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DVI FINANCIAL SERVICES INC.,
CONTRIBUTOR AND SERVICER
AND
DVI RECEIVABLES CORP. XIV
AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
Dated as of December 1, 2000
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ALL RIGHTS IN AND TO THIS AGREEMENT ON THE PART OF DVI RECEIVABLES CORP. XIV
HAVE BEEN ASSIGNED TO DVI RECEIVABLES XIV, L.L.C. AND REASSIGNED AND ARE SUBJECT
TO A SECURITY INTEREST IN FAVOR OF U.S. BANK TRUST NATIONAL ASSOCIATION, AS
TRUSTEE, UNDER THE AMENDED AND RESTATED INDENTURE DATED AS OF DECEMBER 1, 2000
FOR THE BENEFIT OF THE PERSONS REFERRED TO THEREIN.
TABLE OF CONTENTS
Page
SECTION 1. CAPITAL CONTRIBUTION............................................................................2
1.01 Contribution....................................................................................2
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE CONTRIBUTOR...............................................................4
2.01 Corporate Organization and Authority............................................................4
2.02 Business and Property...........................................................................5
2.03 Equipment and Contracts.........................................................................5
2.04 Contract Schedule..............................................................................10
2.05 Pending Litigation.............................................................................10
2.06 No Material Event..............................................................................10
2.07 Transactions Legal and Authorized..............................................................10
2.08 Governmental Consent...........................................................................11
2.09 Compliance with Law............................................................................11
2.10 Ordinary Course; No Insolvency.................................................................11
2.11 Assets and Liabilities.........................................................................11
2.12 Fair Consideration; Valid Sale.................................................................11
2.13 Ability to Pay Debts...........................................................................12
2.14 Bulk Transfer Provisions.......................................................................12
2.15 Tax Returns....................................................................................12
2.16 Transfer Taxes.................................................................................12
2.17 Principal Executive Office.....................................................................12
2.18 Legal Name.....................................................................................12
2.19 Servicing Provisions Customary.................................................................13
2.20 Defaults.......................................................................................13
2.21 ERISA..........................................................................................13
2.22 All Filings Made...............................................................................13
2.23 Nonconsolidation...............................................................................13
2.24 All Representations and Warranties True........................................................14
2.25 Prospectus Supplement. .......................................................................14
2.26 Insurance. ...................................................................................14
2.27 No Bankruptcy Petition Against the Transferor,
the Managing Member or the Issuer..............................................................15
2.28 Delivery of Obligor Contact Information........................................................15
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE TRANSFEROR...............................................................15
3.01 Transferor Organization and Authority; Subsidiaries............................................15
3.02 Due Authorization and No Violation.............................................................15
3.03 No Litigation..................................................................................15
3.04 Principal Office...............................................................................16
3.05 Tax Returns....................................................................................16
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PAGE
3.06 Solvency.......................................................................................16
3.07 Approvals......................................................................................16
3.08 Nonconsolidation...............................................................................16
SECTION 4. ADMINISTRATION OF CONTRACTS....................................................................17
4.01 Servicer to Act................................................................................17
4.02 Contract Amendments and Modifications; Repurchase
of Contracts by Servicer.......................................................................18
4.03 Contract Defaults; Residual Realizations.......................................................19
4.04 Costs of Servicing; Servicer's Fee.............................................................20
4.05 Other Transactions.............................................................................21
4.06 Collection of Moneys...........................................................................21
4.07 Voluntary Termination..........................................................................22
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS.....................................................22
5.01 Servicer Advances..............................................................................22
5.02 Indemnification................................................................................22
5.03 Repurchase and Substitution of Contracts; Other Payments.......................................23
SECTION 6. INFORMATION TO BE PROVIDED.....................................................................24
6.01 Monthly Servicer Report........................................................................24
6.02 Tax Reporting and Treatment....................................................................24
6.03 Other Information..............................................................................25
6.04 Annual Independent Certified Public Accountant's Report........................................25
6.05 Payment Advices................................................................................25
SECTION 7. SUBSTITUTION OF CONTRACTS......................................................................26
7.01 Substitution...................................................................................26
7.02 Notice of Substitution.........................................................................28
7.03 Contributor's and Servicer's Subsequent Obligations............................................28
7.04 Usage of Predecessor Contracts in Calculations.................................................28
SECTION 8. THE SERVICER...................................................................................28
8.01 Corporate Existence of the Servicer............................................................28
8.02 Limitation on Liability of the Servicer and Others.............................................29
8.03 Servicer Not to Resign or be Removed...........................................................29
8.04 Financial and Business Information.............................................................30
8.05 Officer's Certificates.........................................................................30
8.06 Inspection.....................................................................................31
8.07 Servicer Records...............................................................................31
8.08 Insurance......................................................................................31
8.09 No Bankruptcy Petition Against the Transferor,
the Managing Member or the Issuer..............................................................31
8.10 Fidelity Bond and Errors and Omissions Insurance...............................................31
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PAGE
SECTION 9. THE CONTRIBUTOR................................................................................32
9.01 Corporate Existence of the Contributor.........................................................32
9.02 Financial and Business Information.............................................................32
9.03 Inspection.....................................................................................33
9.04 No Bankruptcy Petition Against the Managing Member,
the Transferor or the Issuer...................................................................33
9.05 Accounts, Books and Records....................................................................33
9.06 Tax Returns....................................................................................34
9.07 Insurance......................................................................................34
9.08 Protection of Right, Title and Interest........................................................34
9.09 Other Liens or Interests.......................................................................35
9.10 Costs and Expenses.............................................................................35
SECTION 10. EVENTS OF DEFAULT..............................................................................35
10.01 Servicer Events of Default.....................................................................35
10.02 Termination....................................................................................37
10.03 Trustee to Act; Appointment of Successor.......................................................37
10.04 Servicer to Cooperate..........................................................................38
10.05 Remedies Not Exclusive.........................................................................38
10.06 Waiver of Past Defaults........................................................................39
SECTION 11. ASSIGNMENT.....................................................................................39
11.01 Assignment to Trustee..........................................................................39
11.02 Assignment by Contributor or Servicer..........................................................39
SECTION 12. NATURE OF CONTRIBUTOR'S OBLIGATIONS
AND SECURITY THEREFOR..........................................................................39
12.01 Contributor's Obligations Absolute.............................................................39
12.02 Power of Attorney..............................................................................40
SECTION 13. MISCELLANEOUS PROVISIONS.......................................................................40
13.01 Sale...........................................................................................40
13.02 Amendment......................................................................................41
13.03 Waivers........................................................................................41
13.04 Notices........................................................................................41
13.05 Costs and Expenses.............................................................................42
13.06 Third Party Beneficiaries......................................................................43
13.07 Survival of Representations....................................................................43
13.08 Confidential Information.......................................................................43
13.09 Headings and Cross-References..................................................................43
13.10 GOVERNING LAW..................................................................................43
13.11 Consent to Jurisdiction........................................................................43
13.12 Counterparts...................................................................................43
13.13 Statutory References...........................................................................43
EXHIBITS
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Exhibit A Contract Schedule
Exhibit B Monthly Servicer Report
Exhibit C Reserved
Exhibit D Substitute Contract Transfer Form
Exhibit E Form of Re-Assignment
Exhibit F Form of Officer's Certificate for Section 7
Exhibit G Forms of Contracts
Exhibit H Underwriting Guidelines
APPENDICES
Appendix I Defined Terms
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AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
This Agreement is made and dated as of December 1, 2000, by
and between DVI FINANCIAL SERVICES INC., a Delaware corporation ("DVI"), as
contributor (in such capacity, the "CONTRIBUTOR") and servicer (in such
capacity, the "SERVICER") hereunder, and DVI RECEIVABLES CORP. XIV, a Delaware
corporation (the "TRANSFEROR").
RECITALS
A. Pursuant to this Agreement, the Contributor is contributing
and assigning to the Transferor, (i) all right, title and interest of the
Contributor in, to and under, INTER ALIA, a pool of non-cancelable Finance
Leases, Fair Market Value Leases, Leveraged Lease Loans, Lease Receivable
Purchases and Secured Equipment Notes described in Exhibit A hereto (the
"INITIAL CONTRACTS"), (ii) certain payments and proceeds received relating to
the Initial Contracts that are payable after the Cut-Off Date and (iii) an
interest in each item of underlying Equipment that is subject to each Initial
Contract. The Contributor may contribute and assign certain Substitute Contracts
and an interest in the Equipment related thereto and certain other related
payments and proceeds in accordance with the terms of this Agreement.
B. Pursuant to the Amended and Restated Subsequent Contract
Transfer Agreement (the "SCTA"), dated as of December 1, 2000, by and between
the Transferor and the Issuer, the Transferor is transferring to the Issuer all
of its right, title and interest in and to the Trust Property.
C. Pursuant to the Amended and Restated Indenture (the
"AMENDED AND RESTATED INDENTURE"), dated as of December 1, 2000, the Issuer is
issuing its Asset-Backed Securities (the "NOTES"). Pursuant to the Amended and
Restated Indenture, the Issuer is granting to the trustee thereunder (the
"TRUSTEE"), for the benefit and security of the holders from time to time of the
Notes, a security interest in the Trust Property, which includes, INTER ALIA,
all right, title (other than ownership of any Equipment) and interest of the
Transferor in, to and under the Contracts, the Equipment and this Agreement.
D. In connection with the contribution and assignment of such
Contracts and the transfer of an interest in the related Equipment, the
Contributor agrees to undertake certain obligations set forth herein.
E. In consideration for the Servicing Fee and other amounts as
more particularly set forth herein, the Servicer agrees to undertake certain
obligations set forth herein.
F. Capitalized terms used but not defined herein shall have
the respective meanings set forth in Appendix I hereto.
AGREEMENTS
SECTION 1. CAPITAL CONTRIBUTION
1.01 CONTRIBUTION.
(a) Upon the terms and conditions herein set forth, the
Contributor hereby agrees to transfer, assign and contribute, on one or more
Contract Transfer Dates, to the Transferor as a capital contribution (or, in
case of any Substitute Contracts, the related Substitution Date), without
recourse except as set forth herein, all of the Contributor's right, title and
interest in and to the Contributed Property. The Transferor assumes all of the
Contributor's obligations under the Contracts arising after the related Cut-Off
Date. All funds which are part of the Conveyed Property and which are received
by the Contributor under or in connection with the Contracts that are payable
after the applicable Cut-Off Date shall be received, held and applied by the
Contributor in trust for the benefit of the Transferor as owner of the
Contracts.
(b) After giving effect to such contribution, the ownership of
each Contract will be vested in the Transferor. The Contract Files and any other
documents relating to the Contracts and the other Contributed Property that are
delivered as part of the Contributed Property or as incidental thereto are and
shall be held in trust by the Trustee for the benefit of the Noteholders. The
Contributor agrees to take no action inconsistent with the ownership of the
Contracts and the other Contributed Property, to promptly indicate to all
parties with a valid interest inquiring as to the true ownership of the
Contracts and the other Contributed Property, that the Contracts and the other
Contributed Property have been contributed and assigned to the Transferor and to
claim no ownership interest in the Contracts and the other Contributed Property.
Nothing contained in this Agreement shall affect in any respect the rights of
the Contributor, its successors and assigns, to deal in any Unrelated Property.
(c) The Contributor shall take, or cause to be taken, such
actions and execute such documents as are necessary to protect the Trustee's
interest in the Contracts, security interest in the Equipment and the other
Contributed Property against all other Persons, including, without limitation,
the following: (i) in the case of the Contracts, on or before the Closing Date
(or, in case of any Substitute Contracts, the related Substitution Date), (A)
filing UCC-1 financing statements naming the Contributor as debtor, the
Transferor as secured party, the Issuer as assignee of the secured party and the
Contracts as collateral in the jurisdiction in which the principal place of
business of the Contributor is located, (B) UCC-1 financing statements naming
the Transferor as debtor, the Issuer as secured party, the Trustee as assignee
of the secured party and the Contracts as collateral in the jurisdiction in
which the principal place of business of the Transferor is located, (C) filing
UCC financing statements naming the Issuer as debtor and the Trustee as secured
party in the jurisdiction in which the principal place of business of the Issuer
is located, and (D) filing UCC-3 termination statements or releases from
lenders, if any, with liens on the Contracts; (ii) in the case of the assignment
or grant of its interests in the Equipment, within thirty days after the Closing
Date (or, in case of any Substitute Contracts, the related Substitution Date),
(A) with respect to a security interest in Equipment (other than Equipment for
which the Original Equipment Cost is less than $25,000 and subject to Finance
Leases or Secured Equipment Notes), filing UCC financing statements naming the
Obligor as debtor, the Contributor as secured party, U.S. Bank Trust National
Association, as custodian or as trustee, as assignee of the secured party and
the Equipment as
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collateral, in the appropriate filing offices in the jurisdiction in which the
Equipment was located on the date on which the Contract was originated, (B) with
respect to the Transferor's interest in the Equipment related to DVI Fair Market
Value Leases, filing precautionary UCC-1 financing statements (i) naming the
Contributor as debtor, the Transferor as secured party, and the Issuer as
assignee of secured party, and the Equipment as Collateral, in the appropriate
filing offices in the jurisdiction in which the Equipment is located on the
relevant transfer date, (ii) naming the Transferor as debtor, the Issuer as
secured party, and U.S. Bank Trust National Association, as trustee or as
custodian as assignee of the secured party, and the Equipment as Collateral, in
the appropriate filing offices in the jurisdiction in which the Equipment is
located on the relevant transfer date, (iii) naming the Issuer as debtor and
U.S. Bank Trust National Association, as trustee or as custodian as secured
party, and the Equipment as Collateral, in the appropriate filing offices in the
jurisdiction in which the Equipment is located on the relevant transfer date,
(C) with respect to all Fair Market Value Leases other than DVI Fair Market
Value Leases, filing UCC-1 financing statements (i) naming the originator as
debtor, the Contributor as secured party and DVI's interest in the Equipment as
Collateral, (ii) naming the Contributor as debtor, the Transferor as secured
party, and the Issuer as assignee of the secured party, and the related
Equipment as Collateral, filed in the appropriate filing offices in the
jurisdiction in which the Transferor maintains its chief executive office, (iii)
naming the Transferor as debtor, the Issuer as secured party, and U.S. Bank
Trust National Association, as custodian or as Trustee, as assignee of the
secured party, and the related Equipment as Collateral, filed in the appropriate
filing offices in the jurisdiction in which the Transferor maintains its chief
executive office, (iv) naming the Issuer as debtor, and U.S. Bank Trust National
Association, as custodian or as Trustee, as secured party and the related
Equipment as Collateral, filed in the appropriate filing offices in the
jurisdiction in which the Transferor maintains its chief executive office, (D)
with respect to all Fair Market Value Leases, filing UCC-1 financing statements
naming the Transferor as debtor, U.S. Bank Trust National Association, as
custodian or trustee, as secured party and the Transferor's security interest in
the Equipment as collateral in the appropriate filing offices in the
jurisdiction in which the Transferor maintains its chief executive office, (E)
filing UCC-3 assignments of any "precautionary" filings naming the Obligor as
debtor, the Contributor as secured party, U.S. Bank Trust National Association,
as custodian or as trustee, as assignee of the secured party and the Equipment
as collateral (other than Equipment subject to either Finance Leases or Secured
Equipment Notes and for which the Original Equipment Cost is less than $25,000),
in the appropriate filing offices where the Equipment was located at the time
the Contract was originated, (F) with respect to Equipment subject to Leveraged
Lease Loans or Lease Receivable Purchases, filing UCC-3 assignments naming the
Obligor as debtor, the Contributor as secured party, U.S. Bank Trust National
Association, as custodian or as trustee, as assignee of the secured party and
the Equipment as collateral, in the appropriate filing offices in the
jurisdiction where the Equipment was located on the date the underlying contract
was originated, (G) filing UCC-3 termination statements or releases from
lenders, if any, with liens on the Equipment, (H) with respect to any Equipment
for which a certificate of title has been issued, making an application for
notation of lien on each such certificate of title indicating the interest of
the Trustee, (I) filing UCC assignments with respect to each Contract acquired
by the Contributor from a third party, naming such person as debtor/seller, the
Contributor as secured party/purchaser, the Trustee as assignee of the secured
party and such acquired contracts as collateral, (J) filing UCC assignments with
respect to each Leveraged Lease Loan or Lease Receivable Purchase, naming the
related Obligor as debtor, the Contributor as secured party, the Trustee as
assignee of the secured party and the related underlying equipment lease as
collateral, (K) delivering a certificate certifying that it has (1) made the
filings of UCC financing statements set forth above and certifying that copies
of such UCC
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financing statements are on file with the Trustee and (2) made the applications
set forth above and attaching copies of such applications. Thereafter, the
Contributor promptly shall file such additional UCC financing statements,
continuation statements and assignments and cause to be made such notations on
certificates of title with respect thereto as may be necessary because of
equipment replacements in accordance with the provisions of any Contract, or
otherwise so that the interest of the Trustee in (x) each of the Contracts, (y)
the Equipment which is subject to the Contracts and (z) the remainder of the
Trust Property will be perfected by such filings with the appropriate UCC filing
offices and/or notations on the appropriate certificates of title.
(d) If (i) any change in either the Contributor's name,
structure or the location of its principal place of business or chief executive
office occurs, then the Contributor shall deliver thirty (30) days' prior
written notice of such change or relocation to the Transferor and the Trustee
and (ii) if the Contributor becomes aware of the change in location of any
Equipment, then, no later than sixty (60) days after the effective date of such
change or relocation, shall file such amendments or statements as may be
required to preserve and protect the Transferor's, the Issuer's and the
Trustee's interest in the Contracts, the Equipment and the other Trust Property.
The Contributor shall pay all filing fees or taxes payable in respect of any UCC
financing or continuation statements required to be filed pursuant to this
Section 1.01(d).
(e) On or prior to the Closing Date or the related
Substitution Date, as applicable, the Contributor shall deliver to the Trustee
the sole original, manually executed counterpart of each Contract that
constitutes "chattel paper" (or, if the original Contract is in the form of a
schedule or supplement to a master lease or loan, all original counterparts of
such schedule or supplement previously in the possession of the Contributor or
the Transferor together with a true and correct copy of such master lease or
loan) or an "instrument". The Contributor will cause its accounting records to
be clearly and unambiguously marked to show that such Contract has been
transferred by the Contributor to the Transferor, and by the Transferor to the
Issuer, and then pledged by the Issuer to the Trustee for the benefit of the
Noteholders.
SECTION 2. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE CONTRIBUTOR
The Contributor (in its capacity as such and as the initial
Servicer under this Agreement) hereby represents and warrants to the Transferor
and covenants and agrees with the Transferor for the benefit of the Transferor,
the Issuer, the Trustee and the Noteholders with respect to the Initial
Contracts, as of the Closing Date and, with respect to any Substitute Contracts
(except for Sections 2.02 and 2.25) as of each Substitution Date (unless
otherwise indicated herein):
2.01 CORPORATE ORGANIZATION AND AUTHORITY. The Contributor (in
its capacity as such and as the initial Servicer under this Agreement):
(a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all requisite power and authority and all
necessary licenses and permits to own and operate its properties and to
carry on its business as now conducted
4
(except where the failure to have such licenses and permits could not
individually or in the aggregate have a material adverse effect on the
business or condition (financial or otherwise) of the Contributor or
impair the enforceability of any Contract) and to enter into and
perform its obligations under this Agreement and each Transaction
Document to which it is a party and the transactions contemplated
hereby, including performance of the duties of the Servicer and the
Contributor hereunder;
(c) has duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary (except where the failure
to be so qualified or in good standing could not individually or in the
aggregate have a material adverse effect on the Trust Property or the
business or condition (financial or otherwise) of the Contributor or
impair the enforceability of any Contract); and
(d) has duly executed and delivered this Agreement
and each Transaction Document to which it is a party and all other
documents delivered in connection herewith, and this Agreement are each
the legal, valid and binding obligation of the Contributor enforceable
in accordance with the terms hereof except as enforcement of such terms
may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and by equitable
principles (regardless of whether such enforceability is in a
proceeding in equity or at law).
2.02 BUSINESS AND PROPERTY. The Prospectus Supplement (the
"PROSPECTUS SUPPLEMENT") dated May 8, 2001, to the Prospectus, dated January 12,
2000, correctly describes in all material respects the Initial Contracts and the
general nature of the business of the Contributor.
2.03 EQUIPMENT AND CONTRACTS.
(a) As to each Contract:
(i) (A) immediately prior to the transfers and conveyances set
forth herein, the Contributor will be the sole owner of, and have good and
marketable title to, the subject Contracts. With respect to any Leveraged Lease
Loans, Fair Market Value Lease or Lease Receivable Purchase, the Contributor
will have a valid first priority security interest in the equipment lease and
the Equipment that has been pledged as collateral security for such Leveraged
Lease Loan, Fair Market Value Lease or Lease Receivable Purchase; (B)
immediately prior to the transfers and conveyances set forth herein, the
Contributor will have acquired either good title to each item of Equipment or,
with respect to the Equipment that is the subject of a Secured Equipment Note,
Lease Receivables Purchase, Finance Lease or a Leveraged Lease Loan, a valid
first priority perfected security interest therein from the related Obligor
(except for Equipment relating to a Secured Equipment Note or Finance Lease and
for which the Original Equipment Cost is less than $25,000). Immediately prior
to such date, with respect to each item of Equipment related to Fair Market
Value Leases, the Contributor will have paid in full to the manufacturer or
supplier or Obligor, as the case may be, the purchase price and any related
charges in connection with the acquisition of such Equipment; (C) upon the
transfer to the Transferor by the Contributor of the Contributor's interest in
the Contracts and its interest in the Equipment pursuant to Section 1 hereof,
the Transferor will, after giving effect to the provisions of Section 1.01(d),
have a valid first priority perfected ownership interest in, and
5
have good title to the Contributed Property including the Contracts and either a
valid first priority security interest in the Contributor's interest in the
Equipment (except for Equipment relating to a Secured Equipment Note or Finance
Lease and for which the Original Equipment Cost is less than $25,000), or, with
respect to DVI Fair Market Value Leases, an ownership interest in the related
Equipment subject to any Contract; at such time, the Contracts and the
Transferor's interest in the Equipment will be free and clear of all Liens other
than the rights of each Obligor under the Contract to which such Obligor is a
party and Liens to be discharged on the Closing Date; and there will be no
delinquent taxes or other outstanding charges affecting the Equipment which are
or may be Liens;
(ii) each of the Contracts is a legal, valid and binding full
recourse obligation of the related Obligor, enforceable by the Contributor (and
its designee) against such Obligor in accordance with the terms thereof, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors' rights and by
general equitable principles, and is in full force and effect, and any and all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending and equal credit opportunity laws applicable to the
origination, enforceability or assignment of each Contract have been complied
with; and the Contributor has no knowledge of any challenge, dispute or claim by
the Obligor under or affecting any Contract or of the bankruptcy or the
insolvency of any such Obligor;
(iii) the obligation of each Obligor to pay Contract Payments
under each of its related Contract(s) throughout the term thereof is and will be
unconditional, without any right of set- off by such Obligor and without regard
to any event affecting the Equipment, the obsolescence of any Equipment, any
claim of such Obligor against the Contributor or any change in circumstance of
such Obligor or any other circumstance whatsoever;
(iv) the Contributor has no knowledge that any item of the
Equipment has suffered any loss or damage except for such Equipment that has
been restored to its original condition, ordinary wear and tear excepted;
(v) each Contract requires the Obligor thereunder to either
maintain insurance covering damage to, destruction or theft of the Equipment
subject thereto in an amount at least equal to the remaining Discounted Contract
Balance of such Contract;
(vi) as of the Cut-Off Date, (A) no Contract had a remaining
term of more than 83 months, (B) no Contract Payment under any Contract is
delinquent for more than sixty (60) days and (C) no event of default has
occurred and is continuing under any Contract;
(vii) there will be no facts or circumstances existing as of
the time of the transfer pursuant to this Agreement which give rise, or would
give rise at any time in the future, to any right of rescission, offset,
counterclaim or defense, including the defense of usury, to the obligations of
any Obligor, including the obligation of such Obligor to pay all amounts due
with respect to any Contract and neither the operation of any of the terms of
any Contract or the exercise of any right thereunder will render such Contract
unenforceable in whole or in part or subject to any right of rescission, offset,
counterclaim or defense, including the defense of usury, and no such right of
rescission, offset, counterclaim or defense has been asserted with respect
thereto;
6
(viii) no Contract has been amended, altered or modified in
any respect and no provision of any Contract has been waived, except in writing
and copies of all such writings are attached to the Contract delivered to the
Transferor;
(ix) no Obligor has been released, in whole or in part, from
any of its obligations in respect of a Contract; no Contract has been satisfied,
cancelled or subordinated, in whole or in part, or rescinded, and no Equipment
has been released from the related Contract, in whole or in part, nor has any
instrument been executed that would effect any such satisfaction, release,
cancellation, subordination or rescission;
(x) each Contract is in substantially one of the forms
included as Exhibit G to this Agreement, and no Contract shall have been the
subject of any restructuring of the terms and provisions thereof;
(xi) no Contract permits early termination or voluntary
prepayment by the Obligor;
(xii) no right of the Contributor with respect to an Obligor's
failure to pay all rent due under any Contract has been waived by the
Contributor;
(xiii) each Contract is "chattel paper" or an "instrument"
under the UCC as in effect in the applicable jurisdiction; the sole executed
counterpart of each Contract that constitutes chattel paper or an instrument is
in the possession of the Trustee and all of the documents required to be
delivered to the Trustee in connection therewith pursuant to Section 1 have been
so delivered;
(xiv) no Obligor is an Affiliate of the Contributor or the
Servicer;
(xv) the Contributor has no knowledge that the obligations of
any Obligor under any Contract will not be paid in full;
(xvi) no Contract will have been originated in or be subject
to the laws of any jurisdiction whose laws would make the assignment and
transfer thereof pursuant to the terms hereof or of the other Transaction
Documents unlawful;
(xvii) in the case of each Contract which consists of a master
lease and one or more exhibits or schedules thereto, (A) the Contributor has not
assigned and will not assign such master lease in its entirety, and has not
delivered and will not deliver physical possession of such master lease, to any
Person other than the Trustee and (B) such exhibits or schedules constitute a
separate contract and are not part of any other contract not sold to the
Transferor;
(xviii) all parties to each Contract had requisite authority
and capacity to execute such Contract;
(xix) prior to the time of assignment, transfer, sale and
contribution to the Transferor, each Contract will have been originated by the
Contributor in the ordinary course of its business, except for certain Contracts
which have been acquired by the Contributor in the ordinary course of its
business, and each Contract shall have been underwritten by the Contributor in
accordance with the standards set forth on Exhibit H hereto;
7
(xx) the Contributor is not aware of any fact that would
prevent or prohibit Obligors from being reimbursed by Medicare or Medicaid for
any services provided;
(xxi) the Contract Schedule accurately reflects the
information relating to each Contract;
(xxii) there are no proceedings or investigations pending or,
to the knowledge of the Contributor, threatened, before any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality
(A) asserting the invalidity of any of the Contracts, (B) seeking to prevent the
payment and discharge of any of the Contracts or (C) seeking any determination
or ruling that would materially and adversely affect the performance by an
Obligor of its obligations under, or the validity or enforceability of the
Contracts;
(xxiii) each Contract effects either the lease of or the grant
of a perfected first priority security interest in, a specified item of
Equipment (other than Equipment relating to a Secured Equipment Note or Finance
Lease and for which the Original Equipment Cost is less than $25,000) in favor
of the Contributor as lessor, secured party or seller as the case may be, and
contains provisions sufficient for the realization of such leasehold interest,
security interest or ownership interest as the case may be, as against such
Equipment, and is assignable by the Contributor without the consent of any other
Person;
(xxiv) each Contract provides that the Contributor has no
obligation to assemble, install, test, adjust or service the Equipment subject
to a Contract. Each Contract provides that the Obligor, at its sole expense, at
all times during the term of the Contract and until return of the Equipment will
maintain the Equipment in good operating order, repair, condition, appearance
and protect the Equipment from deterioration, and provide all accessories,
upgrades, repairs, replacement parts and service required therefor except that
the equipment lease pledged as collateral security for a Leveraged Lease Loan
may in certain instances provide that the related lessor is responsible for
maintaining such Equipment;
(xxv) the Contributor has no knowledge that any Obligor under
a Contract is a Person involved in the business of selling medical equipment of
the same type as the Equipment subject to such Contract;
(xxvi) with respect to each item of Equipment either (A) no
such Equipment has been relocated from the jurisdiction set forth in the
Contract or, (B) if such Equipment has been relocated from the jurisdiction set
forth in the Contract and the Contributor has knowledge of any such relocation,
all UCC filings necessary to continue the first priority security interest in
such Equipment have been made (other than Equipment relating to a Secured
Equipment Note or Finance Lease and for which the Original Equipment Cost is
less than $25,000);
(xxvii) no Contract is a consumer lease as defined in Article
2A of the UCC;
(xxviii) each Obligor has accepted the related Equipment and,
after reasonable opportunity to inspect and test, has not notified the
Contributor of any defects therein;
(xxix) no Obligor is a government or municipality; and
8
(xxx) no Contract requires the prior written consent of the
Obligor or contains any other restriction relating to the transfer or assignment
of such Contract by the Contributor or the seller except such consent as has
been obtained on or prior to the date of such transfer.
(b) The Contributor represents and warrants, as to the
Contracts in the aggregate:
(i) the Aggregate Discounted Contract Balance of the Contracts
as of the Closing Date is equal to $325,093,057.74; and
(ii) the Contracts have the following characteristics: (A)
each Initial Contract has a Discounted Contract Balance as of the
Cut-Off Date of not more than $4,439,211.29; (B) no Discounted Contract
Balance of any Contract will include an amount attributable to any (i)
Purchase Option Payment for such Contract, (ii) Contract Payment due on
or prior to the Cut-Off Date, (iii) security deposit or (iv) advance
payment; (C) as of the Cut-Off Date, no item of Equipment has been
repossessed; (D) as of the Cut-Off Date no Contract is a refinancing
due to delinquencies under a prior lease, security agreement or loan
with the same Obligor relating to the Equipment; (E) the Obligor with
respect to each Contract has a place of business in, or is organized
under, the laws of any state or territory of the United States of
America; (F) with respect to the Initial Contracts, each Contract will
have a Scheduled Termination Date no later than April 30, 2008; (G) as
of the Cut-Off Date, (i) the Discounted Contract Balance of Contracts
that have Balloon Payments constitute not more than 8.12% of the
Aggregate Discounted Contract Balance, (ii) the Discounted Contract
Balance of Contracts that have non-level payments to the Scheduled
Termination Date (excluding Contracts that have Balloon Payments)
constitutes not more than 44.57% of, with respect to the Initial
Contracts, the Aggregate Discounted Contract Balance of the Initial
Contracts as of the Closing Date; (H) as of the Closing Date, (i) the
sum of the Discounted Contract Balances of all Contracts with Equipment
located in any one State will not exceed 18.23% of, with respect to the
Initial Contracts, the Aggregate Discounted Contract Balance of the
Initial Contracts, (ii) no single Obligor will have a Discounted
Contract Balance that exceeds 2.05% of the Aggregate Discounted
Contract Balance on the Closing Date, (iii) the sum of the Discounted
Contract Balances of any five Contracts shall not exceed 9.73% of the
Aggregate Discounted Contract Balance on the Closing Date and (iv) the
sum of the Discounted Contract Balances of all Contracts for which the
related Equipment is magnetic resonance imaging equipment will not
exceed $102,000,000 of the Aggregate Discounted Contract Balance as of
the Closing Date; (I) not more than 10.0% of the Aggregate Discounted
Contract Balance will arise from Contracts which constitute loans to
manufacturers, wholesalers, and retailers; (J) the Obligor under each
Contract has made at least one Contract Payment under such Contract
prior to the first Payment Date occurring after the time such Contract
was executed by the parties thereto in addition to any payment made at
the time of the signing of such Contract except for Contracts
representing 6.0% of the Aggregate Discounted Contract Balance as of
the Closing Date which Contracts provide for the related initial
Contract Payment to be due within 30 days of the Payment Date occurring
on June 11, 2001; (K) the sum of the Discounted Contract Balance of all
Contracts that are Lease Receivable Purchases shall not exceed, at any
time, more than 3.0% of the Aggregate Discounted Contract Balance as of
the Closing Date and, (L) no Balloon Payment is more than six and a
half times larger than the average Contract payment related to such
Contract.
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2.04 CONTRACT SCHEDULE. The Contract Schedule (i) accurately
sets forth the identifying number of each Contract, the Obligor's name and
address, the original Scheduled Maturity Date of each Contract, the remaining
maturity of each Contract, the Discounted Contract Balance of each Contract as
of the Cut-Off Date, the amount and scheduled due date of each Contract Payment
due under each of the Contracts, and the original amount funded on each
Contract, (ii) accurately sets forth the information with respect to certain
other characteristics of the Contracts and the Equipment described on such list,
(iii) identifies those Contracts which constitute Pool A and those Contracts
which constitute Pool B and (iv) is otherwise true and correct in all material
respects.
2.05 PENDING LITIGATION. There are no actions, suits,
proceedings, investigations or injunctive or other orders pending, or to the
knowledge of the Contributor or Servicer threatened, against or affecting the
Contributor or Servicer or any subsidiary in or before any court, governmental
authority or agency or arbitration board or tribunal, including, but not limited
to, any such actions, suits, proceeding, investigation or order with respect to
any environmental or other liability resulting from the ownership or use of any
of the Equipment which, individually or in the aggregate, involve the
possibility of materially and adversely affecting the properties, business, or
condition (financial or otherwise) of the Contributor or Servicer and its
subsidiaries, or the ability of the Contributor or Servicer to perform its
obligations under this Agreement or the payment or enforceability of any
Contract.
2.06 NO MATERIAL EVENT. No event has occurred which materially
adversely affects the Contributor's operations, including, but not limited to,
its ability to perform the transaction contemplated hereunder.
2.07 TRANSACTIONS LEGAL AND AUTHORIZED. This Agreement and all
other documents delivered in connection herewith and the assignment, transfer
and contribution by the Contributor to the Transferor of all of the
Contributor's right, title and interest in and to each Contract and a security
interest in each item of Equipment at any time transferred hereunder and
compliance by the Contributor and the Servicer with all of the provisions of
this Agreement:
(a) have been duly authorized by all necessary
corporate action on the part of the Contributor or the Servicer, as the
case may be, and do not and will not require any stockholder approval,
or approval or consent of any trustee or holders of any indebtedness or
obligations of the Contributor or the Servicer, as the case may be;
(b) are within the corporate powers of the
Contributor and the Servicer; and
(c) are legal and will not conflict with, result in
any breach in any of the provisions of, constitute a default under, or
result in the creation of any lien upon any property of the Contributor
or the Servicer, as the case may be, under the provisions of, any
agreement, charter instrument, by-law or other instrument to which the
Contributor or the Servicer, as the case may be, is or will be a party
or by which it or its property may be bound or result in the violation
of any law, regulation, rule, order or judgment applicable to the
Contributor or the Servicer, as the case may be, or its properties, or
any order to which the Contributor or the Servicer, as the case may be,
or its properties is subject, of or by any government or governmental
agency or authority.
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2.08 GOVERNMENTAL CONSENT. Except for the filing of the UCC
financing statements and the making of applications as set forth in Section
1.01(c) hereof, no consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority is or will be
necessary or required on the part of the Contributor in connection with the
execution and delivery of this Agreement or the assignment, transfer and
contribution of the Contracts and the Equipment hereunder.
2.09 COMPLIANCE WITH LAW. Each of the Contributor and the
Servicer:
(a) is not in violation of any laws, ordinances,
governmental rules or regulations or court orders to which it is
subject; and
(b) has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business.
2.10 ORDINARY COURSE; NO INSOLVENCY. The transactions
contemplated by this Agreement are being consummated by the Contributor and the
Servicer, respectively, in furtherance of the Contributor's and the Servicer's
ordinary business purposes and constitute a practical and reasonable course of
action by the Contributor and the Servicer, respectively, designed to improve
the financial position of the Contributor and the Servicer, respectively, with
no contemplation of insolvency and with no intent to hinder, delay or defraud
any of its present or future creditors. Neither as a result of the transactions
contemplated by this Agreement, nor immediately before or after such
transactions, will the Contributor or the Servicer be insolvent, and both the
Contributor and the Servicer shall have adequate capital for the conduct of its
business and the payment of anticipated obligations.
2.11 ASSETS AND LIABILITIES.
(a) Both immediately before and after the assignment, transfer
and contribution of Contracts (including the right to receive all payments due
or to become due thereunder) and the other Contributed Property, the present
fair salable value of the Contributor's assets will be in excess of the amount
that will be required to pay the Contributor's probable liabilities as they then
exist and as they become absolute and matured.
(b) Both immediately before and after the assignment and
transfer of Contracts and the other Contributed Property, the sum of the
Contributor's assets will be greater than the sum of the Contributor's debts,
valuing the Contributor's assets at a fair salable value.
2.12 FAIR CONSIDERATION; VALID SALE. The consideration
received and to be received by the Contributor in exchange for the assignment,
transfer and contribution of the Contracts and the Contributed Property is fair
consideration having value equivalent to or in excess of the value of the assets
being transferred by the Contributor. This Agreement effects a valid assignment,
transfer and contribution of the Contributor's interest in the Contracts and the
other Contributed Property, enforceable against creditors of and purchasers from
the Contributor.
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2.13 ABILITY TO PAY DEBTS. Neither as a result of the
transactions contemplated by this Agreement nor otherwise does the Contributor
believe that it will incur debts beyond its ability to pay or which would be
prohibited by its charter documents or by-laws. The Contributor's assets and
cash flow enable it to meet its present obligations in the ordinary course of
business as they become due.
2.14 BULK TRANSFER PROVISIONS. No transfer, assignment or
conveyance of Contracts or the other Contributed Property by the Contributor to
the Transferor contemplated by this Agreement will be subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
2.15 TAX RETURNS.
(a) The provisions for taxes on the books of the
Contributor and each subsidiary are in accordance with generally accepted
accounting principles.
(b) The Contributor and the Transferor are members of
an affiliated group, within the meaning of Section 1504 of the Code, that files
a consolidated return for federal income tax purposes, and all of the entities
with which the Contributor is consolidated for federal income tax purposes
(including the Transferor) have timely filed all tax returns required to be
filed in any jurisdiction and have paid all taxes, assessments, fees and other
governmental charges upon them or their properties, income or franchises, shown
to be due and payable on such returns, except to the extent any such entity is
contesting the same in good faith by appropriate proceedings and has set aside
adequate reserves in accordance with generally accepted accounting principles
for the payment thereof. The Contributor does not know of any proposed
additional tax assessment against any such entity in any material amount or of
any basis therefor.
2.16 TRANSFER TAXES. No transfer, assignment or conveyance of
Contracts or the other Contributed Property contemplated by this Agreement is
subject to or will result in any tax, fee or governmental charge payable by the
Contributor or the Transferor to any federal, state or local government
("TRANSFER TAXES"). In the event that the Contributor or the Transferor receives
actual notice of any Transfer Taxes arising out of the transfer, assignment and
conveyance of any Contracts and/or the other Contributed Property, on written
demand by the Transferor, or upon the Contributor otherwise being given notice
thereof, the Contributor shall pay, and otherwise indemnify and hold the
Transferor, the Issuer, the Trustee and the holders of the Notes harmless, on an
after-tax basis, from and against any and all such Transfer Taxes (it being
understood that neither the holders of the Notes nor the Trustee shall have any
obligation to pay such Transfer Taxes).
2.17 PRINCIPAL EXECUTIVE OFFICE. The principal place of
business and chief executive office of each of the Contributor and the Servicer
is located at 0000 Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000, and has been located
in the same county and state for at least four months prior to the date of
execution and delivery of this Amended and Restated Agreement.
2.18 LEGAL NAME. The legal name of the Contributor is as set
forth in this Agreement and the Contributor has not changed its name in the last
six years and does not have any trade names, fictitious names, assumed names or
"doing business as" names except Medical Equipment Finance Xxxxxxx, XXX Xxxxxxx,
XXX Xxxxxx, XXX Strategic Partner Group, DVI Health
12
Services Corp., DVI Finance Inc., DVI Affiliated Capital, Third Coast Capital
and Medical Devices Capital Company.
2.19 SERVICING PROVISIONS CUSTOMARY. The servicing
arrangements hereunder, including, without limitation, the terms and conditions
pursuant to which the Contributor will act as Servicer and the Servicer's Fee
and other amounts to be paid to the Contributor, are consistent with the
arrangements and customary practices of the Contributor when providing
comparable services to nonaffiliated entities and of other services in the
equipment leasing industry.
2.20 DEFAULTS. As of the Closing Date, neither the Contributor
nor the Servicer is in default with respect to any debt or obligation.
2.21 ERISA. The Contributor neither maintains, contributes to,
nor has any obligations to contribute to any "employee pension benefit plans,"
as such term is defined in Section 3(2) of ERISA (other than the 401(k) Plan of
DVI, Inc.). The execution and delivery of this Agreement and the other
applicable Transaction Documents and the consummation of the transactions
contemplated thereby will neither result in, constitute or otherwise give rise
to a "prohibited transaction" as described in Section 406 of ERISA or Section
4975 of the Code, with respect to a Contributor Plan. For the purpose of this
Section 2.21, the term "CONTRIBUTOR PLAN" shall mean an "employee benefit plan"
(as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are, have been or are required to be made,
by the Contributor or by any trade or business, whether or not incorporated,
which, together with the Contributor, is under common control, as described in
Section 414(b) or (c) of the Code or Section 4001 of ERISA.
2.22 ALL FILINGS MADE. At the Closing Date, no further filings
(including, without limitation, UCC filings) or other actions are necessary in
any jurisdiction to give the Transferor either a security or an ownership
interest in the Contracts and the other Contributed Property, except that with
respect to the Equipment, the Contributor shall, within 30 days of the Closing
Date, file the UCC financing statements and made the necessary applications with
respect to the Equipment that are described in Section 1.01(c) hereof.
2.23 NONCONSOLIDATION. The Contributor is operated in such a
manner that it would not be substantively consolidated with the Transferor or
the Issuer, such that the separate existence of the Contributor and the
Transferor or the Issuer would not be disregarded in the event of a bankruptcy
or insolvency of the Contributor or the Transferor or the Issuer, and in such
regard, among other things:
(a) the Contributor is not involved in the day to day
management of the Transferor or the Issuer;
(b) the Contributor maintains separate corporate
records and books of account from the Transferor and the Issuer and
otherwise observes corporate formalities and has a separate business
office from the Transferor and the Issuer;
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(c) the financial statements and books and records of
the Contributor prepared after the respective dates of creation of the
Transferor and the Issuer reflect and will reflect the separate
existence of the Transferor and the Issuer;
(d) the Contributor maintains its assets separately
from the assets of the Transferor and the Issuer (including through the
maintenance of a separate bank account), the Contributor's funds and
assets, and records relating thereto, have not been and are not
commingled with those of the Transferor or the Issuer and the separate
creditors of the Transferor and the Issuer will be entitled to be
satisfied out of the Transferor's assets or the Issuer's assets,
respectively, prior to any value in the Transferor becoming available
to the Transferor's equityholders or the Contributor's creditors;
(e) all business correspondence of the Contributor
and other communications are conducted in the Contributor's own name
and on its own stationery;
(f) the Transferor and the Issuer do not act as an
agent of the Contributor in any capacity and the Contributor does not
act as agent for the Transferor or the Issuer, but instead presents
itself to the public as a corporation separate from the Transferor and
the Issuer; PROVIDED that the Contributor is the Servicer hereunder;
and
(g) the Transferor is not engaged in any other
activities other than the transactions contemplated by the Transaction
Documents.
2.24 ALL REPRESENTATIONS AND WARRANTIES TRUE. All
representations and warranties made by the Contributor in any certificate or
other document delivered at the closing of the transactions contemplated by the
applicable Transaction Document, including all representations and warranties
made to Xxxxxxx Xxxxxxxx & Xxxx in support of their opinions, are true and
correct in all material respects.
2.25 PROSPECTUS SUPPLEMENT. The Prospectus Supplement does not
contain any untrue statement of material fact or omit to state a material fact
necessary to make the statements contained therein not misleading in light of
the circumstances under which they were made; PROVIDED, HOWEVER, the Contributor
makes no representation or warranty as to the information contained in or
omitted from the Prospectus Supplement in reliance upon and in conformity with
information furnished to the Contributor in writing by Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated or Banc One Capital Markets, Inc. or any of their
respective Affiliates (I.E. the paragraphs under the headings "THE UNDERWRITING"
or "PLAN OF DISTRIBUTION") or by the Trustee (under the heading "THE TRUSTEE").
2.26 INSURANCE. In addition to the insurance maintained by the
Obligors with respect to the Equipment, the Contributor maintains, among other
policies, a general liability insurance policy in the aggregate amount of
$1,000,000 and an excess liability insurance policy in umbrella form in the
aggregate amount of $3,000,000 for a total of $4,000,000 of liability insurance.
Each of such policies is in full force and effect and covers all Equipment owned
by the Contributor and the Transferor. All premiums in respect of such policies
have been paid. Each of the Trustee on behalf of the Noteholders, and the
Transferor is named as additional insureds on such liability policies.
14
2.27 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR, THE
MANAGING MEMBER OR THE ISSUER. The Contributor covenants and agrees it will not,
prior to the date that is one year and one day after the payment in full of all
amounts owing pursuant to the Transaction Documents, institute against, or join
any other Person in instituting against, any of the Transferor, the Managing
Member or the Issuer, any bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings or other similar proceedings under any
federal or state bankruptcy or similar law. This Section 2.27 shall survive the
termination of this Agreement.
2.28 DELIVERY OF OBLIGOR CONTACT INFORMATION. With respect to
each Contract contributed by the Contributor to Transferor on each Contribution
Date, the Contributor shall, on or before such Contribution Date, provide the
Trustee, in writing and in a form reasonably acceptable to the Trustee, contact
information of the related Obligor, including the name, phone number, facsimile
number and address of each key contact individual.
SECTION 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE TRANSFEROR
The Transferor hereby represents to the Contributor as of the
Closing Date and warrants, covenants and agrees as follows:
3.01 TRANSFEROR ORGANIZATION AND AUTHORITY; SUBSIDIARIES. The
Transferor is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of formation, and has full power and
authority to own and convey the Contracts and execute and deliver the
Transaction Documents to which the Transferor is a party (collectively, the
"TRANSFEROR DOCUMENTS") and all related documents, and to perform the terms and
provisions hereof. The Transferor has no subsidiaries, but is the sole
beneficial owner of the Issuer.
3.02 DUE AUTHORIZATION AND NO VIOLATION. Each of the
Transferor Documents and all related documents have been duly authorized,
executed and delivered by the Transferor, and is the legal, valid and binding
obligation of the Transferor enforceable in accordance with its terms, except as
the same may be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or by general
equitable principles. The consummation of the transactions contemplated by the
Transferor Documents and all related documents and the fulfillment of the terms
hereof, will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets
of the Transferor pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement, guarantee or similar agreement or instrument under which
the Transferor is a debtor or guarantor (other than the liens created pursuant
to the Transaction Documents), nor will such action result in any violation of
the provisions of the certificate of incorporation or the by-laws of the
Transferor. All applicable laws, rules, regulations, and orders with respect to
the Transferor, its business and properties, have been complied with. No
consents and no filings or governmental approvals that have not been made or
obtained are required for due execution, delivery and performance of the
agreements by the Transferor.
3.03 NO LITIGATION. No legal or governmental proceedings are
pending to which the Transferor is a party or of which any property of the
Transferor is the subject, and, to the
15
knowledge of the Transferor, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others and no injunctions, writs,
restraining orders or other orders of any nature are in effect or, to the
knowledge of the Transferor, threatened, other than such proceedings which will
not have a material adverse effect upon the general affairs, financial position,
net worth or results of operations of the Transferor and will not materially and
adversely affect the performance by the Transferor of its obligations under, or
the validity and enforceability of, the Transferor Documents and all related
documents.
3.04 PRINCIPAL OFFICE. The Transferor's principal place of
business and chief executive office is located at 0000 Xxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxx 00000. The legal name of the Transferor is as set forth herein and
the Transferor has no tradenames, fictitious names, assumed names or "doing
business" names.
3.05 TAX RETURNS. The Transferor has filed on a timely basis
all tax returns required to be filed in any jurisdiction and has paid all taxes,
assessments, fees and other governmental charges upon it or its properties,
income or franchises, shown to be due and payable on such returns, except to the
extent the Transferor is contesting the same in good faith by appropriate
proceedings and has set aside adequate reserves in accordance with generally
accepted accounting principles for the payment thereof. The Transferor does not
know of any proposed additional tax assessment against it in any material amount
or of any basis therefor.
3.06 SOLVENCY. The Transferor is solvent and will not become
insolvent after giving effect to the contemplated transactions. The Transferor
is paying its debts as they become due and will have adequate capital to conduct
its business after giving effect to the contemplated transactions.
3.07 APPROVALS. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery of the Transferor Documents have been or will be
taken or obtained on or prior to the Closing Date.
3.08 NONCONSOLIDATION. The Transferor is operated in such a
manner that it would not be substantively consolidated with the Contributor,
such that the separate existence of the Transferor and the Contributor would not
be disregarded in the event of a bankruptcy or insolvency of the Transferor or
the Contributor, and in such regard, among other things:
(a) the Transferor is not involved in the day to day
management of the Contributor;
(b) the Transferor maintains separate Transferor
records and books of account from the Contributor and otherwise
observes Transferor formalities and has a separate business office from
the Contributor;
(c) the financial statements and books and records of
the Transferor prepared after the date of creation of the Contributor
reflect and will reflect the separate existence of the Contributor;
16
(d) the Transferor maintains its assets separately
from the assets of the Contributor (including through the maintenance
of a separate bank account), the Transferor's funds and assets, and
records relating thereto, have not been and are not commingled with
those of the Contributor and the separate creditors of the Contributor
will be entitled to be satisfied out of the Contributor's assets prior
to any value in the Contributor becoming available to the Contributor's
equityholders or the Transferor's creditors;
(e) all business correspondence of the Transferor and
other communications are conducted in the Transferor's own name and on
its own stationery;
(f) the Contributor does not act as an agent of the
Transferor in any capacity and the Transferor does not act as agent for
the Contributor, but instead presents itself to the public as a
corporation separate from the Contributor; PROVIDED that the
Contributor is the Servicer hereunder; and
(g) the Transferor will at all times maintain two
Independent Directors (as such term is defined in the certificate of
incorporation of the Transferor).
SECTION 4. ADMINISTRATION OF CONTRACTS
4.01 SERVICER TO ACT.
(a) Notwithstanding the transfers and assignments of the
Contracts and the other Contributed Property contemplated hereby, the Servicer,
for the benefit of the Transferor, and, upon assignment of the Transferor's
rights hereunder to the Issuer (and the Issuer's assignment thereof to the
Trustee for the benefit of the Trustee and the Noteholders), will service and
administer each Contract in accordance with the terms thereof and of this
Agreement. The Servicer shall provide the Obligors with appropriate invoices and
such other notices as may be required to ensure that all Contract Payments,
Prepayment Amounts and Partial Prepayment Amounts on or in respect of each
Contract are remitted by the Obligors directly to a Lock-Box Account.
(b) The Servicer shall do, and shall have full power and
authority to do, subject only to the specific requirements and prohibitions of
this Agreement, any and all things in connection with the servicing and
administration of the Contracts and the Equipment which are in the same manner
in which it services contracts and equipment held for its own account
(including, without limitation, servicing and administration of Contracts with
respect to which the related Equipment may be substituted or upgraded) and
consistent with prudent and customary practices of servicers in the industry,
but in performing its duties hereunder, the Servicer will act on behalf and for
the benefit of the Transferor, the Issuer, the Trustee and the Noteholders,
subject at all times to the provisions of the Transaction Documents, without
regard to any relationship which the Servicer or any Affiliate of the Servicer
may otherwise have with an Obligor. Notwithstanding the prior sentence, the
Servicer shall, within ten (10) Business Days after the Closing Date, notify
each Obligor to make all payments with respect to its respective Contracts which
are due after the Cut-Off Date directly to a Lock-Box Account. The Servicer
shall give the Trustee and the Rating Agencies prior written notice of any
change in the location of a Lock-Box Account and the Servicer shall give at
least ten (10) days' prior written notice of the new location to each Obligor.
The Servicer shall at
17
all times act in accordance with the provisions of each Contract, and shall
observe and comply with all requirements of law applicable to it. Except as
permitted by the terms of any Contract following a default thereunder, the
Servicer shall not take any action which would result in the interference with
the Obligor's right to quiet enjoyment of the Equipment subject to the Contract
during the term thereof.
(c) Without limiting the generality of the foregoing, the
Servicer will be responsible, among other duties, to (i) invoice each Obligor
for all Contract Payments required to be paid by such Obligor in such manner and
to the same extent as the Servicer does with respect to similar contracts held
for its own account, (ii) maintain with respect to each Contract and each item
of Equipment, and with respect to each payment by each Obligor and compliance by
each Obligor with the provisions of each Contract, complete and accurate records
in such manner and to the same extent as the Servicer does with respect to
similar contracts held for its own account, and (iii) execute, deliver and file
(or cause the same to be done), and the Servicer is hereby authorized and
empowered to execute, deliver, and file on behalf of the Transferor, the Issuer
and the Trustee, any and all tax returns with respect to sales, use, personal
property and other taxes (other than corporate income and franchise tax returns)
and any and all reports or licensing applications required to be filed in any
jurisdiction with respect to any Contract or any item of Equipment and any and
all filings required by Section 4.01(d) below.
(d) The Servicer will file the UCC financing statements as set
forth in Sections 1.01(c) and 7.01(c) hereof within the time frames set forth
therein and thereafter will file such additional UCC financing statements and
continuation statements and assignments in accordance with the provisions of any
Contract and item of Equipment or otherwise so that the security interest in
favor of the Trustee in each of the Contracts and the related Equipment will be
perfected by such filings with the appropriate UCC filing offices. The
Transferor agrees to execute such UCC financing statements and continuation
statements as shall be necessary and shall furnish the Servicer with any powers
of attorney or other documents necessary and appropriate to carry out its
servicing and administration duties hereunder.
(e) The Servicer will maintain, or cause to be maintained,
with respect to the Contracts and the Equipment, liability insurance in amounts
at least as great as those described in Section 2.26.
(f) The Servicer will notify the Trustee, in writing and in a
form reasonably acceptable to the Trustee, of any change in the contact
information of any Obligor, including the name, phone number, facsimile number
and address of each key contact individual, within 30 days following the
discovery or receipt of notice of such change.
4.02 CONTRACT AMENDMENTS AND MODIFICATIONS; REPURCHASE OF
CONTRACTS BY SERVICER. (a) In performing its obligations hereunder, the Servicer
may, acting in the name of the Transferor and without the necessity of obtaining
the prior consent of the Transferor or the Trustee, enter into and grant
modifications, waivers and amendments to the terms of any Contract except for
modifications, waivers or amendments that (i) are inconsistent with the
servicing standards set forth in Section 4.01 above, (ii) would extend the date
of the final Contract Payment on any Contract by more than 24 months, (iii)
would reduce or adversely affect, individually or in the aggregate, the
Obligor's obligation to maintain, service, insure and care for the Equipment or
would permit the
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alteration of any item of Equipment in any way which could adversely affect its
present or future value,(iv) extend the Stated Maturity Date of the Notes, (v)
have a material adverse effect on the weighted average life of any Class of
Notes, (vi) be implemented on more than twenty percent of the Initial Aggregate
Discounted Contract Balance of the Contracts, (vii) be effected on any Contract
that is either 90 days or more delinquent or Defaulted Contract, (viii) PROVIDED
that the Issuer fails to deposit an amount into the Collection Account equal to
such decrease, decrease the Discounted Contract Balance of any Contract or (ix)
otherwise could adversely affect, individually or in the aggregate, the
interests of any of the Transferor, the Issuer, the Trustee or the Noteholders.
Notwithstanding the provisions of clause (ii) of the preceding sentence, the
Servicer may (1) permit any of the actions set forth in clause (ii) of the
preceding sentence, which in the Servicer's sole discretion, in accordance with
the same manner in which it services contracts and equipment held for its own
account, would maximize Recoveries on any Defaulted Contract, or (2) permit
termination of a Contract which does not otherwise provide for termination by
requiring, in the case of either clause (1) or (2), that the Obligor pay, or, if
the terms of such extension or termination do not provide for such payment by
the Obligor that the Servicer deposit, in lieu of all future Contract Payments
with respect to such Contract, an amount which equals or exceeds the applicable
Prepayment Amount for such Contract as of 11:00 A.M. New York time on the second
Business Day prior to the Payment Date next succeeding the making of such
payment is deposited into the Collection Account; PROVIDED, HOWEVER, that the
Servicer will not be permitted to allow prepayment by an Obligor if there are
any amounts due under the related Contract after such prepayment.
In the event of any modification, waiver or amendment of any
Contract in accordance with this Section 4.02, the Servicer will promptly
furnish the Transferor, the Issuer and the Trustee with a copy thereof, together
with a certificate of the Servicer signed by one of its executive or financial
officers stating that such modification, waiver or amendment is not prohibited
by the provisions of this Section 4.02.
(b) If an Obligor requests either an upgrade or a trade-in of
an item of Equipment, the Servicer may either (x) remove such Contract and the
related Equipment from the Trust Property PROVIDED that the Servicer either (i)
subject to the limitations set forth in Section 7.01(c), transfers a Substitute
Contract and the related Equipment to the Transferor in accordance with Section
7 of this Agreement or (ii) deposits an amount equal to the Prepayment Amount
for such Contract into the Collection Account or (y) permit such Contract and
remaining related Equipment to remain in the Trust Property, PROVIDED that the
Servicer deposits an amount equal to the Partial Prepayment Amount for such
Contract into the Collection Account.
4.03 CONTRACT DEFAULTS; RESIDUAL REALIZATIONS.
(a) Upon receipt of notice from the Transferor, the Issuer,
the Trustee or any other Person, or if the Servicer otherwise learns that the
Obligor under any Contract is in default thereunder, the Servicer will take such
action as is appropriate, consistent with the Servicer's administration of
contracts held for its own account and consistent with the customary practices
of servicers in the industry, including such action as may be necessary to
cause, or attempt to cause, the Obligor thereunder to cure such default (if the
same may be cured) or to terminate or attempt to terminate such Contract and to
recover, or attempt to recover, all damages resulting from such default.
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(b) The Servicer will use its best efforts (i) to sell or
re-lease any Equipment and realize on any other collateral related to a
Defaulted Contract in a timely manner and upon reasonable terms and conditions
so as to maximize, to the extent possible under then prevailing market
conditions, as expeditiously as is consistent with sound commercial practice and
the Servicer standard referenced in Section 4.01, the net proceeds from such
Equipment and other collateral, if any and (ii) to sell or re-lease any
Equipment remaining subject to the lien of the Amended and Restated Indenture
upon the expiration of the Contract to which such Equipment is subject, in a
timely manner and in a manner consistent with that utilized by the Servicer with
respect to equipment owned by it so as to maximize, to the extent possible under
then prevailing market conditions, the net proceeds from such Equipment.
(c) In the event that the Servicer is required to sell any
item of Equipment pursuant to the provisions of this Section 4.03 at a time when
the Servicer is trying to lease or sell other similar items of equipment, the
Servicer will not favor any such other item in its remarketing efforts.
4.04 COSTS OF SERVICING; SERVICER'S FEE.
(a) All costs of servicing each Contract in the manner
required by this Section 4 shall be borne by the Servicer, but the Servicer
shall be entitled to retain, out of any amounts actually recovered by the
Servicer in the performance of its obligations under Section 4.03 hereof with
respect to any Contract or the Equipment subject thereto, the Servicer's actual
out-of-pocket expenses reasonably incurred in the course of such performance
with respect to such Contract or Equipment (For all purposes of this Section 4,
the Servicer's "out-of-pocket expenses" means only those expenses incurred to
non-Affiliated third parties (E.G., outside counsel in a collection suit) and
shall not include salaries, operating costs, overtime wages and other such
"overhead" costs or expenses of the Servicer or its Affiliates, and shall not
include expenses of or payments to an agent or subservicer allowed under Section
11.02, except that out-of-pocket expenses for the fees and expenses of an agent
used to remarket Equipment subject to Contracts shall be included as "out-of-
pocket expenses"). In addition, the Servicer shall be entitled to receive from
the Transferor on each Payment Date any unreimbursed Nonrecoverable Advances or
Servicer Advances with respect to any Contract (in accordance with Section 5)
and a servicing fee (the "SERVICING FEE") in the amount described in paragraph
(b) below.
(b) As compensation to the Servicer for its servicing of the
Contracts, the Servicer will be entitled to receive on each Payment Date from
amounts on deposit in the Collection Account the Servicing Fee in an amount
equal to the product of (i) one-twelfth, (ii) the Servicing Fee Rate and (iii)
the Aggregate Discounted Contract Balance as of the beginning of the related
Collection Period. In addition, the Servicer will be entitled to receive as
additional compensation late payment fees, the penalty portion of interest paid
on past due amounts, origination fees, documentation fees, other administrative
fees or similar charges allowed by applicable law with respect to the Contracts,
and certain other similar fees paid by the Obligors ("SERVICING CHARGES") and
earnings from any Eligible Investments of amounts on deposit in the Collection
Account.
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(c) The Servicer hereby agrees:
(i) to pay to the Trustee from time to time such
compensation for all services rendered by it under the Amended and
Restated Indenture as the Servicer and the Trustee have agreed in
writing prior to the Closing Date, such payment to be made independent
of the other payment obligations of the Servicer hereunder;
(ii) except as otherwise expressly provided herein,
to reimburse the Trustee upon its request for all reasonable expenses,
disbursements, and advances incurred or made by the Trustee in
accordance with any provision of the Amended and Restated Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement, or advance as may be attributable to its negligence or
bad faith;
(iii) to pay the Trustee its annual administrative
fee on the Closing Date;
(iv) to pay the reasonable fees and expenses of
Trustee's counsel, Xxxxxx and Xxxxxxx, on the Closing Date; and
(v) to pay the reasonable annual administrative fee
of each Lock-Box Bank.
To the extent the Trustee has not been paid pursuant to the
Amended and Restated Indenture, then all of the expenses set forth in this
clause (c) shall be borne by the Servicer, and the Servicer shall not be
entitled to reimbursement of such amounts from the Trust Property.
4.05 OTHER TRANSACTIONS. Nothing in this Agreement shall
preclude the Contributor or the Servicer from entering into other contracts or
other financial transactions with any Obligor or selling or discounting any such
contract with any Person.
4.06 COLLECTION OF MONEYS.
(a) Subject to Section 4.06(b), the Servicer shall remit or
cause each Lock-Box Bank to remit all payments received by it on or in respect
of any Contract or Equipment (including any Residual Payment) during such
Collection Period into the Collection Account (including any such amounts then
held by the Servicer) as soon as practicable, but in any event within two
Business Days after receipt thereof; PROVIDED, HOWEVER, that upon satisfaction
of conditions provided by the Rating Agencies from time to time, the Servicer
shall be permitted to deposit such amounts received during a particular
Collection Period into the Collection Account within two Business Days prior to
the related Payment Date.
(b) Any such amounts remitted to the Collection Account may
not include Excluded Amounts.
(c) Notwithstanding the provisions of paragraph (a) hereof,
the Servicer may retain, or will be entitled to be reimbursed, from amounts
otherwise payable into, or on deposit in, the Collection Account with respect to
a Collection Period, amounts previously deposited in the
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Collection Account but later determined to have resulted from mistaken deposits
or payments due before or on the Cut-Off Date or postings of checks returned for
insufficient funds (PROVIDED that the Servicer accounts for such amounts in the
Monthly Servicer's Report for the related Collection Period). The amount to be
retained or reimbursed hereunder shall not be included in funds available for
distribution with respect to the related Payment Date.
(d) Pending their deposit into the Collection Account, all
collections shall be segregated by book-entry or similar form of identification
on the Servicer's books and records and identified as the property of the
Transferor.
4.07 VOLUNTARY TERMINATION. At the option of the Servicer, the
obligations and responsibilities of the Servicer with respect to all of the
Contracts shall terminate on any Payment Date on which the Aggregate Discounted
Contract Balance is less than 10% of the Initial Aggregate Discounted Contract
Balance so long as the Servicer deposits or causes to be deposited into the
Collection Account the Repurchase Amount for each Contract.
SECTION 5. SERVICER ADVANCES; REPURCHASE OF CONTRACTS
5.01 SERVICER ADVANCES. Following each Determination Date, the
Servicer shall advance and remit to the Trustee, in such manner as will ensure
that the Trustee will have immediately available funds on account thereof by
11:00 A.M. New York time on the second Business Day prior to the next succeeding
Payment Date, a Servicer Advance equal to an amount sufficient to cover all
amounts due and unpaid on any Delinquent Contract as of the related
Determination Date; PROVIDED, HOWEVER, that the Servicer will not be obligated
to make a Servicer Advance with respect to (a) any Defaulted Contract, (b) any
Contract that was finally liquidated on or prior to such Determination Date or
(c) any Contract if the Servicer, in its good faith judgment, believes that such
Servicer Advance would be a Nonrecoverable Advance. If the Servicer determines
that any Servicer Advance it has made, or is contemplating making, would be a
Nonrecoverable Advance, the Servicer shall deliver to the Trustee an Officer's
Certificate stating the basis for such determination.
The Servicer shall be reimbursed for Servicer Advances on each
Payment Date from amounts on deposit in the Collection Account as follows: (i)
for any Servicer Advance made with respect to a Delinquent Contract, from
subsequent collections of such delinquent Contract Payments, Prepayment Amounts
or Repurchase Amounts and (ii) for any Nonrecoverable Advance, from all
collections received on all of the Contracts.
5.02 INDEMNIFICATION. Each of the Contributor and the Servicer
agrees to indemnify and hold harmless the Transferor, the Issuer, the Managing
Member, the Servicer, the Trustee, (which shall include each of their respective
members, directors, officers, employees and agents), the Contributor and each
Noteholder, as the case may be, (each an "INDEMNIFIED PARTY") against any and
all liabilities, losses, damages, penalties, costs and expenses (including costs
of defense and legal fees and expenses) which may be incurred or suffered by
such Indemnified Party (except to the extent caused by gross negligence or
willful misconduct on the part of the Indemnified Party) as a result of claims,
actions, suits or judgments asserted or imposed against an Indemnified Party and
arising out of the transactions contemplated hereby or by the Amended and
Restated Indenture or
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arising out of, or based upon, action or inaction by the Contributor or the
Servicer, as the case may be, that is contrary to the terms of this Agreement or
the other Transaction Documents to which it is a party or a breach by the
Contributor or the Servicer, as the case may be, of any of its covenants set
forth in any of the Transaction Documents to which it is a party or any
information certified in any schedule delivered by the Contributor or the
Servicer, as the case may be, being untrue in any material respect as of the
date of such Certification, including without limitation, any claims resulting
from any use, operation, maintenance, repair, storage or transportation of any
item of Equipment, whether or not in the Servicer's possession or under its
control pursuant to this Agreement, and any tort claims and any fines or
penalties arising from any violation of the laws or regulations of the United
States or any state or local government or governmental authority, PROVIDED that
the foregoing indemnity shall in no way be deemed to impose on the Contributor
any obligation, other than to the extent specifically set forth in this Section
5, to make any payment with respect to principal or interest on the Notes or to
reimburse the Transferor for any payments on account of the Notes. In every
circumstance where the Indemnified party seeking indemnity hereunder for legal
fees, counsel fees and related costs and expenses is a Noteholder it is
understood, and the Noteholders by their acceptance of their respective Notes
agree, that such reimbursement, indemnification and holding harmless is limited
to the reasonable fees, related costs and expenses of the Noteholders Counsel
only. The obligations of the Contributor under this Section 5.02 shall survive
the termination of the Agreement the resignation or removal of the Trustee and
the termination of the Servicer pursuant to the terms hereof.
5.03 REPURCHASE AND SUBSTITUTION OF CONTRACTS; OTHER PAYMENTS.
(a) The Contributor or the Servicer, as the case may be, shall inform the
Transferor, the Issuer, the Managing Member and the Trustee promptly, in
writing, upon the discovery of a breach of any of the Contributor's
representations and warranties set forth herein. With respect to any breach of
the Contributor's representations and warranties set forth herein which
materially and adversely affects the interest of the Noteholders in any Contract
or Contracts, the Contributor, unless within 90 days following the discovery or
receipt of notice of such breach such breach has been cured or waived in all
respects by the Noteholders evidencing more than 50% of the Voting Rights, shall
either (a) purchase such Contract and the security interest in the related
Equipment from either the Transferor or the Issuer, as the case may be, or (b)
replace such Contract and the security interest in the related Equipment with a
Substitute Contract in accordance with the provisions of Sections 7.01, 7.02 and
7.03 of this Agreement. In the event of a repurchase of a Contract, the
Contributor shall remit to the Trustee (upon written notice to the Trustee
thereof) for deposit into the Collection Account the Repurchase Amount of each
such Contract to be repurchased on or prior to 11:00 A.M. New York City time on
the second Business Day prior to the Payment Date immediately following the date
when the Contributor shall become obligated to purchase (or, if such Contract is
then a Defaulted Contract, an amount equal to the Repurchase Amount as of the
date such Contract first became a Defaulted Contract, together with interest
thereon at the Discount Rate from the date such Contract first became a
Defaulted Contract to the end of the month preceding the date of payment). In
connection with such repurchase, the Servicer shall be reimbursed in accordance
with Section 3.04(b) of the Amended and Restated Indenture for all amounts, if
any, theretofore advanced by the Servicer pursuant to Section 5.01 with respect
to such Contract. The Trustee shall deposit such Repurchase Amounts in the
Collection Account on or prior to 11:00 A.M. New York City time on the second
Business Day immediately following the date on which the Trustee receives such
Repurchase Amounts. Without limiting the generality of the foregoing, it is
agreed and understood that for purposes of this Section 5.03, any inaccuracy in
any representation or warranty with respect
23
to (i) the priority of the lien of the Amended and Restated Indenture with
respect to any Contract or (ii) the amount (if less than represented) of the
Contract Payments or Repurchase Amount under any Contract shall be deemed to be
material.
(b) With respect to all Predecessor Contracts and the security
interest in the related Equipment purchased or replaced by the Contributor
pursuant to this Section 5 hereof, the Transferor will deliver to the
Contributor, an instrument substantially in the form of Exhibit E hereto,
assigning to the Contributor, without recourse, representation or warranty
(except as to the absence of liens, claims, or encumbrances resulting from
actions taken, or failed to be taken, by the Transferor), all of the
Transferor's right, title and interest in and to such Predecessor Contracts and
the security interest in the related Equipment, and all security and documents
relating thereto.
(c) The Transferor, the Issuer and the Trustee agree that the
obligation of the Contributor to repurchase or substitute any Contract pursuant
to this Section 5.03 shall constitute the sole remedy for any such breach
available against the Contributor by the Transferor, the Issuer, any Noteholder
or the Trustee; PROVIDED, that the limitation contained in this clause (c) shall
not otherwise limit the rights of any such Person under Section 5.02.
(d) The Servicer shall have the right, but not the obligation,
to repurchase a Delinquent Contract in order to more effectively service such
Delinquent Contract and to enforce the obligations of the obligor under such
Delinquent Contract; PROVIDED that the Servicer will not repurchase more than
fifteen percent (15%) of the Initial Aggregate Discounted Contract Balance of
the Contracts. In the event of a repurchase of a Delinquent Contract, the
Servicer shall remit to the Trustee (upon written notice to the Trustee thereof)
for deposit into the Collection Account the Repurchase Amount of each such
Delinquent Contract to be repurchased on or prior to 11:00 A.M. New York City
time on the second Business Day prior to the Payment Date immediately following
the date when the Servicer desires to repurchase such Delinquent Contract. In
connection with such repurchase, the Servicer shall be reimbursed in accordance
with Section 3.04(b) of the Amended and Restated Indenture for all amounts, if
any, theretofore advanced by the Servicer pursuant to Section 5.01 with respect
to such Delinquent Contract. The Trustee shall deposit such Repurchase Amounts
in the Collection Account on or prior to 11:00 A.M. New York City time on the
second Business Day immediately following the date on which the Trustee receives
such Repurchase Amounts.
SECTION 6. INFORMATION TO BE PROVIDED
6.01 MONTHLY SERVICER REPORT. On or prior to each
Determination Date, the Servicer shall deliver a report in writing substantially
in the form of Exhibit B (the "MONTHLY SERVICER REPORT") to the Trustee and the
Rating Agencies.
6.02 TAX REPORTING AND TREATMENT. (a) The Servicer shall
furnish or cause to be furnished to each Noteholder, within a reasonable time
after the end of each calendar year, to each Noteholder who was a Noteholder at
any time during such year, a report setting forth the amount of principal and
interest paid on the Notes during such year and indicating such other customary
factual information as the Servicer deems necessary, or as any Noteholder
reasonably requests, to enable Noteholders to prepare their respective tax
returns. In addition, the Servicer shall provide, or cause to be provided to the
Internal Revenue Service and each Noteholder, information statements required
24
by the Code (and the regulations issued thereunder) or as such Noteholders may
reasonably request from time to time with respect to in the case of any class of
Notes that is issued with original issue discount within the meaning of section
1273 of the Code ("OID"), information statements with respect to OID. For
purposes of consolidated federal and state income and franchise tax reporting,
the Contributor will be treated (i) as the owner of the Contracts and the other
Contributed Property and (ii) as the borrower under the Amended and Restated
Indenture.
(b) The Transferor, the Issuer, the Managing Member, the
Contributor, the Servicer, any subservicer and each Noteholder by acceptance of
its Note (and any Person that is a beneficial owner of any interest in a Note,
by virtue of such Person's acquisition of a beneficial interest therein) agrees
to treat the Notes as indebtedness for purposes of federal, state and local
income or franchise taxes (and any other tax imposed on or measured by income).
6.03 OTHER INFORMATION. The Servicer shall, at the Trustee's
request, furnish to the Trustee from time to time certain information and make
various calculations which are relevant to the performance of the Trustee's
duties as set forth in the Amended and Restated Indenture. Copies of all
information furnished pursuant to this Section shall also be furnished to the
Rating Agencies.
6.04 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT.
The Servicer shall cause a firm of independent certified public accountants (who
may also render other services to the Servicer or to the Contributor) to deliver
to the Trustee, the Rating Agencies and each Noteholder within 90 days following
the end of each fiscal year of the Servicer, beginning with June 30, 2002, a
written statement to the effect that such firm has examined in accordance with
generally accepted practices samples of the accounts, records, and computer
systems of the Servicer for the fiscal year ended on the previous June 30
relating to the Contracts (which accounts, records, and computer systems shall
be described in one or more schedules to such statement), that such firm has
compared the information contained in the Servicer's reports delivered in the
relevant period with information contained in the accounts, records, and
computer systems for such period, and that, on the basis of such examination and
comparison, such firm is of the opinion that the Servicer has, during the
relevant period, serviced the Contracts in compliance with such servicing
procedures, manuals, and guides and in the same manner as it services comparable
leases for itself or others, and that such certificates, accounts, records, and
computer systems have been properly prepared and maintained in all material
respects, except in each case for (a) such exceptions as such firm shall believe
to be immaterial and (b) such other exceptions as shall be set forth in such
statement. Copies of all information furnished pursuant to this Section shall
also be furnished to the Rating Agencies.
6.05 PAYMENT ADVICES. Each payment by the Contributor or the
Transferor or the Servicer to the Trustee pursuant to any of the provisions of
the Transaction Documents shall be accompanied by written advice containing
sufficient information to identify the Contract and/or Equipment to which such
payment relates, the Section of the Transaction Documents pursuant to which such
payment is made, and the proper application pursuant to the provisions of the
applicable Transaction Document of the amounts being paid.
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SECTION 7. SUBSTITUTION OF CONTRACTS
7.01 SUBSTITUTION. (a) (1) With respect to Pool A, in addition
to the Servicer's other rights of substitution, the Servicer will have the right
(but not the obligation), at any time in connection with exercise by the
Transferor of its rights of substitution under the SCTA, to substitute (a "POOL
A NON-PERFORMING CONTRACT SUBSTITUTION") one or more Eligible Contracts and the
security interest in the related Equipment subject thereto (the foregoing
collectively, a "SUBSTITUTE CONTRACT") for a Contract in Pool A and the security
interest in the related Equipment subject thereto (the foregoing collectively, a
"PREDECESSOR CONTRACT") if:
(i) (A) any Contract Payment on the Predecessor Contract is
delinquent for at least sixty (60) consecutive days as of the most
recent Determination Date; or
(B) a bankruptcy petition has been filed by or
against the Obligor or, with respect to a Leveraged Lease Loan, the
related Lessor, under any Predecessor Contract; or
(C) the Predecessor Contract was initially classified
as a Defaulted Contract during the related Collection Period;
PROVIDED, HOWEVER, that if the Predecessor Contract included a first
priority perfected security interest in Equipment related to a Fair
Market Value Lease, the related Substitute Contract, if related to a
Fair Market Value Lease, shall also include a first priority perfected
security interest in the Equipment related thereto; and
(ii) the conditions set forth in Section 7.01(d) have been
satisfied and the sum of (x) the Discounted Contract Balances of all
Substitute Contracts substituted under this Section 7.01(a)(1) and (y)
amounts deposited by the Servicer in the Collection Account in
connection with all such substitutions under this Section 7.01(a)(1)
does not exceed 10% of the Pool A Aggregate Discounted Contract Balance
as of the Closing Date.
(2) With respect to Pool A, in addition to the Servicer's
other rights of substitution, the Servicer will have the right (but not the
obligation) at any time in connection with exercise by the Transferor of its
rights of substitution under the SCTA, to substitute (a "POOL A PREPAID CONTRACT
SUBSTITUTION") one or more Substitute Contracts for a Predecessor Contract in
Pool A if (i) the Predecessor Contract has been prepaid and (ii) the conditions
set forth in Section 7.01(d) have been satisfied and the sum of (x) the
Discounted Contract Balance of all Substitute Contracts substituted under this
Section 7.01(a)(2) and Section 4.02(b) and (y) amounts deposited by the Servicer
in the Collection Account in connection with all such substitutions under this
Section 7.01(a)(2) and Section 4.02(b) does not exceed 10% of the Pool A
Aggregate Discounted Contract Balance as of the Closing Date.
(b) (1) With respect to Pool B, in addition to the Servicer's
other rights of substitution, the Servicer will have the right (but not the
obligation), at any time in connection with exercise by the Transferor of its
rights of substitution under the SCTA, to substitute (a "POOL B GENERAL CONTRACT
SUBSTITUTION") one or more Substitute Contracts for a Predecessor Contract in
Pool B if the conditions set forth in Section 7.01(d) have been satisfied and
the sum of (x) the Discounted Contract Balances of all Substitute Contracts
substituted under this Section 7.01(b)(1) and (y)
26
amounts deposited by the Servicer in the Collection Account in connection with
all such substitutions under this Section 7.01(b)(1) does not exceed 10% of the
Pool B Aggregate Discounted Contract Balance as of the Closing Date.
(2) With respect to Pool B, in addition to the Servicer's
other rights of substitution, the Servicer will have the right (but not the
obligation), at any time in connection with exercise by the Transferor of its
rights of substitution under the SCTA, to substitute (a "POOL B PREPAID CONTRACT
SUBSTITUTION") one or more Substitute Contracts for a Predecessor Contract in
Pool B if (i) the Predecessor Contract has been prepaid and (ii) the conditions
set forth in Section 7.01(d) have been satisfied and the sum of (x) the
Discounted Contract Balance of all Substitute Contracts substituted under this
Section 7.01(b)(2) and Section 4.02(b) and (y) amounts deposited by the Servicer
in the Collection Account in connection with all such substitutions under this
Section 7.01(b)(2) and Section 4.02(b) does not exceed 10% of the Pool B
Aggregate Discounted Contract Balance as of the Closing Date; unless the Rating
Agencies have otherwise permitted.
(c) Any substitution pursuant to this Section 7.01 or Section
5.03 shall become effective upon (i) delivery to the Trustee and the Transferor
of the Substitute Contract Contribution Form, substantially in the form of
Exhibit D hereto, transferring to the Transferor (and the Issuer, as assignee of
the Transferor) all right, title and interest of the Contributor or the Servicer
in and to the Eligible Contract being substituted and a security interest in the
related Equipment subject thereto, and granting the Trustee a valid and first
priority security interest in such Substitute Contracts and the related
Equipment (other than with respect to a Secured Equipment Note or Finance Lease
and for which the Original Equipment Cost is less than $25,000) subject thereto,
(ii) delivery to the Trustee of amendments to, or executed originals of, the UCC
financing statements referred to in Section 1.01(c) hereof reflecting the
deletion of the Predecessor Contract and the addition of the Substitute
Contract, (iii) delivery to the Contributor by the Transferor of an instrument,
substantially in the form of Exhibit E hereto, transferring to the Contributor
or the Servicer, without representation or warranty, all of the Transferor's
right, title and interest in and to the Predecessor Contract, (iv) delivery to
the Trustee of the sole original, manually executed counterpart of each Contract
that constitutes "chattel paper" or an "instrument" under the UCC and (v)
delivery to the Trustee of an amendment to the Contract Schedule, reflecting the
deletion of the Predecessor Contract and the addition of the Substitute
Contract. Upon delivery of each Substitute Contract and the Substitute Contract
Transfer Form therefor, the definition of "Contributed Property" will be
automatically amended to include such Substitute Contract and all related
property and rights contained in the definition of Contributed Property.
(d) With respect to a substitution of Contracts in accordance
with the provisions of this Section 7 and Section 5.03 hereof, each proposed
Substitute Contract must (i) be an Eligible Contract; (ii) satisfy all of the
representations and warranties set forth in Section 2.03(a) of this Agreement;
(iii) have a Discounted Contract Balance such that the sum of its Discounted
Contract Balance, including any additional cash delivered by the Servicer into
the Collection Account in connection therewith, is not less than the Discounted
Contract Balance of the Contract(s) being replaced; (iv) not cause the remaining
weighted average life of the Contracts (as calculated based upon the Contract
Payments which constitute the Discounted Contract Balance of the Contracts) to
be materially altered; (v) in accordance with the Servicer's standard credit
evaluation policies, be of equal or better credit quality than the Contract
being replaced; and (vi) with respect to a substitution of a Contract that was
originated by DVI Financial Services, Inc., be a Contract that was originated
27
by DVI Financial Services, Inc. For purposes of determining compliance with
clause (iii) of the preceding sentence, if more than one Substitute Contract is
being provided on any date, the Discounted Contract Balance of the Substitute
Contracts and the Contracts being replaced shall be determined on an aggregate
basis.
7.02 NOTICE OF SUBSTITUTION. In the Monthly Servicer Report to
be delivered on each Determination Date, the Contributor shall give written
notice to the Trustee, each Noteholder, the Rating Agencies and the Servicer of
each substitution of Contracts pursuant to Section 7.01(a) hereof and of any
substitution or repurchase pursuant to Section 5.03 hereof during the preceding
Collection Period. Such Monthly Servicer Report or other written notice shall
(i) specify the amount of each periodic Contract Payment under the Predecessor
Contract and the amount of each periodic Contract Payment under each Eligible
Contract being substituted, (ii) specify the residual values of the Equipment
subject to the Predecessor Contract and the Equipment subject to the Eligible
Contract being substituted, (iii) specify the Discounted Contract Balance of the
Predecessor Contracts, the Discounted Contract Balance of the Substitute
Contracts, any Excess Substituted Discounted Contract Balance, and any amounts
to be deposited in the Collection Account in connection with such Substitute
Contracts and (iv) with respect to a substitution pursuant to Section 7.01(a)
hereof, be accompanied by an Officer's Certificate, substantially in the form of
Exhibit F hereto, certifying as to compliance with the provisions of Section
7.01(a) hereof.
7.03 CONTRIBUTOR'S AND SERVICER'S SUBSEQUENT OBLIGATIONS. Upon
any substitution of Contracts in accordance with the provisions of this Section
7 or Section 5.03, the Contributor's and the Servicer's obligations hereunder
with respect to the Predecessor Contract shall cease (except for the Servicer's
obligation as set forth in Section 4.03 hereof to take such action as is
necessary and appropriate to maximize net proceeds to be paid to the Trustee)
but the Contributor and the Servicer shall each thereafter have the same
obligations with respect to the Substitute Contract substituted as it has with
respect to all other Contracts subject to the terms hereof.
7.04 USAGE OF PREDECESSOR CONTRACTS IN CALCULATIONS. After
substitution therefore in accordance with the terms and conditions of the
Transaction Documents, no Predecessor Contract or any other Contract repurchased
or substituted for in accordance with the Transaction Documents, including the
subsequent default, delinquency or breach thereof, shall be included in any
calculation or determination made under the Transaction Documents, including,
without limitation, the calculation of either any Amortization Event or
Indenture Event of Default.
SECTION 8. THE SERVICER
8.01 CORPORATE EXISTENCE OF THE SERVICER. The Servicer will
keep in full force and effect its existence, rights and franchise as a
corporation under the laws of its jurisdiction of incorporation and will
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is necessary to protect the validity
and enforceability of any of the Contracts or to permit performance of the
Servicer's duties under this Agreement.
The Servicer shall not merge or consolidate with any other
Person unless: (i) the entity surviving such merger or consolidation is a
corporation organized under the laws of the United States or any state thereof,
(ii) the surviving entity, if not the Servicer, shall execute and deliver to
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the Transferor and the Trustee, in form and substance satisfactory to each of
them, (x) an instrument expressly assuming all of the obligations of the
Servicer hereunder, and (y) an Officer's Certificate to the effect that such
Person is a corporation of the type described in the preceding clause (i), has
effectively assumed the obligations of the Servicer hereunder, that all
conditions precedent provided for in this Agreement relating to such transaction
have been complied with, that all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Transferor, the
Issuer and Trustee in the Trust Property, and reciting the details of such
filings, or stating that no such action shall be necessary to preserve and
protect such interest, (iii) the Servicer shall deliver to the Trustee a letter
from each Rating Agency to the effect that such consolidation, merger or
succession will not, in and of itself, result in a downgrading of the ratings
for the Notes and (iv) immediately after giving effect to such transaction, no
Servicer Event of Default, and no event which, after notice or lapse of time, or
both, would become a Servicer Event of Default shall have occurred and be
continuing.
8.02 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS. (a)
Neither the Servicer nor any of the directors, officers, employees or agents of
the Servicer shall incur any liability to the Transferor, the Issuer, the
Trustee or the holders of the Notes, for any action taken or not taken in good
faith pursuant to the terms of this Agreement with respect to any Contract
(including any Defaulted Contract) or the Equipment subject thereto; PROVIDED,
HOWEVER, that this provision shall not protect the Servicer or any such person
against any breach of representations or warranties made by it herein or in any
certificate delivered in conjunction with the purchase of the Notes or for any
liability that would otherwise be imposed by reason of willful misfeasance or
negligence in the performance of its duties hereunder or by reason of reckless
disregard of obligations and duties hereunder.
(b) Except as provided in this Agreement, the Servicer shall
not be under any obligation to appear in, prosecute, or defend any legal action
that shall not be incidental to its duties to service the Contracts in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; PROVIDED, HOWEVER, that the Servicer may undertake, at its
expense, any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties to this
Agreement and the interests of the Noteholders under this Agreement.
(c) The Servicer, and any director or officer or employee or
agent of the Servicer, may rely in good faith on the advice of counsel selected
by it with due care or on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
8.03 SERVICER NOT TO RESIGN OR BE REMOVED. The Servicer shall
not resign from the servicing obligations and duties hereby imposed on it except
in connection with an assignment permitted by Section 11.02 hereof or upon
determination that such duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of independent counsel, in form and
substance satisfactory to the Noteholders evidencing more than 50% of the Voting
Rights, to such effect delivered to the Trustee.
Except as provided in Section 10.02 hereof, the Servicer shall
not be removed or be replaced as Servicer with respect to any Contract or
Equipment; PROVIDED, HOWEVER, that upon the occurrence of any Amortization
Event, Noteholders evidencing not less than 66-2/3% of the Voting
29
Rights shall have the right to replace DVI as Servicer with a successor Servicer
in accordance with Section 10.02 hereof.
No resignation or removal of the Servicer shall in any event
(i) become effective until the successor Servicer shall have assumed the
Servicer's servicing responsibilities and obligations in accordance with Section
10.02 hereof, or (ii) affect the Contributor's obligations pursuant to this
Agreement.
8.04 FINANCIAL AND BUSINESS INFORMATION. The Servicer will
deliver to the Transferor, the Issuer, the Trustee (who shall forward copies to
each Noteholder) and the Rating Agencies:
(a) promptly upon their becoming available, one copy
of each report (including the Servicer's (or for so long as DVI
Financial Services Inc. is the Servicer, DVI, Inc.'s) annual report to
shareholders and reports on Form 8-K, 10-K, and 10-Q), proxy statement,
registration statement, prospectus and notices filed with or delivered
to any securities exchange, the Securities and Exchange Commission or
any successor agencies, in each case relating to the Transferor or the
Notes;
(b) immediately upon becoming aware of the existence
of any condition or event which constitutes a Servicer Event of
Default, a written notice describing its nature and period of existence
and what action the Servicer is taking or proposes to take with respect
thereto;
(c) promptly upon the Servicer's becoming aware of:
(i) any proposed or pending investigation of
it by any governmental authority or agency, or
(ii) any court or administrative proceeding
which individually or in the aggregate involves the possibility of
materially and adversely affecting the properties, business, profits or
conditions (financial or otherwise) of the Servicer, a written notice
specifying the nature of such investigation or proceeding and what
action the Servicer is taking or proposes to take with respect thereto
and evaluating its merits; and
(d) (i) upon request, the Servicer shall furnish to
the Transferor, the Issuer and the Trustee, within ten (10) Business
Days, a list of all Contracts (by contract number and name of Obligor),
as of the end of the most recent Collection Period, held as part of the
Trust Property, together with a reconciliation of such list to the
Contract Schedule and (ii) with reasonable promptness, any other data
and information which may be reasonably requested from time to time.
8.05 OFFICER'S CERTIFICATES. With each set of documents
delivered pursuant to Section 8.04(a), the Servicer will deliver an Officer's
Certificate stating (i) that the officer signing such Certificate have reviewed
the relevant terms of this Agreement and have made, or caused to be
30
made under such officer's supervision, a review of the activities of the
Servicer during the period covered by the statements then being furnished, (ii)
that the review has not disclosed the existence of any Servicer Event of Default
or, if a Servicer Event of Default exists, describing its nature and what action
the Servicer has taken and is taking with respect thereto and (iii) that on the
basis of such review the officer signing such certificate is of the opinion that
during such period the Servicer has serviced the Contracts in compliance with
the procedures hereof except as described in such certificate.
8.06 INSPECTION. The Servicer shall make available to the
Trustee or its duly authorized representatives, attorneys or auditors, and the
Noteholders or their duly authorized representative attorneys or auditors copies
of the Contract Files and the related accounts, records and computer systems
maintained by the Servicer at such times during normal operating hours as the
Trustee shall reasonably request which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Nothing in this
Section 8.06 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 8.06. Any expense
incident to the exercise by the Trustee or any Noteholder during the continuance
of a Servicer Event of Default of any right under this Section 8.06 shall be
borne by the Servicer, but any expense due to the exercise of a right by any
such Person prior to the occurrence of a Servicer Event of Default shall be
borne by such Person.
8.07 SERVICER RECORDS. On or before the Closing Date, the
Servicer will indicate in its records that it is servicing and administering
each Contract in its capacity as Servicer hereunder, at the request and for the
benefit of the Transferor (and subject to the provisions of the applicable
Transaction Documents) and its successors and assigns (including the Issuer and
the Trustee).
8.08 INSURANCE. The Servicer will track, on a quarterly basis,
casualty insurance premium payments by Obligors as required by the Contracts, in
the same manner in which the Servicer would service contracts and equipment held
for its own account.
8.09 NO BANKRUPTCY PETITION AGAINST THE TRANSFEROR, THE
MANAGING MEMBER OR THE ISSUER. The Servicer covenants and agrees it will not,
prior to the date that is one year and one day after the payment in full of all
amounts owing pursuant to the Transaction Documents, institute against, or join
any other Person in instituting against, any of the Transferor, the Managing
Member or the Issuer, any bankruptcy, reorganization, receivership, arrangement,
insolvency or liquidation proceedings or other similar proceedings under any
federal or state bankruptcy or similar law. This Section 8.09 shall survive the
termination of this Agreement.
8.10 FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with coverage appropriate and customary
in the industry with responsible companies on all officers, employees or other
persons acting in any capacity with regard to the Contracts to handle funds,
money, documents and papers relating to the Contracts. Any such fidelity bond
and errors and omissions insurance shall protect and insure the Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons and shall be
31
maintained in a form and amount that would meet the requirements of a prudent
institutional servicer. No provision of this Section 8.10 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Any
such fidelity bond or insurance policy shall not be cancelled or modified in a
materially adverse manner without ten days' prior written notice to the Rating
Agencies. Promptly upon receipt of any notice from the surety or the insurer
that such fidelity bond or insurance policy has been terminated or materially
modified, the Servicer shall notify the Trustee and the Rating Agency of any
such termination or modification.
SECTION 9. THE CONTRIBUTOR
9.01 CORPORATE EXISTENCE OF THE CONTRIBUTOR. The Contributor
will keep in full force and effect its existence, rights and franchise as a
corporation under the laws of its jurisdiction of incorporation and will
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is necessary to protect the validity
and enforceability of any of the Contracts or to permit performance of the
Contributor's duties under this Agreement.
The Contributor shall not merge or consolidate with any other
Person unless (i) the entity surviving such merger or consolidation is a
corporation organized under the laws of the United States or any jurisdiction
thereof, (ii) the surviving entity, if not the Contributor, shall execute and
deliver to the Transferor, the Servicer and the Trustee, in form and substance
satisfactory to each of them, (x) an instrument expressly assuming all of the
obligations of the Contributor hereunder, and (y) an Officer's Certificate to
the effect that such Person is a corporation of the type described in the
preceding clause (i), has effectively assumed the obligations of the Contributor
hereunder, that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with, and, that all UCC financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Transferor, the Issuer and Trustee in the Trust Property, and reciting the
details of such filings, or stating that no such action shall be necessary to
preserve and protect such interest, (iii) the Contributor shall deliver to the
Trustee a letter from each Rating Agency to the effect that such consolidation,
merger or succession will not, in and of itself, result in a downgrading of the
ratings for the Notes and (iv) immediately after giving effect to such
transaction, no event of default under any Transaction Document, and no event
which, after notice or lapse of time, or both, would become an event of default
shall have occurred and be continuing.
9.02 FINANCIAL AND BUSINESS INFORMATION. The Contributor will
deliver to the Transferor, the Issuer, the Trustee and the Rating Agencies and,
upon request, to each Noteholder:
(a) promptly upon their becoming available, one copy
of each report (including DVI, Inc.'s annual report to shareholders and
reports on Form 8-K, 10-K, and 10-Q), proxy statement, registration
statement, prospectus and notice filed with or delivered to any
securities exchange, the Securities and Exchange Commission or any
successor agencies;
(b) promptly upon the Contributor's becoming aware of
32
(i) any proposed or pending investigation of
it by any governmental authority or agency, or
(ii) any court or administrative proceedings
which individually or in the aggregate involves or may involve the
possibility of materially and adversely affecting the properties,
business, profits or conditions (financial or otherwise) of the
Contributor, a written notice specifying the nature of such
investigation or proceeding and what action the Contributor is taking
or proposes to take with respect thereto and evaluating its merits; and
(c) with reasonable promptness, any other data and
information which may be reasonably requested from time to time.
9.03 INSPECTION. The Contributor shall make available to the
Transferor, the Managing Member, the Issuer or the Trustee or their respective
duly authorized representatives, attorneys or auditors and the Noteholders or
their duly authorized representatives, attorneys or auditors its accounts,
records and computer systems regarding any Contract maintained by the
Contributor at such times during normal operating hours as the Trustee, the
Managing Member, the Issuer or the Transferor shall reasonably instruct which do
not unreasonably interfere with the Contributor's normal operations or customer
or employee relations. Nothing in this Section 9.03 shall affect the obligation
of the Contributor to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Contributor to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 9.03. Any expense incident to the exercise
by the Trustee or any Noteholder during the continuance of a Servicer Event of
Default of any right under this Section 9.03 shall be borne by the Servicer, but
any expense due to the exercise of a right by any such Person prior to the
occurrence of a Servicer Event of Default shall be borne by such Person.
9.04 NO BANKRUPTCY PETITION AGAINST THE MANAGING MEMBER, THE
TRANSFEROR OR THE ISSUER. The Contributor covenants and agrees it will not,
prior to the date that is one year and one day after the payment in full of all
amounts owing pursuant to the Amended and Restated Indenture, institute against,
or join any other Person in instituting against, any of the Managing Member, the
Transferor or the Issuer, any bankruptcy, reorganization, receivership,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under any federal or state bankruptcy or similar law. This Section 9.04 shall
survive the termination of this Agreement.
9.05 ACCOUNTS, BOOKS AND RECORDS.
(a) The Contributor shall maintain accounts and records as to
each Contract accurately and in sufficient detail to permit the reader thereof
to know at any time the status of such Contract, including payments and
recoveries made and payments owing (and the nature of each). Prior to the
transfer of the Contracts to the Transferor, the Contributor will clearly xxxx
its books and records and each Contract File (including each Contract) to
reflect each sale of a Contract and the Equipment subject thereto to the
Transferor, the resale to the Issuer and to show that the Issuer owns the
Contracts absolutely. The Contributor or the Transferor, as the case may be,
will cause the electronic ledger, the Contract File (including the Contract),
with respect to each Contract and the
33
related Contract and the Contract Schedule to be clearly and unambiguously
marked to show that such Contract and the related Contract has been contributed
by Contributor to the Transferor, resold by the Transferor to the Issuer and
pledged by the Issuer to the Trustee for the benefit of the Noteholders pursuant
to the Amended and Restated Indenture.
(b) The Contributor shall maintain its computer systems so
that, from and after the time of sale hereunder of the Contracts to the
Transferor, the Contributor's master computer records (including archives) that
refer to a Contract and the related Contract shall indicate clearly the interest
of the Transferor in such Contract and that such Contract has been resold to the
Issuer and pledged by the Issuer to the Trustee for the benefit of the
Noteholders. Indication of the Transferor's ownership of a Contract, the resale
to the Issuer, and the pledge of such Contract by the Issuer to the Trustee for
the benefit of the Noteholders shall be deleted from or modified on the
Contributor's computer systems when, and only when, the Contract shall have been
paid in full or purchased or substituted by the Contributor pursuant to the
terms hereof.
9.06 TAX RETURNS. (a) At all times, so long as any of the
Notes or the other obligations secured by the Amended and Restated Indenture
remain outstanding, the Contributor, the Managing Member and the Transferor
shall be members of the same affiliated group within the meaning of Section 1504
of the Code (the "DVI GROUP") and shall join in the filing of a consolidated
return for federal income tax purposes.
(b) The Contributor shall promptly pay and discharge, or cause
the payment and discharge of, all federal income taxes (and all other material
taxes) when due and payable by Contributor, the DVI Group, the Managing Member,
or the Transferor, except (i) such as may be paid thereafter without penalty or
(ii) such as may be contested in good faith by appropriate proceedings and for
which an adequate reserve has been established and is maintained in accordance
with GAAP. The Contributor shall promptly notify the Transferor, the Trustee,
the Managing Member and the Noteholders of any material challenge, contest or
proceeding pending by or against Contributor, the Managing Member, or the DVI
Group before any taxing authority.
9.07 INSURANCE. The Contributor will at all times maintain
general liability and excess liability insurance policies in at least the amount
set forth in Section 2.26.
9.08 PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) The Contributor shall not change its name, identity, or
corporate structure in any manner that would, could, or might make any UCC
financing statement or continuation statement filed by the Contributor in
accordance with Section 1.01(c) seriously misleading within the meaning of ss.
9-402(7) of the UCC, unless it shall have given the Transferor at least thirty
(30) days' prior written notice thereof and shall promptly file appropriate
amendments to all previously filed UCC financing statements or continuation
statements.
(b) If at any time the Contributor shall propose to sell,
grant a security interest in, or otherwise transfer any interest in contracts to
any prospective purchaser, lender, or other transferee, the Contributor shall
give to such prospective purchaser, lender, or other transferee computer tapes,
records, or print-outs (including any restored from archives) that, if they
shall refer in any manner whatsoever to any Contract, shall indicate clearly
that such Contract has been sold to
34
the Transferor and then resold to the Issuer and pledged by the Issuer to the
Trustee for the benefit of the Noteholders.
(c) The Contributor shall deliver to the Transferor, the
Managing Member, the Rating Agencies and the Trustee promptly after the
execution and delivery of each amendment hereto, an opinion of counsel either
(i) stating that, in the opinion of such counsel, all UCC financing statements
and continuation statements necessary to preserve and protect fully the interest
of the Transferor, the Issuer and the Trustee in the Trust Property have been
filed or, with respect to the Equipment, are required to be filed within thirty
(30) days following the Closing Date or the Substitution Date, as applicable, or
(ii) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest.
9.09 OTHER LIENS OR INTERESTS. Except for the conveyances
hereunder, the Contributor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any lien on the
Contracts or any other Trust Property or any interest therein, and the
Contributor shall defend the right, title, and interest of the Transferor, the
Issuer and the Trustee in, to and under the Contracts and the other Trust
Property against all claims of third parties claiming through or under the
Contributor; PROVIDED, HOWEVER, that the Contributor's obligations to the
Trustee under this Section 9.09 shall terminate upon the repayment in full of
the Notes and the expiration of any applicable preference period and, with
respect to any Contract, on the date it is paid in full or purchased by the
Contributor pursuant to Section 5.03 hereof.
9.10 COSTS AND EXPENSES. The Contributor agrees to pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under the Amended and Restated Indenture.
SECTION 10. EVENTS OF DEFAULT
10.01 SERVICER EVENTS OF DEFAULT. The following events and
conditions shall constitute Servicer Events of Default hereunder:
(i) failure on the part of the Servicer (or for so long
as the Contributor is the Servicer, the Transferor) to (A) remit any
payment to the Trustee within the time period required by Section 4.06
hereof or (B) make any Servicer Advance required by Section 5.01
hereof;
(ii) failure to pay to the Trustee on or before the date
when due in accordance with the terms hereof, any deposit required to
be made by the Servicer pursuant to Section 4.02 hereof;
(iii) failure on the part of either the Servicer (or for
so long as the Contributor is the Servicer, the Transferor) duly to
observe or perform in any material respect any other of their
respective covenants or agreements in this Agreement (including without
limitation, failure of the Servicer to deliver a Monthly Servicer
Report on the date required pursuant to Section 6.01 or the delivery of
a Monthly Servicer Report which is materially incorrect) which failure
materially and adversely affects the rights of the Noteholders and
35
continues unremedied for a period of 30 days after the Servicer becomes
aware of such failure or the giving of written notice of such failure
(A) to the Servicer (or the Transferor, if applicable) by the Trustee
or (B) to the Servicer (or the Transferor, if applicable) and the
Trustee by Noteholders evidencing not less than 66-2/3% of the Voting
Rights, taken together.
(iv) if any representation or warranty of the Servicer
made in this Agreement or in any certificate or other writing delivered
pursuant hereto or the Transaction Documents or made by any successor
Servicer in connection with such successor Servicer's assumption of the
duties of the Servicer shall prove to be incorrect in any material
respect as of the time when the same shall have been made;
(v) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Servicer
(or for so long as the Contributor is the Servicer, the Transferor) in
an involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or (B) a
decree or order adjudging the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of the
Servicer (or for so long as the Contributor is the Servicer, the
Transferor) under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator, or
other similar official of the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) or of any substantial part
of the property of either, or ordering the winding up or liquidation of
the affairs of either, and the continuance of any such decree or order
for relief or any such other decree or order unstayed and in effect for
a period of 90 consecutive days;
(vi) the commencement by the Servicer (or for so long as
the Contributor is the Servicer, the Transferor) of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by either to the entry of a decree or order for relief in respect of
the Servicer (or for so long as the Contributor is the Servicer, the
Transferor) in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against either, or the filing by either of a petition or
answer or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by either to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator, or similar
official of the Servicer (or for so long as the Contributor is the
Servicer, the Transferor) or of any substantial part of the property of
either, or the making by either of an assignment for the benefit of
creditors, or the failure by the Servicer (or for so long as the
Contributor is the Servicer, the Transferor) to pay its debts generally
as they become due, or the taking of corporate action by the Servicer
(or for so long as the Contributor is the Servicer, the Transferor) in
furtherance of any such action;
(vii) any assignment by the Servicer, or any attempt by
the Servicer to assign its duties or rights hereunder, except as
specifically permitted hereunder;
36
(viii) (A) the failure of the Servicer to make one or more
payments with respect to aggregate recourse indebtedness for borrowed
money exceeding $2,000,000 or (B) the occurrence of any other event or
the existence of any other condition, the effect of which event or
condition is to cause more than $2,000,000 of aggregate recourse
indebtedness for borrowed money of the Servicer to become due before
its (or their) stated maturity or before its (or their) regularly
scheduled dates of payment, so long as such failure, event or condition
specified in either clause (A) or (B) shall be continuing and shall not
have been waived by the Person or Persons entitled to performance;
(ix) the rendering against the Servicer of a final
judgment, decree or order (all possible appeals having been exhausted)
for the payment of money in excess of $2,000,000 which is uninsured,
and the continuance of such judgment, decree or order unsatisfied and
in effect for any period of 60 consecutive days without a stay of
execution; or
(x) the occurrence of an Amortization Event (so long as
the Contributor is the Servicer).
10.02 TERMINATION. If a Servicer Event of Default shall have
occurred and be continuing, the Trustee shall, upon the request of Noteholders
evidencing more than 66-2/3% of the Voting Rights, give written notice to the
Servicer of the termination of all of the rights and obligations of the Servicer
(but none of the Contributor's obligations hereunder, which shall survive any
such termination) under this Agreement. On the receipt by the Servicer of such
written notice, all rights and obligations of the Servicer under this Agreement,
including without limitation the Servicer's right hereunder to receive Servicing
Fees accruing subsequent to such termination date, but none of the Contributor's
obligations hereunder, shall cease and the same shall pass to and be vested in,
and assumed by, the Trustee pursuant to and under this Agreement and the Amended
and Restated Indenture subject to the provisions of Section 10.03; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in- fact or otherwise, any and
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and assignment of any
Contract and the related Contract and Equipment or such passing, vesting or
assumption or to cause Obligors to remit all future Contract Payments and other
amounts due under any Contract to such account as shall be specified by the
Trustee. The Servicer may be removed only pursuant to a Servicer Event of
Default.
10.03 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 10.02 hereof, the Trustee (subject to subsection
(b) hereof) shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement of the Contracts and, to such extent,
shall be subject to all the responsibilities, duties and liabilities (other than
the duty to advance funds and to indemnify) relating thereto placed on the
Servicer by the terms and provisions hereof (but not the obligations of the
Contributor contained herein which shall survive any such termination as above
provided) and shall be entitled to receive from the Transferor the Servicing Fee
and other servicing compensation provided for in Section 4.04 hereof; PROVIDED
that the Trustee shall in no way be responsible or liable for any action or
actions of the Servicer before the time the Servicer receives such a notice of
termination.
37
(b) The Trustee may, if it is unwilling or unable to act as
the successor Servicer, give notice of such fact to each Noteholder and (i)
appoint a successor Servicer with a net worth of at least $15,000,000 and
reasonably acceptable to Noteholders evidencing more than 50% of the Voting
Rights and whose regular business includes the servicing of receivables arising
from equipment similar to the Equipment, as the successor Servicer hereunder to
assume all of the rights and obligations of the Servicer hereunder, including,
without limitation, the Servicer's right (but not the obligations of the
Contributor contained herein) hereunder to receive the Servicing Fee (PROVIDED
THAT, notwithstanding any other provision to the contrary contained in any
Transaction Document, no increase in the Servicer Fee due to any successor
Servicer shall be made without the consent of the Noteholders that hold, as of
the date of determination, more than 50% of the then-Outstanding Note Balance of
each class of Notes then Outstanding) or, (ii) if no such institution is so
appointed, petition a court of competent jurisdiction to appoint an institution
meeting such criteria as the Servicer hereunder. Pending appointment of a
successor Servicer hereunder, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee shall cause such successor Servicer to enter into a servicing agreement
substantially in the form of this Agreement except that such agreement shall not
include any of the Contributor's representations, warranties or obligations and
the Trustee may make arrangements for the compensation of such successor
Servicer out of payments on Contracts and the related Contracts as it and such
successor Servicer shall agree; PROVIDED, HOWEVER, that no such compensation
shall be in excess of that provided in Section 4.04 hereof. Neither the Trustee
nor a Successor Servicer shall be deemed to be in default hereunder by reason of
its failure to make, or its delay in making, any distribution hereunder or any
portion thereof which failure or delay was caused by (i) the failure of the
prior Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the prior Servicer.
10.04 SERVICER TO COOPERATE. The Servicer hereby agrees to
cooperate with the successor Servicer appointed in accordance with Section 10.02
or 10.03 hereof, as applicable, in effecting the termination and transfer of the
responsibilities and rights of the Servicer hereunder to the successor Servicer,
including, without limitation, the execution and delivery of assignments of UCC
financing statements, and the transfer to the successor Servicer for
administration by it of all cash amounts which shall at the time be held by the
Servicer or thereafter received with respect to the Contracts and the related
Contracts. The Servicer hereby agrees to transfer to any successor Servicer its
electronic records and all other records, correspondence and documents relating
to the Contracts and the related Contracts in the manner and at such times as
the successor Servicer shall reasonably request. The Servicer hereby designates
the successor Servicer its agent and attorney-in-fact to execute transfers of
UCC financing statements (including any and all UCC financing statements naming
an individual Obligor as debtor and the Contributor as secured party) and any
other filings or instruments which may be necessary or advisable to effect such
transfer of the Servicer's responsibilities and rights hereunder. Upon any such
termination or appointment of a successor Servicer, the Trustee shall give
prompt written notice thereof to each Noteholder in the manner provided in the
Amended and Restated Indenture.
10.05 REMEDIES NOT EXCLUSIVE. Nothing in the preceding
provisions of this Section 10 shall be interpreted as limiting or restricting
any rights or remedies which the Transferor, the Issuer, the Trustee, the
Noteholders or any other Person would otherwise have at law or in equity on
account of the breach or violation of any provision of this Agreement by the
Servicer, including
38
without limitation the right to recover full and complete damages on account
thereof to the extent not inconsistent with Section 8.02 hereof.
10.06 WAIVER OF PAST DEFAULTS. Holders of Notes evidencing
more than 50% of the Voting Rights may waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon except to the extent expressly so waived.
SECTION 11. ASSIGNMENT
11.01 ASSIGNMENT TO TRUSTEE. It is understood that this
Agreement and all rights of the Transferor hereunder and with respect to the
Contributed Property will be assigned by the Transferor to the Issuer, and then
assigned by the Issuer to the Trustee, for the benefit of the Trustee and the
Noteholders, and may be subsequently assigned by the Trustee to any successor
Trustee. Each of the Contributor and the Servicer hereby expressly agrees to
each such assignment and agrees that all of its duties, covenants, obligations,
indemnities, representations and warranties hereunder, and all of the rights and
remedies of the Transferor hereunder, shall be for the benefit of, and may be
enforced directly by, the Issuer, the Trustee, the Noteholders and any successor
to or assignee of any thereof.
11.02 ASSIGNMENT BY CONTRIBUTOR OR SERVICER. None of the
respective rights or obligations of the Contributor and the Servicer hereunder
may be assigned without the prior written consent of the Transferor and the
Trustee (acting upon the instructions of Noteholders evidencing not less than
66-2/3% of the Voting Rights); PROVIDED that nothing herein shall preclude the
Servicer from performing its duties hereunder through the use of agents to the
extent that such use is consistent with the Servicer's business practices in
dealing with similar contracts and equipment for its own account, and PROVIDED,
FURTHER, that the use of an agent shall not relieve the Servicer from any of its
obligations hereunder.
SECTION 12. NATURE OF CONTRIBUTOR'S OBLIGATIONS AND SECURITY
THEREFOR
12.01 CONTRIBUTOR'S OBLIGATIONS ABSOLUTE. The obligations of
the Contributor hereunder, and the rights of the Issuer and the Trustee, as
assignee of the Transferor, in and to all amounts payable by the Contributor
hereunder, shall be absolute and unconditional and shall not be subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment whatsoever
including, without limitation, abatements, reductions, setoffs, defenses,
counterclaims or recoupments due or alleged to be due to, or by reason of, any
past, present or future claims which the Contributor may have against the
Servicer, the Issuer, the Managing Member, the Transferor, the Trustee, any
holder of the Notes or any other Person for any reason whatsoever; nor, except
as otherwise expressly provided herein, shall this Agreement terminate, or the
respective obligations of the Transferor, the Contributor or the Servicer be
otherwise affected, by reason of any defect in any Contract or in any unit of
Equipment or in the respective rights and interests of the Transferor, the
Issuer, the Contributor
39
and the Trustee in any thereof, or by reason of any liens, encumbrances,
security interests or rights of others with respect to any Contract or any unit
of Equipment, or any failure by the Transferor, or the Servicer to perform any
of its obligations herein contained, or by reason of any other indebtedness or
liability, howsoever and whenever arising, of the Transferor, the Issuer, the
Managing Member, the Servicer, the Trustee or any holder of the Notes to the
Contributor or any other Person or by reason of any insolvency, bankruptcy, or
similar proceedings by or against the Contributor, the Servicer, the Transferor,
the Issuer, the Trustee or any other Person or for any other cause whether
similar or dissimilar to the foregoing, any present or future law to the
contrary notwithstanding, it being the intention of the parties hereto that all
obligations of the Contributor hereunder and all amounts payable by the
Contributor hereunder shall continue to be due and payable in all events and in
the manner and at the times herein provided unless and until the obligation to
perform or pay the same shall be terminated or limited pursuant to the express
provisions of this Agreement; PROVIDED that nothing in this Section 12.01 shall
be interpreted as precluding the Contributor from pursuing independently any
claim it may have against the Transferor, the Servicer, the Issuer, the Managing
Member, any holder of the Notes or any other Person; PROVIDED, FURTHER, that any
claims of the Contributor against the Transferor shall be subordinate in right
of payment to amounts due and owing to the Trustee under the Amended and
Restated Indenture and any amounts received by the Contributor on such claims
shall be held in trust by the Contributor for the Trustee and turned over to the
Trustee until such time as all amounts due the Trustee under the Transaction
Document are fully paid.
12.02 POWER OF ATTORNEY. Each of the Contributor and Servicer
hereby grants to each of the Transferor and the Trustee the power as its
attorney-in-fact (i) to file UCC financing statements in the appropriate offices
evidencing the conveyance of the Contracts and other Contributed Property to the
Transferor and (ii) in the event an event of default exists under any
Transaction Document, to do any and all other acts as may be necessary or
appropriate to effect the transaction contemplated herein. The Contributor will
execute any document or instrument deemed necessary by the Transferor or the
Trustee to effect or to evidence this power of attorney. All costs associated
with such filings or instructions shall be paid by the Contributor.
SECTION 13. MISCELLANEOUS PROVISIONS
13.01 SALE. The Contributor agrees to treat the conveyances to
the Transferor of the Contributor's interest in the Contracts and Equipment
pursuant to the terms of this Agreement for all purposes other than taxes
measured by income (including, without limitation, financial accounting purposes
of the Contributor on a stand alone basis) as a sale of the Contributor's
interest in the Contracts and Equipment on all relevant books, records,
financial statements and other applicable documents. The execution and delivery
of this Agreement shall constitute an acknowledgment by the Contributor and the
Transferor that each intends that the assignment and transfer herein
contemplated constitutes an outright sale and assignment to the Transferor by
the Contributor of its interest in the Contracts and the other Contributed
Property, and not for security, conveying good title in such interests free and
clear of any liens, and that such interest shall not be a part of the
Contributor's estate in the event of the bankruptcy or the occurrence of another
similar event, of, or with respect to, the Contributor. In the event that such
conveyance is determined to be made as security for a loan made by the
Transferor, the Issuer, the Trust or the Noteholders to the Contributor, the
parties intend that the Contributor shall have granted to the Transferor, and
its successors and
40
assigns, a security interest in the Contracts and other Contributed Property and
that this Agreement shall constitute a security agreement under applicable law.
The conveyance to the Transferor shall be treated as a sale to
the extent of cash remitted to the Contributor and shall be treated as an
additional contribution to the capital of the Transferor to the extent of the
excess of the Discounted Contract Balances of the Contracts conveyed over the
amount of such cash.
13.02 AMENDMENT. This Agreement may be amended from time to
time by the parties hereto, without the consent of any of the Noteholders, to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be materially inconsistent with the provisions of this Agreement, PROVIDED
that such actions shall not adversely affect in any respect the interests of any
Noteholder.
This Agreement may also be amended from time to time by the
parties hereto with the consent of the Holders of Notes evidencing more than 50%
of the Voting Rights (and with prior written notice to the Rating Agencies) for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Holders of Notes; PROVIDED, HOWEVER, that such amendment may not, without
the consent of all of the Noteholders (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions that are required to be made for the benefit of such
Noteholders, (ii) reduce the aforesaid percentage of the Voting Rights which are
required to consent to any such amendment, or (iii) modify this Section 13.02.
The Servicer shall deliver copies of any amendment to this Agreement to each of
the Rating Agencies and each Noteholder.
13.03 WAIVERS. No failure or delay on the part of the
Transferor, the Issuer or the Trustee in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other or
further exercise thereof or the exercise of any other power, right or remedy.
13.04 NOTICES. All communications and notices pursuant hereto
to any party shall be in writing or by telegraph, telex or telecopy and
addressed or delivered to it at its address (or in case of telex or telecopy, at
its telex or telecopy number at such address) as follows or at such other
address as may be designated by it by notice to the other party and, if mailed
or sent by telegraph or telex, shall be deemed given when mailed, communicated
to the telegraph office or transmitted by telex or telecopy:
(a) in the case of the Contributor or Servicer:
0000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
41
(b) in the case of the Transferor:
0000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(c) in the case of the Managing Member:
0000 Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Securitization Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(d) in the case of the Trustee:
000 Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Structured Finance
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(e) in the case of the Rating Agencies:
Fitch, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Asset-Backed Monitoring
(Equipment Leases)
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: ABS Monitoring Department
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
E-Mail: XxxxxxxxXxxxxxx@xxxxxx.xxx
13.05 COSTS AND EXPENSES. The Contributor will pay all
reasonable expenses incident to the performance of its obligations under this
Agreement and any other Transaction Document and the Contributor agrees to pay
all reasonable out-of-pocket costs and expenses of the Transferor, including
fees and expenses of counsel, in connection with the enforcement of any
obligation of the Contributor hereunder.
42
13.06 THIRD PARTY BENEFICIARIES. The Issuer, the Trustee and
the Noteholders are express third party beneficiaries to this Agreement.
13.07 SURVIVAL OF REPRESENTATIONS. The respective agreements,
representations, warranties and other statements by the Contributor and the
Transferor set forth in or made pursuant to this Agreement shall remain in full
force and effect and will survive the Closing Date.
13.08 CONFIDENTIAL INFORMATION. The Transferor agrees that it
will neither use nor disclose to any person the names and addresses of the
Obligors, except in connection with the enforcement of the Transferor's rights
hereunder, under the Contracts, under the applicable Transaction Documents or as
required by law.
13.09 HEADINGS AND CROSS-REFERENCES. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in this
Agreement to Section names or numbers are to such Sections of this Agreement.
13.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF.
13.11 CONSENT TO JURISDICTION. Each of the parties hereto
irrevocably submits to the jurisdiction of any New York State or Federal court
sitting in the Borough of Manhattan in the City of New York over any suit,
action or proceeding arising out of or relating to this Agreement. Each of the
parties hereto irrevocably waives, to the fullest extent permitted by law, any
objection which it may have to the laying of the venue of any such suit, action
or proceeding brought in such a court and any claim that any such suit, action
or proceeding brought in such a court has been brought in any inconvenient
forum. Each of the parties hereto agrees that the final judgment in any such
suit, action or proceeding brought in such a court shall be conclusive and
binding upon each of the parties hereto and may be enforced by the courts of New
York (or any other courts to the jurisdiction of which it is subject) by a suit
upon such judgment; PROVIDED that service of process is effected upon it as
permitted by law; PROVIDED, HOWEVER, that each of the parties hereto does not
waive, and the foregoing provisions of this sentence shall not constitute or be
deemed to constitute a waiver of, (i) any right to appeal any such judgment, to
seek any stay or otherwise to seek reconsideration or review of any such
judgment or (ii) any stay of execution or levy pending an appeal from, or a
suit, action or proceeding for reconsideration or review of, any such judgment.
13.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts and by different parties on separate counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
13.13 STATUTORY REFERENCES. References in this Agreement to
any section of the UCC shall mean, on or after the effective date of adoption of
any revision to the UCC in the applicable jurisdiction, such revised or
successor section thereto.
43
AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
DATED AS OF DECEMBER 1, 2000
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed by their respective officers thereunto duly authorized as of
the date first above written.
DVI FINANCIAL SERVICES INC.
By:
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Assistant Treasurer
DVI RECEIVABLES CORP. XIV
By:
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Assistant Treasurer
EXHIBIT A
CONTRACT SCHEDULE
-----------------
See Schedule 1 to the Amended and Restated Indenture.
A-1
EXHIBIT B
MONTHLY SERVICER REPORT
-----------------------
[DVI TO PROVIDE]
X-0
XXXXXXX X
XXXXXXXX
X-0
XXXXXXX X
SUBSTITUTE CONTRACT TRANSFER FORM
DVI Financial Services Inc. (the "CONTRIBUTOR") and DVI
Receivables Corp. XIV (the "TRANSFEROR"), pursuant to the Amended and Restated
Contribution and Servicing Agreement, dated as of December 1, 2000 (the
"CONTRIBUTION AND SERVICING AGREEMENT"), hereby confirm their understanding with
respect to the contribution by the Contributor to the Transferor of those
substitute Contracts listed on the Schedule 1 attached hereto (the "SUBSTITUTE
CONTRACTS"), together with a security interest in all of the Contributor's
right, title and interest in and to the related Equipment and other related
property described herein.
CONVEYANCE OF SUBSTITUTE CONTRACTS. The Contributor hereby
makes a capital contribution to the Transferor of all of Contributor's rights,
title and interest in, to, and under (i) the Substitute Contracts listed on
Schedule 1 hereto including, without limitation, its interests in the proceeds
of such Substitute Contracts, the right to receive all amounts due or to become
due thereunder after __________ (the "CUT-OFF DATE"), but excluding any Retained
Interest, (ii) the Contract Files relating to such Contracts, (iii) a security
interest in the Equipment subject to such Substitute Contracts, (iv) any
remarketing agreement to the extent specifically relating to a Substitute
Contract, and all guarantees, cash deposits or credit support (other than any
accounts receivable of the related Obligor) supporting or securing payment of
any arrangements with the vendor, dealer or manufacturer of the Equipment to the
extent specifically relating to any Substitute Contract, (v) any insurance
carried by any Obligor under any Substitute Contract (or the related Equipment)
and (vi) all income, payments and proceeds of the foregoing.
The Contributor hereby confirms that:
(1) On or prior to ___________ (the "SUBSTITUTION DATE"), the
Contributor shall have deposited in the Collection Account all collections in
respect of the Substitute Contracts that were due on or after the related
Cut-Off Date;
(2) As of the Substitution Date, the Contributor was not
insolvent nor will it be made insolvent by such transfer nor is any of them
aware of any pending insolvency;
(3) Each Substitute Contract is an Eligible Contract;
(4) On or prior to the Substitution Date, the Contributor
shall have delivered to the Trustee the sole original, manually executed
counterpart of each Substitute Contract that constitutes "chattel paper" or an
"instrument", as such terms are defined in the UCC;
(5) The sum of the Discounted Contract Balances as of the
Cut-Off Date of the Substitute Contracts listed on Schedule 1 attached hereto is
$__________;
(6) When the Substitute Contracts are added to the Trust
Property, all representations and warranties will be true and correct as of the
Substitution Date unless any breach of such representations and warranties
resulting from the inclusion of such Substitute Contract shall have been waived
in advance by Noteholders evidencing more than 50% of the Voting Rights;
D-1
(7) The Contributor has delivered to the Trustee evidence of
all UCC filings necessary to give the Trustee a perfected first priority
security interest in the Substitute Contract and the related Equipment (other
than Equipment relating to a Secured Equipment Note or Finance Lease and for
which the Original Equipment Cost is less than $25,000);
(8) Such Substitute Contract(s) shall be added to, and
constitute a part of, [Pool A] [Pool B]; and
(9) Such Substitute Contract(s) is/are being substituted
pursuant to [Section 5.03 of the Agreement] [Section 7.01(a)(1) of the
Agreement] [Section 7.01(a)(2) of the Agreement] [Section 7.01(b)(1) of the
Agreement] [Section 7.01(b)(2) of the Agreement].
All terms and conditions of the Contribution and Servicing
Agreement and the other Transaction Documents with respect to the Contributor
and the Substitute Contracts have been complied with and are hereby ratified,
confirmed and incorporated herein; PROVIDED THAT in the event of any conflict,
the provisions of this Substitute Contract Transfer Form shall control over the
conflicting provisions of the Contribution and Servicing Agreement.
Terms capitalized herein and not defined herein shall have
their respective meanings as set forth in the Contribution and Servicing
Agreement.
DVI FINANCIAL SERVICES INC.
By:_______________________________
Name:_____________________________
Title:____________________________
DVI RECEIVABLES CORP. XIV
By:_______________________________
Name:_____________________________
Title:____________________________
D-2
EXHIBIT E
FORM OF RE-ASSIGNMENT BY TRANSFEROR
PURSUANT TO SECTION 5.03(b) OR 7.01(c) OF THE
AMENDED AND RESTATED CONTRIBUTION AND SERVICING AGREEMENT
DVI Receivables Corp. XIV (the "TRANSFEROR") pursuant to the
Amended and Restated Contribution and Servicing Agreement, dated as of December
1, 2000, between the Transferor and DVI Financial Services Inc. (the
"CONTRIBUTOR") does hereby sell, transfer, assign, deliver and otherwise convey
to Contributor, without recourse, representation or warranty, all of the
Transferor's right, title and interest in and to all of the Predecessor
Contracts listed on Schedule A hereto and all security and documents relating
thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ______
day of ___________.
DVI RECEIVABLES CORP. XIV
By:_______________________________
Name:_____________________________
Title:____________________________
E-1
EXHIBIT F
FORM OF OFFICER'S CERTIFICATE PURSUANT TO SECTION 7
---------------------------------------------------
The undersigned certifies that the undersigned is a duly
authorized officer of DVI Financial Services Inc. (the "CONTRIBUTOR"), and that,
as such the undersigned is authorized to execute and deliver this certificate on
behalf of the Contributor, and further certifies pursuant to Section 7.02 of the
Amended and Restated Contribution and Servicing Agreement (the "AGREEMENT")
dated as of December 1, 2000, between the Contributor and DVI Receivables Corp.
XIV (the "TRANSFEROR"), that to his or her knowledge, the Contributor's
contribution to the Transferor of those Substitute Contracts listed in Schedule
1 attached hereto, together with all of the Contributor's right, title and
interest in and to the related Contracts and the related Contributed Property,
is in compliance with Section 7 of the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name.
Date:
DVI FINANCIAL SERVICES INC.
By:_______________________________
Name:_____________________________
Title:____________________________
F-1
EXHIBIT G
FORMS OF CONTRACTS
------------------
Copies are on file at the offices of U.S. Bank Trust National
Association, as Indenture Trustee, and are available upon request.
G-1
EXHIBIT H
UNDERWRITING GUIDELINES
-----------------------
Copies are on file at the offices of U.S. Bank Trust National
Association, as Indenture Trustee, and are available upon request.
H-1
APPENDIX I
----------
See copy of Appendix I following
the Amended and Restated Indenture
H-2
