONTRACTS....................................................................49
Section 5.01 Initial Servicer's Appointment and Acceptance; Responsibility for Contract
Administration...................................................................49
Section 5.02 General Duties...................................................................49
Section 5.03 Assignment or Replacement........................................................50
Section 5.04 Disposition Upon Termination of Contract.........................................50
Section 5.05 Subservicers.....................................................................50
Section 5.06 Further Assurance................................................................50
Section 5.07 Notice to Obligors...............................................................50
Section 5.08 Collection Efforts; Modification of Contracts....................................51
Section 5.09 Prepayments of Certain Contracts.................................................52
Section 5.10 Certain Extensions; Acceleration.................................................52
Section 5.11 Taxes and Other Amounts..........................................................52
Section 5.12 Suits by Servicer................................................................52
Section 5.13 Remittances......................................................................53
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Section 5.14 Servicer Advances................................................................53
Section 5.15 Realization Upon Liquidated Contract.............................................53
Section 5.16 Maintenance of Insurance Policies................................................53
Section 5.17 Certain Other Duties With Respect to Trust.......................................53
Section 5.18 Servicing Compensation...........................................................54
Section 5.19 Payment of Certain Expenses by Servicer..........................................54
Section 5.20 Records..........................................................................54
Section 5.21 Inspection.......................................................................54
Section 5.22 Trust To Cooperate in Releases...................................................55
Section 5.23 Separate Entity Existence........................................................55
Section 5.24 Assignment of Servicing..........................................................55
ARTICLE VI COVENANTS OF THE DEPOSITOR................................................................55
Section 6.01 LLC Existence....................................................................55
Section 6.02 Contracts Not to be Evidenced by Promissory Notes................................56
Section 6.03 Security Interests...............................................................56
Section 6.04 Delivery of Collections..........................................................56
Section 6.05 Regulatory Filings...............................................................56
Section 6.06 Compliance With Law..............................................................56
Section 6.07 Activities.......................................................................56
Section 6.08 Indebtedness.....................................................................57
Section 6.09 Guarantees.......................................................................57
Section 6.10 Investments......................................................................57
Section 6.11 Merger; Transfers................................................................57
Section 6.12 Payments.........................................................................57
Section 6.13 Other Agreements.................................................................57
Section 6.14 Separate Entity Existence........................................................58
Section 6.15 Location; Records................................................................59
Section 6.16 Liability of Depositor; Indemnities..............................................59
Section 6.17 Bankruptcy Limitations...........................................................61
Section 6.18 Limitation on Liability of Depositor and Others..................................61
ARTICLE VII ESTABLISHMENT OF ACCOUNTS; PAYMENTS.......................................................61
Section 7.01 Trust Accounts; Collections......................................................61
Section 7.02 Reserve Account..................................................................63
Section 7.03 Trust Account Procedures.........................................................63
Section 7.04 Securityholder Payments..........................................................64
Section 7.05 Allocations and Payments.........................................................64
Section 7.06 Repurchases of, or Substitution for, Contracts for Breach of Representations
and Warranties...................................................................70
Section 7.07 Reassignment of Repurchased or Substituted Contracts.............................71
Section 7.08 The Servicer's Purchase Option...................................................71
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TABLE OF CONTENTS
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ARTICLE VIII SERVICER DEFAULTS; SERVICING TRANSFER.....................................................71
Section 8.01 Servicer Default.................................................................71
Section 8.02 Servicing Transfer...............................................................72
Section 8.03 Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act.......73
Section 8.04 Notifications to Noteholders and the Equity Certificateholders...................74
Section 8.05 Effect of Transfer...............................................................75
Section 8.06 Database File....................................................................75
Section 8.07 Successor Servicer Indemnification...............................................75
Section 8.08 Responsibilities of the Successor Servicer.......................................75
Section 8.09 Servicer Not to Resign...........................................................76
ARTICLE IX SERVICER REPORTING........................................................................76
Section 9.01 Monthly Servicer's Reports.......................................................76
Section 9.02 Officer's Certificate............................................................77
Section 9.03 Other Data.......................................................................77
Section 9.04 Annual Reporting; Evidence as to Compliance......................................77
Section 9.05 Annual Statement of Compliance from Servicer.....................................77
ARTICLE X TERMINATION...............................................................................78
Section 10.01 Sale of Trust Assets...........................................................78
ARTICLE XI MISCELLANEOUS.............................................................................78
Section 11.01 Amendments.....................................................................78
Section 11.02 Governing Law..................................................................80
Section 11.03 Notices........................................................................80
Section 11.04 Severability of Provisions.....................................................82
Section 11.05 Third Party Beneficiaries......................................................82
Section 11.06 Counterparts...................................................................82
Section 11.07 Headings.......................................................................83
Section 11.08 No Bankruptcy Petition; Disclaimer and Subordination...........................83
Section 11.09 Jurisdiction...................................................................84
Section 11.10 Servicer Indemnity.............................................................84
Section 11.11 Limitation of Liability of Owner Trustee.......................................84
Section 11.12 WAIVER OF JURY TRIAL...........................................................84
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EXHIBITS
Exhibit A Form of VFC Assignment...........................................................A-1
Exhibit B Initial Schedule of Contracts....................................................B-1
Exhibit C Form of Monthly Servicer's Report................................................C-1
Exhibit D Form of Substitution Transfer Agreement..........................................D-1
Exhibit E Schedule of Representations and Warranties.......................................E-1
Exhibit F Minimum Value Filing Exceptions..................................................F-1
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This POOLING AND SERVICING AGREEMENT dated as of July 1, 2005
(as amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof, this "Agreement"), is among CIT Equipment
Collateral 2005-EF1, a Delaware statutory trust (together with its successors
and assigns, the "Trust"), CIT Funding Company, LLC, a Delaware limited
liability company (together with its successors and assigns, the "Depositor"),
CIT Financial USA, Inc. (together with its successors and assigns, "CFUSA") and
The CIT Group/Equipment Financing, Inc., a Delaware corporation (together with
its successors and assigns, "CITEF") and in its capacity as servicer hereunder
(the "Servicer").
WHEREAS the Depositor desires to fund the Trust by selling,
conveying and assigning from time to time, pursuant hereto or pursuant to
Substitution Transfer Agreements hereunder, designated Contracts or pools of
Contracts together with certain related security therefor and other related
rights and property as further described herein, which Contracts were originated
by the Financing Originator, or acquired by purchase and assignment by the
Financing Originator from the prior owner thereof, and subsequently conveyed (i)
by the Financing Originator to CFUSA; (ii) by CFUSA to the Depositor, with
respect to Contracts and related assets acquired by CFUSA from the Financing
Originator as described in clause (i) above; (iii) in the case of the VFC
Contracts, by the Depositor to the VFC Trust (as defined herein); and (iv) in
the case of the VFC Contracts warehoused in the VFC Trust, by the VFC Trust back
to the Depositor;
WHEREAS the Trust is willing to purchase and accept assignment
of such Contracts and related assets; and
WHEREAS the Servicer is willing to service such Contracts and
related assets for the benefit and account of the Trust and the Holders pursuant
to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accounting Date" means, with respect to a Payment Date, the
last day of the preceding calendar month.
"Accountant's Report" has the meaning specified in Section
9.04.
"Accrual Period" means, with respect to any Payment Date, with
respect to the Class A-1 Notes and the Class A-4 Notes, the period from and
including the immediately preceding Payment Date to but excluding such Payment
Date (or, in the case of the initial Accrual Period, from and including the
Closing Date to but excluding the first Payment Date following the Closing
Date), and with respect to each other Class of Notes, the period from and
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including the 20th day of the immediately preceding calendar month to but
excluding the 20th day of the related calendar month, provided, that in each
case, the initial Accrual Period following the Closing Date shall be the period
from and including the Closing Date to but excluding September 20, 2005.
"Addition Notice" means, with respect to any transfer of
Subsequent Contracts to the Trust pursuant to Section 2.03 (and the Depositor's
corresponding prior purchase of such Contracts from CFUSA), a notice, which
shall be given at least five days prior to the related Subsequent Transfer Date,
identifying the Subsequent Contracts to be transferred, the Contract Principal
Balance of such Subsequent Contracts and the related Substitution Event (with
respect to an identified Contract or Contracts then in the Contract Pool) to
which such Subsequent Contract relates, with such notice to be signed both by
the Depositor and CFUSA.
"Administration Agreement" means the Administration Agreement
dated as of July 1, 2005 (as amended, restated, supplemented, or otherwise
modified from time to time in accordance with the terms thereof) by and among
the Trust, CITEF, the Depositor and the Indenture Trustee.
"Administrator" shall be the party named as such under the
Administration Agreement.
"Affiliate" of any specified Person means any other Person
controlling or controlled by, or under common control with, such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing.
"Aggregate Principal Amount" means, with respect to any group
of Notes of any Class, at any date of determination, the sum of the Principal
Amounts of such Notes on such date of determination.
"Agreement" means this Pooling and Servicing Agreement, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof.
"Allocation Criteria" means, with respect to the allocation of
Insurance Proceeds or Liquidation Proceeds between the Trust (for inclusion as
Collections) and the Depositor, as contemplated in the definition of Available
Funds, that Insurance Proceeds or Liquidation Proceeds with respect to the
Contracts consisting of Leases are allocable pro rata between inclusion as
Available Funds in respect of the Contract Pool, on the one hand, and directly
to the Depositor, on the other, based upon (i) for allocation to Available
Funds, the Required Payoff Amount for such Lease (determined as of the last day
of the Collection Period during which such Lease became a Liquidated Contract),
and (ii) for allocation to the Depositor, the Book Value of the related
Equipment; provided, that in the event the Insurance Proceeds or Liquidation
Proceeds in respect of a particular Lease exceed the sum of such Required Payoff
Amount for such Lease plus the Book Value of the related Equipment, any such
excess shall be allocated solely to the Depositor.
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"Applicable Security" means, with respect to a Vendor Loan,
any (i) Secondary Contract securing such Vendor Loan and (ii) Equipment securing
such Vendor Loan or a related Secondary Contract.
"Assignment Agreement" means the Assignment Agreement, dated
July 1, 2005 (as amended, restated, supplemented, or otherwise modified from
time to time in accordance with the terms thereof), by and between CFUSA, as
transferor, and CITEF.
"Available Funds" means, as to any Payment Date, the sum of
(i) the Related Collection Period Collections for such Payment Date, (ii) any
Servicer Advances on deposit in the Collection Account as of the immediately
preceding Deposit Date, (iii) any Swap Counterparty Payments made by the Swap
Counterparty in connection with the Class A-4 Notes and (iv) to the extent
necessary to pay interest, amounts of the type described in clause (i) above
that the Trust received after the end of the related Collection Period;
provided, however, that Available Funds shall not include any amount allocable
to the Depositor as representing Excluded Residual Investments.
"Available Reserve Amount" means, with respect to a Payment
Date, the amount of funds equal to the lesser of (i) the amount on deposit in
the Reserve Account (determined (a) exclusive of any Investment Earnings thereon
and (b) before giving effect to any deposit to be made or withdrawals from the
Reserve Account with respect to such Payment Date), and (ii) the Specified
Reserve Account Balance.
"Bankruptcy Code" means The United States Bankruptcy Code,
Title 11 et seq., of the United States Code, as amended from time to time.
"Book Value" means, with respect to any Equipment subject to a
Lease, the value of such Equipment as shown on the accounting books and records
of the Financing Originator (or the Depositor, in the case of Equipment relating
to Contracts being transferred pursuant to the VFC Assignment), as of the
Cut-Off Date for the related Lease (it being understood that Book Value
constitutes a measure of the lessor's residual interest in the Equipment as
shown on its books and records as of such date, net of the financial asset shown
on such books and records represented by the discounted Scheduled Payments owing
on the Lease).
"Business Day" means any day which is neither a Saturday or a
Sunday, nor another day on which banking institutions in the cities of
Livingston, New Jersey, Tempe, Arizona or New York, New York are authorized or
obligated by law, executive order, or governmental decree to be closed;
provided, that, for purposes of computing One-Month LIBOR, a Business Day is any
day on which dealings in deposits in United States dollars are transacted in the
London interbank market.
"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.
"Certificate of Formation" means the limited liability company
Certificate of Formation of the Depositor.
"Certificate of Trust" has the meaning given such term in the
Trust Agreement.
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"Certificate Register" has the meaning specified in the Trust
Agreement.
"CFUSA" means CIT Financial USA, Inc., a Delaware corporation.
"CITEF" means The CIT Group/Equipment Financing, Inc., a
Delaware corporation.
"CITEF Contract" means a Contract originated or acquired by
CITEF, but which is not a VFC Contract.
"Class" means any of the group of Notes, or the Equity
Certificate identified herein as the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and
the Class D Notes or the Equity Certificate, as applicable.
"Class A Notes" means the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes.
"Class A-1 Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess, if any, of the Class A-1 Interest Payment
Amount for the preceding Payment Date over the amount that was actually paid in
respect of interest on the Class A-1 Notes on such preceding Payment Date, plus,
to the extent permitted by law, an amount equal to the product of (i) the Class
A-1 Interest Rate, (ii) such excess, and (iii) a fraction equal to the number of
days in the related Accrual Period divided by 360.
"Class A-1 Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class A-1 Monthly Interest Payment Amount and the
Class A-1 Interest Carryover Shortfall for such Payment Date.
"Class A-1 Interest Rate" means 3.852% per annum.
"Class A-1 Maturity Date" means September 15, 2006 (or, if
such day is not a Business Day, the next succeeding Business Day).
"Class A-1 Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class A-1 Interest Rate, (ii) the Initial Class
A-1 Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
Class A-1 Interest Rate, (ii) the Principal Amount of the Class A-1 Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class A-1 Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth.
"Class A-1 Notes" means the 3.852% Class A-1 Receivable-Backed
Notes in the Aggregate Principal Amount of $152,000,000, issued pursuant to the
Indenture.
"Class A-2 Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess, if any, of the Class A-2 Interest Payment
Amount for the preceding Payment
4
Date over the amount that was actually paid in respect of interest on the
Class A-2 Notes on such preceding Payment Date, plus, to the extent permitted by
law, an amount equal to the product of (i) the Class A-2 Interest Rate,
(ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class A-2 Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class A-2 Monthly Interest Payment Amount and the
Class A-2 Interest Carryover Shortfall for such Payment Date.
"Class A-2 Interest Rate" means 4.30% per annum.
"Class A-2 Maturity Date" means December 20, 2007 (or, if such
day is not a Business Day, the next succeeding Business Day thereafter).
"Class A-2 Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class A-2 Interest Rate, (ii) the Initial Class
A-2 Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
Class A-2 Interest Rate, (ii) the Principal Amount of the Class A-2 Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class A-2 Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth.
"Class A-2 Notes" means the 4.30% Class A-2 Receivable-Backed
Notes in the Aggregate Principal Amount of $113,000,000, issued pursuant to the
Indenture.
"Class A-3 Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess, if any, of the Class A-3 Interest Payment
Amount for the preceding Payment
Date over the amount that was actually paid in respect of interest on the Class
A-3 Notes on such preceding Payment Date, plus, to the extent permitted by law,
an amount equal to the product of (i) the Class A-3 Interest Rate, (ii) such
excess, and (iii) a fraction equal to one-twelfth.
"Class A-3 Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class A-3 Monthly Interest Payment Amount and the
Class A-3 Interest Carryover Shortfall for such Payment Date.
"Class A-3 Interest Rate" means 4.42% per annum.
"Class A-3 Maturity Date" means May 20, 2009 (or, if such day
is not a Business Day, the next succeeding Business Day thereafter).
"Class A-3 Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class A-3 Interest Rate, (ii) the Initial Class
A-3 Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
Class A-3 Interest Rate, (ii) the Principal Amount of the Class A-3 Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class A-3 Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth.
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"Class A-3 Notes" means the 4.42% Class A-3 Receivable-Backed
Notes in the Aggregate Principal Amount of $189,000,000, issued pursuant to the
Indenture.
"Class A-4 Interest Carryover Shortfall" means, with respect
to any Payment Date, the excess, if any, of the Class A-4 Interest Payment
Amount for the preceding Payment Date over the amount that was actually paid in
respect of interest on the Class A-4 Notes on such preceding Payment Date, plus,
to the extent permitted by law, an amount equal to the product of (i) the Class
A-4 Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class A-4 Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class A-4 Monthly Interest Payment Amount and the
Class A-4 Interest Carryover Shortfall for such Payment Date.
"Class A-4 Interest Rate " means, (a) prior to the occurrence
of a Swap Event, a floating rate of interest per annum based on One-Month LIBOR
plus 0.04% and (b) following the occurrence of a Swap Event, a rate equal to
4.49228% per annum.
"Class A-4 Maturity Date" means September 20, 2010 (or, if
such day is not a Business Day, the next succeeding Business Day thereafter).
"Class A-4 Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class A-4 Interest Rate, (ii) the Initial Class
A-4 Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, (b) with respect to each subsequent Accrual
Period and the related Payment Date prior to the occurrence of a Swap Event, an
amount equal to the product of (i) the Class A-4 Interest Rate, (ii) the
Principal Amount of the Class A-4 Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class A-4 Noteholders
on or prior to such immediately preceding Payment Date, and (iii) a fraction
equal to the number of days in such Accrual Period divided by 360, and (c) with
respect to each subsequent Accrual Period and the related Payment Date after the
occurrence of a Swap Event, an amount equal to the product of (i) the Class A-4
Interest Rate, (ii) the Principal Amount of the Class A-4 Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class A-4 Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth.
"Class A-4 Notes" means the Floating Rate Class A-4
Receivable-Backed Notes in the Aggregate Principal Amount of $82,100,000, issued
pursuant to the Indenture.
"Class A-4 Supplemental Interest Payment Amount" means with
respect to each Accrual Period and the related Payment Date, an amount equal to
the sum of: (a) Class A-4 Swap Shortfall; plus (b) interest on the Class A-4
Swap Shortfall at a rate of 4.49228% per annum.
"Class A-4 Swap Shortfall" means, upon the occurrence of a
Swap Event, any amount greater than zero calculated as follows: (a) with respect
to the first Accrual Period and the related Payment Date, an amount equal to the
product of (i) the floating rate of interest per annum based on One-Month LIBOR
plus 0.04%, (ii) the Initial Class A-4 Principal Amount, and (iii) a fraction
equal to the number of days in such Accrual Period divided by 360, minus an
amount equal to the product of (i) 4.49228%, (ii) the Initial Class A-4
Principal Amount, and (iii)
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a fraction equal to one twelfth, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
floating rate of interest per annum based on One-Month LIBOR plus 0.04%, (ii)
the Principal Amount of the Class A-4 Notes on the immediately preceding Payment
Date, after giving effect to all payments of principal to Class A-4 Noteholders
on or prior to such immediately preceding Payment Date, and (iii) a fraction
equal to the number of days in such Accrual Period divided by 360, minus an
amount equal to the product of (i) 4.49228%, (ii) the Principal Amount of the
Class A-4 Notes on the immediately preceding Payment Date, after giving effect
to all payments of principal to Class A-4 Noteholders on or prior to such
immediately preceding Payment Date, and (iii) a fraction equal to one twelfth.
"Class B Interest Carryover Shortfall" means, with respect to
any Payment Date, the excess, if any, of the Class B Interest Payment Amount for
the preceding Payment Date over the amount that was actually paid in respect of
interest on the Class B Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class B
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class B Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class B Monthly Interest Payment Amount and the
Class B Interest Carryover Shortfall for such Payment Date.
"Class B Interest Rate" means 4.71% per annum.
"Class B Maturity Date" means December 20, 2010 (or, if such
day is not a Business Day, the next succeeding Business Day thereafter).
"Class B Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class B Interest Rate, (ii) the Initial Class B
Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
Class B Interest Rate, (ii) the Principal Amount of the Class B Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class B Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth.
"Class B Notes" means the 4.71% Class B Receivable-Backed
Notes in the Aggregate Principal Amount of $12,382,000, issued pursuant to the
Indenture.
"Class C Interest Carryover Shortfall" means, with respect to
any Payment Date, the excess, if any, of the Class C Interest Payment Amount for
the preceding Payment Date over the amount that was actually paid in respect of
interest on the Class C Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class C
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class C Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class C Monthly Interest Payment Amount and the
Class C Interest Carryover Shortfall for such Payment Date.
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"Class C Interest Rate" means 4.78% per annum.
"Class C Maturity Date" means June 20, 2011 (or, if such day
is not a Business Day, the next succeeding Business Day thereafter).
"Class C Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class C Interest Rate, (ii) the Initial Class C
Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
Class C Interest Rate, (ii) the Principal Amount of the Class C Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class C Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth.
"Class C Notes" means the Class C 4.78% Receivable-Backed
Notes in the Aggregate Principal Amount of $20,050,000, issued pursuant to the
Indenture.
"Class D Interest Carryover Shortfall" means, with respect to
any Payment Date, the excess, if any, of the Class D Interest Payment Amount for
the preceding Payment Date over the amount that was actually paid in respect of
interest on the Class D Notes on such preceding Payment Date, plus, to the
extent permitted by law, an amount equal to the product of (i) the Class D
Interest Rate, (ii) such excess, and (iii) a fraction equal to one-twelfth.
"Class D Interest Payment Amount" means, with respect to any
Payment Date, the sum of the Class D Monthly Interest Payment Amount and the
Class D Interest Carryover Shortfall for such Payment Date.
"Class D Interest Rate" means 5.10% per annum.
"Class D Maturity Date" means January 20, 2012 (or, if such
day is not a Business Day, the next succeeding Business Day thereafter).
"Class D Monthly Interest Payment Amount" means (a) with
respect to the first Accrual Period and the related Payment Date, an amount
equal to the product of (i) the Class D Interest Rate, (ii) the Initial Class D
Principal Amount, and (iii) a fraction equal to the number of days in such
Accrual Period divided by 360, and (b) with respect to each subsequent Accrual
Period and the related Payment Date, an amount equal to the product of (i) the
Class D Interest Rate, (ii) the Principal Amount of the Class D Notes on the
immediately preceding Payment Date, after giving effect to all payments of
principal to Class D Noteholders on or prior to such immediately preceding
Payment Date, and (iii) a fraction equal to one-twelfth
"Class D Notes" means the Class D 5.10% Receivable-Backed
Notes in the Aggregate Principal Amount of $21,228,735, issued pursuant to the
Indenture.
"Closing Date" means August 24, 2005.
"Code" means the Internal Revenue Code of 1986, as amended.
8
"Collection Account" means the account so designated
established pursuant to Section 7.01.
"Collection Account Property" means the Collection Account,
all amounts and investments held from time to time in the Collection Account
(whether in the form of deposit accounts, physical property, book-entry
securities, uncertificated securities or otherwise), and all proceeds of the
foregoing.
"Collection Period" means a period beginning on the first day
of a calendar month and ending on, but not including, the first day of the next
calendar month, provided that the first Collection Period shall be the two
calendar months preceding the month in which the first Payment Date occurs.
"Collections" means the sum of (i) all Scheduled Payments on
the Contracts, including (without duplication) Scheduled Payments on Defaulted
Contracts, received on or after the Cut-Off Date (excluding the Excluded
Amounts); (ii) any Prepayments received on the Contracts on or after the Cut-Off
Date (other than (a) in the case of a Lease, any Excluded Residual Investment
which shall be allocated to the Depositor, or (b) in the case of a Prepaid
Contract for which a substitution has been made in accordance with Section 2.03
of this Agreement, that portion thereof to which the Depositor is entitled
pursuant to Section 2.03); (iii) the Purchase Amount of any Contracts purchased
by CFUSA in accordance with Section 7.06 of this Agreement (other than any
portion thereof attributable in the case of a Lease to the Excluded Residual
Investments); (iv) the amount paid by CFUSA or the Depositor to purchase the
Contracts pursuant to Section 7.08 of this Agreement; (v) that portion of the
Liquidation Proceeds received in respect of any Contracts and the disposition of
the related Equipment on or after the Cut-Off Date allocated to the Trust; and
any earnings on the investment of amounts credited to amounts of deposit in the
Collection Account; provided that, Collections shall not include any amounts
received with respect to any Excluded Residual Investment.
"Commission" means the United States Securities and Exchange
Commission.
"Computer Disk" means the computer disk generated by the
Servicer (or any subservicer under Section 5.05), which provides information
relating to Contracts in the Contract Pool and which was used by such party in
selecting the related Contracts for conveyance and inclusion in such Contract
Pool, and includes the master file and the history file as well as servicing
information with respect to such Contracts.
"Contract" means each End-User Contract and each Vendor Loan
listed on any Schedule of Contracts but, unless otherwise specified herein,
shall not refer to any Secondary Contract.
"Contract Assets" means, with respect to any Contracts
(including Substitute Contracts) and related assets conveyed or being conveyed
to the Depositor pursuant to a Substitution Assignment Agreement, the VFC
Assignment or the Non-VFC Purchase Agreement, and concurrently conveyed or being
conveyed by the Depositor to the Trust pursuant to this Agreement or a
Substitution Transfer Agreement, all right, title and interest of CFUSA or the
VFC Trust, as the case may be, in, to and under:
9
(i) such Contracts, and all monies due or to become
due in payment of such Contracts on and after the relevant Cut-Off Date, and
including Scheduled Payments due but not yet received prior to the relevant
Cut-Off Date and all other Scheduled Payments due or becoming due on or after
the relevant Cut-Off Date, any Prepayments, any payments in respect of a
casualty or early termination, any Liquidation Proceeds received with respect
thereto, but excluding any Scheduled Payments both due and actually received and
processed prior to the related Cut-Off Date and any Excluded Amounts;
(ii) the Financed Items related to such Contracts and,
in the case of any Vendor Loan, related Applicable Security, including all
proceeds from any sale or other disposition of such Financed Items (but subject
to the exclusion and release herein of Excluded Amounts);
(iii) the related Contract Files;
(iv) all payments made or to be made in the future
with respect to such Contracts or the Obligor thereunder under any Vendor
Agreements with the Financing Originator and under any guarantee or similar
credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such
Contract; and
(vi) all income from and proceeds of the foregoing.
"Contract File" means, with respect to each Contract, the
fully executed original counterpart (for UCC purposes) of the Contract, the
original certificate of title or other title document with respect to the
related Equipment (if applicable), and otherwise such documents or electronic
entries, if any, that the Servicer (or Financing Originator) keeps on file in
accordance with Customary Policies and Procedures evidencing ownership of such
Equipment (if applicable), and all other documents originally delivered to the
Financing Originator or held by the Servicer (or subservicer under Section 5.05)
with respect to any Contract.
"Contract Pool" means, as of any date of determination, the
aggregate of the Contracts which have been conveyed to the Trust and which
constitute as of such date Trust Assets under the terms and provisions hereof.
"Contract Pool Principal Balance" means with respect to any
Payment Date, the sum of the Contract Principal Balances (computed as of the
related Accounting Date) for all Contracts; provided that, on any Payment Date
on which the Contract Pool Principal Balance is determined to be less than or
equal to $10,000,000, then the Contract Pool Principal Balance will deemed to
equal $0.
"Contract Principal Balance" means as of any Accounting Date,
with respect to any Contract, the present value of the unpaid Scheduled Payments
due on such Contract after such Accounting Date (excluding all Scheduled
Payments due on or prior to, but not received as of, such Accounting Date, as
well as any Scheduled Payments due after, but received as of, such Accounting
Date), after giving effect to any Prepayments received on or prior to such
Accounting Date, discounted monthly at the Discount Rate (assuming, for purposes
of such
10
calculation, that each Scheduled Payment is due on the last day of the
applicable Collection Period); provided that, for purposes of computing the
Contract Pool Principal Balance or, except where stated otherwise, for any other
purpose described herein, the Contract Principal Balance of any Defaulted
Contract as of the end of a given Collection Period will be deemed to be its
Contract Principal Balance plus Scheduled Payments due but not yet paid on such
Contract as of the first day of the Collection Period during which it became a
Defaulted Contract, less the Defaulted Contract Valuation Amount for such
Defaulted Contract, except that the Contract Principal Balance of any Contract
which became a Liquidated Contract during a given Collection Period or which was
a Contract which CFUSA was obligated to purchase from the Trust pursuant to
Section 7.06 of this Agreement as of the end of a given Collection Period will
be deemed to be zero on and after the last day of the Collection Period.
"Corporate Trust Office" means the corporate trust office of
the Owner Trustee, which office initially shall be located at 000 Xxxxxxx Xxxxxx
0-X, Xxx Xxxx, XX 00000 or such other office at such other address as the Owner
Trustee may designate from time to time by notice to the Equity
Certificateholder, the Servicer, the Administrator and the Depositor.
"CSA" means each conditional sales agreement, including, as
applicable, schedules, subschedules, supplements and amendments to a master
conditional sales agreement, pursuant to which specified assets were
conditionally sold to an Obligor at specified monthly, quarterly, semi-annual or
annual payments.
"Cumulative Loss Ratio" means the ratio, expressed as a
percentage, of (a) the Cumulative Net Losses, over (b) the Initial Contract Pool
Principal Balance.
"Cumulative Net Losses" means the aggregate of the Defaulted
Contract Valuation Amounts minus an amount equal to the sum of any subsequent
cash collections on Defaulted Contracts, including Liquidation Proceeds.
"Customary Policies and Procedures" means, with respect to any
Contract Assets, the customary standards, policies and procedures of the
Financing Originator with respect to such Contract Assets in effect at the time
of the Cut-Off Date with respect thereto, as the same may be changed from time
to time (provided that any such change does not materially impair (i) the
collectibility of the related Contract, or (ii) the Servicer's ability to
perform its obligations under this Agreement with respect thereto).
"Cut-Off Date" means July 1, 2005, and with respect to any
Substitute Contract, the Substitution Cut-Off Date (as the context may require).
"Date of Processing" means, with respect to any transaction or
Collection, the date on which such transaction or Collection is first recorded
(and, in the case of a transaction or Collection related to a particular
Contract, identified as to such particular Contract as part of Available Funds)
on the Financing Originator's or the Servicer's computer master file of
Contracts (without regard to the effective date of such recordation).
"Defaulted Contract" means any Contract in the Contract Pool
with respect to which there has occurred one or more of the following: (i) all
or some portion of any Scheduled Payment under the Contract (constituting at
least $25 of such Scheduled Payment due) is
11
180 days or more delinquent from its original due date (or, with respect to a
Contract for which there exists available payment recourse to a Vendor to
satisfy the amount in default, and which recourse was not yet available
(pursuant to the contractual terms thereof) or had not yet been paid by the
Vendor prior to the end of such 180 day period, then at such time thereafter as
the Vendor shall have failed to pay such defaulted amount in accordance with the
provisions of the Program Agreement, Vendor Assignment or other agreement with
the Vendor providing such recourse), (ii) as to which the Servicer has
repossessed the Equipment securing such Contract, or (iii) as to which the
Servicer has determined, in accordance with the Customary Policies and
Procedures, that the collectibility of the Contract has been impaired.
"Defaulted Contract Valuation Amount" means, as to any
Defaulted Contract, the sum of (a) fifty percent of the Contract Principal
Balance of such Defaulted Contract as of the first day of the Collection Period
during which the Contract became a Defaulted Contract, (b) any Scheduled
Payments due from but not yet paid by the Obligor in respect of such Defaulted
Contract as of the first day of the Collection Period during which the Contract
became a Defaulted Contract, and (c) any subsequent cash collections on such
Contract. However the Defaulted Contract Valuation Amount shall never exceed the
Contract Principal Balance plus Scheduled Payments due but not yet paid as of
the first day of the Collection Period during which the Contract became a
Defaulted Contract.
"Delaware Trustee" has the meaning specified in the Trust
Agreement.
"Delaware Statutory Trust Act" has the meaning specified in
the Trust Agreement.
"Delinquent Contract" means any Contract as to which all or a
portion of a Scheduled Payment (constituting at least $25 of such Scheduled
Payment due) is more than 60 days delinquent from its original due date.
"Deposit Date" means the Business Day immediately preceding
each Payment Date.
"Depositor" means the "Depositor" as defined in the preamble
hereto, or any successor entity thereto.
"Determination Date" means, with respect to any Payment Date,
the second Business Day prior to such Payment Date.
"Discount Rate" means, with respect to each Contract, the
annual percentage rate of interest for such Contract as set forth in the
Receivables System.
"Dollar" and "$" means lawful currency of the United States of
America.
"Eligible Contract" means each Contract owned (prior to its
conveyance by the Financing Originator to CFUSA under the VFC Conveyancing
Agreement or the Non-VFC Conveyancing Agreement, as the case may be; prior to
its conveyance by CFUSA to the Depositor under the VFC Purchase Agreement or the
Non-VFC Purchase Agreement, as the case may be, and prior to its conveyance by
the VFC Trust to the Depositor pursuant to the VFC
12
Assignment, if a VFC Contract) by the Financing Originator, CFUSA or the VFC
Trust, as the case may be, and with respect to which each of the following is
true (to the extent applicable to such type of Contract) at the time of its
conveyance to the Trust on the Closing Date (or Substitution Transfer Date, as
applicable):
(a) the information with respect to the Contract, any
Secondary Contract securing the obligations under such Contract, and the
Financed Items related to the Contract, delivered to the Servicer by or at the
direction of CFUSA under the Series 2005-EF1 VFC Purchase Agreement or the
Non-VFC Purchase Agreement, as the case may be, or by or at the direction of the
VFC Trust pursuant to the VFC Assignment is true and correct in all material
respects;
(b) immediately prior to the transfer of such Contract
and any related Equipment (or security interest therein) or Applicable Security
to the Depositor (and the Depositor's concurrent transfer thereof to the Trust),
CFUSA or the VFC Trust owned and had good and marketable title to (and following
the transfer by CFUSA or the VFC Trust, the Depositor owns and has good and
marketable title to) the Contracts, free and clear of any Liens, other than
Permitted Liens; and immediately prior to the transfer of such Contract and any
related Equipment (or security interest therein) or Applicable Security by the
Financing Originator to CFUSA, such Contract was owned by the Financing
Originator free and clear of any Liens, other than with respect to Permitted
Liens;
(c) the Contract is neither a Defaulted Contract nor a
Delinquent Contract;
(d) no provision of the Contract has been waived,
altered or modified in any material respect, except as indicated in the Contract
File;
(e) the Contract is a valid and binding payment
obligation of the Obligor and is enforceable in accordance with its terms
(except as may be limited by applicable Insolvency Laws and the availability of
equitable remedies);
(f) the Contract is not subject to litigation, or to
rights of rescission, setoff, counterclaim or defense and, to CFUSA's or the
Servicer's knowledge, no such rights have been asserted or threatened with
respect to the Contract;
(g) the Contract, at the time it was made, had been
originated in compliance (in all material respects) with applicable law, and did
not violate the laws of the United States or any state in any material respect;
(h) (i) the Contract and any related Financed Item or
interest therein (other than Excluded Residual Investments) have not been sold,
transferred, assigned or pledged by the Financing Originator or CFUSA or the VFC
Trust (in the case of VFC Contracts) to any other Person (other than (a) the
sale of Contracts and any Financed Item financed or interest therein to CFUSA or
to the Depositor and then the VFC Trust and (b) the financed sale of Equipment
to an End-User effected through an End-User Contract), (ii) if such Contract
finances Equipment other than a Vehicle, such Contract is secured by a fully
perfected lien or ownership interest in favor of the Financing Originator or, in
the case of Equipment other than a Vehicle
13
relating to the VFC Contracts, the Depositor, on or in respect of the related
Equipment (other than as contemplated by the Minimum Value Filing Exception),
or, if the Contract is a Vendor Loan, the Vendor Loan is secured by a fully
perfected lien or ownership interest in favor of the Financing Originator or the
VFC Trust in the related Applicable Security, or (iii) if such Contract finances
a Vehicle, within 90 calendar days of the origination of such Contract by the
Financing Originator or Third Party Source, all applicable state registration or
recording procedures were initiated, and the Financing Originator's or Third
Party Source's interest in such Vehicle will be or was noted or recorded within
180 days of such origination, or a certificate of title or similar evidence of
recordation on which the Financing Originator's or Third Party Source's interest
has been noted has been obtained;
(i) if the Contract constitutes an "instrument" or
"tangible chattel paper" for purposes of the UCC, there is not more than one
"secured party's original" counterpart of the Contract and such original
counterpart is in the Contract File;
(j) all filings (including filings of UCC financing
statements) necessary (i) in respect of all Contracts, to evidence or perfect
the conveyance or transfer of the Financing Originator's ownership interest in
the Contract, and the Financing Originator's corresponding interest in the
related Equipment or Applicable Security, as applicable, to CFUSA, and (ii) in
respect of all Contracts, to evidence or perfect the conveyance or transfer of
CFUSA's or the VFC Trust's ownership interest in the Contract, and CFUSA's or
VFC Trust's corresponding interest in the related Equipment or Applicable
Security, as applicable, to the Depositor (as well as the concurrent conveyance
of such property hereunder, other than ownership interests in Equipment, from
the Depositor to the Trust), have been made or provided for in all appropriate
jurisdictions; provided, that (A) UCC financing statement filings with respect
to Equipment or Applicable Security which name the Financing Originator as
secured party have not been amended to indicate either CFUSA, the Depositor or
the Trust as an assignee (although separate UCC filings were made against the
Financing Originator's interest in Applicable Security in each jurisdiction
where a related Vendor is located) and (B) certificates of title with respect to
Vehicles which name the Financing Originator or a Third Party Source as owner or
lienholder have not been amended to name CFUSA, the Depositor or the Trust as
the lienholder; and provided further, that only filings in the State of Delaware
have been made in favor of the Trust as secured party against the Depositor as
debtor describing as collateral (among other things) the Depositor's ownership
interest in Equipment, in respect of the security interest in Equipment owned by
the Depositor which has been granted to the Trust pursuant to Section 2.01
hereof.
(k) the Obligor is not, to CFUSA's knowledge, subject
to bankruptcy or other insolvency proceedings;
(l) the Obligor's billing address is in the United
States or Puerto Rico, and the Contract is a U.S. dollar-denominated obligation;
(m) the Contract does not require the prior written
notification to or consent of an Obligor or contain any other restriction on the
transfer or assignment of the Contract, or all consents and approvals required
by the terms of the Contract for the sale of the Contract hereunder have been
received;
14
(n) either (x) the obligations of the related Obligor
under such Contract are irrevocable and unconditional and non-cancelable (it
being understood that Contracts which are prepayable in accordance with their
terms shall not, by virtue of that fact alone, be deemed revocable, conditional
or cancelable) or, if not irrevocable and unconditional, have the benefit of a
Vendor Guarantee or (y) with respect to Leases with Lessees that are
governmental entities or municipalities, if such Lease is canceled in accordance
with its terms, either (1) the Vendor that assigned such Lease to the Financing
Originator is unconditionally obligated to repurchase such lease from the
Financing Originator for a purchase price not less than the Contract Principal
Balance of such Lease (as of the date of cancellation), or (2) pursuant to the
Purchase and Sale Agreements, CFUSA has indemnified the Depositor against such
cancellation in an amount at least equal to the Contract Principal Balance of
such Lease (as of the date of cancellation), less any amounts paid by the Vendor
pursuant to clause (1);
(o) no selection procedure adverse to the interests of
the Trust or the Equity Certificateholder was used in selecting the Contract for
the Contract Pool;
(p) the Obligor under the Contract is required to
maintain casualty insurance or to self-insure with respect to the related
Equipment in accordance with the Customary Policies and Procedures;
(q) the Contract constitutes tangible chattel paper,
an account, an instrument or a general intangible, in each case as defined under
the UCC;
(r) the Contract is not a "consumer lease" as defined
in Section 2A-103(1)(e) of the UCC;
(s) if such Contract is a Lease, to the best knowledge
of the Financing Originator, the Lessee thereunder has accepted and has had
reasonable opportunity to inspect the related Equipment;
(t) except as provided in clause (n) above, the
Contract is not subject to any guarantee by the Financing Originator, nor has
the Financing Originator established any specific credit reserve with respect to
the related Obligor;
(u) if such Contract is a Lease, such Lease is a
"triple net lease" under which the Obligor is responsible for the maintenance,
taxes and insurance with respect to the related Equipment in accordance with
general industry standards applicable to such item of Equipment;
(v) if such Contract is a Vendor Loan, such Vendor
Loan is secured by an Eligible Secondary Contract having an aggregate Contract
Principal Balance for such Eligible Secondary Contract (determined as of the
relevant Cut-Off Date for such Vendor Loan) not less than the outstanding
principal amount of such Vendor Loan;
(w) such Contract is not an obligation of the United
States of America or an agency, department, or instrumentality of the United
States of America;
15
(x) such Contract contains provisions customary to
similar financing agreements for Financed Items, which provisions are sufficient
and enforceable (except as may be limited by applicable Insolvency Laws and the
availability of equitable remedies) to enable the Financing Originator (or its
assignees, including the VFC Trust, the Depositor and the Trust) to realize
against the Financed Items related thereto (to the extent such Financed Items
secure or support the payment of the Contract);
(y) if the Obligor in respect of such Contract is a
state or local governmental entity or municipality, the conveyance of such a
Contract under and pursuant to the Transaction Documents does not violate
applicable state or municipal laws or regulations (if any) restricting or
prohibiting the assignment of claims against or obligations of such Obligor; and
(z) such Contract was originated or acquired by the
Financing Originator in accordance with its Customary Policies and Procedures as
in effect at the time of such origination or acquisition.
"Eligible Investments" means any of the following:
(i) direct obligations of, and obligations fully
guaranteed by, the United States of America, the Federal Home Loan Mortgage
Corporation (if then rated "Aaa" by Moody's), the Federal National Mortgage
Association, or any agency or instrumentality of the United States of America
the obligations of which are backed by the full faith and credit of the United
States of America and which are non-callable;
(ii) demand and time deposits in, certificates of
deposit of, bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustees or any Affiliate
of the Trustees, acting in their commercial capacity) incorporated under the
laws of the United States of America or any state thereof or the District of
Columbia (or any domestic branch or agency of a foreign bank) and subject to
supervision and examination by federal and/or state authorities, so long as, at
the time of such investment or contractual commitment providing for such
investment, the commercial paper or other short-term debt obligations of such
depository institution or trust company have been rated at least "P-1" or higher
from Moody's, "A-1+" from Standard & Poor's and, if rated by Fitch, "F1+" from
Fitch; or any other demand or time deposit or certificate of deposit which is
fully insured by the Federal Deposit Insurance Corporation and which is rated at
least "P-1" by Moody's;
(iii) repurchase obligations with respect to any
security described in either clause (i) or (ii) above and entered into with any
institution whose commercial paper is at least rated "P-1" from Moody's, at
least "A-1+" by Standard & Poor's and, if rated by Fitch, at least "F1+" by
Fitch;
(iv) securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the United
States of America or any State thereof which have a credit rating of at xxxxx
"X0" or "P-1" from Moody's, at least "AAA" from
16
Standard & Poor's and, if rated by Fitch, at least "AAA" from Fitch, at the time
of such investment;
(v) commercial paper (which may be issued by CIT)
having a rating of at least "P-1" from Moody's, at least "A-1+" from Standard &
Poor's and, if rated by Fitch, at least "F1+" from Fitch, at the time of such
investment;
(vi) money market funds which are rated "Aaa" by
Moody's, at least "AAAm" or "AAAm-G" by Standard & Poor's and, if rated by
Fitch, at least "AAA" by Fitch, including funds which meet such rating
requirements for which the Trustees or an affiliate of the Trustees serves as an
investment advisor, administrator, shareholder servicing agent and/or custodian
or subcustodian, notwithstanding that (i) such Trustee or an affiliate of such
Trustee charges and collects fees and expenses from such funds for services
rendered, (ii) such Trustee charges and collects fees and expenses for services
rendered pursuant to this instrument, and (iii) services performed for such
funds and pursuant to this instrument may converge at any time. (The Depositor
and the Servicer specifically authorize such Trustee or an affiliate of such
Trustee to charge and collect all fees and expenses from such funds for services
rendered to such funds, in addition to any fees and expenses such Trustee may
charge and collect for services rendered pursuant to this instrument); and
(vii) any other investments approved by the
Rating Agencies.
"Eligible Secondary Contract" shall mean each Secondary
Contract
(i) that satisfies all the criteria set forth in
the definition of "Eligible Contract" except clauses (b) and (h) (in each case,
with respect to ownership by the Financing Originator, CFUSA, the Depositor, or
VFC Trust of the Contract) and (w) thereof, and except that the term "Obligor"
shall mean "End-User" in all such criteria;
(ii) with respect to which Secondary Contract and
the proceeds thereof the Financing Originator (or, in the case of VFC Contracts,
the VFC Trust, as assignee) has a duly perfected first priority lien; and
(iii) with respect to which if such Secondary
Contract secures a Vendor Loan constituting a Contract, the transfer of the
Financing Originator's security interest in such Secondary Contract and the
proceeds thereof to CFUSA, the transfer of CFUSA's interest so acquired to the
Depositor, and, if applicable, the Depositor's transfer of its interest therein
to the VFC Trust and the VFC Trust's transfer of such interest back to the
Depositor, is effective to create in favor of the Depositor a lien therein and
such lien has been duly perfected.
"Eligible Servicer" means CITEF or any of its Affiliates, the
Trustees or any other Person qualified to act as Servicer of the Contracts under
applicable federal and state laws and regulations, which Person services not
less than $100,000,000 in outstanding principal amount of equipment financing
contracts.
"End-User" shall mean any party that uses the Financed Items
pursuant to an End-User Contract.
17
"End-User Contract" shall mean any CSA, Secured Note, Lease,
IPA, or other Financing Agreement covering Financed Items originated or acquired
by an Originator.
"Equipment" means with respect to any Contract, the tangible
assets constituting "goods" within the meaning of the UCC, in each case financed
or leased by an Obligor pursuant to a Contract, or which otherwise provide
security for the payment of amounts payable thereunder.
"Equity Certificate" has the meaning specified in the Trust
Agreement.
"Equity Certificateholder" means the Person in whose name the
Equity Certificate is registered in the Certificate Register, which initially
shall be the Depositor.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" has the meaning specified in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended or supplemented from time to time.
"Excluded Amounts" means (i) any collections on deposit in the
Collection Account or otherwise received by the Servicer on or with respect to
the Contract Pool or related Equipment, which collections are attributable to
any taxes, fees or other charges imposed by any Governmental Authority, (ii) any
collections representing reimbursements of insurance premiums or payments for
services that were not financed by the applicable Originator, (iii) collections
relating to security deposits, and (iv) collections representing Late Charges,
documentation fees, administrative charges or extension fees on any Contract, or
maintenance premiums in respect of related Equipment.
"Excluded Residual Investments" means Residual Investments,
other than Guaranteed Residual Investments.
"FDIC" shall mean the Federal Deposit Insurance Corporation,
or any successor thereto.
"Financed Items" means Equipment and other property and
services that are permitted to be financed under Contracts in accordance with
Customary Policies and Procedures of the Financing Originator.
"Financing Agreement" means each financing agreement covering
Financed Items, other than a CSA, a Secured Note, a Lease or an IPA.
"Financing Originator" means CITEF.
"Fitch" means Fitch, Inc., or any successor thereto.
18
"Governmental Authority" means the United States of America,
any state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government.
"Guaranteed Residual Investment" means each Residual
Investment with respect to which the Financing Originator has an agreement with
either the Vendor or to the related Obligor on an End-User Contract for payment
of such Residual Investment.
"Holder" has the meaning specified in the Indenture.
"Indebtedness" means, with respect to any Person at any date,
without duplication, (a) all indebtedness of such person for borrowed money or
for the deferred purchase price of property or services (other than current
liabilities incurred in the ordinary course of business and payable in
accordance with customary trade practices) or which is evidenced by a note,
bond, debenture or similar instrument, (b) all obligations of such Person under
capital leases, (c) all obligations of such Person in respect of acceptances or
letters of credit issued or created for the account of such Person, (d) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof,
and (e) obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (d) above.
"Indenture" means the Indenture, dated as of the date hereof,
between the Trust and the Indenture Trustee, as amended, supplemented or
otherwise modified from time to time.
"Indenture Trustee" means the Person acting as Indenture
Trustee under the Indenture, its successors in interest and any successor
trustee under the Indenture.
"Independent", when used with respect to any specified Person,
means such a Person who (i) is in fact independent of the Trust, the Depositor
or the Servicer, (ii) is not a director, officer or employee of any Affiliate of
the Trust, the Depositor or the Servicer, (iii) is not a person related to any
officer or director of the Trust, the Depositor or the Servicer or any of their
respective Affiliates, (iv) is not a holder (directly or indirectly) of more
than 10% of any voting securities of the Trust, the Depositor or the Servicer or
any of their respective Affiliates, and (v) is not connected with the Trust, the
Depositor or the Servicer as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"Independent Accountants" has the meaning specified in Section
9.04.
"Ineligible Contract" has the meaning specified in Section
7.06.
"Initial Class A-1 Principal Amount" means $152,000,000
"Initial Class A-2 Principal Amount" means $113,000,000
"Initial Class A-3 Principal Amount" means $189,000,000
19
"Initial Class A-4 Principal Amount" means $82,100,000
"Initial Class B Principal Amount" means $12,382,000
"Initial Class C Principal Amount" means $20,050,000
"Initial Class D Principal Amount" means $21,228,735
"Initial Contract Assets" means those Contract Assets conveyed
to the Trust on the Closing Date.
"Initial Contract Pool Principal Balance" means $589,760,735
"Initial Contracts" means those Contracts conveyed to the
Trust on the Closing Date.
"Initial Principal Amount" means, when used in the context of
a reference to an individual Class of Notes, the initial principal amount
applicable to such Class as defined above.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a decree or the entry of order for relief by a court having
jurisdiction in the premises in respect of such Person or any substantial part
of its property in an involuntary case under any applicable Insolvency Law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable Insolvency Law now or hereafter
in effect, or the consent by such Person to the entry of an order for relief in
an involuntary case under such law, taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for such Person
or for any substantial part of its property; or (c) or the making by such Person
of any general assignment for the benefit of creditors; or (d) the failure by
such Person generally to pay its debts as such debts become due; or (e) the
admission by such Person in writing of its inability generally to pay its debts
when the same become due; or (f) the taking of action by such Person in
furtherance of any of the foregoing.
"Insolvency Laws" means the Bankruptcy Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
"Insolvency Proceeds" has the meaning specified in Section
10.01.
"Insurance Policy" means, with respect to any Contract, 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 (or Financing Originator)
under any Insurance Policy.
20
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time.
"Investment Earnings" means, the investment earnings (net of
losses and investment expenses) on amounts on deposit in the Collection Account
and the Reserve Account.
"IPA" means each installment payment agreement, including as
applicable, schedules, subschedules, supplements and amendments, pursuant to
which the relevant Originator financed the purchase or acquisition of specified
assets by an Obligor for specified monthly, quarterly, semiannual or annual
payments.
"Late Charges" means any late payment fees paid by Obligors
on Contracts.
"Lease" means each lease agreement granting the use of
equipment or other assets for a specified time in exchange for payments and
including, as applicable, schedules, subschedules, supplements and amendments to
a master lease, pursuant to which the Originator, as lessor, leased specified
assets to a Lessee at a specified monthly, quarterly, semiannual or annual
rental.
"Lessee" means, with respect to any Lease, the Obligor with
respect to such Lease.
"LIBOR Determination Date" means for each Accrual Period, the
second Business Day preceding the first day of the Accrual Period.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), equity interest, participation interest, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional transfer or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"Liquidated Contract" means, as to any Collection Period, any
Contract or Defaulted Contract (a) which the Servicer has determined is
uncollectible in accordance with the Customary Policies and Procedures, or (b)
for which the Equipment securing such Contract has been disposed of or any
Applicable Security has been disposed.
"Liquidation Expenses" means, with respect to any Liquidated
Contract, the aggregate amount of all out-of-pocket expenses reasonably incurred
by the Servicer (including amounts paid to or expenses incurred by any
subservicer, other than subservicing fees, if any) in accordance with Customary
Policies and Procedures in connection with the repossession, refurbishing and
disposition of any related Equipment or any other Applicable Security, and other
out-of-pocket costs related to the liquidation of any such Equipment, including
reasonable attorneys' fees incurred in the attempted collection of any amount
owing pursuant to such Liquidated Contract, and including amounts determined by
the Servicer in its reasonable discretion as payable in respect of any sales,
use, personal property or other taxes assessed or to be assessed on repossessed
or liquidated Equipment or any other Applicable Security.
21
"Liquidation Loss" means, with respect to any Liquidated
Contract, the amount, if any, by which (a) the Required Payoff Amount for such
Liquidated Contract as of the date such Contract became a Liquidated Contract
exceeds (b) that portion of the Liquidation Proceeds for such Liquidated
Contract allocated to the Trust.
"Liquidation Proceeds" means, with respect to a Liquidated
Contract, proceeds from the transfer, lease or re-lease of the related Financed
Items or other Applicable Security, Insurance Proceeds, and any other recoveries
with respect to such Liquidated Contract and the related Financed Items or other
Applicable Security (including, without limitation, amounts received pursuant to
a Program Agreement and Scheduled Payments received on such Defaulted
Contracts), but net of Liquidation Expenses, Late Charges, amounts payable to a
Vendor in respect of (and in amounts not exceeding) amounts previously paid by
such Vendor in respect of such Contract under Vendor recourse provisions, and
amounts, if any, so received that are required to be refunded to the Obligor on
such Contract.
"Material Adverse Effect" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the ability of CFUSA, the Financing
Originator, the VFC Trust, the Depositor, the Trust or the Servicer to perform
in all material respects its obligations under this Agreement or any other
Transaction Document;
(ii) the validity or enforceability of this
Agreement, any other Transaction Document, or the Contracts, or the
collectibility of the Contracts; or
(iii) the status, existence, perfection, priority
or enforceability of the Trust's interest in the Contracts and the other Trust
Assets.
"Material Modification" means a termination or release
(including pursuant to prepayment), or an amendment, modification or waiver, or
equivalent similar undertaking or agreement, by the Servicer with respect to a
Contract which would not otherwise be permitted under the standards and criteria
set forth in Sections 5.08, 5.09 and/or 5.10 hereof.
"Maturity Date" means, as applicable, the Class A-1 Maturity
Date, Class A-2 Maturity Date, Class A-3 Maturity Date, Class A-4 Maturity Date,
Class B Maturity Date, Class C Maturity Date or Class D Maturity Date.
"Minimum Value Filing Exception" means the variation from the
Financing Originator's normal policies and practices with respect to filing UCC
financing statements against an Obligor describing Equipment which is the
subject of a Contract, in each case as set forth in Exhibit F hereto.
"Monthly Servicer's Report" has the meaning specified in
Section 9.01.
"Moody's" means Xxxxx'x Investors Service, Inc., or any
successor thereto.
"Nonrecoverable Advance" means with respect to any
Determination Date and any Contract, the amount, if any, advanced by the
Servicer pursuant to Section 5.14 which the
22
Servicer has as of such Determination Date determined in good faith will not be
ultimately recoverable by the Servicer.
"Non-VFC Contract Assets" means the Contract Assets pertaining
to the Non-VFC Contracts.
"Non-VFC Contracts" means Contracts conveyed by CFUSA to the
Depositor pursuant to the Non-VFC Purchase Agreement, as listed in Schedule A to
the Non-VFC Purchase Agreement.
"Non-VFC Conveyancing Agreement" means the Non-VFC
Conveyancing Agreement, dated as of July 1, 2005, by and among the Financing
Originator and CFUSA, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Non-VFC Purchase Agreement" means the Non-VFC Purchase and
Sale Agreement, dated July 1, 2005, by and among CFUSA, as the seller, and the
Depositor, as purchaser, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Note" means any one of the notes of the Trust of any Class
executed and authenticated in accordance with the Indenture.
"Noteholder" means any registered holder of a Note.
"Note Register" has the meaning specified in the Indenture.
"Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes, Class B Notes, Class C Notes, and Class D Notes.
"Obligor" means, with respect to any Contract, the Person or
Persons obligated to make payments with respect to such Contract, including any
guarantor thereof (and including, with respect to a Contract consisting of a
Vendor Loan, the Vendor obligated in respect of such Vendor Loan).
"Officer's Certificate" means, with respect to any Person, a
certificate signed by an authorized officer of such Person and delivered to the
party entitled to receipt thereof under any applicable Transaction Document.
"One-Month LIBOR" means as of any LIBOR Determination Date and
with respect to the related Accrual Period, the rate of interest per annum equal
to the London interbank offered rate for deposits in U.S. dollars having a
maturity of one month which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on the LIBOR Determination Date. If the rate does not appear on
Telerate Page 3750, then One-Month LIBOR for the LIBOR Determination Date will
be determined on the basis of the rates at which deposits in U.S. dollars having
a maturity of one month and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on the LIBOR
Determination Date to prime banks in the London interbank market by the
Reference Banks. The Servicer will request the principal London office of each
of the Reference Banks to provide a quotation of its rate to the
23
Indenture Trustee. If at least two quotations are provided, One-Month LIBOR will
be the arithmetic mean, rounded, if necessary, to the nearest .01%, of the
offered rates. If fewer than two quotations are provided, One-Month LIBOR will
be the arithmetic mean, rounded, if necessary to the nearest 0.01%, of the
offered rates quoted at approximately 11:00 a.m., New York City time, on the
LIBOR Determination Date to the Indenture Trustee by three major banks in New
York, New York, selected by the Servicer, for loans in United States dollars to
leading European banks having a maturity of one month and in a principal amount
of not less than U.S. $1,000,000. However, if those banks do not quote a rate to
the Indenture Trustee as described above, One-Month LIBOR will be the One-Month
LIBOR in effect for the immediately preceding Accrual Period.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel (including internal counsel) for the Depositor or the Servicer
and who shall be reasonably acceptable to the Trust and the Indenture Trustee.
"Originator" means, with respect to each Contract, the party
that is the original lessor or financing party thereunder.
"Outstanding" has the meaning specified in the Indenture.
"Overcollateralization Amount" means, with respect to any
Payment Date, an amount as of the end of the related Collection Period equal to
the excess of the Contract Pool Principal Balance over the sum of: (i) the
Aggregate Principal Amount of the Class A Notes, plus (ii) the Aggregate
Principal Amount of the Class B Notes, plus (iii) the Aggregate Principal Amount
of the Class C Notes, plus (iv) the Aggregate Principal Amount of the Class D
Notes.
"Overcollateralization Principal Payment Amount" means, with
respect to any Payment Date, the amount necessary to reduce the Aggregate
Principal Amount of the Notes then outstanding, without giving effect to
payments of principal on such Payment Date, such that the Overcollateralization
Amount, together with the Reserve Account Amount immediately prior to such
Payment Date equals or exceeds the Required Credit Enhancement as of such
Payment Date.
"Owner Trustee" means The Bank of New York, not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement, its
successors in interest and any successor owner trustee under the Trust
Agreement.
"Payment Date" shall mean the twentieth (20th) day of each
calendar month or, if such twentieth (20th) day is not a Business Day, the next
succeeding Business Day, with the first such Payment Date being September 20,
2005; provided, that solely with respect to Class A-1 Notes, principal and
interest will also be paid on the Class A-1 Maturity Date to the extent that any
of the Class A-1 Notes remain outstanding after the Payment Date in August,
2006, and the Class A-1 Maturity Date will be a Payment Date solely for such
purposes.
"Paying Agent" means any Person described as such in Section
7.04(b).
"Permitted Liens" means
24
(a) with respect to Contracts in the Contract Pool:
(i) Liens for state, municipal or other local
taxes if such taxes shall not at the time be due and payable or if the Depositor
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto;
(ii) Liens in favor of CFUSA created by the
Financing Originator pursuant to the VFC Conveyancing Agreement or the Non-VFC
Conveyancing Agreement, as the case may be, or Liens in favor of the Depositor
created pursuant to the Purchase and Sale Agreements or Liens in favor of the
VFC Trust created pursuant to the VFC Pooling Agreement, in each case
transferred to the Trust pursuant hereto;
(iii) Liens in favor of the Financing Originator
in respect of Contracts which have been transferred to the Financing Originator
and pursuant to the Purchase and Sale Agreements by the Financing Originator to
the Depositor (through CFUSA and the VFC Conveyancing Agreement or the Non-VFC
Conveyancing Agreement, as the case may be, in the case of CITEF Contracts, and
through CFUSA, the Depositor and the VFC Trust and the VFC Assignment in the
case of the VFC Contracts) and in each case transferred to the Trust pursuant
hereto;
(iv) Liens created pursuant to this Agreement in
favor of the Trust; and
(v) Liens in favor of the Indenture Trustee
created pursuant to the Indenture and/or this Agreement; and
(b) with respect to the related Equipment or to any
other Applicable Security (to the extent applicable):
(i) materialmen's, warehousemen's, mechanics' and
other liens arising by operation of law in the ordinary course of business for
sums not due;
(ii) Liens for state, municipal or other local
taxes if such taxes shall not at the time be due and payable or if the Depositor
shall currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto;
(iii) Liens in favor of CFUSA created by the
Financing Originator pursuant to the VFC Conveyancing Agreement or the Non-VFC
Conveyancing Agreement, as the case may be, or Liens in favor of the Depositor
created pursuant to the Purchase and Sale Agreements, in each case transferred
to the Trust pursuant hereto or Liens in favor of the Depositor created pursuant
to the VFC Purchase and Sale Agreement;
(iv) Liens created pursuant to this Agreement in
favor of the Trust;
25
(v) Liens in favor of an originator which have
been transferred to the Financing Originator and pursuant to the Purchase and
Sale Agreements by the Financing Originator to the Depositor (through CFUSA and
the VFC Conveyancing Agreement or the Non-VFC Conveyancing Agreement, as the
case may be, in the case of CITEF Contracts, and through CFUSA, the Depositor
and the VFC Trust and the VFC Assignment in the case of the VFC Contracts) and
in each case transferred to the Trust pursuant hereto;
(vi) Liens in favor of the Indenture Trustee
created pursuant to the Indenture and/or this Agreement;
(vii) Liens created pursuant to the underlying
loan documents relative to Contracts, transferred by the Depositor or other
depositor, as applicable to:
(A) CIT Equipment Collateral 2004-EF1 Trust
created pursuant to the Amended and Restated Trust Agreement, dated as of May 1,
2004, by and between NCT Funding Company, L.L.C. and Deutsche Bank Trust Company
Delaware; and
(B) CIT Equipment Collateral 2003-EF1 Trust
created pursuant to the Amended and Restated Trust Agreement, dated as of August
1, 2003, by and between NCT Funding Company, L.L.C. and M&T Trust Company of
Delaware;
(viii) Interests in favor of a Vendor which are
subject to the prior payment of all Obligor obligations in respect of Scheduled
Payments on the related Contract; and
(ix) Liens granted by the End-Users which are
subordinated to the interest of the Trust in such Equipment.
"Person" means any individual, corporation, estate,
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization
or government or any agency or political subdivision thereof.
"Prepaid Contract" means any Contract that has terminated or
been prepaid in full prior to its scheduled expiration date (including because
of a Casualty Loss), other than a Defaulted Contract.
"Prepayment" means with respect to any Collection Period for
any Contract, a partial or full prepayment of amounts due and owing under such
Contract.
"Principal Amount" means, with respect to a Class of Notes,
the aggregate Initial Principal Amount thereof reduced by the aggregate amount
of any payments applied in reduction of such principal amount.
"Program Agreement" means each vendor finance program
agreement pursuant to which End-User Contracts originated by a Vendor are
assigned to the Financing Originator.
26
"Purchase Amount" means, with respect to Ineligible Contracts,
on any date of determination, the aggregate Required Payoff Amount for such
Ineligible Contracts as of the related Accounting Date.
"Purchase and Sale Agreements" means, collectively, the
Non-VFC Purchase Agreement, the VFC Purchase Agreement, and the Series 2005-EF1
VFC Purchase Agreement.
"Purchase Price" means, with respect to any Contract conveyed
on the Closing Date (or any Subsequent Transfer Date, as applicable), an amount
equal to the Contract Principal Balance of such Contract as of the applicable
Cut-Off Date.
"Qualified Institution" means (a) the corporate trust
department of the Indenture 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), (i) (A)
which has (or the parent corporation of which has) either (1) a long-term
unsecured debt rating acceptable to the Rating Agencies or (2) a short-term
unsecured debt rating or certificate of deposit rating acceptable to the Rating
Agencies or (B) which is otherwise acceptable to the Rating Agencies and (ii)
whose deposits are insured by the FDIC.
"Rating Agency" as of any date means each of the nationally
recognized statistical rating organizations requested by the Depositor to
provide ratings on the Notes which is rating the Notes on such date.
"Rating Agency Condition" means, with respect to any action or
series of related actions or proposed transaction or series of related proposed
transactions, that Fitch (if transaction is rated by Fitch) shall be notified in
writing of such action or series of related actions, and other Rating Agencies
shall have notified the Depositor, the Owner Trustee and the Indenture Trustee
in writing that such action or series of related actions or the consummation of
such proposed transaction or series of related transactions will not result in a
Ratings Effect.
"Ratings Effect" means, with respect to any action or series
of related actions or proposed transaction or series of related proposed
transactions, a reduction or withdrawal of the rating of any outstanding Class
with respect to which a Rating Agency has previously issued a rating as a result
of such action or series of related actions or the consummation of such proposed
transaction or series of related transactions.
"Receivables System" means the accounting system administered
and utilized by the Servicer, including all accounting data inputs therein,
including those relating to the accounting for the Contracts.
"Record Date" means, with respect to any Payment Date, the
Business Day immediately preceding such Payment Date (so long as the Notes are
in book-entry form) or the last day of the prior calendar month (if certificated
Notes have been issued).
"Redemption Date" has the meaning specified in Section 7.08
hereof.
"Redemption Price" has the meaning specified in Section 7.08
hereof.
27
"Reference Banks" means those certain four leading banks,
selected by the Servicer, engaged in transactions in Eurodollar deposits in the
international Eurocurrency market and having an established place of business in
London.
"Related Collection Period Collections" means, as of any
Payment Date, the amount of Collections on deposit in the Collection Account as
of the Deposit Date which were received and processed by the Servicer during the
related Collection Period, including all Liquidation Proceeds as to Defaulted or
Liquidated Contracts (other than in respect of an Excluded Residual Investment)
so received but excluding any Purchase Amounts.
"Replaced Assets" has the meaning assigned such term in
Section 2.03.
"Replaced Contracts" has the meaning assigned such term in
Section 2.03.
"Required Credit Enhancement" means, with respect to any
Payment Date, an amount equal to the percentage of the Contract Pool Principal
Balance set forth in the table below as of the end of the immediately prior
Collection Period; provided, that, the percentages for the Required Credit
Enhancement set forth below shall be reduced to the amount specified below, only
if the applicable Cumulative Loss Ratio, as of the Payment Dates that shall
occur in February 2007 and August 2007, is less than or equal to the Target
Cumulative Loss Ratio.
Required Credit
Payment Date Enhancement
----------------------------------- ---------------
September 2005 - January 2007 4.00%
February 2007 - July 2007 3.50%
On or after August 2007 3.00%
"Required Holders" means (i) prior to the payment in full of
the Class A-Notes, Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and/or Class A-4 Noteholders, holding Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and/or Class A-4 Notes, respectively, evidencing more
than 66 2/3% of the Aggregate Principal Amount of all Class A-Notes Outstanding,
(ii) from and after the payment in full of the Class A-Notes, Holders of Class B
Notes holding Class B Notes evidencing more than 66 2/3% of the Aggregate
Principal Amount of all Class B Notes Outstanding, (iii) from and after the
payment in full of the Class B Notes, Holders of Class C Notes holding Class C
Notes evidencing more than 66 2/3% of the Aggregate Principal Amount of all
Class C Notes Outstanding, and (iv) from and after the payment in full of the
Class C Notes, Holders of the Class D Notes holding Class D Notes evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class D Notes
Outstanding.
"Required Payoff Amount" means, with respect to any Collection
Period for a Contract, the sum of (i) the Scheduled Payment due in such
Collection Period, together with any Scheduled Payments due in prior Collection
Periods but not yet received, plus (ii) the Contract Principal Balance of such
Contract (after taking into account the Scheduled Payment due in such Collection
Period and any Scheduled Payments due in prior Collection Periods whether or not
actually received and, with respect to Contracts that are Defaulted Contracts,
the Contract
28
Principal Balance plus Scheduled Payments due but not yet paid on such Contract
as of the first day of the Collection Period during which it became a Defaulted
Contract without giving effect to the Defaulted Contract Valuation Amount) less
any subsequent cash collections on such contract.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"Reserve Account" means the Reserve Account established and
maintained pursuant to Section 7.01 hereof.
"Reserve Account Amount" means, as of any Payment Date, the
then current amount then on deposit in the Reserve Account.
"Residual Investment" means, with respect to certain Leases,
any funds that the Financing Originator shall have advanced against all or any
portion of the anticipated residual value of the leased Equipment upon the
expiration of such Lease in accordance with its terms in excess of the Contract
Principal Balance of such Lease.
"Responsible Officer" means, with respect to the Owner
Trustee, any officer in its Corporate Trust Administration Department (or any
similar group of a successor Owner Trustee) who has primary responsibility for
administering the Trust or the Trust Agreement, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"Scheduled Payment" means, with respect to any Contract, the
monthly or quarterly or semi-annual or annual rent or financing (whether
principal or principal and interest) payment or other payment scheduled to be
made by the related Obligor under the terms of such Contract; it being
understood that Scheduled Payments do not include any Excluded Amount or
Excluded Residual Investment.
"Schedule of Contracts" means the schedule of Contracts which
are conveyed to the Trust pursuant to this Agreement, executed and delivered on
the Closing Date, which schedule shall identify by any reasonable means or
designation the Financing Originator with respect to each Contract identified in
such Schedule, and which includes the Contracts listed on Exhibit B hereto
(which may be in electronic form rather than as an exhibit hereto). Such
Schedule shall be supplemented from time to time (a) by each subsequent
Substitution Schedule of Contracts with respect to each Substitution Transfer
Agreement and related Substitute Contracts, which Schedules of Contracts shall
be deemed incorporated and made a part of the original Schedule of Contracts on
Exhibit B hereto; and (b) by the Servicer from time to time to reflect the
release by and removal from the Trust Assets of (i) Contracts released in
connection with (A) in respect of a Contract becoming a Prepaid Contract in
accordance herewith or having
29
its final Scheduled Payment paid in full in accordance with the Contract, or (B)
in respect of a repurchase from the Trust through payment of a Purchase Amount,
and (ii) Replaced Contracts. The Schedule of Contracts is to be maintained by
the Servicer (with copies thereof, as the same shall be supplemented or amended
as described above, to be provided promptly to the Trust).
"Schedule of Representations" means the Schedule of
Representations and Warranties set forth on Exhibit E hereto.
"Secondary Contract" shall mean, with respect to a Vendor
Loan, each End-User Contract securing such Vendor Loan.
"Secured Note" means each promissory note with a related
security interest evidenced by written agreement, pursuant to which the purchase
of specified assets by an Obligor or End-User is financed for specified monthly,
quarterly, semiannual or annual payments.
"Securities" means the Notes and the Equity Certificate, or
any of them.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securityholders" means the Holders of the Notes or the Equity
Certificate.
"Series 2005-EF1 VFC Purchase Agreement" means the Series
2005-EF1 VFC Purchase and Sale Agreement, dated as of July 1, 2005, among CFUSA
and the Depositor, as the same may be amended, supplemented, restated or
otherwise modified from time to time.
"Servicer" means initially CITEF, until any Successor Servicer
is appointed pursuant to Article VIII hereof, and thereafter, means the
Successor Servicer so appointed.
"Servicer Advance" means, with respect to any Payment Date,
the amounts, if any, deposited by the Servicer in the Collection Account for
such Payment Date in respect of Scheduled Payments pursuant to Section 5.14
hereof.
"Servicer Default" has the meaning given such term in Section
8.01.
"Servicer Letter of Credit" has the meaning given such term in
Section 7.01(b)(ii)(B) hereof.
"Servicing Fee" has the meaning specified in Section 5.18
hereof.
"Servicing Fee Percentage" means 0.75%.
"Servicing Officer" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of Contracts.
"Servicing Standard" means, with respect to the servicing and
collection activities of the Servicer concerning the Contract Assets, the
conduct of such activities with reasonable care, using that degree of skill and
attention that the Financing Originator for such Contract
30
Assets exercises with respect to all comparable contracts and related assets
that it services for itself or others, and in accordance with Customary Policies
and Procedures and applicable law.
"Servicing Transfer" is defined in Section 8.02(b).
"Solvent" means, as to any Person at any time, that (a) the
fair value of the Property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established or such liabilities evaluated for
purposes of Section 101(31) of the Bankruptcy Code; (b) the present fair
saleable value of the Property of such Person in an orderly liquidation of such
Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured; (c)
such Person is able to realize upon its Property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's property would
constitute unreasonably small capital.
"Specified Reserve Account Balance" means with respect to any
Payment Date, an amount equal to the lesser of (a) the outstanding Principal
Amount of the Notes; and (b) (i) an amount equal to 1.90% of the Initial
Contract Pool Principal Balance for each Payment Date from September 2005
through and including July 2007; (ii) 1.65% of the Initial Contract Pool
Principal Balance for each Payment Date from August 2007 through and including
January 2008; or (iii) 1.40% of the Initial Contract Pool Principal Balance for
each Payment Date on or after February 2008; provided, however, that the
Specified Reserve Account Balance shall be reduced from 1.90% or 1.65%, as the
case may be, of the Initial Contract Pool Principal Balance, only if the
applicable Cumulative Loss Ratio, as of the Payment Date in August 2007 or the
Payment Date in February 2008 is less than or equal to the Target Cumulative
Loss Ratio for such Payment Date.
"Standard & Poor's" means Standard & Poor's Ratings Service, a
division of The XxXxxx-Xxxx Companies, or any successor thereto.
"Subsidiary" means with respect to a Person, any corporation
or other entity of which securities or other ownership interests (whether
directly or indirectly in connection with contract rights) having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"Substitute Contract" means any Contract conveyed, assigned
and transferred by the Depositor or CFUSA to the Trust pursuant to Section 2.03.
"Substitute Contract Assets" means Contract Assets relating to
Substitute Contracts.
"Substitute Contract Qualification Conditions" means, with
respect to any Substitute Contract being transferred to the Trust pursuant to
Section 2.03, each of the following:
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(1) the accuracy of each of the following statements as of the
related Cut-Off Date for such Contract:
(a) the Contract Principal Balance of such Substitute
Contract is not less than that of the related Replaced Contract[s];
(b) no adverse selection procedure shall have been
employed in the selection of such Substitute Contract from the Financing
Originator's portfolio; and
(c) each such Substitute Contract satisfied the
criteria set forth in the definition of Eligible Contract herein.
(2) with respect to any such Substitute Contract which is
replacing a Replaced Contract of the type described in clause (a) of the
definition of Substitution Event, the condition that after giving effect to such
transfer, the Contract Pool Principal Balance of all Substitute Contracts
transferred to the Trust since the Closing Date in respect of Replaced Contracts
of the same type shall not exceed 10% of the Initial Contract Pool Principal
Balance.
"Substitute Transferred Assets" has the meaning assigned such
term in Section 2.03.
"Substitution Assignment Agreement" means, with respect to any
Substitute Contracts, the agreement between CFUSA and the Depositor pursuant to
which CFUSA transfers the identified Substitute Contracts to the Depositor
pursuant to the Non-VFC Purchase Agreement or the Series 2005-EF1 VFC Purchase
Agreement, as the case may be.
"Substitution Cut-Off Date" means the date specified as such
for the relevant Substitute Contracts, in the related Substitution Transfer
Agreement.
"Substitution Event" means, with respect to any transfer of a
related Substitute Contract to the Trust under Section 2.03, the occurrence of
any of the following: (a) one or more Contracts identified in the related
Substitution Notice as being an intended Replaced Contract with respect to such
Substitute Contract, has become a Defaulted Contract, (b) one or more Contracts
identified in the related Substitution Notice as being an intended Replaced
Contract with respect to such Substitute Contract, has been subjected to a
Material Modification, (c) one or more Contracts identified in the related
Substitution Notice as being an intended Replaced Contract with respect to such
Substitute Contract, has become an Ineligible Contract, or (d) one or more
Contracts identified in the related Substitution Notice as being an intended
Replaced Contract with respect to such Substitute Contract, has become a Prepaid
Contract and the Trust has not yet received the related Prepayment.
"Substitution Notice" means, with respect to any transfer of
Substitute Contracts to the Trust pursuant to Section 2.03 (and the Financing
Originator's corresponding conveyance and assignment of such Substitute
Contracts), a notice, which shall be given at least five days prior to the
related Substitution Transfer Date, identifying the Substitute Contracts to be
transferred, the Contract Principal Balance of such Substitute Contracts and the
related Substitution Event (with respect to an identified Contract or Contracts
then in the Contract Pool, which will upon such substitution become a Replaced
Contract) to which such Substitute
32
Contract relates, with such notice to be signed both by the Depositor and the
Financing Originator.
"Substitution Schedule of Contracts" means a schedule or list,
substantially in the form of the initial Schedule of Contracts delivered on the
Closing Date, but listing each Substitute Contract being transferred to the
Trust pursuant to a related Substitution Transfer Agreement, as well as the
related Replaced Contracts being removed from the existing Contract Pool by
virtue of such substitution.
"Substitution Transfer Agreement" means the agreement
identified as such in Section 2.03(b)(iv) hereof.
"Substitution Transfer Date" means any date on which
Substitute Contracts are transferred to the Trust.
"Successor Servicer" has the meaning given such term in
Section 8.02(b).
"Swap Agreement" means the ISDA Master Agreement between the
Trust and Swap Counterparty, including the schedule thereto, the related credit
support annex and the confirmation thereunder each dated August 24, 2005, as the
same may be amended from time to time as permitted therein and herein, in each
case to the extent relating to the swap, contemplated therein.
"Swap Counterparty" means Barclays Bank PLC.
"Swap Counterparty Payment" means any payment made by the Swap
Counterparty under the Swap Agreement.
"Swap Event" means any period following the termination of the
Swap Agreement, in which the Trust shall have not entered into a new swap
agreement with a swap counterparty acceptable to the Rating Agencies.
"Swap Trust Payment" means any payment made by the Trust to
the Swap Counterparty with respect to the excess, if any, of the fixed swap rate
of 4.49228% per annum over One-Month LIBOR plus 0.04% and other amounts, if any,
due under the Swap Agreement (other than any amounts payable upon a termination
thereof).
"Target Cumulative Loss Ratio" means, for any Payment Date,
the percentages set forth opposite the applicable Payment Dates below of the
Initial Contract Pool Principal Balance as of the end of the applicable prior
Collection Period:
Payment Date Target Cumulative Loss Ratio
------------------- ----------------------------
February 20, 2007 2.00%
August 20, 2007 2.50%
February 20, 2008 3.00%
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"Tax Opinion" means, with respect to any action, an Opinion of
Counsel to the effect that, for federal income tax purposes, (i) following such
action the Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) following such action the Trust will
be disregarded as a separate entity from the Depositor, and (iii) such action
will not affect the tax characterization as debt of Notes of any outstanding
Class issued by the Trust for which an Opinion of Counsel has been provided that
such Notes are debt.
"Telerate Page 3750" means the display page so designated on
the telerate service (or another page replacing that page on that service for
the purpose of displaying comparable rates or prices).
"Third Party Source" means any affiliate of CITEF, Vendor or
other manufacturer, dealer, lender or intermediary from which CITEF purchased a
Contract.
"Transaction Documents" means this Agreement, any Substitution
Transfer Agreement, the VFC Conveyancing Agreement, the VFC Purchase Agreement,
the VFC Assignment, the VFC Pooling Agreement, the Non-VFC Conveyancing
Agreement, the Non-VFC Purchase Agreement, the Series 2005-EF1 VFC Purchase
Agreement, the Trust Agreement, the Administration Agreement, the Indenture and
any other agreements contemplated herein or therein.
"Transferred Assets" means with respect to any Contracts
(including Substitute Contracts) conveyed or being conveyed to the Trust
pursuant to this Agreement, all right and interest of the Depositor in, to and
under the following:
(i) such Contracts and other related Contract Assets
(subject to the proviso below);
(ii) related rights of the Depositor under the
Purchase and Sale Agreements and Substitution Assignment Agreement (if any) and
the VFC Assignment, including, without limitation, in respect of the obligation
of CFUSA to repurchase or substitute for such Contracts under certain
circumstances as specified therein;
(iii) rights under this Agreement each Substitution
Transfer Agreement and each Assignment Agreement; and
(iv) all income from and proceeds of the foregoing;
provided, that Transferred Assets shall not include any title to or ownership
interest (other than any Guaranteed Residual Investment) in the Equipment
related to such Contracts (although security interests in such Equipment
established pursuant to the related Contract, and proceeds thereof, shall
constitute Transferred Assets), and provided further, that the security interest
granted by the Depositor pursuant to Section 2.01 hereof in related Equipment
owned by it, shall constitute part of Transferred Assets.
"Trust" means the trust governed by the Trust Agreement, the
assets and property of which consists of the Trust Assets.
34
"Trust Accounts" means, collectively, the Collection Account
and the Reserve Account, or either of them.
"Trust Account Property" means the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of July 1, 2005, among the Depositor, the Owner Trustee, and
The Bank of New York (Delaware) as Delaware Trustee, as amended, restated,
supplemented or otherwise modified from time to time.
"Trust Assets" has the meaning given to such term in the Trust
Agreement.
"Trust Estate" shall have the meaning specified in the Trust
Agreement.
"Trustees" means the Owner Trustee, the Delaware Trustee and
the Indenture Trustee, or any of them individually as the context may require.
"UCC" means the Uniform Commercial Code as enacted from time
to time in the State of New York.
"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 7.05 and
which the Servicer has determined in its sole discretion are Nonrecoverable
Advances, and with respect to which the Servicer has given a written
certification to such effect to the Trust (which certification may take the form
of an entry on a Monthly Servicer's Report identifying Unreimbursed Servicer
Advances).
"United States" means the United States of America.
"Vehicle" means any motor vehicle, the transfer of interests
in which is governed by a state certificate of title or registry system.
"Vendor" means, with respect to a Contract, the equipment
manufacturer, dealer or distributor, or software licensor or distributor, or
other Person that provided financing under such Contract in connection with the
acquisition or use by an End-User of such party's Equipment, Software, Services
or other products.
"Vendor Agreements" means, collectively, Vendor Assignments
and Program Agreements.
"Vendor Assignment" means each assignment agreement pursuant
to which an individual End-User Contract originated by a Vendor is assigned by
such Vendor to the Financing Originator.
35
"Vendor Guarantee" means the irrevocable obligation of a
Vendor to pay to the Financing Originator the aggregate outstanding principal
amount of a Contract which has been canceled by the related Obligor pursuant to
the terms of such Contract.
"Vendor Loan" means a limited recourse loan agreement payable
by a Vendor and secured by the Vendor's interest in Secondary Contracts and by
the Equipment, if any, related thereto.
"VFC Assignment" means the Release and Assignment instrument
dated the Closing Date, substantially in the form attached hereto as Exhibit A,
executed by the VFC Trust conveying, assigning and releasing the VFC Contract
Assets to the Depositor.
"VFC Contract Assets" means the Contract Assets pertaining to
the VFC Contracts.
"VFC Contracts" means Contracts conveyed by the VFC Trust to
the Depositor pursuant to the VFC Assignment, as listed in the Schedule of
Contracts attached to the VFC Assignment.
"VFC Conveyancing Agreement" means the Amended and Restated
Conveyancing Agreement dated as of March 2, 1999, as amended and restated as of
June 29, 2000 among the TCC Financing Originators (defined therein) and CFUSA,
as the same has been or may be amended, supplemented, restated or otherwise
modified from time to time.
"VFC Pooling Agreement" means the Amended and Restated Pooling
and Servicing Agreement dated as of March 2, 1999, as amended and restated as of
June 29, 2000, by and among the VFC Trust, the Depositor and Capita Corporation,
as the same has been or may be amended, supplemented, restated or otherwise
modified from time to time.
"VFC Purchase Agreement" means the Amended and Restated Sale
and Contribution Agreement dated as of March 2, 1999, as amended and restated as
of June 29, 2000, by and among CFUSA, Capita Corporation, and the Depositor, as
the same has been or may be amended, supplemented, restated or otherwise
modified from time to time.
"VFC Trust" means the CIT Equipment Trust - VFC Series created
and existing pursuant to the Trust Agreement dated as of February 25, 1999, as
amended by Amendment No. 1 dated as of June 27, 2000, by and between the
Depositor and The Bank of New York (Delaware), as owner trustee, as the same has
been or may be amended, supplemented, restated or otherwise modified from time
to time.
"Vice President" of any Person means any vice president of
such Person, whether or not designated by a number or words before or after the
title "Vice President," who is a duly elected officer of such Person.
"Voting Power" means, with respect to any outstanding
membership interest of the Depositor, the power (expressed as a percentage)
represented by such membership interest of the aggregate voting power of all
outstanding membership interests of the Depositor having ordinary voting power,
including the power to vote for election of members of the Board of
36
Directors (and, if any class thereof has power to designate members of the Board
of Directors or any special committee thereof, the power so to designate).
Section 1.02 Usage of Terms. With respect to all terms in
this Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "writing"
include printing, typing, lithography and other means of reproducing words in
a visible form; references to agreements and other contractual instruments
include all amendments, modifications and supplements thereto or any changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
Section 1.03 Section References. All section references,
unless otherwise indicated, shall be to Sections in this Agreement.
Section 1.04 Accounting Terms. All accounting terms used but
not specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE II
FUNDINGS OF TRUST; TRANSFERS OF CONTRACTS
Section 2.01 Creation and Funding of Trust; Transfer of
Transferred Assets to Trust. (a) The Trust has been created (i) pursuant to an
initial trust agreement as amended and restated by the Trust Agreement, and (ii)
by the filing by the Delaware Trustee of an appropriately completed Certificate
of Trust under the Delaware Statutory Trust Act. The Depositor, as settlor of
the Trust, shall fund and convey assets to the Trust pursuant to the terms and
provisions hereof. The Trust shall be administered pursuant to the provisions of
this Agreement, the Administration Agreement and the Trust Agreement for the
benefit of the Noteholders and the Equity Certificateholder. Each of the Owner
Trustee and the Administrator (as defined in the Administration Agreement) is
hereby specifically recognized by the parties hereto as empowered to conduct
business dealings on behalf of the Trust in accordance with the terms hereof and
of the Trust Agreement and Administration Agreement.
(b) Subject to the terms and conditions set forth
herein, the Depositor, in consideration of the purchase price of the Contracts
and the related Transferred Assets and the retention of the Equity Certificate,
does hereby transfer, assign, set over and otherwise convey to the Trust, on the
Closing Date, by execution of this Agreement, without recourse (other than as
expressly provided herein), (i) all the right, title and interest of the
Depositor in and to the Contracts and the related Transferred Assets identified
in this Agreement, and (ii) all income from and proceeds of the foregoing. The
"purchase price" for the Contracts and the related Transferred Assets shall be
an amount equal to $588,612,768. Such purchase price shall be payable in
immediately available funds on the Closing Date.
(c) The parties hereto hereby agree and acknowledge
that title to or ownership of any related Equipment shall not be transferred to
the Trust upon such conveyance
37
and that the Depositor shall retain its ownership interest (to the extent the
same has been so conveyed to the Depositor pursuant to the VFC Purchase
Agreement, the Non-VFC Purchase Agreement, the Series 2005-EF1 VFC Purchase
Agreement and the VFC Assignment) in such Equipment (provided, that the parties
agree and intend that any mere security interest, as opposed to title or
ownership interest, in the related Equipment which secures the Contract pursuant
to the terms thereof, is being assigned and conveyed as part of the Transferred
Assets in accordance with the definition thereof). The Depositor and the Trust
further intend and agree that, except as described in the preceding sentence
with respect to ownership interests in related Equipment, any such transfer is
intended to be a conveyance and transfer of ownership of the Contracts and the
related Transferred Assets (or Substitute Transferred Assets conveyed as
described in Section 2.03 below) and that such Contracts and the related
Transferred Assets shall not be part of the Depositor's estate in the event of
the filing of a bankruptcy petition by or against the Depositor under any
bankruptcy law. In the event, however, that notwithstanding such intent and
agreement, a transfer and assignment contemplated hereby (or Substitution
Transfer Agreement, as applicable) is determined not to be a conveyance of
ownership, the Depositor hereby grants to the Trust a first priority perfected
security interest in (i) the right, title, and interest of the Depositor in and
to such Contracts and the related Transferred Assets identified herein (or
Substitution Transfer Agreement, as applicable), and (ii) all income from and
proceeds of the foregoing, and this Agreement (or Substitution Transfer
Agreement, as applicable), collectively, shall constitute a security agreement
under applicable law, securing the related obligations of the Trust to the
Noteholder and the Equity Certificateholder, in the order and priorities, and
subject to the other terms and conditions of, this Agreement and the other
Transaction Documents, together with such other obligations or interests as may
arise hereunder and thereunder with respect to such Contracts and the related
Transferred Assets in favor of the parties thereto.
(d) In furtherance of and not in limitation of any of
the foregoing, the Depositor with respect to each item of Equipment owned by it
as described above, by execution and delivery of this Agreement (or Substitution
Transfer Agreement, as applicable), hereby on and as of the Closing Date (or
Substitution Transfer Date, as applicable) grants to the Trust and the Indenture
Trustee a first priority perfected security interest in the right, title, and
interest of the Depositor in and to such item of owned Equipment, securing in
each case an amount payable by the Trust in respect of the Notes corresponding
to the Contract Principal Balance from time to time of the related Contract; it
being understood, however, that (i) recourse to such Equipment in realization of
the benefits of such security interest shall only occur if the related Contract
has become a Liquidated Contract, and (ii) the application of Liquidation
Proceeds realized therefrom shall be governed in accordance with the provisions
hereof generally applicable to such Collections and allocation in accordance
with the Allocation Criteria.
(e) The Depositor, by execution and delivery of this
Agreement (or Substitution Transfer Agreement, as applicable) authorizes the
Trust to file UCC financing statements naming the Depositor as Debtor, the Trust
as Secured Party and the Indenture Trustee as Assignee in each jurisdiction that
the Depositor deems necessary in order to protect its security interests in the
Contracts and Equipment.
Section 2.02 Acceptance by Trust. On the Closing Date the
Trust shall issue, and the Owner Trustee, or the Indenture Trustee as its
authenticating agent under the Trust
38
Agreement, shall authenticate, to, or upon the order of, the Depositor and in
accordance with the Trust Agreement, the Equity Certificate representing
ownership of a beneficial interest in 100% of the Trust and the Trust shall
issue, and the Indenture Trustee shall authenticate, to, or upon the order of,
the Depositor in accordance with the terms of the Indenture the Notes secured by
the Collateral. The Trust hereby acknowledges its acceptance of the Trust
Assets, and declares that it shall maintain such right and interest in the Trust
Assets in accordance with the terms of this Agreement and the Trust Agreement
upon the trust herein and therein set forth.
Section 2.03 Conveyance of Substitute Contracts. (a) Subject
to the limitations set forth in (and the other terms and conditions of) this
Section 2.03, the Depositor may substitute other Contracts and related assets
for Contracts and related Transferred Assets previously conveyed to the Trust
and in the Contract Pool, by conveying such other Contracts and related assets
to the Trust pursuant to all procedures and documentation specified below. Upon
the effectiveness of such substitution, such other Contracts and related
Transferred Assets (such Contracts, "Substitute Contracts", and collectively,
"Substitute Transferred Assets") shall, for all purposes of this Agreement and
the Trust Agreement, constitute and be considered as part of the Trust Assets,
and the Contracts already in the Contract Pool and related Transferred Assets
for which the Substitute Contract Assets have been substituted (such Contracts,
"Replaced Contracts", and collectively, "Replaced Assets") shall no longer
constitute Trust Assets. Upon consummation of such substitution, the Trust shall
be deemed to have assigned to the Depositor all of the Trust's right, title and
interest in and to the Replaced Assets, without recourse, representation or
warranty.
In addition, the parties hereto intend and agree that any
conveyance described in this Section 2.03 is made with the intent and effect
described in subsection (c) of Section 2.01 above.
(b) Subject to the conditions set forth in this
subsection (b) below, and pursuant to one or more related Substitution Transfer
Agreements, the Depositor shall transfer, assign, set over and otherwise convey
to the Trust, without recourse (other than as expressly provided herein), (i)
all the right and interest of the Depositor in and to the Substitute Contracts
listed on the related Substitution Schedule of Contracts, and (ii) all other
rights and property interests consisting of Transferred Assets related to such
Substitute Contracts, provided, that the Depositor may not make substitutions
for Prepaid Contracts until the Class A-1 Notes have been paid in full. The
Depositor shall effect such transfers only upon the satisfaction of each of the
following conditions on or prior to the related Substitution Transfer Date (and
the delivery of a related Substitution Notice by the Depositor shall be deemed a
representation and warranty by the Depositor that such conditions have been or
will be, as of the related Substitution Transfer Date, satisfied):
(i) at least five days prior to the related
Substitution Transfer Date, the Depositor shall have provided the Owner Trustee
on behalf of the Trust and the Indenture Trustee with a Substitution Notice
complying with the definition thereof contained herein;
39
(ii) there shall have occurred, with respect to
each such Substitute Contract, a corresponding Substitution Event with respect
to one or more intended Replaced Contracts then constituting Contracts in the
Contract Pool;
(iii) the Substitute Contract(s) being conveyed
to the Trust, satisfy the Substitute Contract Qualification Conditions;
(iv) the Depositor shall have delivered to the
Owner Trustee on behalf of the Trust a duly executed written assignment
agreement in substantially the form of Exhibit D hereto (a "Substitution
Transfer Agreement"), which shall include a Substitution Schedule of Contracts
identifying the Substitute Contracts and the related Replaced Contracts;
(v) CFUSA shall have delivered to the Depositor
and the Owner Trustee on behalf of the Trust a duly executed Substitution
Assignment Agreement with respect to such conveyance;
(vi) no selection procedures adverse to the
interests of either the Trust, the Noteholders or the Equity Certificateholder
shall have been utilized in selecting the Substitute Contracts;
(vii) each of the representations and warranties
made by CFUSA pursuant to Article III of the Series 2005-EF1 VFC Purchase
Agreement or Non-VFC Purchase Agreement, as the case may be, shall be true and
correct as of the related Substitution Transfer Date (including the
representation made as to compliance with the UCC filing criteria set forth in
clause (j) of the definition of Eligible Contract), and CFUSA shall have
performed in all material respects all obligations to be performed by it under
the Series 2005-EF1 VFC Purchase Agreement or Non-VFC Purchase Agreement, as the
case may be, on or prior to such Substitution Transfer Date; and
(viii) the Servicer and CFUSA and the Financing
Originator shall, at their own expense, on or prior to the Substitution Transfer
Date, have indicated in their respective computer files that the Substitute
Contracts identified on the Substitution Schedule of Contracts attached to the
related Substitution Transfer Agreement have been assigned and conveyed to the
Trust through the Depositor pursuant to this Agreement and the Series 2005-EF1
VFC Purchase Agreement or Non-VFC Purchase Agreement, as the case may be.
The failure to satisfy any of the foregoing conditions to
transfer or to obtain a waiver thereof shall not be deemed to adversely affect
the validity of any such transfer.
Section 2.04 Release of Excluded Amounts. The Trust hereby
agrees to release to the Servicer, an amount equal to the Excluded Amounts
immediately upon identification thereof, which release shall be automatic and
shall require no further act by the Trust, provided that the Trust shall execute
and deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested in writing by the Servicer.
Upon such release, such Excluded Amounts shall not constitute and shall not be
included in the Trust Assets.
40
Section 2.05 Waiver. The Trust hereby waives, releases and
terminates (i) any rights it may have in any equipment (other than the Equipment
financed by any Contract) as security for any obligations owing to it under the
Contracts, (ii) any rights it may have in any property as security for any
Contract other than the rights relating to the related Equipment which secures
such Contract and the proceeds thereof and (iii) any rights it may have to apply
moneys received under a receivable that was not sold to the Trust pursuant to
Section 2.01. Notwithstanding anything to the contrary contained herein, the
foregoing in no way constitutes a waiver, release or termination of any of the
rights of the Trust with respect to the Equipment financed by any Contract and
the rights related to such Equipment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of CFUSA. Under
the Purchase and Sale Agreements, CFUSA has made, and upon execution of each
Substitution Assignment Agreement is deemed to remake with respect to the
relevant Contract Assets conveyed by the Non-VFC Purchase Agreement, or the
Series 2005-EF1 VFC Purchase Agreement, as the case may be, each of the
representations and warranties set forth in the Schedule of Representations, and
has consented (in consideration of the Depositor's purchase of the Contracts) to
the assignment by the Depositor to the Trust of the Depositor's rights with
respect thereto. Such representations speak as of the Closing Date in the case
of the Initial Contracts, and as of the applicable Substitution Transfer Date in
the case of the Substitute Contracts, but shall survive the transfer and
assignment of the related Contracts to the Trust. Pursuant to Section 2.01 of
this Agreement, the Depositor has sold, assigned, transferred and conveyed to
the Trust as part of the Transferred Assets its rights under the Purchase and
Sale Agreements, including without limitation, the representations and
warranties of CFUSA therein as set forth in the Schedule of Representations,
together with all rights of the Depositor with respect to any breach thereof
including any right to require CFUSA to repurchase or substitute for any
Contract in accordance with the Purchase and Sale Agreements. It is understood
and agreed that the representations and warranties set forth or referred to in
this Section shall survive delivery of the Contract Files to the Trust or any
custodian.
The Depositor hereby confirms to the Trust that it has entered
into the Purchase and Sale Agreements with CFUSA, that CFUSA has made the
representations and warranties in the Schedule of Representations, that such
representations and warranties run to and are for the benefit of the Trust, and
that pursuant to Section 2.01 of this Agreement the Depositor has transferred
and assigned to the Trust all rights of the Depositor to cause CFUSA under the
Purchase and Sale Agreements to repurchase or substitute for Contracts conveyed
thereunder in the event of a breach of such representations and warranties
applicable to such Contract.
Section 3.02 Representations and Warranties of the Depositor.
By its execution of this Agreement, and each Substitution Transfer Agreement,
the Depositor represents and warrants to the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders and the Equity Certificateholder that, as of
the Closing Date and Substitution Transfer Date (and, with respect to the
representation set forth in subsection (k) of this Section 3.02 below, as of the
date the certificate, written report or written statement referred to in such
subsection is furnished):
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(a) Organization and Good Standing. The Depositor is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite power to own its
assets and to transact the business in which it is currently engaged. The
Depositor is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by it, or
properties owned or leased by it, requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or otherwise) of the Depositor or
the Trust.
(b) Authorization; Valid Transfer; Binding
Obligations. The Depositor has the power and authority to make, execute, deliver
and perform this Agreement and the other Transaction Documents to which it is a
party and all of the transactions contemplated under this Agreement and the
other Transaction Documents to which it is a party, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party and has
taken all necessary action to authorize the due execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party and to cause the Trust to be created. This Agreement and any
Substitution Transfer Agreement shall effect a valid transfer and assignment of
the right, title, and interest of the Depositor in and to relevant Transferred
Assets, enforceable against the Depositor and creditors of and purchasers from
the Depositor. This Agreement and the other Transaction Documents to which the
Depositor is a party have been duly executed and delivered by the Depositor and
constitute the legal, valid and binding obligation of the Depositor enforceable
against the Depositor in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally, any applicable law imposing
limitations upon, or otherwise affecting, the availability or enforcement of
rights to indemnification hereunder and by the availability of equitable
remedies. The Depositor is selling the Transferred Assets to the Trust with the
intention of removing the Transferred Assets from the estate of the Depositor
pursuant to the applicable provisions of the Bankruptcy Code.
(c) No Consent Required. The Depositor is not required
to obtain the consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or the other Transaction Documents to which it
is a party.
(d) No Violations. The execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party by the Depositor, and the consummation of the transactions contemplated
hereby and thereby, will not violate any Requirements of Law applicable to the
Depositor, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Depositor is a party or by which the Depositor
or any of the Depositor's properties may be bound, or result in the creation or
imposition of any security interest, lien, charge, pledge, preference, equity or
encumbrance of any kind upon any of its properties pursuant to the terms of any
such mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
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(e) Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Depositor threatened, against the Depositor
or any of its properties or with respect to this Agreement or the other
Transaction Documents to which it is a party (1) which, if adversely determined,
would in the reasonable judgment of the Depositor have a material adverse effect
on the business, properties, assets or condition (financial or otherwise) of the
Depositor or the Trust or the transactions contemplated by this Agreement or the
other Transaction Documents to which the Depositor is a party or (2) seeking to
adversely affect the federal income tax or other federal, state or local tax
attributes of the Notes.
(f) Taxes. The Depositor has filed or caused to be
filed all material tax returns which, to its knowledge, are required to be filed
and has paid all taxes shown to be due and payable on such returns or on any
material assessments made against it or any of its property and all other
material taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any amount of tax due, the validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in accordance with generally accepted accounting
principles have been provided on the books of the Depositor); no tax lien has
been filed and, to the Depositor's knowledge, no claim is being asserted, with
respect to any such tax, fee or other charge.
(g) Schedule of Representations. The representations
and warranties set forth on the Schedule of Representations are true and correct
as of the Closing Date (or Substitution Transfer Date, as applicable) with
respect to the Transferred Assets being conveyed to the Trust on such date.
(h) Solvency. The Depositor, at the time of and after
giving effect to each conveyance made hereunder, is Solvent on and as of the
date thereof.
(i) Domicile; Name Changes. The Depositor's state of
organization has not been changed within the four months preceding the Closing
Date and any Substitution Transfer Date (or if so changed, all necessary actions
in connection with such change have been or are being timely taken in accordance
with Section 4.03 hereof). The Depositor has not changed its name, whether by
amendment of its certificate of formation, by reorganization or otherwise,
within the four months preceding such date (or if so changed, all necessary
actions in connection with such change have been or are being timely taken in
accordance with Section 4.03 hereof).
(j) Not an Investment Company. The Depositor is not an
"investment company" (and does not control, and is not under the control of, an
investment company) within the meaning of the Investment Company Act of 1940, as
amended (or the Depositor is exempt from all provisions of such Act).
(k) Accuracy of Information. No certificate, written
report or written statement furnished by the Depositor to the Servicer, the
Trust, the Owner Trustee, any Securityholder or the Administrator in connection
with this Agreement or any other Transaction Document was inaccurate in any
material respect as of the date it was dated or (except as
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otherwise disclosed to the Servicer, the Trust, the Owner Trustee, such
Securityholder or the Administrator, as the case may be, at such time) as of the
date so furnished.
(l) Security Interest. This Agreement creates a valid
and continuing security interest (as defined in the UCC) in the Contracts in
favor of the Trust, which security interest is prior to all other Liens (other
than Permitted Liens), and is enforceable as such as against creditors of and
purchasers from the Depositor. The Depositor has caused, or will have caused
within ten days after the date hereof, the filing of all appropriate UCC
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest in
the Contracts granted to the Trust hereunder. All UCC financing statements filed
or to be filed against the Depositor in favor of the Trust in connection
herewith describing the Contracts contain or will contain a statement to the
effect that a purchase of or security interest in any Contracts described in
such financing statement will violate the rights of the Trust.
(m) Priority. Other than the security interest granted
to the Trust pursuant to this Agreement, the Depositor has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed any of the
Contracts (other than to the VFC Trust, which Contracts were reconveyed to the
Depositor pursuant to the VFC Assignment). The Depositor has not authorized the
filing of and is not aware of any financing statements against the Depositor
that include a description of collateral covering the Contracts other than any
financing statement relating to the security interest granted to the Trust
hereunder or that has been terminated (other than to the VFC Trust, which
security interests were reconveyed to the Depositor pursuant to UCC-1 or UCC-3
Assignments). The Depositor is not aware of any judgment or tax lien filings
against it.
Such representations (except to the extent expressly stated by their terms to
speak as of a different date or time) speak as of the Closing Date and each
Substitution Transfer Date, if any, but shall survive the transfer and
assignment of the Contracts to the Trust.
Section 3.03 Representations and Warranties of the
Servicer. The Servicer represents and warrants to the Trust, the Owner Trustee,
the Indenture Trustee, the Noteholders and the Equity Certificateholder that, as
of the date of the execution and delivery of this Agreement and as of the
Closing Date and each Substitution Transfer Date:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Servicer is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or otherwise) of the
Servicer or the Trust. The Servicer (or any permitted subservicer hereunder with
respect to affected Contracts, if the Servicer is not so licensed) is properly
licensed in each jurisdiction to the extent required by the laws of such
jurisdiction to service the Contracts in accordance with the terms hereof.
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(b) Authorization; Binding Obligations. The Servicer
has the power and authority to make, execute, deliver and perform this Agreement
and the other Transaction Documents to which the Servicer is a party and all of
the transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the due execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Servicer is a
party. This Agreement and the other Transaction Documents to which the Servicer
is a party have been duly executed and delivered by the Servicer and constitute
the legal, valid and binding obligation of the Servicer enforceable against the
Servicer in accordance with their terms, except as enforcement of such terms may
be limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally, any applicable law imposing limitations upon, or
otherwise affecting, the availability or enforcement of rights to
indemnification hereunder and by the availability of equitable remedies.
(c) No Consent Required. The Servicer is not required
to obtain the consent of any other Person or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the Servicer is a party.
(d) No Violations. The execution, delivery and
performance of this Agreement and the other Transaction Documents to which the
Servicer is a party by the Servicer will not violate any Requirements of Law
applicable to the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or by
which the Servicer or any of the Servicer's properties may be bound, or result
in the creation of or imposition of any security interest, lien, pledge,
preference, equity or encumbrance of any kind upon any of its properties
pursuant to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.
(e) Litigation. No litigation or administrative
proceeding of or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Servicer threatened, against the Servicer or
any of its properties or with respect to this Agreement, or any other
Transaction Document to which the Servicer is a party which, if adversely
determined, would in the reasonable judgment of the Servicer have a material
adverse effect on the business, properties, assets or condition (financial or
otherwise) of the Servicer or the Trust or the transactions contemplated by this
Agreement or any other Transaction Document to which the Servicer is a party.
(f) Accuracy of Information. No certificate, written
report or written statement, furnished by the Servicer to the Depositor, the
Trust, the Owner Trustee, any Securityholder or the Administrator in connection
with this Agreement or any other Transaction Document was inaccurate in any
material respect as of the date it was dated or (except as otherwise disclosed
to the Depositor, the Trust, the Owner Trustee, such Securityholder or the
Administrator, as the case may be, at such time) as of the date so furnished.
Each financial statement furnished pursuant to clause (i) of Section 9.04 is
complete and correct in all material respects and fairly presents the financial
condition of the Servicer (or its parent entity, if the Servicer is a
wholly-owned subsidiary of another entity), as of the reporting date specified
45
therein, and the results of operations of the Servicer (or such parent entity,
as applicable) for the period then ended, all in accordance with generally
accepted accounting principles as in effect in the jurisdiction of the entity
for which such financial statement is furnished.
(g) No Servicer Default. No event has occurred and is
continuing and no condition exists which constitutes a Servicer Default.
ARTICLE IV
PERFECTION OF TRANSFERS AND PROTECTION OF SECURITY INTERESTS
Section 4.01 Custody of Contracts. (a) Subject to the
terms and conditions of this Section 4.01, the contents of each Contract File
shall be held in the custody of the Servicer (including through any subservicer
contemplated under Section 5.05), for the benefit of, and as agent for, the
Noteholders, the Equity Certificateholder, the Indenture Trustee and the Trust,
as the owner thereof.
(b) The Servicer agrees to maintain the Contract Files
at its offices where they are currently maintained, or at such other offices of
the Servicer (or a subservicer contemplated under Section 5.05) as shall from
time to time be established by the Servicer or such subservicer (or in certain
instances at offsite storage facilities in the same general geographic area as
an office of the Servicer or subservicer, pursuant to contractual agreement
between the Servicer or subservicer and the Person owning or maintaining such
offsite facility). The Servicer may temporarily move individual Contract Files
or any portion thereof without notice or other such compliance, as necessary to
conduct collection and other servicing activities in accordance with the
Servicing Standard; provided, however, that the Servicer will take all action
necessary to maintain the perfection of the Trust's interest in the Trust Assets
and the proceeds thereof. It is intended that by the Servicer's agreement
pursuant to Section 4.01(a) above and this Section 4.01(b), the Trust and the
Owner Trustee for the benefit of the Trust shall be deemed to have possession of
the Contract Files for purposes of Section 9-301 of the Uniform Commercial Code
of the State in which the Contract Files are located.
(c) As custodian, the Servicer shall have and perform
the following powers and duties:
(i) hold the Contract Files on behalf of the
Noteholders and the Equity Certificateholder and the Trust; maintain accurate
records pertaining to each Contract to enable it to comply with the terms and
conditions of this Agreement; and maintain a current inventory thereof,
(ii) maintain and comply with Customary Policies
and Procedures with respect to Persons authorized to have access to the Contract
Files;
(iii) attend to all details in connection with
maintaining custody of the Contract Files on behalf of the Noteholder and the
Equity Certificateholder and the Trust; and
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(iv) indicate in the appropriate computer records
that the Contracts as of the Closing Date (or Substitution Transfer Date, as the
case may be) have been conveyed to the Trust.
(d) In performing its duties under this Section 4.01,
the Servicer agrees to act in accordance with the applicable Servicing Standard.
In acting as custodian of the Contract Files, the Servicer further agrees not to
assert any legal or beneficial ownership interest in the Contracts or the
Contract Files, except as provided in Section 5.02.
(e) The Servicer agrees to indemnify the Noteholders
and the Equity Certificateholder, the Owner Trustee, the Indenture Trustee and
the Trust for any and all liabilities, obligations, losses, damages, payments,
costs, or expenses of any kind whatsoever which may be imposed on, incurred by
or asserted against any of such parties as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Contract Files or
any other breach or noncompliance of the Servicer in the performance of its
duties and obligations as Servicer hereunder; provided, however, that the
Servicer will not be liable to any such party for any portion of any such amount
resulting from the gross negligence, willful misconduct or bad faith of such
party.
Section 4.02 Filings. On or prior to the Closing Date, the
Servicer shall cause UCC financing statement(s) to be filed or provided for, and
from time to time the Servicer shall take and cause to be taken such other
actions and execute such other documents as are necessary to perfect or further
perfect and protect the Trust's first priority interest in the Trust Assets
against all other Persons. Such additional actions may include without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of records or documents of title. This Section
4.02 shall not apply to the Trust's interests in Vehicles, which shall be
maintained as described in Section 4.04 below.
Section 4.03 Name Change or Relocation. (a) During the term of
this Agreement, neither the Servicer nor the Depositor shall change, nor shall
the Servicer permit the Financing Originator to change, (x) its state of
organization, name, identity or structure or location within the meaning of the
applicable UCC or (y) the location of the Contract Files, without first giving
at least 30 days' prior written notice to the Servicer, the Owner Trustee, and
the Indenture Trustee.
(b) If any change in either the Servicer's, the
Financing Originator's or the Depositor's name, identity or structure or other
action would make any financing or continuation statement or notice of lien
seriously misleading within the meaning of applicable provisions of the UCC or
any title statute, the Servicer, no later than four months after the effective
date of such change, shall file such amendments as may be required to preserve
and protect the Trust's interests in the Trust Assets and the proceeds thereof.
In addition, neither the Financing Originator, the Servicer nor the Depositor
shall change its state of organization or the location of the Contract Files
unless it has first taken such action as is necessary to preserve and protect
the Trust's interest in the Trust Assets.
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Promptly after taking any of the foregoing actions (but not
later than 20 calendar days), the Servicer shall deliver to the Owner Trustee,
the Indenture Trustee and the Rating Agencies an Opinion of Counsel reasonably
acceptable to the Owner Trustee, the Indenture Trustee and the Rating Agencies
stating that, in the opinion of such counsel, all financing statements or
amendments necessary to preserve and protect the interests of the Trust and
Indenture Trustee in the Trust Assets have been filed, and reciting the details
of such filing.
Section 4.04 Maintenance of Security Interests in Vehicles;
Retitling. (a) With respect to each Contract secured by a Vehicle, the Servicer,
in accordance with the Customary Policies and Procedures, shall, at its own
expense, take such steps as are necessary to maintain perfection of the security
interest created by each Contract in the related Vehicle in favor of the
Financing Originator. The Servicer hereby agrees to take such steps as are
necessary to re-perfect such security interest in the name of the Financing
Originator in the event of the relocation of a Vehicle to a jurisdiction other
than the jurisdiction in which steps had been taken to perfect the security
interest in favor of the Financing Originator; provided, however, that the
Servicer will not amend any certificate of title to name CFUSA, the Depositor or
the Trust as the lienholder, and neither the Servicer nor the Depositor will be
required to deliver any certificate of title to the Trust or note thereon the
Trust's interest. In the event that the assignment of the Contract to the Trust
is insufficient, without a notation on the related Vehicle's certificate of
title, to grant to the Trust a perfected security interest in the related
Financed Vehicle, CITEF, in its capacity as Financing Originator hereby agrees
to serve as the Trust's agent for the purpose of perfecting the security
interest in such Financed Vehicle and that the Financing Originator's listing as
the secured party on the certificate of title is in the capacity as agent of the
Trust.
(b) If, at any time after CITEF is no longer the
Servicer and the Successor Servicer is unable to foreclose upon a Vehicle
because the title document for such Vehicle does not show such Successor
Servicer or the Trust as the lienholder, CITEF shall take all necessary steps to
apply for a replacement title document showing the Successor Servicer or the
Trust as the secured party; provided that the Successor Servicer shall reimburse
CITEF for reasonable expenses incurred in connection therewith.
(c) In order to facilitate the Successor Servicer's
actions, as described in subsection 4.04(b) hereof, CITEF will provide the
Successor Servicer with any necessary power of attorney permitting it to retitle
the Vehicle. The Depositor hereby appoints the Trust (acting through the Owner
Trustee or the Servicer) its attorney-in fact to endorse, as appropriate, the
certificate of title relating to any Vehicle in order to cause a change in the
registration of legal owner of the Vehicle to the Trust at such time as such
certificate of title is endorsed and delivered to the appropriate state
department of motor vehicles with appropriate fees. The Depositor will provide
the Trust with any necessary power of attorney for such purpose.
(d) If the Successor Servicer is unable to retitle the
Vehicle, in the event that the Successor Servicer seeks to foreclose on a
Vehicle then CITEF will take all actions reasonably necessary to act with the
Successor Servicer, to the extent permitted by law, to foreclose upon the
Vehicle, provided that the Successor Servicer shall reimburse CITEF for
reasonable expenses incurred in connection therewith.
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ARTICLE V
SERVICING OF CONTRACTS
Section 5.01 Initial Servicer's Appointment and Acceptance;
Responsibility for Contract Administration. CITEF shall be and is hereby
appointed as the Servicer and custodian (as contemplated in Article IV hereof)
pursuant to this Agreement with respect to the Contract Assets in the Contract
Pool. CITEF accepts the appointment and agrees to act as the Servicer and
custodian pursuant to this Agreement.
Except to the extent otherwise specified herein or as
contemplated in Section 5.05, the Servicer will have the sole obligation to
manage, administer, service and make collections on the Contracts and perform or
cause to be performed all contractual and customary undertakings of the
Originator of the Contracts to the Obligor. The Trust, at the written request of
a Servicing Officer, shall furnish the Servicer with any powers of attorney or
other documents necessary or appropriate in the opinion of the Servicer to
enable the Servicer to carry out its servicing and administrative duties
hereunder. The Servicer is hereby appointed the Servicer hereunder until such
time as any Servicing Transfer may be effected pursuant to Article VIII hereof.
Section 5.02 General Duties. The Servicer will service,
administer and enforce the Contracts in the Contract Pool on behalf of the Trust
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 and
as shall not contravene the provisions of this Agreement or any other
Transaction Document. The Servicer will manage, service, administer, and make
collections on the Contracts in the Contract Pool in accordance with the
Servicing Standard. The Servicer's duties will include collection and posting of
all payments, responding to inquiries of Obligors regarding the Contracts in the
Contract Pool, investigating delinquencies, accounting for collections,
furnishing reports with respect to collections and payments as contemplated in
Article IX hereof, making Servicer Advances in accordance with Section 5.14
hereof, and using its best efforts to maintain the perfected first priority
interest of the Trust in the Trust Assets (subject to Permitted Liens). The
Servicer 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 Contract pursuant to Section 5.15 or
commences or participates in a legal proceeding (including a bankruptcy
proceeding) relating to or involving a Contract in the Contract Pool, the Trust
will be deemed to have automatically assigned such Contract to the Servicer
solely for purposes of, and to the extent necessary for, commencing or
participating in any such proceeding as a party or claimant (but in all cases
subject to the continuing interest of the Trust and its assignees in the
proceeds and recoveries from such proceedings, as and to the extent provided in
the Transaction Documents), and the Servicer is authorized and empowered by the
Trust, pursuant to this Section 5.02, to execute and deliver, on behalf of
itself and the Trust, 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 Contract on the
grounds that it is not a real party in interest or
49
a holder entitled to enforce the Contract, then the Trust will, at the
Servicer's expense and written direction, take steps to enforce the Contract.
Section 5.03 Assignment or Replacement. At the request of an
Obligor, the Servicer may in its sole discretion consent to the assignment by
such Obligor of its rights under a Contract in the Contract Pool or the sublease
of a unit of the Equipment relating to such a Contract, so long as such Obligor
remains liable for all of its obligations under such Contract; provided, that
the Servicer may release such Obligor from its obligations if the Obligor's
assignee is determined by the Servicer to be of at least equivalent credit risk,
all in accordance with Customary Policies and Procedures. Upon the request of
any Obligor, 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, so long as such Obligor remains liable for all of its
obligations under such Contract.
Section 5.04 Disposition Upon Termination of Contract. Upon
the termination of a Contract included in the Contract Pool as a result of a
default by the Obligor thereunder, and upon any such Contract becoming a
Defaulted Contract, the Servicer will use commercially reasonable efforts to
dispose of any related Equipment. Without limiting the generality of the
foregoing, if the Servicer disposes of any such Equipment by purchasing such
Equipment or by selling such Equipment to any of its Affiliates, such
disposition shall be for a purchase price equal to the fair market value thereof
(as determined by the Servicer in its reasonable discretion). The Servicer will
deposit any Prepayments and any Liquidation Proceeds derived from any such
disposition in accordance with Article VII hereof.
Section 5.05 Subservicers. The Servicer may enter into
servicing agreements with one or more subservicers (including any Affiliate of
the Servicer) to perform all or a portion of the servicing functions on behalf
of the Servicer; provided that the Servicer shall remain obligated and be liable
to the Trust for servicing and administering the Contracts in the Contract Pool
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 such Contracts. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and its subservicer
and neither the Owner Trustee, the Trust, the Indenture Trustee nor any
Noteholder or Equity Certificateholder will have any responsibility therefor.
All actions of a subservicer taken pursuant to such a sub-servicing agreement
will be taken as an agent of the Servicer with the same force and effect as
though performed by the Servicer.
Section 5.06 Further Assurance. The Trust will execute and
deliver to the Servicer, and the Servicer will prepare and 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 and the other
Transaction Documents.
Section 5.07 Notice to Obligors. In the event that the
Servicer resigns or is replaced, then if the place for payment pursuant to any
Contract is changed, the Successor Servicer must give each related Obligor
prompt written notice of the appointment of the
50
Successor Servicer and the place to which such Obligor should make payments
pursuant to each such Contract.
Section 5.08 Collection Efforts; Modification of Contracts.
(a) The Servicer will make reasonable efforts to collect all payments called for
under the terms and provisions of the Contracts in the Contract Pool as and when
the same become due, in accordance with the Servicing Standard. The Servicer is
authorized in its discretion to waive any Late Charges, or other administrative
fees, expenses and charges collectible in respect of a Contract in the Contract
Pool, including late payment interest, documentation fees, insurance
administration charges, and extension fees.
(b) The Servicer also may, subject to Sections 5.09 and
5.10, at the request of an Obligor and at the Servicer's option, waive, amend,
modify or otherwise vary any other provision of a Contract in accordance with
Customary Policies and Procedures (it being understood that any modification or
amendment of a Contract resulting from an Insolvency Event with respect to the
related Obligor will not be deemed to have been granted by the Servicer
hereunder), including without limitation:
(i) in order to (A) change the Obligor's regular
due date to a date within the same Collection Period in which such due date
occurs, or (B) re-amortize (over the remainder of the original Contract term)
the Scheduled Payments on a Contract following a partial Prepayment (provided,
that the sum of such partial Prepayment and the Contract Principal Balance of
the affected Contract after re-amortization is at least equal to the Contract
Principal Balance for such Contract prior to giving effect to the partial
Prepayment), or
(ii) for any other purpose; provided, that no such
modification or amendment shall:
(A) change the amount or the due date of any Scheduled
Payment (except as provided in clauses (i)(A) and (B) above, Section 5.09 and
Section 5.10 below);
(B) release the related Equipment from the Contract,
unless (1) the release complies with Section 5.03 above, or (2) the release is
pursuant to a partial Prepayment (which, in the case of a partial Prepayment on
a Lease, meets the requirements of Section 5.09 below) and the ratio of the fair
market value (determined by the Servicer in its reasonable discretion) of the
related Equipment to the Contract Principal Balance of the affected Contract
after giving effect to such Prepayment and release, is at least equal to such
ratio existing prior to such event;
(C) except as provided in clause (ii)(A) above, result
in the Contract Principal Balance of the Contract being less than it would have
been absent such modification or amendment; or
(D) if such modification or amendment had been in
effect on the Closing Date or the relevant Substitution Transfer Date with
respect to the Contract, cause or have caused the Contract not to constitute an
Eligible Contract.
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Section 5.09 Prepayments of Certain Contracts. The Servicer
may, at its option and in accordance with Customary Policies and Procedures,
agree to permit a Contract in the Contract Pool that is not otherwise
contractually prepayable by its terms and is not a Defaulted Contract, to become
a Prepaid Contract through a voluntary Prepayment by the Obligor (which shall
not be deemed to include prepayment due to a Casualty Loss); provided, that the
Servicer will not permit the voluntary full or partial Prepayment of such a
Contract unless the amount of such Prepayment (or, in the case of a partial
Prepayment, the sum of such Prepayment and the remaining Contract Principal
Balance of the Contract after application of such Prepayment), together with
such additional amounts as are (i) otherwise available to or supplied by the
Servicer for the purpose of prepaying such Contract, and (ii) deposited in the
Collection Account contemporaneously with the deposit therein of such
Prepayment, is at least equal to the Required Payoff Amount for such Contract
determined as of the beginning of the current Collection Period.
Section 5.10 Certain Extensions; Acceleration. (a) The
Servicer may (subject to subsection (b) below) grant payment extensions on a
Contract in the Contract Pool, consistent with Customary Policies and Procedures
(it being understood that any extensions on a Contract resulting from an
Insolvency Event with respect to the related Obligor will not be deemed to have
been granted by the Servicer hereunder) if the Servicer believes in good faith
that such extension is necessary to avoid a termination and liquidation of such
Contract and will maximize the amount to be received by the Trust with respect
to such Contract; provided, however, that the aggregate period of all extensions
granted on a Contract shall not exceed six months. Nothing in this Section 5.10
shall be deemed to prevent the Servicer from extending or renewing, or otherwise
accepting the continued performance by the Obligor under, a Contract after
expiration of its stated term.
(b) The Servicer also, consistent with Customary
Policies and Procedures, may accelerate (or elect not to accelerate) the
maturity of all or any Scheduled Payments under any Contract in the Contract
Pool 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 may accelerate the Scheduled Payments due under any Contract in the
Contract Pool (and take other action in accordance with applicable Customary
Policies and Procedures, including repossessing or otherwise converting the
related Equipment, to realize upon the value of such Contract and the related
Equipment) to the fullest extent permitted by the terms of such Contract,
promptly after such Contract becomes a Defaulted Contract.
Section 5.11 Taxes and Other Amounts. To the extent provided
for in any Contract in the Contract Pool, the Servicer will make reasonable
efforts consistent with the Servicing Standard to collect (or cause to be
collected) all payments with respect to amounts due for taxes, assessments and
insurance premiums relating to such Contract or the related Equipment and remit
such amounts to the appropriate Governmental Authority or insurer on or prior to
the date such payments are due.
Section 5.12 Suits by Servicer. Notwithstanding anything
herein to the contrary, the Servicer does not have any obligation pursuant to
this Agreement to appear in, prosecute or defend any legal action which is not
incidental to its servicing duties under this Agreement.
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Section 5.13 Remittances. The Servicer will remit and service
all Collections in accordance with Article VII hereof.
Section 5.14 Servicer Advances. For any Collection Period, if
the Servicer determines that any Scheduled Payment (or portion thereof) which
was due and payable pursuant to a Contract in the Contract Pool 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 Payment (or portion thereof), to the extent that in its
sole discretion it determines that it can recover such amount from subsequent
Collections under the related Contract; provided, however, if a Person other
than an affiliate of CITEF becomes the Servicer hereunder, such Person shall not
be required to make a Servicer Advance. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 11:00 a.m. (New York time)
on the Deposit Date, in immediately available funds. The Servicer will be
entitled to be reimbursed for Servicer Advances pursuant to Article VII hereof.
Section 5.15 Realization Upon Liquidated Contract. The
Servicer will use its reasonable best efforts consistent with the Servicing
Standard to repossess or otherwise comparably convert the ownership of any
Equipment relating to a Liquidated Contract and will act as transfer and
processing agent for Equipment or Applicable Security which it repossesses. The
Servicer will follow such other practices and procedures, consistent with the
Servicing Standard, in order to realize upon such Equipment or Applicable
Security, which practices and procedures may include reasonable efforts to
enforce all obligations of Obligors and repossessing and selling such Equipment
or Applicable Security at public or private sale in circumstances other than
those described in the preceding sentence. In any case in which any such
Equipment or Applicable Security has suffered damage, the Servicer will not
expend funds in connection with any repair or toward the repossession of such
Equipment or Applicable Security 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
transfer or disposition of Equipment or Applicable Security relating to a
Liquidated Contract in accordance with Article VII hereof.
Section 5.16 Maintenance of Insurance Policies. The Servicer
will use reasonable efforts, consistent with the Servicing Standard, to ensure
that each Obligor complies with applicable insurance requirements set forth in
the related Contract; provided that the Servicer, in accordance with Customary
Policies and Procedures, may allow Obligors to self-insure. If an Obligor fails
to maintain property damage insurance to the extent required under its Contract,
the Servicer may, consistent with Customary Policies and Procedures, purchase
and maintain such insurance on behalf of, and at the expense of (if the
applicable Contract so provides), the Obligor. In connection with its activities
as Servicer of Contracts in the Contract Pool, the Servicer agrees to present,
on behalf of itself, the Trust and the Noteholders or Equity Certificateholders,
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 Contract.
Section 5.17 Certain Other Duties With Respect to Trust. The
Servicer shall, and hereby agrees that it will, monitor the Trust's compliance
with all applicable provisions of
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state and federal securities laws, notify the Trust and the Administrator of any
actions to be taken by the Trust necessary for compliance with such laws and
prepare on behalf of the Trust and the Administrator all notices, filings or
other documents or instruments required to be filed under such laws.
Section 5.18 Servicing Compensation. As compensation for its
servicing activities with respect to the Contract Pool, and also in
consideration of its expenses as set forth in Section 5.19, the Servicer shall
be entitled to receive a servicing fee in respect of any Collection Period (or
portion thereof) (with respect to each Collection Period, the "Servicing Fee"),
equal to the sum of (i) the product of one-twelfth of the Servicing Fee
Percentage per annum multiplied by the Contract Pool Principal Balance as of the
first day of such Collection Period (except that for the first Collection Period
the Servicing Fee will be the sum of (A) the product of one-twelfth of the
Servicing Fee Percentage per annum multiplied by the Contract Pool Principal
Balance as of July 1, 2005, plus (B) the product of one-twelfth of the Servicing
Fee Percentage per annum multiplied by the Contract Pool Principal Balance as of
August 1, 2005) and (ii) collections representing Late Charges, documentation
fees, administrative charges or extension fees on any Contract, or maintenance
premiums in respect of the related Equipment.
Section 5.19 Payment of Certain Expenses by Servicer. The
Servicer will be required to pay all expenses incurred by it in connection with
its activities under this Agreement, including fees and disbursements of
independent accountants, counsel, the Trustees, 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 (including ongoing fees and expenses of the Owner Trustee and the
Delaware Trustee) to be for the account of the Trust or the Depositor, but
excluding Liquidation Expenses incurred as a result of activities contemplated
by Section 5.15 (which may be netted from Liquidation Proceeds). The Servicer
will be required to pay all reasonable fees and expenses owing to the Owner
Trustee and the Delaware Trustee or the Indenture Trustee in connection with the
maintenance of the Collection Account. The Servicer shall be required to pay
such expenses for its own account and shall not be entitled to any payment or
reimbursement therefor other than the Servicing Fee, payable from Collections as
provided herein.
Section 5.20 Records. The Servicer shall, during the period it
is Servicer hereunder, maintain such books of account and other records as will
enable the Trust or the Administrative Agent to determine the status of each
Contract in the Contract Pool.
Section 5.21 Inspection. (a) The Servicer shall afford the
Owner Trustee and the Indenture Trustee and their respective authorized agents
not more frequently than once during each calendar year at the Servicer's
expense, not to exceed $1,000 in expenses and upon reasonable prior written
request, reasonable access during normal business hours to the Servicer's
records relating to the Contracts in the Contract Pool, and will cause its
personnel to assist in any examination of such records by any such Person, and
allow copies of the same to be made. The examination referred to in this Section
will be conducted in a manner which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination, such examining party may, using
generally accepted audit procedures, verify the status of each such Contract and
review the Computer Disk and records relating thereto for conformity to reports
prepared by the Servicer
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pursuant to Article IX hereof, and compliance with the standards represented to
exist as to each such Contract in this Agreement and the other Transaction
Documents.
(b) At all times during the term hereof, the Servicer
shall keep available a copy of the Schedule of Contracts at its principal
executive office for inspection by any such party referred to in subsection (a)
of this Section 5.21.
Section 5.22 Trust To Cooperate in Releases. At the same time
as (i) any Lease in the Contract Pool terminates and the Equipment related to
such Lease is sold, (ii) any Contract in the Contract Pool becomes a Prepaid
Contract and in connection therewith the Equipment related to such Prepaid
Contract is sold, (iii) the final Scheduled Payment is made in full on a
Contract in the Contract Pool, (iv) a Contract previously in the Contract Pool
becomes a Replaced Contract in accordance with Section 2.03, or is repurchased
by deposit of a Purchase Amount as provided herein, or (v) the Servicer
substitutes or replaces any unit of Equipment as contemplated in Section 5.03,
the Trust shall to the extent requested by the Servicer release the Trust's
interest in the Equipment relating to such affected Contract or such substituted
or replaced Equipment, as the case may be; provided that such release will not
constitute a release of the Trust's interest in the proceeds of Equipment the
subject of a Contract still in the Contract Pool (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
transfer of such Equipment, the Trust and the Indenture Trustee shall execute
and deliver to the Servicer any assignments, bills of sale, authorizations to
file termination statements and any other releases and instruments as the
Servicer may request and prepare at its expense in order to effect such release
and transfer; provided that neither the Trust nor the Indenture Trustee shall be
deemed to make any representation or warranty, express or implied, with respect
to any such Equipment in connection with such transfer and assignment. Nothing
in this Section 5.22 shall diminish the Servicer's obligations pursuant to
Article VII with respect to the proceeds of any such transfer.
Section 5.23 Separate Entity Existence. The Servicer is and at
all times since its incorporation has been operated in such a manner that it
would not be substantively consolidated with either the Depositor or the Trust
and such that the separate existence of any of the Servicer, the Depositor or
the Trust would not be disregarded in the event of a bankruptcy or insolvency of
the Servicer.
Section 5.24 Assignment of Servicing. The Servicer may sell,
transfer, assign or convey its rights as Servicer to any Eligible Servicer, upon
written notice to the Trustees and the Rating Agencies, without the consent of
the Securityholders or the Trustees, provided that the Rating Agency Condition
is satisfied. No such sale, transfer, assignment or conveyance shall become
effective until such Eligible Servicer shall have assumed all of the
responsibilities and obligations of the Servicer under the Transaction
Documents.
ARTICLE VI
COVENANTS OF THE DEPOSITOR
Section 6.01 LLC Existence. During the term of this Agreement,
the Depositor will keep in full force and effect its existence, rights and
franchises as a limited liability company
55
under the laws of the jurisdiction of its formation and will obtain and preserve
its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Transaction Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Depositor and its Affiliates will be
conducted on an arm's-length basis.
Section 6.02 Contracts Not to be Evidenced by Promissory
Notes. The Depositor will take no action to cause any Contract not originally
consisting of or evidenced by an instrument (except to the extent part of
tangible chattel paper) (as such terms are defined in the UCC), to be evidenced
by an instrument, except in connection with the enforcement or collection of
such Contract.
Section 6.03 Security Interests. The Depositor will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Contract in the Contract Pool or on any other
Trust Asset or on any related Equipment, whether now existing or hereafter
transferred to the Trust, or any interest therein (except for Permitted Liens).
The Depositor will immediately notify the Trust and the Indenture Trustee of the
existence of any Lien (other than Permitted Liens) on any Contract in the
Contract Pool or on any other Trust Assets or on any related Equipment; and the
Depositor shall defend the right and interest of the Trust in, to and under the
Contracts in the Contract Pool and the related Equipment, against all claims of
third parties; provided, however, that nothing in this Section 6.03 shall
prevent or be deemed to prohibit (i) the Depositor from suffering to exist
Permitted Liens upon any of the Contracts in the Contract Pool or any related
Equipment, or (ii) repurchases or substitutions by CFUSA pursuant to the
Purchase and Sale Agreements.
Section 6.04 Delivery of Collections. The Depositor agrees to
pay to the Servicer promptly any misdirected Collections received by the
Depositor in respect of the Contracts in the Contract Pool, for application in
accordance with Article VII.
Section 6.05 Regulatory Filings. The Depositor shall make any
filings, reports, notices, applications and registrations with, and seek any
consents or authorizations from, the United States Securities and Exchange
Commission and any state securities authority on behalf of the Trust as may be
necessary or that the Depositor deems advisable to comply with any federal or
state securities or reporting requirements or laws.
Section 6.06 Compliance With Law. The Depositor hereby agrees
to comply in all material respects with all Requirements of Law applicable to
the Depositor.
Section 6.07 Activities. The Depositor shall not engage in any
business or activity of any kind, or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other undertaking, which is
not directly related to the transactions contemplated and authorized by this
Agreement or the other Transaction Documents; provided, however, that the
Depositor may purchase and sell (or grant Liens in respect of) contracts and/or
other related assets similar to the Contracts to other Persons in securitization
or other non-recourse financing transactions involving CFUSA or any of its
Affiliates.
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Section 6.08 Indebtedness. The Depositor shall not create,
incur, assume or suffer to exist any Indebtedness or other liability whatsoever,
except (i) obligations incurred under this Agreement or other Transaction
Documents, or incidental thereto, (ii) liabilities incidental to the maintenance
of its corporate existence in good standing, or (iii) obligations in connection
with transactions described in the proviso to Section 6.07.
Section 6.09 Guarantees. The Depositor shall not become or
remain liable, directly or contingently, in connection with any Indebtedness or
other liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase, agreement to
supply or advance funds, or otherwise, except as contemplated hereby and in
connection with transactions described in the proviso to Section 6.07.
Section 6.10 Investments. The Depositor shall not make or
suffer to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Person except (i) for purchases or other
acquisitions of Contracts and related Contract Assets pursuant to the Purchase
and Sale Agreements or purchases or other acquisitions of similar contracts and
related assets permitted by the proviso to Section 6.07, (ii) the holding of
ownership interests in Equipment contemplated herein or in transactions
permitted by the proviso to Section 6.07, or (iii) for investments in Eligible
Investments in accordance with the terms of this Agreement or investments in
connection with the transactions permitted by the proviso to Section 6.07.
Section 6.11 Merger; Transfers. The Depositor shall not enter
into any transaction of merger or consolidation, or liquidate or dissolve itself
(or suffer any liquidation or dissolution) or acquire or be acquired by any
Person, or convey, sell, lease or otherwise dispose of all or substantially all
of its property or business, except as provided for in this Agreement.
Section 6.12 Payments. The Depositor shall not declare or pay,
directly or indirectly, any dividend or make any other payment (whether in cash
or other property) with respect to the profits, assets or capital of the
Depositor or any Person's interest therein, or purchase, redeem or otherwise
acquire for value any of its equity ownership interests now or hereafter
outstanding, except that the Depositor may effect payments of its earnings in
respect of Trust Assets to its members in each case so long as it would continue
to be Solvent after giving effect thereto, and otherwise in accordance with the
Transaction Documents.
Section 6.13 Other Agreements. The Depositor shall not become
a party to, or permit any of its properties to be bound by, any indenture,
mortgage, instrument, contract, agreement, lease or other undertaking, except
this Agreement and the other Transaction Documents to which it is a party and
any agreement relating to another transaction permitted by the proviso to
Section 6.07; nor shall it amend or modify the provisions of its Certificate of
Formation or Limited Liability Company Agreement except in accordance with the
Transaction Documents and with the consent of the Required Holders, or issue any
power of attorney except to the Owner Trustee, the Indenture Trustee or the
Servicer pursuant to the Transaction Documents (or other similar powers of
attorney in connection with transactions permitted by the proviso to
Section 6.07).
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Section 6.14 Separate Entity Existence.
(i) The Depositor shall:
(A) Maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking institutions. The
funds of the Depositor will not be diverted to any other Person or for other
than authorized uses of the Depositor.
(B) Ensure that, to the extent that it shares the
same officers or other employees as any of its members or Affiliates, the
salaries of and the expenses related to providing benefits to such officers and
other employees shall be fairly allocated among such entities, and each such
entity shall bear its fair share of the salary and benefit costs associated with
all such common officers and employees.
(C) Ensure that, to the extent that it jointly
contracts with any of its members or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in so doing
shall be allocated fairly among such entities, and each such entity shall bear
its fair share of such costs. To the extent that the Depositor contracts or does
business with vendors or service providers when the goods and services provided
are partially for the benefit of any other Person, the costs incurred in so
doing shall be fairly allocated to or among such entities for whose benefit the
goods and services are provided, and each such entity shall bear its fair share
of such costs. All material transactions between Depositor and any of its
Affiliates shall be only on an arm's-length basis.
(D) To the extent that the Depositor and any of
its members or Affiliates have offices in the same location, there shall be a
fair and appropriate allocation of overhead costs among them, and each such
entity shall bear its fair share of such expenses.
(E) Conduct its affairs strictly in accordance
with its Limited Liability Company Agreement and its Certificate of Formation,
and observe all necessary, appropriate and customary limited liability company
formalities, including, but not limited to, holding all regular and special
members' and manager/directors' meetings appropriate to authorize all entity
action, keeping separate and accurate records of such meetings and its actions,
passing all resolutions or consents necessary to authorize actions taken or to
be taken, and maintaining accurate and separate books, records and accounts,
including, but not limited to, payroll and intercompany transaction accounts.
(ii) The Depositor, is and at all times since its
organization has been operated in such a manner that it would not be
substantively consolidated with CFUSA, the Servicer or the Trust and such that
the separate existence of any of the Depositor, CFUSA, the Servicer or the Trust
would not be disregarded in the event of a bankruptcy or insolvency of the
Depositor, CFUSA, the Servicer or the Trust, and in such regard:
(A) the Depositor shall not (1) dissolve or
liquidate, in whole or in part or (2) merge or consolidate with or into any
other entity, or convey or transfer
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all or substantially all of its properties and assets to any other entity except
in compliance with this Agreement and the Indenture.
(B) the Depositor is not involved in the
day-to-day management of CFUSA, the Servicer or the Trust:
(C) the Depositor maintains separate records and
books of account from CFUSA and the Servicer and the Trust and otherwise
observes formalities under its charter and as required by law;
(D) the financial statements and books and
records of the Depositor will reflect the separate existence of CFUSA, the
Servicer and the Trust;
(E) the Depositor maintains its assets separately
from the assets of CFUSA, the Servicer and the Trust (including through the
maintenance of a separate bank account), the Depositor's funds and assets, and
records relating thereto, have not been and are not commingled with those of
CFUSA, the Servicer and the Trust (except temporarily as otherwise permitted
hereby), transactions between CFUSA, the Depositor and the Servicer are
generally reflective of arm's length transactions, and the separate creditors of
CFUSA, the Servicer and the Trust will be entitled to be satisfied out of the
respective assets of CFUSA, the Servicer and the Trust prior to any value in the
Servicer or the Trust becoming available to the Servicer's or the Trust's
equityholders or the Depositor's creditors;
(F) all business correspondence of the Depositor
and other communications are conducted in the Depositor's own name and on its
own stationery; and
(G) neither CFUSA, the Servicer nor the Trust
acts as an agent of the Depositor in any capacity and the Depositor does not act
as agent for the Servicer or the Trust, but instead presents itself to the
public as an entity separate from the Servicer and the Trust.
Section 6.15 Location; Records. The Depositor shall not change
its state of organization nor move outside the State of New Jersey, the location
of its chief executive office, without thirty (30) days' prior written notice to
the Trust, the Indenture Trustee and the Servicer, and will promptly take all
actions required (including, but not limited to, all filings and other acts
necessary or advisable under the UCC of each relevant jurisdiction) in order to
continue the first priority perfected security interest of the Indenture Trustee
in Trust Assets. The Depositor will give the Indenture Trustee, the Trust and
the Servicer prompt notice of a change within the State of New Jersey of the
location of its chief executive office.
Section 6.16 Liability of Depositor; Indemnities. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Depositor under this Agreement.
The Depositor shall indemnify, defend and hold harmless the
Trust, the Trustees (including in their individual capacity) and the Servicer
(and any of their respective officers, directors, employees or agents) from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein and in the other
59
Transaction Documents, including any sales, gross receipts, general corporation,
tangible personal property, personal property replacement privilege or license
taxes (but, in the case of the Trust, not including any taxes asserted with
respect to, and as of the date of, the transfer of Contracts to the Trust or the
issuance and original sale of the Notes, or asserted with respect to ownership
of Contract Assets, or federal or other income taxes arising out of payments
from Collections on the Trust Assets) and costs and expenses in defending
against the same.
The Depositor shall indemnify, defend and hold harmless the
Trust, the Trustees (including in their individual capacity), the Servicer (and
any of their respective officers, directors, employees or agents) and the
Securityholders from and against any loss, liability or expense incurred by
reason of the Depositor's willful misfeasance, bad faith or negligence (other
than errors in judgment) in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under this
Agreement.
The Depositor shall indemnify, defend and hold harmless the
Trust, the Trustees (including in their individual capacity), and the Servicer
(and any of their respective officers, directors, employees or agents) from and
against all costs, expenses, losses, claims, damages and liabilities arising out
of or incurred in connection with the acceptance or performance (or failure of
performance) of the trusts and duties herein and, in the case of the Owner
Trustee and the Delaware Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee
and the Delaware Trustee shall be due to the willful misfeasance, bad faith or
negligence of the Owner Trustee or the Delaware Trustee, as applicable, or shall
arise from the breach by the Owner Trustee and the Delaware Trustee of any of
its representations or warranties set forth in Section 7.03 of the Trust
Agreement, or (ii) the Indenture Trustee shall be due to the willful
misfeasance, bad faith or negligence of the Indenture Trustee.
The Depositor shall indemnify, defend and hold harmless the
Trustees (including in their individual capacity) from and against any loss,
liability or expense incurred by reason of the Depositor's or Trust's violation
of federal or state securities laws in connection with the offering and sale of
the Notes and the Certificate.
Indemnification under this Section shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation;
provided, however, that the indemnification under this Section, notwithstanding
anything to the contrary, is limited to the assets of the Depositor (including
its rights under Article VI of the Series 2005-EF1 VFC Purchase Agreement or
Article VI of the Non-VFC Purchase Agreement); provided, further, any indemnity
payments to be made pursuant to this Section shall not be made from the Trust
Assets (except to the extent any of the same have been distributed to the
Depositor free and clear of any interest of the Trust therein and except to the
extent CFUSA as co-obligor is obligated to make such payment pursuant to Article
VI of the Series 2005-EF1 VFC Purchase Agreement, or Article VI of the Non-VFC
Purchase Agreement), and such indemnity payments, if unpaid, shall not
constitute a claim against the Trust or the Trust Assets (except in respect of
rights against CFUSA in respect of the aforementioned Articles of the Purchase
and Sale Agreements). If the Depositor (or CFUSA pursuant to the aforementioned
Articles of the Purchase and Sale Agreements) shall have made any indemnity
payments pursuant to this Section and the Person to
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or on behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to the
Depositor (or CFUSA, as applicable), without interest.
Indemnification under this Section shall survive the
resignation or removal of any of the Trustees, as the case may be, and the
termination of the Trust Agreement or this Agreement.
Section 6.17 Bankruptcy Limitations. The Depositor shall not,
without the affirmative vote of each of the manager/directors of the Depositor
(which must include the affirmative vote of at least one duly appointed
Independent Director as defined in the Certificate of Formation and the Limited
Liability Company Agreement of the Depositor) (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Depositor or a substantial part
of its property, (E) make a general assignment for the benefit of creditors, (F)
admit in writing its inability to pay its debts generally as they become due, or
(G) take any entity action in furtherance of the actions set forth in clauses
(A) through (F) above; provided, however, that no manager/director may be
required by any member of the Depositor to consent to the institution of
bankruptcy or insolvency proceedings against the Depositor so long as it is
Solvent.
Section 6.18 Limitation on Liability of Depositor and Others.
The Depositor and any director or officer or employee or agent of the Depositor
may rely in good faith on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor shall not be under any obligation to appear in, prosecute or
defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE VII
ESTABLISHMENT OF ACCOUNTS; PAYMENTS
Section 7.01 Trust Accounts; Collections. (a) On or before the
Closing Date, the Depositor (or the Servicer on its behalf) shall cause the
Indenture Trustee to establish the Collection Account (the "Collection Account")
and the Reserve Account (the "Reserve Account"), each in the name of the
Indenture Trustee for the benefit of the Noteholders and the Equity
Certificateholder. The Servicer is hereby required to ensure that each of the
Trust Accounts is established and maintained as a segregated corporate trust
account with a Qualified Institution. If any institution with which any of the
accounts established pursuant to this Section 7.01(a) ceases to be a Qualified
Institution, the Servicer shall within 30 days after notice of such event
establish a replacement account at a Qualified Institution, and effect (or cause
to be effected) a concurrent transfer of all amounts in the current
non-qualifying account to the replacement account.
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(b) (i) Subject to subsection 7.01(b)(ii) hereof, the
Servicer shall deposit or cause to be deposited, without deposit into any
intervening account, into the Collection Account as promptly as practical after
the Date of Processing (but in any case not later than the second Business Day
following the Date of Processing thereof), all Collections on deposit with the
Servicer in the form of available funds, and all Collections otherwise received
by the Servicer (and all Investment Earnings from investments of the Collection
Account).
(ii) Notwithstanding anything in this Agreement
to the contrary, for so long as, and only so long as,
(A) the Servicer or the direct or indirect
parent of the Servicer shall have and maintain a short-term debt rating of at
least "A-1" by Standard & Poor's and either a short-term debt rating of "P -1 "
or a long-term debt rating of at least "A2" by Xxxxx'x, or
(B) the Servicer obtains a letter of credit,
surety bond or insurance policy (the "Servicer Letter of Credit") under which
demands for payment may be made to secure timely remittance of monthly
collections to the Collection Account and the Trustees are provided with a
letter from each Rating Agency to the effect that the utilization of such
alternative remittance schedule and any amendment required to be made to this
Agreement in connection therewith will not result in a qualification, reduction
or withdrawal of its then current rating of the Notes,
the Servicer may make the deposits to the Collection Account specified in
subsection 7.01(b)(i) hereof on a monthly basis, but not later than the Deposit
Date following the last day of the Collection Period within which such payments
were processed by the Servicer, in an amount equal to the net amount of such
deposits and payments which would have been made to the Collection Account
during such Collection Period but for the provisions of this subsection
7.01(b)(ii). In the event that the Servicer is permitted to make remittances of
collections to the Collection Account pursuant to Section 7.01(b)(ii)(B) hereof,
this Agreement may be modified, to the extent necessary to provide for the
Servicer Letter of Credit, without the consent of any Securityholder. The
Servicer shall notify the Trustees if the Servicer no longer complies with the
requirements set forth in clause (A) or (B) above.
(c) Subject to Section 7.01(b)(ii), the Servicer
shall deposit or cause to be deposited, on the Closing Date and on each
Substitution Transfer Date, in immediately available funds into the Collection
Account, all Collections received after the applicable Cut-Off Date and through
and including the date which is two Business Days preceding the Closing Date or
Substitution Transfer Date, as the case may be, in respect of Contracts being
transferred to the Trust on such date.
(d) Notwithstanding Sections 7.01(b) and (c), if
(i) the Servicer makes a deposit into the Collection Account in respect of
Collections of a Contract in the Contract Pool and such Collections were
received by the Servicer in the form of a check which is not honored for any
reason, or (ii) the Servicer makes a mistake with respect to the amount of any
Collections and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection
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Account to reflect such dishonored check or mistake. Any Scheduled Payment in
respect of which a dishonored check is received shall be deemed not to have been
paid.
Section 7.02 Reserve Account. (a) On the Closing Date, the
Depositor shall deposit the sum of $11,205,454 into the Reserve Account from the
net proceeds of the sale of the Notes.
(b) The Indenture Trustee shall use the amounts then
outstanding in the Reserve Account to (i) make payments that shall become due
and payable under Section 7.05(a)(i) through Section 7.05(a)(x) hereof and (ii)
make payments, on any given Payment Date, in amounts equal to the amounts then
outstanding on any Class of the Notes on the respective Maturity Date of such
Class of Notes to the extent that the amount of Available Funds on such Payment
Date, is not sufficient to pay such amounts in accordance with the priority of
payments set forth in Section 7.05. For purposes of determining the amount
available to be withdrawn from the Reserve Account to pay the Class A-4 Interest
Payment Amount, the Class A-4 Interest Rate will be calculated at the fixed swap
rate of 4.49228% per annum.
(c) Subject to Section 7.05, the balance required to
be on deposit in the Reserve Account on any Payment Date (after giving effect to
all deposits thereto or withdrawals therefrom on such Payment Date) shall be an
amount equal to the Specified Reserve Account Balance.
(d) On each Deposit Date, the Indenture Trustee, as
directed by the Servicer, shall transfer any amounts required to be transferred
from the Reserve Account to the Collection Account pursuant to section 7.05(f).
Prior to each Payment Date, the Indenture Trustee, as directed by the Servicer,
shall transfer from the Reserve Account to the Depositor the amount specified by
the Servicer in the related Monthly Servicer's Report representing Investment
Earnings on amounts held in the Reserve Account as of the related Determination
Date. On each Payment Date following the payments made pursuant to Section 7.05,
the Indenture Trustee, as directed by the Servicer, shall transfer to the
Depositor any amount in excess of the Specified Reserve Account Balance.
(e) Pursuant to Section 7.05(f), on the Payment Date
following the occurrence and continuation of an Event of Default, the Indenture
Trustee upon receipt of written instructions from the Servicer shall pay all
amounts on deposit in the Reserve Account into the Collection Account for
application toward payment on the Notes in the priority as set forth in Section
7.05.
(f) Upon the satisfaction and discharge of this
Indenture, any balance remaining in the Reserve Account, after all obligations
to the Noteholders hereunder have been fully satisfied, shall be paid to
reimburse the Indenture Trustee and the Owner Trustee and the Delaware Trustee
for any amounts owing to them arising from the performance of their obligations
under this Indenture and, then, to the Equity Certificateholder.
Section 7.03 Trust Account Procedures. If the Servicer
so directs, in writing (with a copy to the Owner Trustee and the Indenture
Trustee), the Qualified Institution maintaining any Trust Account, shall invest
the amounts therein in Eligible Investments of the
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type specified in such written direction that mature not later than one Business
Day prior to the next succeeding Payment Date (or that mature on such earlier
Business Day as the Rating Agencies shall approve, with a copy of such approval
provided to the Indenture Trustee). Once such funds of any Trust Account are
invested, the Servicer shall not change or permit a change in the investment of
such funds. Subject to the other provisions hereof, the Indenture Trustee shall
have sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Indenture Trustee or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment to
the Indenture Trustee in a manner which complies with this Section 7.03. All
Investment Earnings, if any, on investments of funds in the Collection Account
shall be deposited in or maintained within the Collection Account pursuant to
Section 7.01 and paid on the next Payment Date pursuant to Section 7.05. All
Investment Earnings in the Reserve Account shall be distributed in accordance
with Section 7.02(d) of this Agreement. The Servicer, the Depositor and the
Trust agree and acknowledge that the Indenture Trustee is to have "control"
(within the meaning of Section 9-106 of the UCC as enacted in New York) of
collateral consisting of "Investment Property" (within the meaning of Section
9-102 of the UCC as enacted in New York) for all purposes of this Agreement. In
the absence of timely written direction from the Servicer, the Indenture Trustee
shall invest or cause to be invested amounts in the Trust Accounts in Eligible
Investments of the type specified in clause (vi) of the definition of Eligible
Investments herein. The Indenture Trustee shall not be liable for investment
losses in Eligible Investments as directed by the Servicer.
Section 7.04 Securityholder Payments. (a) On each Payment
Date, each Noteholder and the Equity Certificateholder as of the related Record
Date shall be paid amounts payable on such date pursuant to Section 7.05 below
by check mailed to such Noteholder or the Equity Certificateholder at the
address for such Noteholder or the Equity Certificateholder appearing on the
Note Register or the Certificate Register, or by wire transfer if such
Noteholder or the Equity Certificateholder has provided written instructions for
such payment method to the Indenture Trustee and Owner Trustee, respectively, at
least ten days prior to such Payment Date.
(b) The Indenture Trustee shall serve as the paying
agent ("Paying Agent") hereunder and shall make the payments to the Noteholders
and the Equity Certificateholder required hereunder. The Indenture Trustee
hereby agrees that all amounts held by it for payment hereunder will be held in
trust for the benefit of the Noteholders and the Equity Certificateholder, as
their interests may appear.
Section 7.05 Allocations and Payments.
(a) Allocations and Payments Prior to an Event of
Default. On each Determination Date prior to an Event of Default, the Servicer,
pursuant to written monthly payment instructions and notification (which shall
accompany the Monthly Servicer's Report delivered on such Determination Date),
shall instruct the Indenture Trustee to withdraw, and on the succeeding Payment
Date the Indenture Trustee acting in accordance with such written instructions
shall withdraw, the amounts required to be withdrawn from the Collection Account
and shall make the following payments or allocations from Available Funds plus
deposits made from the Reserve Account pursuant to Section 7.05(f) for the
related Payment Date, in the order of priority specified below:
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(i) pay to the Servicer the reimbursement for
Unreimbursed Servicer Advances and any amounts specified in Section 2.04 hereof,
to the extent the Servicer has not reimbursed itself in respect of such amounts;
(ii) pay to the Servicer, the Servicing Fee for
the related Collection Period;
(iii) (a) pay the Class A-1 Interest Payment
Amount, the Class A-2 Interest Payment Amount, the Class A-3 Interest Payment
Amount, the Class A-4 Interest Payment Amount, to each respective Holder of
Class A Notes; provided, that if the amount of Available Funds remaining to be
allocated pursuant to this clause is less than the full amount required to be so
paid, such Available Funds shall be paid to the Holders of Class A Notes pro
rata based on their respective entitlement pursuant to this clause, and (b) pay
the Swap Counterparty, if applicable, the Swap Trust Payment;
(iv) to the extent that (a) the Principal Amount
of the Class A Notes outstanding on such Determination Date exceeds (b) the
Contract Pool Principal Balance at the end of the related Collection Period, the
Indenture Trustee shall retain the amount of such excess to pay the outstanding
Principal Amount of the Notes as set forth in Section 7.05(d);
(v) pay to the Holders of Class B Notes the Class
B Interest Payment Amount, including any overdue interest; provided, that if the
amount of Available Funds remaining to be allocated pursuant to this clause is
less than the full amount required to be so paid, such Available Funds shall be
paid to the Holders of Class B Notes pro rata based on their respective
entitlement pursuant to this clause;
(vi) to the extent that (a) the sum of the
Principal Amounts of the Class A Notes and the Class B Notes outstanding on such
Determination Date exceeds (b) the Contract Pool Principal Balance at the end of
the related Collection Period minus any amount of principal retained by the
Indenture Trustee in accordance with clause (iv) above, the Indenture Trustee
shall retain the amount of such excess and shall apply the amount of such excess
to pay the outstanding Principal Amount of the Notes as set forth in Section
7.05(d);
(vii) pay to the Holders of Class C Notes the
Class C Interest Payment Amount, including any overdue interest; provided, that
if the amount of Available Funds remaining to be allocated pursuant to this
clause is less than the full amount required to be so paid, such Available Funds
shall be paid to the Holders of Class C Notes pro rata based on their respective
entitlement pursuant to this clause;
(viii) to the extent that (a) the sum of the
Principal Amounts of the Class A Notes, Class B Notes and the Class C Notes
outstanding on such Determination Date exceeds (b) the Contract Pool Principal
Balance at the end of the related Collection Period minus any amount of
principal amount retained by the Indenture Trustee in accordance with clauses
(iv) and (vi) above, the Indenture Trustee shall retain the amount of such
excess and shall apply the amount of such excess to pay the outstanding
Principal Amount of the Notes as set forth in Section 7.05(d);
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(ix) pay to the Holders of Class D Notes the
Class D Interest Payment Amount; provided, that if the amount of Available Funds
remaining to be allocated pursuant to this clause is less than the full amount
required to be so paid, such Available Funds shall be paid to the Holders of
Class D Notes pro rata based on their respective entitlement pursuant to this
clause;
(x) to the extent that (a) the sum of the
Principal Amounts of the Class A Notes, Class B Notes, Class C Notes and Class D
Notes outstanding on such Determination Date exceeds (b) the Contract Pool
Principal Balance at the end of the related Collection Period minus any amount
retained by the Indenture Trustee in accordance with clauses (iv), (vi) and
(viii) above, the Indenture Trustee shall retain the amount of such excess and
shall apply the amount of such excess to pay the outstanding Principal Amount of
the Notes, as set forth in Section 7.05(d);
(xi) transfer to the Reserve Account any amount
necessary to increase the Reserve Account Amount to the Specified Reserve
Account Balance;
(xii) the Indenture Trustee shall retain an
amount equal to the excess of the Overcollateralization Principal Payment
Amount, minus any amount of principal retained by the Indenture Trustee in
accordance with clauses (iv), (vi), (viii) and (x) above, and shall apply the
amount of such excess to pay the outstanding Principal Amount of the Notes as
set forth in Section 7.05(d);
(xiii) pay to the Holders of the Class A-4 Notes
the Class A-4 Supplemental Interest Payment Amount; provided, that if the amount
of Available Funds remaining to be allocated pursuant to this clause is less
than the full amount required to be so paid, such Available Funds shall be paid
to the Holders of the Class A-4 Notes pro rata based on their respective
entitlement to this clause;
(xiv) pay to the Trustees, concurrently and pro
rata, any amounts owing thereto;
(xv) pay to Swap Counterparty any amounts owing
to the Swap Counterparty, minus any amount paid to the Swap Counterparty
pursuant to clause (iii) above; and
(xvi) pay any remaining amounts to the Equity
Certificateholder.
(b) Payments at Stated Maturity. Notwithstanding
Section 7.05(a), to the extent that following the payments set forth above, any
amounts would remain outstanding on any Class of Notes on the Maturity Date of
such Class of Notes, the Indenture Trustee shall apply all remaining Available
Funds to payment of principal on such Class of Notes prior to making any payment
or allocation set forth above to any Class of Notes which is lower in priority
than payment of interest on such Class of Notes.
(c) Payments of Outstanding Interest. Following
the payment of Available Funds on any Payment Date in accordance with the
priority of payment set forth above, if any Class A-1 Interest Payment Amount,
Class A-2 Interest Payment Amount, Class A-3
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Interest Payment Amount, Class A-4 Interest Payment Amount, Class B Interest
Payment Amount, Class C Interest Payment Amount, or Class D Interest Payment
Amount remains outstanding, the Indenture Trustee shall apply any other amounts
of cash available on deposit in the Collection Account to satisfy any such
interest payment obligations in accordance with the priority set forth above in
Section 7.05(a).
(d) Payments of Principal
On each Payment Date, the Indenture Trustee will apply each of
the amounts retained by the Indenture Trustee pursuant to clauses (iv), (vi),
(viii), (x), and (xii) of Section 7.05(a), or clauses (iv), (vi) or (viii) of
Section 7.05(e), as applicable, to make payments to reduce the Principal Amount
of each Class of Notes then outstanding in the following order of priority:
(i) to the Class A-1 Notes, until the outstanding
Principal Balance of the Class A-1 Notes has been paid in full;
(ii) to the Class A-2 Notes, until the
outstanding Principal Balance of the Class A-2 Notes has been paid in full;
(iii) to the Class A-3 Notes, until the
outstanding Principal Balance of the Class A-3 Notes has been paid in full;
(iv) to the Class A-4 Notes, until the
outstanding Principal Balance of the Class A-4 Notes has been paid in full;
(v) to the Class B Notes, until the outstanding
Principal Balance of the Class B Notes has been paid in full;
(vi) to the Class C Notes, until the outstanding
Principal Balance of the Class C Notes has been paid in full;
(vii) to the Class D Notes, until the outstanding
Principal Balance of the Class D Notes has been paid in full; and
(viii) the balance, if any, shall be distributed
in accordance with the relevant priorities set forth in Section 7.05(a) or
Section 7.05(e), as applicable.
(e) Allocations and Payments after an Event of
Default. On each Determination Date after the occurrence and during the
continuance of an Event of Default, the Servicer, pursuant to monthly payment
instructions and notification, shall instruct the Indenture Trustee to withdraw,
and on the succeeding Payment Date the Indenture Trustee acting in accordance
with such instructions shall withdraw, all amounts from the Collection Account
and the Reserve Account in order to make the following payments or allocations
for the related Payment Date in the following order of priority:
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(i) pay to the Servicer the reimbursement for
Unreimbursed Servicer Advances and any amounts specified in Section 2.04 hereof,
to the extent the Servicer has not reimbursed itself in respect of such amounts;
(ii) pay to the Servicer, the Servicing Fee for
the related Collection Period;
(iii) (a) pay the Class A-1 Interest Payment
Amount, the Class A-2 Interest Payment Amount, the Class A-3 Interest Payment
Amount, the Class A-4 Interest Payment Amount, to each respective Holder of
Class A Notes; provided, that if the amount of Funds remaining to be allocated
pursuant to this clause is less than the full amount required to be so paid,
such Funds shall be paid to the Holders of Class A Notes pro rata based on their
respective entitlement pursuant to this clause and (b) pay the Swap
Counterparty, if applicable, the Swap Trust Payment;
(iv) to the extent that (a) the Principal Amount
of the Class A Notes outstanding on such Determination Date exceeds (b) the
Contract Pool Principal Balance at the end of the related Collection Period, the
Indenture Trustee shall retain the amount of such excess to pay to outstanding
Principal Amount of the Class A Notes as set forth in Section 7.05(d);
(v) pay to the Holders of Class B Notes the Class
B Interest Payment Amount, including any overdue interest; provided, that if the
amount of Available Funds remaining to be allocated pursuant to this clause is
less than the full amount required to be so paid, such Available Funds shall be
paid to the Holders of Class B Notes pro rata based on their respective
entitlement pursuant to this clause;
(vi) to the extent that (a) the sum of the
Principal Amounts of the Class A Notes and the Class B Notes outstanding on such
Determination Date exceeds (b) the Contract Pool Principal Balance at the end of
the related Collection Period minus any amount of principal retained by the
Indenture Trustee in accordance with clause (iv) above, the Indenture Trustee
shall retain the amount of such excess and shall apply the amount of such excess
to pay the outstanding Principal Amount of the Notes as set forth in Section
7.05(d);
(vii) pay to the Holders of Class C Notes the
Class C Interest Payment Amount, including any overdue interest; provided, that
if the amount of Available Funds remaining to be allocated pursuant to this
clause is less than the full amount required to be so paid, such Available Funds
shall be paid to the Holders of Class C Notes pro rata based on their respective
entitlement pursuant to this clause;
(viii) to the extent that (a) the sum of the
Principal Amounts of the Class A Notes, Class B Notes and the Class C Notes
outstanding on such Determination Date exceeds (b) the Contract Pool Principal
Balance at the end of the related Collection Period minus any amount of
principal amount retained by the Indenture Trustee in accordance with clauses
(iv) and (vi) above, the Indenture Trustee shall retain the amount of such
excess and shall apply the amount of such excess to pay the outstanding
Principal Amount of the Notes, as set forth in Section 7.05(d);
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(ix) pay to the Holders of Class D Notes the
Class D Interest Payment Amount; provided, that if the amount of Available Funds
remaining to be allocated pursuant to this clause is less than the full amount
required to be so paid, such Available Funds shall be paid to the Holders of
Class D Notes pro rata based on their respective entitlement pursuant to this
clause;
(x) following application of payments made in
accordance with Section 7.05(d) pay:
(A) to the Holders of Class A-1 Notes any
outstanding amounts of principal on the Class A-1 Notes until paid in full;
(B) pro rata to (1) the Holders of
Class A-2 Notes any outstanding amounts of principal on the Class A-2 Notes
until paid in full; (2) to the Holders of Class A-3 Notes any outstanding
amounts of principal on the Class A-3 Notes until paid in full; and (3) to the
Holders of Class A-4 Notes any outstanding amounts of principal on the Class A-4
Notes until paid in full;
(C) to the Holders of Class B Notes any
outstanding amounts of principal on the Class B Notes until paid in full;
(D) to the Holders of Class C Notes any
outstanding amounts of principal on the Class C Notes until paid in full; and
(E) to the Holders of Class D Notes any
outstanding amounts of interest and principal on the Class D Notes until paid in
full;
(xi) pay to the Holders of the Class A-4 Notes
the Class A-4 Supplemental Interest Payment Amount; provided, that if the amount
of Available Funds remaining to be allocated pursuant to this clause is less
than the full amount required to be so paid, such Available Funds shall be paid
to the Holders of the Class A-4 Notes pro rata based on their respective
entitlement to this clause;
(xii) pay to the Trustees, concurrently and pro
rata, any amounts owing thereto;
(xiii) pay to Swap Counterparty any amounts owing
to the Swap Counterparty, minus any amount paid to the Swap Counterparty
pursuant to clause (iii) above; and
(xiv) pay any remaining amounts to the Equity
Certificateholder.
(f) On the Business Day preceding each Payment Date,
the Indenture Trustee shall, in accordance with written directions from the
Servicer, withdraw from amounts on deposit in the Reserve Account, and deposit
into the Collection Account, an amount equal to the lesser of the Available
Reserve Amount for such Payment Date and the sum of the following amounts, if
any:
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(i) the amount, if any, by which the Available
Funds with respect to such Payment Date, is less than the amount required to
make the payments or allocations set forth in clauses (iii)-(x) of Section
7.05(a); plus
(ii) on the first Payment Date following an Event
of Default, the entirety of the Available Reserve Amount shall be deposited in
the Collection Account.
(g) All instructions required to be provided by the
Servicer are deemed given if included in the Monthly Servicer's Report or in a
separate writing.
(h) In the event the Monthly Servicer's Report shows
that, as of any Determination Date, there are amounts on deposit in the
Collection Account which do not constitute Collections and to which the
Depositor is entitled hereunder, the Servicer shall direct the Indenture Trustee
to forthwith pay such amount to or upon its written order.
Section 7.06 Repurchases of, or Substitution for, Contracts
for Breach of Representations and Warranties. Upon a discovery by the Servicer
of an inaccuracy or breach of a representation or warranty set forth in the
Schedule of Representations which has been made or deemed made with respect to a
Contract in the Contract Pool, which inaccuracy or breach materially adversely
affects the Trust's or any Noteholder's or the Equity Certificateholder's
interest in such Contract (without regard to the benefits of the Reserve
Account, any reserve fund, over collateralization or other similar enhancement)
or the collectibility thereof (an "Ineligible Contract"), the Servicer shall
promptly notify CFUSA thereof. As provided in the Series 2005-EF1 VFC Purchase
Agreement and the Non-VFC Purchase Agreement and in accordance with this Section
7.06, CFUSA is obligated to repurchase each such Ineligible Contract, at a
repurchase price equal to the Purchase Amount (determined as of the date such
repurchase is to be funded), not later than the second Deposit Date following
the date the Servicer becomes aware of any such breach or inaccuracy and which
breach or inaccuracy has not otherwise been cured; provided, however, that if
CFUSA is able to effect a substitution for any such Ineligible Contract in
compliance with Section 2.03, CFUSA may, in lieu of repurchasing such Ineligible
Contract, effect a substitution for such Ineligible Contract with a Substitute
Contract not later than the date a repurchase of such Ineligible Contract would
be required hereunder; and provided further, that with respect to a breach or
inaccuracy of any such representations or warranties relating to the Contract
Pool (or all Contracts conveyed on the Closing Date or Substitution Transfer
Date, as the case may be) in the aggregate and not to any particular Contract,
CFUSA (or the Servicer acting on its behalf) may select Contracts (without
adverse selection) to repurchase (or substitute for) such that had such
Contracts not been included as part of the related Transferred Assets (and, in
the case of a substitution, had such Substitute Contract been included as part
of the related Transferred Assets instead of the selected Ineligible Contract)
there would have been no breach or inaccuracy of such representation or
warranty. Notwithstanding any other provision of this Agreement, the obligation
of CFUSA under the Purchase and Sale Agreements and described in this Section
7.06 shall not terminate or be deemed released by any party hereto upon a
Servicing Transfer pursuant to Article VIII. The right to enforce the repurchase
or substitution obligation described in this Section shall constitute the sole
remedy of the Trust, the Indenture Trustee, the Depositor, the Noteholders and
the Equity Certificateholder with respect to the inaccuracy or breach related to
such Ineligible Contract. The Purchase Amount shall be allocated in accordance
with the Allocation Criteria.
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Section 7.07 Reassignment of Repurchased or Substituted
Contracts. Upon deposit into the Collection Account of the Purchase Amount with
respect to an Ineligible Contract as described in Section 7.06 (or upon the
Substitution Transfer Date related to a Substitute Contract described in Section
7.06), or of the repurchase price set forth in Section 7.08, the Indenture
Trustee shall release and reassign to CFUSA all of the Trust's right and
interest in the repurchased or substituted Contract and related Transferred
Assets upon receipt of written instruction from the Servicer without recourse,
representation or warranty, and such reassigned Contract shall no longer
thereafter be included in any calculations of Contract Principal Balances
required to be made hereunder or otherwise be deemed a part of the Trust Assets.
Section 7.08 The Servicer's Purchase Option. On written notice
to the Indenture Trustee at least twenty (20) days prior to a Payment Date, and
provided that the aggregate Principal Amount of Notes outstanding on such
Payment Date is less than 10% of the Initial Contract Pool Principal Balance,
the Servicer may (but is not required to) repurchase from the Trust on that
Payment Date all outstanding Contracts in the Contract Pool at a price equal to
the sum of (a) the aggregate outstanding Principal Amount of the Notes plus
accrued unpaid interest thereon as of such Payment Date, plus (b) the amount of
unreimbursed Servicer Advances (if any) as well as accrued and unpaid monthly
Servicing Fees to the date of such repurchase, plus (c) fees, expenses and
indemnities owed to the Trustees, as applicable, plus (d) any Swap Trust Payment
and any termination payments relative to the Swap Agreement minus (e)
Collections and other Available Funds on deposit in the Collection Account and
available to make such payments on such Payment Date (collectively the
"Redemption Price"). If the Servicer elects to purchase the outstanding
Contracts, the then outstanding Notes shall be redeemed on the Payment Date on
which the purchase by the Servicer occurs (the "Redemption Date").
ARTICLE VIII
SERVICER DEFAULTS; SERVICING TRANSFER
Section 8.01 Servicer Default. "Servicer Default" means the
occurrence of any of the following:
(a) any failure by the Servicer to make any payment,
transfer or deposit or to give instructions or notice to the Owner Trustee or
the Indenture Trustee to make any payment, transfer or deposit, or to deliver
the Monthly Servicer's Report pursuant to this Agreement, which failure
continues unremedied for a period of five (5) Business Days after the first to
occur of (i) written notice from the Owner Trustee (with a copy to the Indenture
Trustee) or the Indenture Trustee (with a copy to the Owner Trustee) of such
failure shall have been given to the Servicer, or (ii) the date the Servicer
becomes aware thereof; or
(b) failure on the part of the Servicer duly to
observe or perform any other covenants or agreements of the Servicer set forth
in this Agreement which has a material adverse effect on the Noteholders or the
Equity Certificateholder, which continues unremedied for a period of thirty (30)
days after the first to occur of (i) the date on which written notice of such
failure requiring the same to be remedied shall have been given to the Servicer
by the
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Indenture Trustee or to the Servicer, the Owner Trustee and the Indenture
Trustee by the Noteholders or the Equity Certificateholder or the Indenture
Trustee on behalf of such Noteholders of Notes aggregating not less than 25% of
the Principal Amount of any Class adversely affected thereby, and (ii) the date
on which the Servicer becomes aware thereof, and such failure continues to
materially adversely affect the Noteholders or the Equity Certificateholders for
such period; or
(c) any representation, warranty or certification made
by the Servicer in this Agreement or in any certificate delivered pursuant
hereto shall prove to have been incorrect when made, which has a material
adverse effect on the Noteholders or the Equity Certificateholder and which
continues to be incorrect in any material respect for a period of thirty (30)
days after the first to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to the
Servicer and the Owner Trustee by the Indenture Trustee, or to the Servicer, the
Owner Trustee and the Indenture Trustee by Noteholders or the Equity
Certificateholders or by the Indenture Trustee on behalf of Noteholders of Notes
aggregating not less than 25% of the Principal Amount of any Class adversely
affected thereby, and (ii) the date on which the Servicer becomes aware thereof,
and such incorrectness continues to materially adversely affect the Noteholders
or the Equity Certificateholders for such period; or
(d) an Insolvency Event shall occur with respect to
the Servicer.
Notwithstanding the foregoing, a delay in or failure of
performance referred to under clause (a) above for a period of five (5) Business
Days or referred to under clause (b) or (c) for a period of sixty (60) days (in
addition to any period provided in (a), (b) or (c)) shall not constitute a
Servicer Default until the expiration of such additional five (5) Business Days
or sixty (60) days, respectively, 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 other similar occurrences. Upon the
occurrence of any such event the Servicer shall not be relieved from using its
best efforts to perform its obligations in a timely manner in accordance with
the terms of this Agreement and the Servicer shall provide the Owner Trustee,
the Indenture Trustee and the Depositor prompt notice of such failure or delay
by it, together with a description of its efforts to so perform its obligations.
The Servicer shall promptly notify the Indenture Trustee in writing of any
Servicer Default of which it is aware.
Section 8.02 Servicing Transfer. (a) If a Servicer Default has
occurred and is continuing, the Required Holders or the Indenture Trustee
(subject to the right of the Indenture Trustee to indemnification pursuant to
Section 6.02(g) or 6.07 of the Indenture) may and shall at the direction of the
Required Holders, by written notice (a "Termination Notice") delivered to the
parties hereto, terminate all (but not less than all) of the Servicer's rights
and obligations under this Agreement with respect to the Trust Assets.
(b) Upon delivery of the Termination Notice (or, if
later, on a date designated therein), and on the date that a successor Servicer
shall have been appointed pursuant to Section 8.03 (such appointment being
herein called a "Servicing Transfer"), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts in the Contract Pool, the Contract Files or otherwise, shall
pass to
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and be vested in such successor (the "Successor Servicer") pursuant to and under
this Section 8.02; and, without limitation, the Successor Servicer is authorized
and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do any and all acts or things necessary or appropriate to effect the purposes
of such notice of termination. The Servicer agrees to reasonably cooperate with
the Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer under this Agreement, including, without limitation, the
transfer to the Successor Servicer for administration by it of all cash amounts
which shall at the time be held by the Servicer for deposit, or have been
deposited by the Servicer, in the Collection Account, or for its own account in
connection with its services hereafter or thereafter received with respect to
the Contracts in the Contract Pool. The Servicer shall transfer to the Successor
Servicer (i) all records held by the Servicer relating to such Contracts in such
electronic form as the Successor Servicer may reasonably request and (ii) any
related Contract Files in the Servicer's possession. In addition, the Servicer
shall permit access to its premises and employees (including all computer
records and programs) to the Successor Servicer or its designee, and shall pay
the reasonable transition expenses of the Successor Servicer. Upon a Servicing
Transfer, the Successor Servicer shall thereafter also be entitled to receive
the Servicing Fee for performing the obligations of the Servicer.
Section 8.03 Appointment of Successor Servicer; Reconveyance;
Successor Servicer to Act. Upon delivery of the Termination Notice (or, if
later, on a date designated therein), the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or, if no such date is specified, until a date mutually
agreed by the Servicer and the Indenture Trustee. The Indenture Trustee shall as
promptly as possible after the giving of or receipt of a Termination Notice,
appoint a Successor Servicer, and such Successor Servicer shall accept its
appointment by a written assumption and by delivery of an opinion of counsel
(which shall not be at the expense of the Indenture Trustee) to the Successor
Servicer relating to corporate matters and enforceability, in each case in a
form acceptable to the Indenture Trustee and the Owner Trustee. Any Successor
Servicer shall be a financial institution having a net worth of at least
$50,000,000 and whose regular business includes the servicing of contracts
similar to the Contracts in the Contract Pool.
In the event that a Successor Servicer has not been appointed
and has not accepted its appointment within 60 days of the delivery of a
Termination Notice, then the Indenture Trustee shall offer the Depositor, and
the Depositor shall offer CFUSA, the right to accept retransfer of all the Trust
Assets, and such party may accept retransfer of such Trust Assets in
consideration of the Depositor's delivery to the Collection Account on or prior
to the next upcoming Payment Date of a sum equal to the Aggregate Principal
Amount of all Notes then outstanding, together with accrued and unpaid interest
thereon through such date of deposit; provided, that the Indenture Trustee, if
so directed by, the Required Holders, need not accept and effect such
reconveyance in the absence of evidence (which may include valuations of an
investment bank or similar entity, which shall not be at the expense of the
Indenture Trustee) reasonably acceptable to such Indenture Trustee or Required
Holders that such retransfer would not constitute a fraudulent conveyance of the
Depositor or CFUSA; provided, further, CFUSA may not accept such retransfer
unless it shall have delivered to each Rating Agency, with a copy to the
Indenture Trustee, an Opinion of Counsel (which shall not be an employee of the
Trust)
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that such retransfer would not constitute a fraudulent conveyance of the
Depositor or CFUSA or that such retransfer would not constitute a preferential
payment by the Depositor or CFUSA.
In the event that a Successor Servicer has not been appointed
and has not accepted its appointment at the time when the then Servicer has
ceased to act as Servicer, the Indenture Trustee without further action shall
automatically be appointed the Successor Servicer. The Indenture Trustee shall
be entitled to receive the Servicing Fee while assuming such duties and shall be
entitled to all rights and benefits of the Servicer (or Successor Servicer)
including the indemnity rights under Section 8.07 hereof. Notwithstanding the
foregoing, if the Indenture Trustee is legally unable or prohibited from so
acting or is unwilling to so act, it shall petition a court of competent
jurisdiction to appoint any established financial institution having a net worth
of at least $50,000,000 and whose regular business includes the servicing of
contracts similar to the Contracts in the Contract Pool as the Successor
Servicer hereunder. On or after a Servicing Transfer, the Successor Servicer
shall be the successor in all respects to the Servicer in its capacity as
servicer under this Agreement, and the transactions set forth or provided for in
this Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the terminated Servicer shall be relieved of such responsibilities,
duties and liabilities arising after such Servicing Transfer; provided, however,
that the Successor Servicer shall not be liable for any acts or omissions of the
departing Servicer occurring prior to such Servicing Transfer or for any breach
by the departing Servicer of any of its representations and warranties contained
in this Agreement or in any related Transaction Document or other agreement. As
compensation therefor, the Successor Servicer shall be entitled to receive the
Servicing Fee from and after the Servicing Transfer. The Trust, the Noteholders
and the Equity Certificateholders, the Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. To the extent the terminated Servicer has made
Servicer Advances, it shall be entitled to reimbursement of the same (and any
unpaid Servicing Fees accrued prior to the Servicing Transfer) notwithstanding
its termination hereunder, to the same extent as if it had continued to service
the Trust Assets hereunder. In addition, it is understood and agreed that if an
Event of Default has occurred and a Servicer Transfer is being effected by
action of the Indenture Trustee hereunder, any documented expenses reasonably
incurred by the Indenture Trustee in connection with effecting such Servicer
Transfer shall be deemed expenses reimbursable from Available Funds.
Section 8.04 Notifications to Noteholders and the Equity
Certificateholders. (a) Promptly following the occurrence of any Servicer
Default of which it is aware, the Servicer shall give written notice thereof to
the Trustees, the Depositor and each Rating Agency at the addresses described in
Section 11.03 and to the Noteholders and Equity Certificateholder at their
respective addresses appearing on the Note Register and the Certificate
Register, respectively.
(b) Within ten (10) days following any termination or
appointment of a Successor Servicer pursuant to this Article VIII, the Indenture
Trustee shall give written notice thereof to each Rating Agency and the
Depositor at the addresses described in Section 11.03, and to the Noteholders,
at their respective addresses appearing on the Note Register, and to the Owner
Trustee.
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Section 8.05 Effect of Transfer. (a) Except as otherwise set
forth in this Agreement, after a Servicing Transfer, the terminated Servicer
shall have no further rights or obligations under this Agreement, including,
without limitation, with respect to the management, administration, servicing,
custody or collection of the Trust Assets, and the Successor Servicer appointed
pursuant to Section 8.03 shall have all of such obligations, except that the
terminated Servicer will transmit or cause to be transmitted directly to the
Successor Servicer for its own account, promptly on receipt and in the same form
in which received, any amounts or items (properly endorsed where required for
the Successor Servicer to collect them) received as payments upon or otherwise
in connection with the Contracts in the Contract Pool.
(b) A Servicing Transfer shall not affect the rights
and duties of the parties to this Agreement (including but not limited to the
indemnities of the departing Servicer) other than those relating to the
management, administration, servicing, custody or collection of the Contracts in
the Contract Pool and related Transferred Assets.
Section 8.06 Database File. The Servicer will provide the
Successor Servicer with a magnetic tape containing the database file for each
Contract in the Contract Pool on and as of the Business Day before the actual
commencement of servicing functions by the Successor Servicer following the
occurrence of a Servicer Default.
Section 8.07 Successor Servicer Indemnification. The departing
Servicer shall defend, indemnify and hold the Successor Servicer and any
officers, directors, employees or agents of the Successor Servicer harmless
against any and all claims, losses, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments and any other costs, fees, and expenses
that the Successor Servicer may sustain in connection with the claims asserted
at any time by third parties against the Successor Servicer which result from
(i) any willful or grossly negligent act taken or omission by the departing
Servicer or (ii) a breach of any representations of the departing Servicer in
Section 3.02. The indemnification provided by this Section 8.07 shall survive
(a) a Servicing Transfer and/or (b) the termination of this Agreement.
Section 8.08 Responsibilities of the Successor Servicer. The
Successor Servicer will not be responsible for delays attributable to the
departing Servicer's failure to deliver information, defects in the information
supplied by the departing Servicer or other circumstances beyond the control of
the Successor Servicer.
The Successor Servicer will make arrangements with the
departing Servicer for the prompt and safe transfer of, and the departing
Servicer shall provide to the Successor Servicer, all necessary servicing files
and records, including (as deemed necessary by the Successor Servicer at such
time): (i) microfiche loan documentation, (ii) servicing system tapes, (iii)
Contract payment history, (iv) collections history and (v) the trial balances,
as of the close of business on the day immediately preceding conversion to the
Successor Servicer, reflecting all applicable Contract Pool information. The
departing Servicer shall be obligated to pay the costs associated with the
transfer of the servicing files and records to the Successor Servicer.
The Successor Servicer shall have no responsibility and shall
not be in default hereunder nor incur any liability for any failure, error,
malfunction or any delay in carrying out any of its duties under this Agreement
if any such failure or delay results from the Successor
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Servicer acting in accordance with information prepared or supplied by a Person
other than the Successor Servicer or the failure of any such Person to prepare
or provide such information. The Successor Servicer shall have no
responsibility, shall not be in default and shall incur no liability (i) for any
act or failure to act by any third party, including the departing Servicer, the
Depositor or the Trustees or for any inaccuracy or omission in a notice or
communication received by the Successor Servicer from any third party or (ii)
which is due to or results from the invalidity or unenforceability of any
Contract under applicable law or the breach or the inaccuracy of any
representation or warranty made with respect to any Contract.
Any Successor Servicer which assumes the role of Successor
Servicer hereunder shall be entitled to the benefits of (and subject to the
provisions of) Section 5.05 concerning delegation of duties to subservicers.
None of the provisions contained in this Agreement shall in
any event require the Indenture Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement except during such time, if any, as the Indenture Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
Section 8.09 Servicer Not to Resign. The Servicer shall not
resign from its obligations and duties under this Agreement except upon
determination that the performance of its duties shall no longer be permissible
under applicable law, compliance with which could not be realized without
material adverse impact on the Servicer's financial condition. No such
resignation shall become effective until the Indenture Trustee or a successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 8.03 hereof.
ARTICLE IX
SERVICER REPORTING
Section 9.01 Monthly Servicer's Reports. With respect to each
Payment Date and the related Collection Period, the Servicer will provide to
each Trustee and each Rating Agency, on the related Determination Date, a
monthly statement (a "Monthly Servicer's Report") substantially in the form of
Exhibit C hereto. The Indenture Trustee will make the Monthly Servicer's Report
available each month to Noteholders and the Rating Agencies via
xxxx://xxx.xxxxxxxx.xxx/xxx. Parties that are unable to use
xxxx://xxx.xxxxxxxx.xxx/xxx are entitled to have a paper copy of the Monthly
Servicer's Report mailed to them via first class mail by requesting such in
writing. The Indenture Trustee shall have the right to change the way the
Monthly Servicer's Report is distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Indenture Trustee
shall provide timely and adequate notification (which notice shall not be less
than 30 days) to all above parties regarding any such changes. The parties
hereto acknowledge that the Indenture Trustee has no obligation to verify the
accuracy of the Monthly Servicer's Report. The Servicer will file the Monthly
Servicer's Reports with the Commission to the extent required by the Exchange
Act.
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Section 9.02 Officer's Certificate. Each Monthly Servicer's
Report delivered pursuant to Section 9.01 shall be accompanied by a certificate
of a Servicing Officer certifying the accuracy of the Monthly Servicer's Report.
Section 9.03 Other Data. The Servicer shall, upon the request
of any Trustee, or any Rating Agency, furnish such Trustee or Rating Agency, as
the case may be, such underlying data used to generate a Monthly Servicer's
Report as may be reasonably requested. In addition, the Servicer will
communicate with the Swap Counterparty and shall provide the Swap Counterparty
with all necessary information as reasonably requested relating to the interest
scheduled to be paid by the Trust under this Agreement so that the Swap
Counterparty can perform its obligations under the Swap Agreement.
Section 9.04 Annual Reporting; Evidence as to Compliance. The
Servicer shall cause a firm of nationally recognized independent accountants
(the "Independent Accountants"), who may also render other services to the
Servicer or its Affiliates, to deliver to the Trustees and each Rating Agency,
on or before March 31 of each year, beginning on March 31, 2006, with respect to
the twelve months ended the immediately preceding December 31 or other
applicable date), a report addressed to the Board of Directors of the Servicer
and to the Trustees (the "Accountant's Report") to the effect that such
Independent Accountants have, at the request of the Servicer, (i) audited the
financial statements of the Servicer (or, if the Servicer is a wholly owned
subsidiary of another entity, the financial statements of such parent entity)
and issued an opinion thereon and that such audit was made in accordance with
generally accepted auditing standards as in effect in the jurisdiction of the
entity being audited, which require that such Independent Accountants plan and
perform the audit to obtain reasonable assurance as to whether the financial
statements of the Servicer (or its parent, as applicable) are free of material
misstatement, and (ii) examined management's assertion that the Servicer
maintained effective control over the servicing of its assets, in accordance
with established or stated criteria, and providing a report thereon, as well as
confirming that such examination was performed in accordance with standards
established by the American Institute of Certified Public Accountants. A copy of
the Accountant's Report may be obtained by any Securityholder by a request in
writing to the Indenture Trustee, in the case of a Noteholder, or in the case of
the Equity Certificateholder, by a request in writing to the Owner Trustee
addressed to its Corporate Trust Office.
Section 9.05 Annual Statement of Compliance from Servicer. The
Servicer will deliver to the Trustees and each of the Rating Agencies, on or
before March 31 of each year commencing March 31, 2006, an Officer's Certificate
stating that (a) a review of the activities of the Servicer during the prior
calendar year and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to such officer's
knowledge, based on such review, the Servicer has fully performed or cause to be
performed in all material respects all its obligations under this Agreement and
no Servicer Default has occurred or is continuing, or, to the extent known to
such officer if there has been a Servicer Default, specifying each such default
known to such officer and the nature and status thereof and the steps being
taken or necessary to be taken to remedy such event.
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A copy of such certificate may be obtained by any Noteholder
or the Equity Certificateholder by a request in writing to the Indenture
Trustee, with respect to any Noteholder, or to the Owner Trustee, with respect
to the Equity Certificateholder.
ARTICLE X
TERMINATION
Section 10.01 Sale of Trust Assets. (a) Upon any transfer of
Trust Assets pursuant to Section 9.02 of the Trust Agreement, the Servicer shall
instruct the Indenture Trustee in writing to deposit the proceeds from such
transfer after all payments and reserves therefrom have been made (the
"Insolvency Proceeds") into the Collection Account. On the Payment Date on which
the Insolvency Proceeds are deposited in such Collection Account (or, if such
proceeds are not so deposited on a Payment Date, on the Payment Date immediately
following such deposit), the Servicer shall instruct the Indenture Trustee to
allocate and apply the Insolvency Proceeds as if (and in the same order of
priority as) the Insolvency Proceeds were Collections being allocated and paid
on such date pursuant to this Agreement.
(b) Notice of any termination of the Trust shall be
given by the Servicer to the Owner Trustee and the Indenture Trustee as soon as
practicable after the Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the
Indenture and the payment in full of the principal of and interest on the Notes,
the Equity Certificateholder will succeed to the rights of the Noteholders
hereunder.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Amendments. (a) This Agreement may be amended in
writing by CFUSA, the Servicer and the Trust and the Indenture Trustee without
prior notice to or the consent of any of the Holders, and in the case of clauses
(v) and (vi), upon satisfaction of the Rating Agency Condition, (i) to correct
manifest error or cure any ambiguity; (ii) to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein;
(iii) to add or amend any provisions as requested by the Rating Agencies in
order to maintain or improve any rating of the Notes (it being understood that,
after the Closing Date, neither the Trust, the Owner Trustee, the Indenture
Trustee, nor CFUSA is obligated to maintain or improve such rating); (iv) to add
to the covenants, restrictions or obligations of CFUSA, the Servicer, the Trust
or the Indenture Trustee or to provide for the delivery of or substitution of a
Servicer Letter of Credit; (v) to evidence and provide for the acceptance of the
appointment of a successor trustee with respect to the Trust Estate and add to
or change any provisions as shall be necessary to facilitate the administration
of the trusts under the Trust Agreement by more than one trustee pursuant to
Article X of the Trust Agreement; (vi) to add, change or amend any provision to
maintain the trust as an entity not subject to federal income tax; or (vii) to
add, change or eliminate any other provisions, provided that an amendment
pursuant to this clause (vii), shall
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not, as evidenced by an Officer's Certificate for the Servicer or CFUSA,
adversely affect in any material respect the interests of the Trust, any
Noteholder or the Equity Certificateholder.
(b) This Agreement may also be amended from time to
time by the parties signatory hereto, with the consent of the Required Holders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions thereof or of modifying in any manner the
rights of the Noteholders or the Equity Certificateholder; 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, payments on the Trust Assets
or payments that shall be required to be made on any Note or the Equity
Certificate (including by way of amendment of related definitions); (ii) change
the manner in which the Reserve Account is applied; or (iii) change in any
manner (including through amendment of related definitions), the Noteholders and
the Equity Certificateholder which are required to consent to any such
amendment; or (iv) make any Note or the Equity Certificate payable in money
other than Dollars, without the consent of the Noteholders of all Notes of the
relevant affected Class then outstanding and the Equity Certificateholder, if
affected; or (v) change in any manner the duties of the Indenture Trustee under
this Agreement without its written consent (in any such case).
(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, together with a copy thereof, to each
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 to each Noteholder and the Equity
Certificateholder, respectively. It shall not be necessary for the consent of
Noteholders and the Equity Certificateholder pursuant to Section 11.01(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 of evidencing the authorization by Noteholders and
the Equity Certificateholder of the execution thereof shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe.
(e) Each Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment on
behalf of the Trust is authorized or permitted by this Agreement, and that all
conditions precedent to such execution as set forth herein have been satisfied.
A Trustee may, but shall not be obligated to, enter into any such amendment
which affects such Trustee's own rights, duties or immunities under this
Agreement or otherwise.
(f) Notwithstanding anything to the contrary in the
foregoing provisions of this Section 11.01, the Depositor or the Servicer,
acting on behalf of the Depositor, may request each Rating Agency to approve a
formula for determining the Specified Reserve Account Balance that is different
from the formula or result determined from the current definition thereof
contained herein so as to result in a decrease in the amount of the Specified
Reserve Account Balance or the manner by which such Reserve Account is funded.
If each Rating Agency delivers to the Indenture Trustee and Owner Trustee a
written notice or letter satisfying the Rating Agency Condition in connection
with such change, then the Specified
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Reserve Account Balance will be theretofore determined in accordance with such
changed formula or manner of funding, and an amendment to this Agreement
effecting such change may be executed without the consent of any Noteholder and
the Equity Certificateholder.
Section 11.02 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS,
RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO CONFLICTS OF LAWS PROVISIONS.
Section 11.03 Notices. All notices, demands, certificates,
requests and communications hereunder ("notices") shall be in writing and shall
be effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
(1) Business Day after delivery to an overnight courier (specifying one (1)
Business Day delivery), or (c) on the date personally delivered to an authorized
officer of the party to which sent, or (d) on the date transmitted by legible
telefax transmission with a confirmation of receipt, in all cases addressed to
the recipient as follows:
(i) If to the Servicer:
The CIT Group/Equipment Financing, Inc.
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Treasury - Securitization
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
CIT Group Inc.
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Treasury - Securitization
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(ii) If to the Depositor:
CIT Funding Company, LLC
c/o CIT Group Inc.
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Treasury - Securitization
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Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(iii) If to the Indenture Trustee:
JPMorgan Chase Bank, National Association
0 Xxx Xxxx Xxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Worldwide Securities Services / Global Debt
(CIT Equipment Collateral 2005-EF1)
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(iv) If to the Financing Originator:
The CIT Group/Equipment Financing, Inc.
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Treasury - Securitization
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(v) If to CFUSA:
CIT Financial USA, Inc.
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Treasury - Securitization
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(vi) If to the Trust or the Owner Trustee:
c/o: The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(vii) if to Standard and Poor's:
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Standard & Poor's Ratings Services
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(viii) if to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No: (000) 000-0000
Telephone No.: (000) 000-0000
(ix) if to Fitch:
Fitch, Inc.
00 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: ABS Surveillance
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Each party hereto may, by notice given in accordance herewith
to each of the other parties hereto, designate any further or different address
to which subsequent notices shall be sent.
Section 11.04 Severability of Provisions. If one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid or unenforceable, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Securities or the rights of the holders thereof.
Section 11.05 Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this Agreement,
and specifically that Obligors are not third party beneficiaries of this
Agreement; provided, that (i) the Owner Trustee and the Delaware Trustee shall
be a third party beneficiary of this Agreement for purposes of Sections 3.01 and
3.02 and 11.11, and the fee and indemnification provisions hereof and (ii) the
Indenture Trustee shall be a third party beneficiary of this Agreement.
Section 11.06 Counterparts. This Agreement may be executed in
several counterparts including by telefax transmission thereof (any by different
parties on separate
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counterparts), each of which shall be an original and all of which shall
together constitute but one and the same instrument.
Section 11.07 Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
Section 11.08 No Bankruptcy Petition; Disclaimer and
Subordination.
(a) Each of the Servicer, the Owner Trustee and each
Noteholder and the Equity Certificateholder (by acceptance of the applicable
Notes or the Equity Certificate) covenants and agrees that it will not institute
against the Depositor, or the Trust, or solicit or join in or cooperate with or
encourage any other Person in instituting against the Depositor or the Trust,
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.
(b) Consistent with the provisions in Section 2.07 of
the Trust Agreement and Section 6.17 hereof, the Trust, as well as each
Noteholder and the Equity Certificateholder by accepting a Note or the Equity
Certificate, acknowledges and agrees that such Note or the Equity Certificate
represents a debt instrument secured by, or a beneficial interest in, the Trust
and Trust Assets only and does not represent an interest in any assets (other
than the Trust Assets) of the Depositor (including by virtue of any deficiency
claim in respect of obligations not paid or otherwise satisfied from the Trust
Assets and proceeds thereof). In furtherance of and not in derogation of the
foregoing, to the extent the Depositor enters into other securitization
transactions as contemplated in Section 6.07, the Trust as well as each
Noteholder and the Equity Certificateholder by accepting a Note or Certificate
acknowledges and agrees that it shall have no right, title or interest in or to
any assets (or interests therein) (other than Trust Assets) conveyed or
purported to be conveyed by the Depositor to another securitization trust (i.e.,
other than the Trust) or other Person or Persons in connection therewith
(whether by way of a sale, capital contribution or by virtue of the granting of
a Lien) ("Other Assets"). To the extent that, notwithstanding the agreements and
provisions contained in the preceding sentences of this subsection, the Trust,
or any Noteholder and the Equity Certificateholder, either (i) asserts an
interest in or claim to, or benefit from, Other Assets, whether asserted against
or through the Depositor or any other Person owned by the Depositor, or (ii) is
deemed to have any such interest, claim or benefit in or from Other Assets,
whether by operation of law, legal process, pursuant to applicable provisions of
Insolvency Laws or otherwise (including without limitation by virtue of Section
1111(b) of the federal Bankruptcy Code or any successor provision having similar
effect under the Bankruptcy Code), and whether deemed asserted against or
through the Depositor or any other Person owned by the Depositor, then the Trust
and each Noteholder and the Equity Certificateholder by accepting a Note or the
Equity Certificate further acknowledges and agrees that any such interest, claim
or benefit in or from Other Assets is and shall be expressly subordinated to the
indefeasible payment in full of all obligations and liabilities of the Depositor
which, under the terms of the relevant documents relating to the securitization
of such Other Assets, are entitled to be paid from, entitled to the benefits of,
or otherwise secured by such Other Assets (whether or not any such entitlement
or security interest is legally perfected or otherwise entitled to a priority of
payment or application under applicable law, including Insolvency Laws, and
whether asserted against the Depositor or
83
any other Person owned by the Depositor), including, without limitation, the
payment of post-petition interest on such other obligations and liabilities.
This subordination agreement shall be deemed a subordination agreement within
the meaning of Section 510(a) of the Bankruptcy Code. Each Noteholder and the
Equity Certificateholder further acknowledges and agrees that no adequate remedy
at law exists for a breach of this Section 11.08 and that the terms and
provisions of this Section 11.08 may be enforced by an action for specific
performance.
(c) The provisions of this Section 11.08 shall be for
the third party benefit of those entitled to rely thereon and shall survive the
termination of this Agreement.
Section 11.09 Jurisdiction. Any legal action or proceeding
with respect to this Agreement may be brought in the courts of the United States
for the Southern District of New York, and by execution and delivery of this
Agreement, each party hereto consents, for itself and in respect of its
property, to the non-exclusive jurisdiction of those courts. Each such party
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of this Agreement or any document related hereto.
Section 11.10 Servicer Indemnity. The Servicer will indemnify
the Depositor, the Trust, the Noteholders, the Equity Certificateholder and the
Trustees (including in their respective individual capacities), and any of their
officers, directors, employees or agents (each an "Indemnified Party") from and
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments and any other costs, fees and expenses that any
Indemnified Party may sustain in connection with claims asserted by third
parties against such Indemnified Party which result from any act or omission on
the part of the Servicer with respect to the Trust Assets or its duties and
obligations under this Agreement, except where such claims arise out of any
willful misconduct, gross negligence or bad faith on the part of such
Indemnified Party. Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee or Indenture Trustee, as the case
may be, and the termination of the Trust Agreement or this Agreement.
Section 11.11 Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed on behalf of the Trust by The Bank of New York, not in its
individual capacity but solely in its capacity as Owner Trustee of the Trust and
in no event shall The Bank of New York in its individual capacity or any
beneficial owner of the Trust have any liability for the representations,
warranties, covenants, agreements or other obligations of the Trust hereunder,
as to all of which recourse shall be had solely to the assets of the Trust. For
all purposes of this Agreement, in the performance of any duties or obligations
of the Trust hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
Section 11.12 WAIVER OF JURY TRIAL. EACH PARTY TO THIS
AGREEMENT WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR THE
84
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE PARTIES
HERETO EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES
HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OF THIS AGREEMENT OR
ANY TRANSACTION DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, AMENDMENTS AND RESTATEMENTS, OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.
[signature page follows]
85
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
CIT EQUIPMENT COLLATERAL 2005-EFl
By: THE BANK OF NEW YORK
By:
------------------------------------
Name:
Title:
CIT FUNDING COMPANY, LLC, as Depositor
By:
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
CIT FINANCIAL USA, INC., in its individual
capacity
By:
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
as Servicer and Financing Originator
By:
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
86
Exhibit A
Form of VFC Assignment
[RELEASE AND ASSIGNMENT AGREEMENT]
FROM
CIT EQUIPMENT TRUST - VFC SERIES
This RELEASE AND ASSIGNMENT AGREEMENT, dated [ ], , is by and
between CIT Equipment Trust - VFC Series, as transferor (the "VFC Trust"), and
CIT Funding Company, LLC, as Depositor and transferee with respect to the
conveyances provided for herein.
WHEREAS, the parties named above are parties, together with
AT&T Capital Corporation (now known as Capita Corporation), as servicer, to the
Amended and Restated Pooling and Servicing Agreement dated as of March 2, 1999,
as amended and restated as of June 29, 2000 (as amended, the "VFC PSA");
WHEREAS, the Depositor wishes to engage in a Take-Out
Securitization (as defined in the VFC PSA); and
WHEREAS, pursuant to Section 5.22 and Section 7.09 of the VFC
PSA, the VFC Trust wishes to release and convey the Contract Assets identified
on the Schedule of Contracts being delivered by the Depositor to the CIT
Equipment Collateral 2005-EF1 (the "New Trust") pursuant to the Pooling and
Servicing Agreement dated as of July 1, 2005, by and among the Depositor, the
New Trust, CIT Financial USA, Inc. and The CIT Group/Equipment Financing, Inc.
(the "New PSA"), concurrently herewith to the New Trust;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein and in the VFC PSA, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
2. Definitions. All terms defined in the New PSA (whether
directly or by reference to other documents) shall have such defined meanings
when used herein, unless such terms are otherwise defined herein.
3. Specification of Cut-off Date. The "Cut-off Date"
applicable to the Contracts conveyed hereby is ____, 200__.
4. Release and Conveyance. The VFC Trust hereby releases and
sells, transfers, assigns, sets over and otherwise conveys to the Depositor,
without recourse, the Contracts and related Contract Assets identified on the
list contained in the computer disk or printout attached hereto as Schedule A.
A-1
5. Counterparts. This Assignment Agreement may be executed in
two or more counterparts including by telefax transmission thereof (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.
6. Governing Law. This Assignment Agreement shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of New York.
7. Receipt. The VFC Trust, on behalf of itself and all
Certificateholders (as defined in the VFC PSA) hereby acknowledges receipt by
each of the Managing Agents (as defined in the VFC PSA) of the Securitization
Transfer Price (as defined in the VFC PSA) pertaining to the release and
transfer of Contracts and Related Contract Assets as provided above and the
satisfaction of all conditions to such release and transfer specified in Section
7.09 of the VFC PSA.
8. Further Assurances. The VFC Trust will, at any time and
from time to time, at the expense of the Depositor, promptly execute and deliver
all further instruments and documents and take all further action that may be
necessary or desirable or that the Depositor may reasonably request in order to
effect the purposes of this Agreement, including, without limitation, executing
and filing financing statements, release and termination statements, or
amendments thereto.
[signatures follow]
A-2
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
CIT FUNDING COMPANY, LLC, CIT EQUIPMENT TRUST - VFC SERIES
as Depositor
By: The Bank of New York, not in its individual
capacity but solely as Trustee
By: By:
---------------------------------------------- ----------------------------------------------
Printed Printed
Name: Name:
---------------------------------------------- --------------------------------------------
Title: Title:
---------------------------------------------- -------------------------------------------
A-3
Exhibit B
Initial Schedule of Contracts
(On File with XxXxxxxxx Will & Xxxxx LLP)
B-1
Exhibit C
Form of Monthly Servicer's Report
(On File with XxXxxxxxx Will & Xxxxx LLP)
C-1
Exhibit D
Form of Substitution Transfer Agreement
SUBSTITUTION TRANSFER AGREEMENT
This SUBSTITUTION TRANSFER AGREEMENT, dated _____________ __,
____, is by and between CIT Funding Company, LLC, as Depositor and transferor,
and CIT Equipment Collateral 2005-EF1, as transferee with respect to the
conveyances evidenced hereby.
WHEREAS, the parties named above are each parties to the
Pooling and Servicing Agreement dated as of July 1, 2005 (as from time to time
amended, supplemented or otherwise modified, the "PSA"); and
WHEREAS, pursuant to the PSA, the Depositor wishes to effect
conveyances of the Substitute Contracts (together with related Substitute
Transferred Assets), identified on the Substitution Schedule of Contracts
attached hereto, in each case in the manner and to the effect described in
Article II of the PSA; and
WHEREAS, the Servicer has delivered or caused to be delivered
a Substitution Notice with respect to such conveyance as required in the PSA;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein and in the PSA, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. All terms defined in the PSA (whether directly
or by reference to other documents) shall have such defined meanings when used
herein, unless such terms are otherwise defined herein.
2. Specification of Cut-Off Date. The "Substitution Cut-Off
Date" applicable to the Substitute Contracts conveyed hereby is _______________
__, ____.
3. Conveyances. Subject to the terms and conditions provided
for in the PSA, the Depositor hereby makes the assignments and conveyances
specified in Article II of the PSA as being effected by execution and delivery
of this Substitution Transfer Agreement, in each case (i) with respect to the
Substitute Contracts (together with related Substitute Transferred Assets)
identified on the Substitution Schedule of Contracts attached hereto, and (ii)
in the manner and to the effect described in Article II of the PSA.
4. Incorporation of PSA. This Substitution Transfer Agreement
is made pursuant to and upon the representations, warranties and agreements on
the part of the parties hereto contained in the PSA and shall be governed in all
respects by the PSA.
5. Ratification of PSA. As supplemented by this Substitution
Transfer Agreement, the PSA is in all respects ratified and confirmed by the
parties hereto.
D-1
6. Counterparts. This Substitution Transfer Agreement may be
executed in two or more counterparts including by telefax transmission thereof
(and by different parties on separate counterparts), each of which shall be an
original, but all of which together shall constitute one and the same
instrument.
7. Governing Law. This Substitution Transfer Agreement shall
be governed by, and construed and enforced in accordance with, the internal laws
of the State of New York.
8. Reaffirmation. As provided in Section 2.03 of the PSA, by
delivery of this Substitution Transfer Agreement the Depositor confirms that the
conditions to transfer set forth in Section 2.03(b) have been satisfied or
otherwise waived as described therein.
[signatures follow]
D-2
IN WITNESS WHEREOF, the parties hereto have caused this
Substitution Transfer Agreement to be executed by their respective officers
thereunto duly authorized as of the date first written above.
CIT FUNDING COMPANY, LLC, CIT EQUIPMENT COLLATERAL 2005-EF1
as Depositor
By: THE BANK OF NEW YORK, not in its individual
capacity but solely as Owner Trustee on behalf
of the Trust]
By:
-----------------------
By:
-------------------------------------------
D-3
Exhibit E
Schedule of Representations and Warranties
(a) List of Contracts. The information set forth in the
Schedule of Contracts (as the same may be amended or deemed amended in respect
of a conveyance of Substitute Contracts on a Substitution Transfer Date) is
true, complete and correct in all material respects as of the Closing Date (or
Substitution Transfer Date, as applicable).
(b) Eligible Contract. As of its applicable Cut-Off Date, each
Contract satisfied the criteria for the definition of Eligible Contract set
forth in this Agreement, and each Secondary Contract securing a Vendor Loan
constituting a Contract satisfied, as of its applicable Cut-Off Date, the
definition of Eligible Secondary Contract set forth in this Agreement.
(c) Contracts Secured by Vehicles. None of the Contracts
relating to Equipment constituting Vehicles are "true leases." No Obligor on any
Contract secured by a Vehicle is an unincorporated common trucking carrier.
(d) Contract Files. As of the Closing Date (or as of the
Substitution Transfer Date, with respect to Substitute Contracts), (i)
immediately prior to such date, CFUSA (or the Financing Originator as custodian
for CFUSA) had possession of each original Contract and the related complete
Contract File, and there were no other custodial agreements relating to the same
in effect (other than offsite storage arrangements described in Section
4.01(b)); (ii) each of such documents which is required to be signed by the
Obligor has been signed by the Obligor in the appropriate spaces; and (iii) to
the Depositor's knowledge the complete Contract File for each Contract is in the
possession of the Servicer. If the Contract is "tangible chattel paper" as
defined in the UCC, the End-User Contracts that constitutes or evidences the
Contract does not have any marks or notations indicating that it has been
pledged, assigned or otherwise conveyed to any other Person besides CFUSA (prior
to their conveyance to the Depositor under the Non-VFC Purchase Agreement), the
VFC Trust (prior to their conveyance to the Depositor under the VFC Assignment)
and the Depositor.
(e) No Material Obligation. No Financing Originator has a
material performance obligation in respect of any Contract in favor of an
Obligor or End-User (it being understood that covenants of quiet enjoyment,
purchase options, obligations to accept return of the property at end of lease
term, and like obligations of a lessor typical of a "triple net" lease, shall
not be deemed "material performance obligations" for purposes of this
representation).
(f) Instruments. Not more than 0.75% of the Initial Contract
Pool Principal Balance are "Instruments" (within the meaning of Article 9 of the
UCC), which evidence or relate to any Contract conveyed to the Trust on the
Closing Date.
(g) Intent to Transfer. CFUSA is selling the Contracts, and on
each Substitution Transfer Date is conveying the Substitute Contracts, to the
Depositor with the intention of removing the Contracts, or the Substitute
Contracts as the case may be, from the estate of CFUSA pursuant to the
applicable provisions of the Bankruptcy Code.
E-1
(h) Vendor Programs. Not more than 1.5% of the Initial
Contract Pool Principal Balance is attributable to Contracts originated by any
one single Vendor.
E-2
Exhibit F
Minimum Value Filing Exceptions
No financing statements are filed against an Obligor located
in a particular State describing Equipment which is the subject of a particular
Contract of any Financing Originator, unless the fair market value of the
Equipment (determined in accordance with its Customary Policies and Procedures)
related to such particular Contract is at least $25,000.
F-1
