Exhibit 4.3
FORM OF SALE AND SERVICING AGREEMENT
AMONG
[ ] EQUIPMENT TRUST SECURITIES 200[ ]-[ ],
AS ISSUER,
BOND SECURITIZATION, L.L.C.,
AS COMPANY,
AND
[ ],
AS SERVICER
DATED AS OF
[ ], [ ]
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS......................................................................................1
Section 1.01 Definitions...............................................................................1
Section 1.02 Other Definitional Provisions............................................................14
ARTICLE II CONVEYANCE OF RECEIVABLES.......................................................................15
Section 2.01 Conveyance of Receivables................................................................15
ARTICLE III THE RECEIVABLES.................................................................................15
Section 3.01 Representations and Warranties of the Company with Respect to the Receivables............15
Section 3.02 Repurchase upon Breach...................................................................18
Section 3.03 Custody of Receivable Files..............................................................19
Section 3.04 Duties of Servicer as Custodian..........................................................19
Section 3.05 Instructions; Authority To Act...........................................................20
Section 3.06 Custodian's Indemnification..............................................................20
Section 3.07 Effective Period and Termination.........................................................20
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES.....................................................21
Section 4.01 Duties of Servicer.......................................................................21
Section 4.02 Collection and Allocation of Receivable Payments.........................................21
Section 4.03 Realization upon Receivables.............................................................22
Section 4.04 Physical Damage Insurance................................................................22
Section 4.05 Maintenance of Security Interests in Financed Equipment..................................22
Section 4.06 Covenants of Servicer....................................................................22
Section 4.07 Purchase of Receivables upon Breach......................................................22
Section 4.08 Servicing Fee............................................................................23
Section 4.09 Servicer's Certificate...................................................................23
Section 4.10 Annual Statement as to Compliance; Notice of Default.....................................23
Section 4.11 Annual Independent Certified Public Accountants' Report..................................24
Section 4.12 Access to Certain Documentation and Information Regarding Receivables....................24
Section 4.13 Servicer Expenses........................................................................24
Section 4.14 Appointment of Subservicer...............................................................24
Section 4.15 Compliance with Regulation AB............................................................25
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TABLE OF CONTENTS
(continued)
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ARTICLE V DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS................25
Section 5.01 Establishment of Trust Accounts..........................................................25
Section 5.02 Collections..............................................................................27
Section 5.03 Application of Collections...............................................................27
Section 5.04 Advances.................................................................................28
Section 5.05 Additional Deposits......................................................................28
Section 5.06 Distributions............................................................................29
Section 5.07 Reserve Account..........................................................................30
Section 5.08 Statements to Certificateholders and Noteholders.........................................32
Section 5.09 Net Deposits.............................................................................33
ARTICLE VI THE COMPANY.....................................................................................33
Section 6.01 Representations of the Company...........................................................33
Section 6.02 Limited Liability Company Existence......................................................34
Section 6.03 Liability of the Company.................................................................35
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations of the Company..............35
Section 6.05 Limitation on Liability of the Company and Others........................................35
Section 6.06 The Company May Own Certificates or Notes................................................35
ARTICLE VII THE SERVICER....................................................................................36
Section 7.01 Representations of Servicer..............................................................36
Section 7.02 Indemnities of Servicer..................................................................37
Section 7.03 Merger or Consolidation of, or Assumption of the Obligations of, Servicer................38
Section 7.04 Limitation on Liability of Servicer and Others...........................................38
Section 7.05 Servicer Not To Resign...................................................................38
ARTICLE VIII DEFAULT.........................................................................................39
Section 8.01 Servicer Default.........................................................................39
Section 8.02 Appointment of Successor.................................................................40
Section 8.03 Repayment of Advances....................................................................40
Section 8.04 Notification to Noteholders and Certificateholders.......................................41
Section 8.05 Waiver of Past Defaults..................................................................41
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TABLE OF CONTENTS
(continued)
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ARTICLE IX TERMINATION.....................................................................................41
Section 9.01 Optional Purchase of All Receivables.....................................................41
ARTICLE X MISCELLANEOUS...................................................................................42
Section 10.01 Amendment................................................................................42
Section 10.02 Protection of Title to Trust.............................................................43
Section 10.03 Notices..................................................................................45
Section 10.04 Assignment by the Company or the Servicer................................................45
Section 10.05 Limitations on Rights of Others..........................................................45
Section 10.06 Severability.............................................................................46
Section 10.07 Separate Counterparts....................................................................46
Section 10.08 Headings.................................................................................46
Section 10.09 Governing Law............................................................................46
Section 10.10 Assignment by Issuer.....................................................................46
Section 10.11 Nonpetition Covenant.....................................................................46
Section 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee...........................46
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SALE AND SERVICING AGREEMENT dated as of _______, among [ ] EQUIPMENT
TRUST SECURITIES 200[ ] - [ ], a Delaware business trust (the "Issuer"), Bond
Securitization, L.L.C., a Delaware limited liability company (the "Company"),
and [ ], a corporation (the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of receivables arising
in connection with equipment loan contracts and equipment installment sale
contracts held by the Company;
WHEREAS, the Company is willing to sell such receivables to the Issuer;
and
WHEREAS, the Servicer is willing to service such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accelerated Principal Distribution Amount" means, with respect to any
Distribution Date, an amount equal to the portion of the Total Distribution
Amount for such Distribution Date that remains after the payment of (i) the
Servicing Fee, (ii) the Noteholders' Interest Distributable Amount, (iii) the
Regular Principal Distribution Amount, (iv) the Certificateholders' Interest
Distributable Amount and (v) the amount, if any, required to be deposited into
the Reserve Account on such Distribution Date pursuant to Section
5.06(b)(ii)(F).
"Advance" means either a Precomputed Advance or Simple Interest Advance or
both, as applicable.
"Amount Financed" means with respect to a Receivable, the amount advanced
under the related Equipment Installment Contract toward the purchase price of
the Financed Equipment and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the related Equipment Installment Contract.
"Available Amount" means, with respect to any Distribution Date, the
amount of funds on deposit in the Reserve Account on such Distribution Date less
the Certificate Interest Reserve Amount with respect to such Distribution Date
before giving effect to any reduction thereto on such date.
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Sale and Servicing Agreement, the Note Depository Agreement, the Certificate
Depository Agreement and other documents and certificates delivered in
connection therewith.
"Certificate Balance" equals, initially, $_ and, thereafter, equals such
initial Certificate Balance reduced by all amounts allocable to principal
previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such term
in the Trust Agreement.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount for such date.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the sum of the Certificateholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Certificateholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Certificate Distribution Account on such preceding Distribution
Date, plus 30 days' interest on such excess, to the extent permitted by law, at
the Pass-Through Rate.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date. Interest with respect
to the Certificates shall be computed on the basis of a 360-day year consisting
of twelve 30-day months for all purposes of this Agreement and the Basic
Documents.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, 30 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Closing Date to
but excluding) at the Pass-Through Rate on the Certificate Balance on the last
day of the preceding Collection Period (or, in the case of the first
Distribution Date, on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date prior to the Distribution Date on which the
Notes are paid in full, zero; and with respect to any Distribution Date on or
after the Distribution Date on which the Notes are paid in full, the Regular
Principal Distribution Amount for such Distribution Date (less, on the
Distribution Date on which the Notes are paid in full, the portion thereof
payable on the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of
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the preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Final Scheduled Distribution Date, the principal required to be
included in the Certificateholders' Principal Distributable Amount will include
the lesser of (a) (i) any Scheduled Payments of principal due and remaining
unpaid on each Precomputed Receivable and (ii) any principal due and remaining
unpaid on each Simple Interest Receivable, in each case, in the Trust as of the
Final Scheduled Maturity Date or (b) the amount that is necessary (after giving
effect to the other amounts to be deposited in the Certificate Distribution
Account on such Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero.
"Certificate Interest Reserve Amount" means, at the time of reference, the
lesser of (i) $ less the amount of any application of the Certificate Interest
Reserve Amount to pay interest on the Certificates on any prior Distribution
Date and (ii) _% of the Certificate Balance on such Distribution Date (before
giving effect to any reduction thereof on such Distribution Date); provided,
however, that the Certificate Interest Reserve Amount shall be zero subsequent
to any reduction by any Rating Agency of its rating of any Class of Notes to
less than "A-" or its equivalent, or withdrawal by any Rating Agency of its
rating of any Class of Notes, unless such rating has been restored.
"Certificate Depository Agreement" has the meaning specified in Section
1.01 of the Trust Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Certificate Pool Factor" means, as of the close of business on the last
day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made on
the immediately following Distribution Date) divided by the initial Certificate
Balance. The Certificate Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Certificate Pool Factor will decline to reflect reductions in
the Certificate Balance.
"Certificates" means the Trust Certificates (as defined in the Trust
Agreement).
"Class" means any one of the classes of Notes.
"Class A-1 Final Scheduled Distribution Date" means the Distribution
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"Class A-2 Final Scheduled Distribution Date" means the Distribution
Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"Clearing Agency" means an organization registered as a clearing agency
pursuant to Section 17A of the Exchange Act.
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"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.01(a)(i).
"Collection Period" means a calendar month. Any amount stated as of the
last day of a Collection Period or as of the first day of a Collection Period
shall give effect to the following calculations as determined as of the close of
business on such last day: (1) all applications of collections, (2) all current
and previous Payaheads, (3) all applications of Payahead Balances, (4) all
Advances and reductions of Outstanding Precomputed Advances or Outstanding
Simple Interest Advances and (4) all distributions to be made on the following
Distribution Date.
"Company" means Bond Securitization, L.L.C., a Delaware limited liability
company and any successor in interest.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Agreement is located
at _; or at such other address as the Indenture Trustee may designate from time
to time by notice to the Noteholders and the Company, or the principal corporate
trust office of any successor Indenture Trustee (of which address such successor
Indenture Trustee will notify the Noteholders and the Company).
"Cutoff Date" means _.
"Cutoff Date Pool Balance" means the aggregate principal balance of the
Receivables as of the Cutoff Date.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee or its nominee or
custodian by physical delivery to the Indenture Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Indenture Trustee or
its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of the UCC) and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the Indenture
Trustee or its nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing
4
corporation's exclusive control, the sending of a confirmation by the financial
intermediary of the purchase by the Indenture Trustee or its nominee or
custodian of such securities and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Indenture Trustee or its nominee or custodian (all of the
foregoing, "Physical Property"), and, in any event, any such Physical Property
in registered form shall be in the name of the Indenture Trustee or its nominee
or custodian; and such additional or alternative procedures as may hereafter
become appropriate to effect the complete transfer of ownership of any such
Trust Account Property (as defined herein) to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Indenture Trustee or its nominee or custodian of the purchase by the
Indenture Trustee or its nominee or custodian of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging to the Indenture Trustee
or its nominee or custodian and indicating that such custodian holds such Trust
Account Property solely as agent for the Indenture Trustee or its nominee or
custodian; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or custodian.
"Distribution Date" means, with respect to each Collection Period, the day
of the following month or, if such day is not a Business Day, the immediately
following Business Day, commencing on _____.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
5
securities of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories that signifies investment
grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee or so long as it shall be Paying Agent
under the Trust Agreement or (b) a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), which (i) has
either (A) a long-term unsecured debt rating of AAA or better by Standard &
Poor's and A1 or better by Moody's or (B) a certificate of deposit rating of
A-1+ by Standard & Poor's and P-1, or better by Moody's, or any other long-term
or short-term or certificate of deposit rating acceptable to the Rating Agencies
and (ii) whose deposits are insured by the FDIC. If so qualified, the Indenture
Trustee, the Owner Trustee or may be considered an Eligible Institution for the
purposes of clause (b) of this definition.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the full
and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the investment or contractual
commitment to invest therein, a rating from each of the Rating Agencies in the
highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or any
agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b); or
(g) any other investment with respect to which the Issuer or the Servicer
has received written notification from the Rating Agencies that the acquisition
of such investment as an
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Eligible Investment will not result in a withdrawal or downgrading of the
ratings on the Notes or Certificates.
"Equipment Installment Contract" means an equipment loan installment
contract originated by a Seller or an equipment installment sale contract
acquired by a Seller from an equipment dealer or another financial institution.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means the Distribution Date.
"Final Scheduled Maturity Date" means _________.
"Financed Equipment" means an item of equipment, together with all
accessions thereto, securing an Obligor's indebtedness under the related
Receivable.
"Indenture" means the Indenture dated as of _, between the Issuer and the
Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Interest Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts, without duplication, with respect to the
Receivables for the Collection Period immediately preceding such Distribution
Date: (a) that portion of all collections on Receivables (including Payaheads)
allocable to interest plus that portion of Payaheads allocable to principal, (b)
Liquidation Proceeds with respect to the Receivables to the extent allocable to
interest due thereon in accordance with the Servicer's customary servicing
procedures, (c) all Advances made by the Servicer of interest due on
Receivables, (d) the Purchase Amount of each Receivable that became a Purchased
Receivable during such Collection Period to the extent attributable to accrued
interest on such Receivable, and (e) Recoveries for such Collection Period;
provided, however, that in calculating the Interest Distribution Amount the
following
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will be excluded: (i) amounts received on Precomputed Receivables to the extent
of any unreimbursed Precomputed Advances of interest; (ii) Liquidation Proceeds
with respect to a particular Precomputed Receivable to the extent of any
unreimbursed Precomputed Advances of interest; (iii) all payments and proceeds
(including Liquidation Proceeds) of any Purchased Receivables the Purchase
Amount of which has been included in the Interest Distribution Amount in a prior
Collection Period; (iv) the sum for all Simple Interest Receivables of
collections on each such Simple Interest Receivable received during such
preceding Collection Period in excess of the amount of interest that would be
due on the aggregate Principal Balance of the Simple Interest Receivables during
such Collection Period at their respective APRs if a payment were received on
each Simple Interest Receivable during such Collection Period on the date
payment is due under the terms of such Simple Interest Receivable; and (v)
Liquidation Proceeds with respect to a Simple Interest Receivable attributable
to accrued and unpaid interest thereon (but not including interest for the then
current Collection Period) but only to the extent of any unreimbursed Simple
Interest Advances.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.01(b).
"Issuer" means [ ] Equipment Trust Securities 200[ ]-[ ].
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to a Receivable by operation of law.
"Liquidated Receivable" means any Receivable liquidated by the Servicer
through the sale of an item of Financed Equipment or otherwise.
"Liquidation Proceeds" means, with respect to any Liquidated Receivable,
the moneys collected in respect thereof, from whatever source on a Liquidated
Receivable during the Collection Period in which such Receivable became a
Liquidated Receivable, net of the sum of any amounts expended by the Servicer in
connection with such liquidation and any amounts required by law to be remitted
to the Obligor on such Liquidated Receivable.
"Note Depository Agreement" means the agreement dated _, among the Issuer,
the Indenture Trustee and the Depository Trust Company, as the initial Clearing
Agency, relating to the Notes.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(a)(iii).
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit decimal
figure equal to the outstanding principal balance of such Class of Notes (after
giving effect to any reductions thereof to be made on the immediately following
Distribution Date) divided by the original outstanding principal balance of such
Class of Notes. The Note Pool Factor for each Class of Notes will be 1.0000000
as of the Closing Date; thereafter, the Note Pool Factor will decline to reflect
reductions in the outstanding principal balance of such Class of Notes.
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"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount for such Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the sum of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Noteholders' Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Interest Rate borne by each Class
of the Notes for the related Interest Period.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and the
Basic Documents, interest with respect to all Classes of Notes shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.
"Noteholders' Monthly Interest Distributable Amount" means, with respect
to any Distribution Date, interest accrued for the related Interest Accrual
Period on each Class of Notes at the Interest Rate for such Class on the
outstanding principal balance of the Notes of such Class on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, the
Closing Date), after giving effect to all distributions of principal to Holders
of the Notes of such Class on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the Closing Date).
"Noteholders Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the sum of (i) the Regular Principal Distribution
Amount plus (ii) the Accelerated Principal Amount plus (iii) any accelerated
payments of principal required to be made from amounts on deposit in the Reserve
Account pursuant to Section 5.07(b)(ii).
"Noteholders' Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Note Distribution Account on such
current Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date; provided, however,
that the Noteholders' Principal Distributable Amount shall not exceed the
outstanding principal balance of the Notes. In addition, (a) on the Class A-1
Final Scheduled Distribution Date, the principal required to be deposited in the
Note Distribution Account will include the amount necessary (after giving effect
to the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding Amount
of the Class A-1 Notes to zero; and (b) on the Class A-2 Final
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Scheduled Distribution Date, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect to
the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding Amount
of the Class A-2 Notes to zero.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Equipment and any other Person who owes payments under the related
Equipment Installment Contract.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, the president, any vice president and (b) the treasurer, assistant
treasurer, secretary or assistant secretary of the Company or the Servicer, as
appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
may be an employee of or counsel to the Company or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee or the Rating
Agencies, as applicable.
"Outstanding Precomputed Advances" on the Precomputed Receivables means
the sum, as of the close of business on the last day of a Collection Period, of
all Precomputed Advances as reduced as provided in Section 5.04(a).
"Outstanding Simple Interest Advances" on the Simple Interest Receivables
means the sum, as of the close of business on the last day of a Collection
Period, of all Simple Interest Advances as reduced as provided in Section
5.04(b).
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"Pass-Through Rate" means _% per annum.
"Payahead" means, with respect to any Receivable that is a Precomputed
Receivable, the amount, as of the close of business on the last day of a
Collection Period, computed in accordance with Section 5.03.
"Payahead Balance" means, with respect to any Receivable that is a
Precomputed Receivable, the sum, as of the close of business on the last day of
a Collection Period, of all Payaheads made by or on behalf of the Obligor on
such Precomputed Receivable, as reduced by applications of previous Payaheads
with respect to such Precomputed Receivable pursuant to Section 5.05 and 5.04.
"Payment Distribution Date" means, with respect to any Distribution Date,
the Business Day immediately preceding such Distribution Date.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
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"Pool Balance" means, as of the close of business on the last day of a
Collection Period, the aggregate Principal Balance of the Receivables as of such
day (excluding Purchased Receivables and Liquidated Receivables).
"Precomputed Advance" means the amount, as of the close of business on the
last day of a Collection Period, that the Servicer is required to advance on the
related Precomputed Receivables pursuant to Section 5.04(a).
"Precomputed Receivable" means any Receivable (i) under which the portion
of a payment allocable to earned interest (which may be referred to in the
related Equipment Installment Contract as an add-on finance charge) and the
portion allocable to the Amount Financed is determined according to the sum of
periodic balances or the sum of monthly balances or any equivalent method or
(ii) that is a monthly actuarial receivable.
"Principal Balance" means (a) with respect to a Precomputed Receivable,
the Amount Financed minus the sum, as of the close of business on the last day
of a Collection Period, of (i) that portion of all Scheduled Payments due on or
prior to such day allocable to principal using the actuarial or constant yield
method, (ii) any refunded portion of extended warranty protection plan costs or
of physical damage, credit life or disability insurance premiums included in the
Amount Financed, (iii) the portion of any related Purchase Amount allocable to
principal and (iv) any prepayment in full or any partial prepayments applied to
reduce the related Principal Balance and (b) with respect to a Simple Interest
Receivable, the Amount Financed minus the sum, as of the close of business on
the last day of a Collection Period, of (i) the portion of all payments made by
or on behalf of the related Obligor on or prior to such day and allocable to
principal using the Simple Interest Method and (ii) the portion of any related
Purchase Amount allocable to principal.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay a Receivable in full under
the terms thereof, including interest to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or by the Company pursuant to Section 3.02.
"Rating Agency" means or, if no such organization or successor is any
longer in existence, a nationally recognized statistical rating organization or
other comparable Person designated by the Company, notice of which designation
shall be given to the Indenture Trustee, the Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that, within 7 days
of receipt of such notice, none of the Rating Agencies shall have notified the
Company, the Servicer, the Owner Trustee or the Indenture Trustee in writing
that such action will result in a reduction or withdrawal of the then current
rating of the Notes or the Certificates.
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"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Equipment Installment Contract listed on Schedule I
(which Schedule may be in the form of microfiche).
"Receivable Files" means the documents specified in Section 3.03.
"Receivables Purchase Agreement" means an agreement, substantially in the
form of Exhibit H hereto, between the Company and a Seller, pursuant to which
such Seller sold Equipment Installment Contracts to be included in the Trust to
the Company.
"Recoveries" means, with respect to any Receivable that becomes a
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts required
by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to each
Receivable and any Distribution Date, the sum of the following amounts, without
duplication, in respect of the Collection Period immediately preceding such
Distribution Date: (a) that portion of all collections on Receivables allocable
to principal (exclusive of Payaheads allocable to principal that have not been
applied as payments under the related Receivables in such Collection Period and
inclusive of Payaheads allocable to principal that have been applied as payments
under the related Receivables in such Collection Period), (b) all Liquidation
Proceeds attributable to the principal amount of Receivables that became
Liquidated Receivables during such Collection Period in accordance with the
Servicer's customary servicing procedures, plus the amount of Realized Losses
with respect to such Liquidated Receivables, (c) all Precomputed Advances made
by the Servicer of principal due on the Precomputed Receivables, (d) to the
extent attributable to principal, the Purchase Amount of each Receivable that
became a Purchased Receivable during such Collection Period, (e) partial
prepayments on Precomputed Receivables relating to refunds of extended warranty
protection plan costs or of physical damage, credit life or disability insurance
policy premiums, but only if such costs or premiums were financed by the
respective Obligors thereon as of the date of the original contract and only to
the extent not included under clause (a) above, and (f) on the Final Scheduled
Distribution Date, any amounts advanced by the Servicer on such Final Scheduled
Distribution Date with respect to principal on the Receivables: provided,
however, that in calculating the Regular Principal Distribution Amount the
following will be excluded: (i) amounts received on Precomputed Receivables to
the extent that the Servicer has previously made an unreimbursed Precomputed
Advance of principal, (ii) Liquidation Proceeds with respect to a particular
Precomputed Receivable to the extent of any unreimbursed Precomputed Advances of
principal, (iii) all payments and proceeds (including Liquidation Proceeds) of
any Purchased Receivables the Purchase Amount of which has been included in the
Principal Distribution Amount in a prior Collection Period, and (iv) Recoveries.
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"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.01(a)(iv).
"Reserve Account Initial Deposit" means an amount equal to the Specified
Reserve Account Balance on the Closing Date (which is equal to $_).
"Scheduled Payment" on a Precomputed Receivable means that portion of the
payment required to be made by the Obligor during each Collection Period
sufficient to amortize the Principal Balance under the actuarial method over the
term of the Receivable and to provide interest at the APR.
"Seller" means, with respect to any Receivable, the Person from whom such
Receivable was acquired by the Company pursuant to the related Receivables
Purchase Agreement.
"Servicer" means, as the Servicer of the Receivables, and each successor
to pursuant to Section 7.03 or 8.02.
"Servicer Default" means an event specified in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during each Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means ___% per annum.
"Simple Interest Advance" means the amount of interest, as of the close of
business on the last day of a Collection Period, that the Servicer is required
to advance on the Simple Interest Receivables pursuant to Section 5.04(b).
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made and the remainder
of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the portion
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means [state formula].
"Total Distribution Amount" means, for each Distribution Date, the sum of
the Interest Distribution Amount and the Regular Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses).
"Trust" means the Issuer.
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"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.01.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as
of _, between the Company and the Owner Trustee.
"Trust Officer" means, in the case of the Indenture Trustee, any Officer
within the Corporate Trust Office of the Indenture Trustee, including any Vice
President, Assistant Vice President, Secretary, Assistant Secretary or any other
officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and, with respect to the Owner Trustee, any officer in the Corporate
Trust Administration Department of the Owner Trustee with direct responsibility
for the administration of the Trust Agreement and the Basic Documents on behalf
of the Owner Trustee.
Section 1.02 Other Definitional Provisions. (a) Capitalized terms used
and not otherwise defined herein have the meanings assigned to them in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under United States generally accepted accounting principles. To
the extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under United States generally accepted accounting principles, the
definitions contained in this Agreement or in any such certificate or other
document shall control.
(d) The words "hereof", "herein", "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
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(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01 Conveyance of Receivables. In consideration of the Owner
Trustee's delivery on the Closing Date to or upon the order of the Company of
$_, the Company does hereby sell, transfer, assign, set over and otherwise
convey to the Issuer, without recourse (subject to the obligations as set forth
herein), all right, title and interest of the Company in and to:
(a) the Receivables and all moneys due thereon on and after the
Cutoff Date, in the case of Precomputed Receivables, and all moneys received
thereon on and after the Cutoff Date, in the case of Simple Interest
Receivables;
(b) the security interest in the Financed Equipment granted by
Obligors pursuant to the Receivables and any other interest of the Company in
such Financed Equipment;
(c) any proceeds with respect to the Receivables from claims on
any physical damage, theft, credit life or disability insurance policies
covering Financed Equipment or Obligors;
(d) any Financed Equipment that shall have secured any such
Receivable and shall have been acquired by or on behalf of the Company, the
Servicer or the Issuer; and
(e) the proceeds of any and all of the foregoing.
ARTICLE III
THE RECEIVABLES
Section 3.01 Representations and Warranties of the Company with Respect
to the Receivables. The Company makes the following representations and
warranties as to the Receivables conveyed by it to the Issuer, on which the
Issuer is deemed to have relied in acquiring the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Characteristics of Receivables. Each Receivable (1) was
originated by the Seller thereof or purchased from an equipment dealer or
another financial institution by such Seller in the ordinary course of such
Seller's business, (2) has created a valid, subsisting and enforceable first
priority security interest in favor of the Seller in the Financed Equipment,
which security interest is assignable by the Seller to the Company, by the
Company to the Issuer and by the Issuer to the Indenture Trustee, (3) contains
customary and enforceable provisions such that
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the rights and remedies of the holder thereof are adequate for realization
against the collateral of the benefits of the security, (4) provides for level
monthly payments (provided, that the payment in the first or last month in the
life of the Receivable may be minimally different from the level payments) that
fully amortize the Amount Financed by maturity and yield interest at the Annual
Percentage Rate, and (5) in the case of a Precomputed Receivable, in the event
that such contract is prepaid, provides for a prepayment that fully pays the
Principal Balance and includes accrued but unpaid interest through the date of
prepayment at the Annual Percentage Rate.
(b) Schedule of Receivables. The information set forth in
Schedule I to this Agreement is true and correct in all material respects as of
the opening of business on the Cutoff Date, and no selection procedures believed
to be adverse to the Noteholders or the Certificateholders were utilized in
selecting the Receivables. The computer tape or other listing regarding the
Receivables made available to the Issuer and its assigns is true and correct in
all material respects as of the Cutoff Date.
(c) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and similar laws now or
hereafter in effect relating to or affecting creditor's rights generally and to
general principles of equity (whether applied in a proceeding at law or in
equity).
(d) No Government Obligor. None of the Receivables is due from
the United States of America or any State thereof or from any agency, department
or instrumentality of the United States of America or any State.
(e) Security Interest in Financed Equipment. Immediately prior
to the sale, assignment and transfer thereof to the Issuer, each Receivable
shall be secured by a validly perfected first security interest in the Financed
Equipment in favor of the related Seller as secured party of all necessary and
appropriate actions have been commenced that would result in the valid
perfection of a first security interest in the Financed Equipment in favor of
the related Seller as secured party.
(f) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Equipment been released from the
lien granted by the related Receivable in whole or in part.
(g) No Waiver. No provision of a Receivable has been waived in
such a manner that the Receivable fails to meet any other representation or
warranty of the Company with respect thereto.
(h) No Amendments. No Receivable has been amended such that the
amount of the Obligor's Scheduled Payments has been increased except for
increases resulting from the inclusion of any premiums for forced placed
physical damage insurance covering the Financed Equipment.
(i) No Defenses. No facts are known to the Company that would
give rise to any right of defense, nor shall the same have been asserted or
threatened, with respect to any Receivable.
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(j) No Liens. To the best of the Company' s knowledge, no liens
or claims have been filed for work, labor or materials relating to an item of
Financed Equipment that are liens prior to, or equal to or coordinate with, the
security interest in the Financed Equipment granted by any Receivable.
(k) No Default. No Receivable has a payment that is more than 90
days overdue as of the Cutoff Date, and, except as permitted in this paragraph,
no default, breach, violation or event permitting acceleration under the terms
of any Receivable has occurred; no continuing condition that with notice or the
lapse of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the Company has
not waived and shall not waive any of the foregoing.
(l) Insurance. The related Seller, in accordance with its
customary procedures, has determined that the Obligor has obtained physical
damage insurance covering the Financed Equipment and under terms of the
Receivable the Obligor is required to maintain such insurance.
(m) Title. It is the intention of the Company that the transfer
and assignment herein contemplated constitute a sale of the Receivables from the
Company to the Issuer and that the beneficial interest in and title to the
Receivables not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against the Company. No Receivable has been sold,
transferred, assigned or pledged by the Company to any Person other than the
Issuer. Immediately prior to the transfer and assignment herein contemplated,
the Company had good and marketable title to each Receivable conveyed by it
hereunder to the Issuer, free and clear of all Liens and rights of others and,
immediately upon the transfer thereof, the Issuer shall have good and marketable
title to each Receivable, free and clear of all Liens and rights of others; and
the transfer has been perfected under the UCC.
(n) Lawful Assignment. No Receivable has been originated in, or
is subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Receivable or any Receivable under this Agreement or the
Indenture is unlawful, void or voidable.
(o) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Issuer a first perfected ownership
interest in the Receivables, and to give the Indenture Trustee a first perfected
security interest therein, shall have been made.
(p) One Original. There is only one original executed copy of
each Receivable.
(q) Maturity of Receivables. The weighted average remaining term
of the Receivables as of the Cutoff Date is months.
(r) Scheduled Payments. (1) No Receivable has payment that is
more than 90 days overdue as of the Cutoff Date; and (2) no Receivable has a
final scheduled payment date that is later than the Final Scheduled Maturity
Date.
(s) Location of Receivable Files. The Receivable Files are kept
at one or more of the locations listed in Schedule II.
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(t) No Bankruptcies. No Obligor on any Receivable as of the
Cutoff Date was noted in the related Receivable File as having filed for
bankruptcy.
(u) No Repossessions. No Financed Equipment securing any
Receivable is in repossession status.
(v) Chattel Paper. Each Receivable constitutes "chattel paper"
as defined in the UCC.
(w) Agreement. The representations and warranties of the Company
in Section 6.01 are true and correct.
(x) Financing. Approximately ___% of the aggregate principal
balance of the Receivables, constituting ___% of the number of the Receivables
as of the Cutoff Date represents financing of new equipment and the remainder of
the Receivables represents financing of used equipment; and approximately ___%
of the aggregate principal balance of the Receivables as of the Cutoff Date
represents Precomputed Receivables and the remainder of the Receivables
represents Simple Interest Receivables. The Principal Balance of the Receivables
as of the Cutoff Date is $_.
(y) APR. The weighted average Annual Percentage Rate of the
Receivables as of the Cutoff Date is approximately ___%.
Section 3.02 Repurchase upon Breach. The Company, the Servicer or the
Owner Trustee, as the case may be, shall inform the other parties to this
Agreement and the Indenture Trustee promptly, in writing, upon the discovery of
any breach of the Company's representations and warranties made pursuant to
Section 3.01 or 6.01. Unless any such breach shall have been cured in all
material respects by the last day of the second Collection Period following the
discovery thereof (and notice to the Company) by the Owner Trustee or receipt by
the Owner Trustee of written notice from the Company or the Servicer of such
breach, the Company shall be obligated to repurchase any Receivable materially
and adversely affected by any such breach as of such last day (or, at the
Company's option, the last day of the first Collection Period following the
discovery). In consideration of the repurchase of any such Receivable, the
Company shall remit the Purchase Amount, in the manner specified in Section
5.05. The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee,
the Noteholders or the Certificateholders with respect to a breach or
representations and warranties pursuant to Section 3.01 and the agreement
contained in this Section shall be to require the Company to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein.
Section 3.03 Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee as
custodian of the following documents or instruments which are hereby or will
hereby be constructively delivered to the Indenture Trustee, as pledgee of the
Issuer as of the Closing Date:
(a) the fully executed original of each Receivable;
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(b) a filmed copy of each original credit application as
executed by the Obligor;
(c) the original certificate of title or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the related Seller in each Financed
Equipment; and
(d) any and all other documents that the Servicer shall keep on
file, in accordance with its customary procedures, relating to a Receivable, an
Obligor or an item of Financed Equipment.
Section 3.04 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files as
custodian for the benefit of the Issuer and maintain such accurate and complete
accounts, records and computer systems pertaining to each Receivable File as
shall enable the Issuer to comply with this Agreement. In performing its duties
as custodian, the Servicer shall act with reasonable care using that degree of
skill and attention that the Servicer exercises with respect to the Receivable
Files relating to all comparable automotive receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer or the Indenture Trustee to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report to
the Issuer and the Indenture Trustee any failure on its part to hold the
Receivable Files and maintain its accounts, records and computer systems as
herein provided and shall promptly take appropriate action to remedy any such
failure. Nothing herein shall be deemed to require an initial review or any
periodic review by the Issuer or the Indenture Trustee of the Receivables Files.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule II or
at such other office as shall be specified to the Issuer and the Indenture
Trustee by written notice not later than 90 days after any change in location.
The Servicer shall make available to the Issuer and the Indenture Trustee or
their respective duly authorized representatives, attorneys or auditors a list
of locations of the Receivable Files and the related accounts, records and
computer systems maintained by the Servicer at such times during normal business
hours as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture
Trustee, the Servicer shall release any Receivable File to the Indenture
Trustee, the Indenture Trustee's agent or the Indenture Trustee's designee, as
the case may be, at such place or places as the Indenture Trustee may designate,
as soon as practicable, and upon the release and delivery of any such document
in accordance with the instructions of the Indenture Trustee, the Servicer shall
be released from any further liability and responsibility under this Section
3.04 with respect to such documents unless and until such time as such documents
shall be returned to the Servicer, and in no event shall the Servicer be
responsible for any loss occasioned by the Indenture Trustee's failure to return
any documents in a timely manner.
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Section 3.05 Instructions; Authority To Act. The Servicer shall be deemed
to have received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by a Trust Officer of the Indenture
Trustee.
Section 3.06 Custodian's Indemnification. The Servicer as custodian shall
indemnify the Trust, the Owner Trustee and the Indenture Trustee and each of
their respective officers, directors, employees and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses of any kind whatsoever that may be imposed on, incurred by or asserted
against the Trust, the Owner Trustee or the Indenture Trustee or any of their
respective officers, directors, employees and agents as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer as custodian of the Receivable Files; provided, however, that the
Servicer shall not be liable to the Owner Trustee for any portion of any such
amount resulting from the willful misfeasance, bad faith or negligence of the
Owner Trustee, and the Servicer shall not be liable to the Indenture Trustee for
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Indenture Trustee.
Section 3.07 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Closing Date and shall continue in
full force and effect until terminated pursuant to this Section. If the Servicer
shall resign as Servicer in accordance with the provisions of this Agreement or
if all of the rights and obligations of any Servicer shall have been terminated
under Section 8.01, the appointment of such Servicer as custodian shall be
terminated by the Indenture Trustee or by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes or, with the consent of
Holders of the Notes evidencing not less than 25% the Outstanding Amount of the
Notes or, with the consent of Holders of the Notes evidencing not less than 25%
of the Outstanding Amount of the Notes, by the Owner Trustee or by
Certificateholders evidencing not less than 25% of the Certificate Balance, in
the same manner as the Indenture Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 8.01. The Indenture Trustee
or, with the consent of the Indenture Trustee, the Owner Trustee may terminate
the Servicer's appointment as custodian, with cause, at any time upon written
notification to the Servicer, and without cause upon 30 days' prior written
notification to the Servicer. As soon as practicable after any termination of
such appointment, the Servicer shall deliver the Receivable Files to the
Indenture Trustee or the Indenture Trustee's agent at such place or places as
the Indenture Trustee may reasonably designate. Notwithstanding any termination
of the Servicer as custodian, the Indenture Trustee or Owner Trustee, as
applicable, shall provide, or shall cause its agent to provide, access to the
Receivable Files to the Servicer for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the Receivables hereunder.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01 Duties of Servicer. The Servicer, for the benefit of the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of
20
all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment coupons to Obligors, reporting tax
information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Owner Trustee and the Indenture Trustee with respect to
distributions and making Advances pursuant to Section 5.04. Subject to the
provisions of Section 4.02, the Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables or to the Financed Equipment securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer
(in the case of a Receivable other than a Purchased Receivable) shall thereupon
be deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. If in any enforcement suit or legal proceeding
it shall be held that the Servicer may not enforce a Receivable on the ground
that it shall not be a real party in interest or a holder entitled to enforce
such Receivable, the Owner Trustee shall, at the Servicer's expense and
direction, take steps to enforce such Receivable, including bringing suit in its
name or the name of the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders. The Owner Trustee shall upon the written
request of the Servicer furnish the Servicer with any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
Section 4.02 Collection and Allocation of Receivable Payments. The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others. The
Servicer may grant extensions, rebates or adjustments on Receivable, which shall
not, for the purposes of this Agreement, modify the original due dates or
amounts of the Scheduled Payments on a Precomputed Receivable or the original
due dates or amounts of the originally scheduled payments of interest on Simple
Interest Receivables; provided, however, that if the Servicer extends the date
for final payment by the Obligor of any Receivable beyond the Final Scheduled
Maturity Date, it shall promptly repurchase the Receivable from the Issuer in
accordance with the terms of Section 4.07. The Servicer may in its discretion
waive any late payment charge or any other fees that may be collected in the
ordinary course of servicing a Receivable. The Servicer shall not agree to any
alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Precomputed Receivables or the originally Scheduled
Payments on Simple Interest Receivables.
Section 4.03 Realization upon Receivables. On behalf of the Issuer, the
Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise convert the ownership of the Financed
Equipment securing any Receivable as to which the Servicer shall have determined
eventual payment in full is unlikely. The Servicer shall follow such customary
and usual practices and procedures as it shall deem necessary or advisable in
its servicing of automotive receivables, which may include reasonable efforts to
realize upon any
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recourse to Dealers and selling the Financed Equipment at public or private
sale. The Servicer shall be entitled to recover all out-of-pocket expenses
incurred by it in the course of converting an item of Financed Equipment into
cash proceeds. The foregoing shall be subject to the provision that, in any case
in which the Financed Equipment shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the repossession of such
Financed Equipment unless it shall determine in its discretion that such repair
and/or repossession will increase the Liquidation Proceeds by an amount greater
than the amount of such expenses.
Section 4.04 Physical Damage Insurance. The Servicer shall, in accordance
with its customary servicing procedures, require that each Obligor shall have
obtained physical damage insurance covering the Financed Equipment as of the
execution of the Receivable.
Section 4.05 Maintenance of Security Interests in Financed Equipment. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to maintain perfection of the security interest created
by each Receivable in the related Financed Equipment. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer and the Indenture Trustee in the event of the
relocation of an item of Financed Equipment or for any other reason. In the
event that the assignment of a Receivable to the Trust is insufficient, without
a notation on the related Financed Equipment's certificate of title, to grant to
the Trust a first perfected security interest in the relaxed Financed Equipment,
the Servicer hereby agrees to serve as the agent of the Trust for the purposes
of perfecting the security interest in such Financed Equipment and that the
Servicer's listing as the secured party on the certificate of title is in its
capacity as agent of the Trust.
Section 4.06 Covenants of Servicer. The Servicer shall not release the
Financed Equipment securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Issuer, the Indenture Trustee, the Certificateholders or the Noteholders
in such Receivable, nor shall the Servicer increase the number of scheduled
payments due under a Receivable.
Section 4.07 Purchase of Receivables upon Breach. The Servicer or the
Owner Trustee shall inform the other party and the Indenture Trustee and the
Company promptly, in writing, upon the discovery of any breach pursuant to
Section 4.02, 4.05 or 4.06 that materially and adversely affects the interests
of the Trust in any Receivable. Unless the breach shall have been cured by the
last day of the second Collection Period following such discovery (or, at the
Servicer's election, the last day of the first following Collection Period), the
Servicer shall purchase, as of such last day, any Receivable that is materially
and adversely affected by such breach. In consideration of the purchase of any
such Receivable pursuant to either of the two preceding sentences, the Servicer
shall remit the Purchase Amount in the manner specified in Section 5.05. For
purposes of this Section, the Purchase Amount shall consist in part of a release
by the Servicer of all rights of reimbursement with respect to Outstanding
Precomputed Advances and Outstanding Simple Interest Advances on the Receivable.
The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders with respect to a breach pursuant to
Section 4.02, 4.05 or 4.06 shall be to require the Servicer to purchase
Receivables pursuant to this Section. The Owner Trustee shall have no duty to
conduct
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any affirmative investigation as to the occurrence of any condition requiring
the repurchase of any Receivable pursuant to this Section.
Section 4.08 Servicing Fee. As compensation for servicing the
Receivables, the Servicer shall be entitled to receive the Servicing Fee on each
Distribution Date, from the Interest Distribution Amount available on such
Distribution Date, in an amount equal to the product of (a) one-twelfth, (b) the
Servicing Fee Rate and (c) the Pool Balance as of the first day of the preceding
Collection Period. The Servicer shall also be entitled to all late fees,
prepayment charges (including, in the case of a Receivable that provides for
payments according to the "Rule of 78s" and that is prepaid in full, the
difference between the Principal Balance of such Receivable (plus accrued
interest to the date of prepayment) and the principal balance of such Receivable
computed according to the "Rule of 78s"), and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables,
collected (from whatever source) on the Receivables, as and when collected, plus
any reimbursement pursuant to the last paragraph of Section 7.02.
Section 4.09 Servicer's Certificate. Not later than 11:00 a.m. (New York
time) on each Payment Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee and the Company, with a
copy to the Rating Agencies, a Servicer's Certificate containing all information
necessary to make the distributions to be made on the related Distribution Date
pursuant to Section 5.06 and 5.07 for the related Collection Period. Receivables
to be purchased by the Servicer or to be repurchased by the Company shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in Schedule I).
Section 4.10 Annual Statement as to Compliance; Notice of Default. (a) The
Servicer shall deliver to the Owner Trustee and the Indenture Trustee, on or
before March 15th of each year beginning _, 200_, an Officers' Certificate of
the Servicer providing such information as is required under Item 1123 of
Regulation AB. The Indenture Trustee shall send a copy of such certificate and
the report referred to in Section 4.11 to the Rating Agencies. A copy of such
certificate and the report referred to in Section 4.11 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in
writing to the Owner Trustee addressed to the Corporate Trust Office. Upon the
telephone request of the Owner Trustee, the Indenture Trustee will promptly
furnish the Owner Trustee a list of Noteholders as of the date specified by the
Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officers' Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Default under Section
8.01(a) or (b).
(c) The Servicer will deliver to the Owner Trustee, on or before
March 15th of each year beginning _, 200_, a report regarding the Servicer's
assessment of compliance with the applicable servicing criteria specified in
Item 1122 of Regulation AB during the immediately preceding calendar year, as
required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB.
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Section 4.11 Annual Independent Certified Public Accountants' Report. The
Servicer shall cause a firm of independent certified public accountants, which
may also render other services to the Servicer or any Affiliate of the Servicer,
to deliver to the Owner Trustee and the Indenture Trustee on or before March
15th of each year beginning _, a report that attests to, and reports on, the
Servicer's assessment delivered pursuant to Section 4.10(c), which attestation
report shall be made in accordance with the requirements of Rule 15d-18 under
the Exchange Act and Item 1122(b) of Regulation AB.
Section 4.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders and
Noteholders access to the Receivable Files in such cases where the
Certificateholders or Noteholders shall be required by applicable statutes or
regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the respective offices of the Servicer. Nothing in this Section 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.
Section 4.13 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the Servicer
and expenses incurred in connection with distributions and reports to
Certificateholders and Noteholders.
Section 4.14 Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, that the
Servicer shall remain obligated and be liable to the Issuer, the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders for the
servicing and administering of the Receivables in accordance with the provisions
hereof without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same terms
and conditions as if the Servicer alone were servicing and administering the
Receivables. The fees and expenses of the subservicer shall be as agreed between
the Servicer and its subservicer from time to time, and none of the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
shall have any responsibility therefor.
Section 4.15 Compliance with Regulation AB. The Servicer agrees to
perform all duties and obligations applicable to or required of the Issuer set
forth in Appendix A attached hereto and made a part hereof in all respects and
makes the representations and warranties therein applicable to it.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS
AND NOTEHOLDERS
Section 5.01 Establishment of Trust Accounts. (a) (i) The Servicer, for
the benefit of the Noteholders and the Certificateholders, shall establish and
maintain in the name of the
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Indenture Trustee an Eligible Deposit Account (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders and the Certificateholders.
(ii) The Servicer, for the benefit of the Noteholders,
shall establish and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Note Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders.
(iii) The Servicer, for the benefit of the Noteholders and
the Certificateholders, shall establish and maintain in the name of
the Indenture Trustee an Eligible Deposit Account (the "Reserve
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders and
the Certificateholders.
(b) Funds on deposit in the Collection Account, the Note
Distribution Account and the Reserve Account (collectively the "Trust Accounts")
shall be invested (1) by the Indenture Trustee in Eligible Investments selected
in writing by the Servicer or an investment manager selected by the Servicer,
which investment manager shall have agreed to comply with the terms of this
Agreement as it relates to investing such funds or (2) by an investment manager
in Eligible Investments selected by such investment manager, provided that (A)
such investment manager shall be selected by the Servicer, (B) such investment
manager shall have agreed to comply with the terms of this Agreement as it
relates to investing such funds, (C) any investment so selected by such
investment manager shall be made in the name of the Indenture Trustee and shall
be settled by a Delivery to the Indenture Trustee that complies with the terms
of this Agreement as it relates to investing such funds, and (D) prior to the
settlement of any investment so selected by such investment manager the
Indenture Trustee shall affirm that such investment is an Eligible Investment.
It is understood and agreed that the Indenture Trustee shall not be liable for
any loss arising from an investment in Eligible Investments made in accordance
with this Section 5.01(b). All such Eligible Investments shall be held by the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders
or the Noteholders, as applicable; provided, that on each Payment Determination
Date all interest and other investment income (net of losses and investment
expenses) on funds on deposit in the Trust Accounts shall be deposited into the
Collection Account and shall be deemed to constitute a portion of the Interest
Distribution Amount for the related Distribution Date. Unless otherwise
permitted by the Rating Agencies, funds on deposit in the Collection Account,
the Reserve Account and the Note Distribution Account shall be invested in
Eligible Investments that will mature (A) not later than the Business Day
immediately preceding the next Distribution Date or (B) on such next
Distribution Date if either (x) such investment is held in the trust department
of the institution with which the Collection Account, the Reserve Account, the
Note Distribution Account or the Certificate Distribution Account, as
applicable, is then maintained and is invested in a time deposit of rated at
least A-1 by Standard & Poor's and P-1 by Moody's (such account being maintained
within the trust department of _) or (y) the Indenture Trustee (so long as the
short-term unsecured debt obligations of the Indenture Trustee are either (i)
rated at least P-1 by Moody's and A-1 by Standard & Poor's on the date such
investment is made or (ii) guaranteed by an entity whose short-term unsecured
debt obligations are rated at least P-1 by Moody's and A-1 by Standard & Poor's
on the date such investment is made) has agreed to advance funds on such
Distribution
25
Date to the Note Distribution Account and the Certificate Distribution Account
in the amount payable on such investment on such Distribution Date pending
receipt thereof to the extent necessary to make distributions on such
Distribution Date. The guarantee referred to in clause (y) of the preceding
sentence shall be subject to the Rating Agency Condition. For the purpose of the
foregoing, unless the Indenture Trustee affirmatively agrees in writing to make
such advance with respect to such investment prior to the time an investment is
made, it shall not be deemed to have agreed to make such advance. Funds
deposited in a Trust Account on a day which immediately precedes a Distribution
Date upon the maturity of any Eligible Investments are not required to be
invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. The Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as the case may
be. If, at any time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Indenture Trustee (or the Servicer on its behalf) shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) establish a new Trust Account as an
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new Trust Account.
(d) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.01(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a financial intermediary (as such term is defined in
Section 8-313(4)) of the UCC acting solely for the Indenture
Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such Trust
Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee,
26
pending maturity or disposition, through continued registration of
the Indenture Trustee's (or its nominee's) ownership of such
security.
(ii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 5.02 Collections. The Servicer shall remit within two Business
Days of receipt thereof to the Collection Account all payments by or on behalf
of the Obligors with respect to the Receivables (other than Purchased
Receivables) and all Liquidation Proceeds, both as collected during the
Collection Period. Notwithstanding the foregoing, for so long as (i) remains the
Servicer, (ii) no Servicer Default shall have occurred and be continuing and
(iii)(x) maintains a short-term rating of at least A-1 by Standard & Poor's and
P-1 by Moody's (and for five Business Days following a reduction in either such
rating) or (y) prior to ceasing daily remittances, the Rating Agency Condition
shall have been satisfied (and any conditions or limitations imposed by the
Rating Agencies in connection therewith are complied with), the Servicer may
remit such collections with respect to the preceding calendar month to the
Collection Account on a less frequent basis, but in no event later than the
Payment Determination Date immediately preceding each Distribution Date. For
purposes of this Article V the phrase "payments by or on behalf of Obligors"
shall mean payments made with respect to the Receivables by Persons other than
the Servicer.
Section 5.03 Application of Collections. All collections for the
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first, in the case of
Precomputed Receivables, to reduce Outstanding Precomputed Advances as described
in Section 5.04(a) and, in the case of Simple Interest Receivables, to reduce
Outstanding Simple Interest Advances to the extent described in Section 5.04(b).
Next, any excess shall be applied, in the case of Precomputed Receivables, to
the Scheduled Payment and, in the case of Simple Interest Receivables, to
interest and principal in accordance with the Simple Interest Method. With
respect to Precomputed Receivables, any remaining excess shall be added to the
Payahead Balance, and shall be applied to prepay the Precomputed Receivable, but
only if the sum of such excess and the previous Payahead Balance shall be
sufficient to prepay the Receivable in full. Otherwise, any such remaining
excess payments shall constitute a Payahead and shall increase the Payahead
Balance.
If the Servicer is required to return a Payahead to the related Obligor,
the amount to be returned shall be retained by the Servicer from collections on
the Receivables allocable to principal and paid by the Servicer to such Obligor.
Section 5.04 Advances. (a) As of the close of business on the last day of
each Collection Period, if the payments by or on behalf of the Obligor on a
Precomputed Receivable (other than a Purchased Receivable) shall be less than
the Scheduled Payment, the Payahead
27
Balance shall be applied by the Servicer to the extent of the shortfall and such
Payahead Balance shall be reduced accordingly. Next, the Servicer shall advance
any remaining shortfall (such amount, a "Precomputed Advance"), to the extent
that the Servicer, at its sole discretion, shall determine that the Precomputed
Advance shall be recoverable from the Obligor, the Purchase Amount, Liquidation
Proceeds or proceeds of any other Precomputed Receivables. With respect to each
Precomputed Receivable, the Precomputed Advance shall increase Outstanding
Precomputed Advances. Outstanding Precomputed Advances shall be reduced by
subsequent payments by or on behalf of the Obligor, collections of Liquidation
Proceeds in respect of such Precomputed Receivables or payments of the Purchase
Amount with respect to such Precomputed Receivables.
If the Servicer shall determine that an Outstanding Precomputed Advance
with respect to any Precomputed Receivable shall not be recoverable as
aforesaid, the Servicer shall be reimbursed from any collections made on other
Precomputed Receivables in the Trust and Outstanding Precomputed Advances with
respect to such Precomputed Receivables shall be reduced accordingly.
(b) As of the close of business on the last day of each
Collection Period, the Servicer shall advance an amount equal to the amount of
interest due on the Simple Interest Receivables at their respective APR's for
the related Collection Period (assuming the Simple Interest Receivables pay on
their respective due dates) minus the amount of interest actually received on
the Simple Interest Receivables during the related Collection Period (such
amount, a "Simple Interest Advance"). With respect to each Simple Interest
Receivable, the Simple Interest Advance shall increase Outstanding Simple
Interest Advances. If such calculation results in a negative number, an amount
equal to such negative number shall be paid to the Servicer and the amount of
Outstanding Simple Interest Advances shall be reduced by such amount. In
addition, in the event that a Simple Interest Receivable becomes a Liquidated
Receivable, Liquidation Proceeds with respect to such Simple Interest Receivable
attributable to accrued and unpaid interest thereon (but not including interest
for the then current Collection Period) shall be paid to the Servicer to reduce
Outstanding Simple Interest Advances, but only to the extent of any Outstanding
Simple Interest Advances.
Section 5.05 Additional Deposits. The Servicer shall deposit in the
Collection Account on the Payment Determination Date for the related Collection
Period the aggregate Advances pursuant to Section 5.04. To the extent that the
Servicer fails to make a Simple Interest Advance pursuant to Section 5.04(b) on
the date required, the Servicer shall notify the Indenture Trustee to withdraw
such amount (or, if determinable, such portion of such amount as does not
represent advances for delinquent interest) from the Reserve Account and deposit
such amount in the Collection Account. The Servicer and the Company shall
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables and the Servicer shall
deposit therein all amounts to be paid under Section 9.01. The Servicer will
deposit the aggregate Purchase Amount with respect to Purchased Receivables when
such obligations are due, unless the Servicer shall not be required to make
daily deposits pursuant to Section 5.02. All such other deposits shall be made
on the Payment Determination Date for the related Collection Period.
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Section 5.06 Distributions. (a) So long as (i) the long-term unsecured
indebtedness of the Servicer is rated Baa3 or better by Moody's or (ii) the
Rating Agency Condition is otherwise satisfied, the Servicer will be entitled to
receive the payment of the Servicing Fee in respect of a Collection Period (and
all unpaid Servicing Fees from prior Collection Periods) at the beginning of
each Collection Period from payments on the Receivables received during such
Collection Period.
(i) On each Payment Determination Date, the Servicer shall
calculate all amounts required to be deposited in the Note
Distribution Account and the Certificate Distribution Account.
(ii) On each Distribution Date, the Servicer shall instruct
the Indenture Trustee (based on the information contained in the
Servicer's Certificate delivered on the related Payment
Determination Date pursuant to Section 4.09) to make the following
deposits and distributions for receipt by the Servicer or deposit in
the applicable account by 11:00 a.m. (New York time), to the extent
of the Total Distribution Amount, in the following order of
priority:
(A) to the extent the Servicer has not received the
payment of the Servicing Fee at the beginning of the related
Collection Period pursuant to clause (a) above, to the Servicer,
from the Interest Distribution Amount, the Servicing Fee (and all
unpaid Servicing Fees from prior Collection Periods);
(B) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of Section
5.06(a) and clause (A), the Noteholders' Interest Distributable
Amount;
(C) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of Section
5.06(a) and clauses (A) and (B), the Noteholders' Principal
Distributable Amount;
(D) to the Certificate Distribution Account, from the
Total Distribution Amount remaining after the application of Section
5.06(a) and clauses (A) through (C), the Certificateholders'
Interest Distributable Amount;
(E) to the Certificate Distribution Account, from the
Total Distribution Amount remaining after the application of Section
5.06(a) and clauses (A) through (D), the Certificateholders'
Principal Distributable Amount;
(F) to the Reserve Account, from the Total Distribution
Amount remaining after the application of Section 5.06(a) and
clauses (A) through (E) (it being understood that the Acceleration
Principal Distribution Amount is a function of and subject to the
amount required to be deposited in the Reserve Account pursuant to
this clause (F)), the amount, if any, necessary to reinstate the
balance in the Reserve Account up to the Specified Reserve Account
Balance; and
29
(G) to the Reserve Account, the portion, if any, of the
Total Distribution Amount remaining after the application of Section
5.06(a) and clauses (A) through (F).
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
Section 5.07 Reserve Account. (a) On the Closing Date, the Owner Trustee
will deposit, on behalf of the Company, the Reserve Account Initial Deposit into
the Reserve Account from the net proceeds of the sale of the Notes and the
Certificates.
(b) (i) After giving effect to clause (ii) below, if the
amount on deposit in the Reserve Account on any Distribution Date (after giving
effect to all deposits thereto or withdrawals therefrom on such Distribution
Date) is greater than the Specified Reserve Account Balance for such
Distribution Date, the Servicer shall instruct the Indenture Trustee to
distribute the amount of such excess to the Company.
(ii) On each Distribution Date subsequent to any reduction
or withdrawal by any Rating Agency of its rating of any Class of
Notes, unless such rating has been restored, if the amount on
deposit in the Reserve Account (taking into account any deposits
therein pursuant to Section 5.06(b) and withdrawals therefrom on
such date pursuant to Section 5.07(c), (d) or (e)) is greater than
the Specified Reserve Account Balance for such Distribution Date,
then the Servicer shall instruct the Indenture Trustee to include
the amount of such excess in the Noteholders' Monthly Principal
Distribution Amount and to deposit the amount of such excess (up to
the amount of cash or cash equivalents in the Reserve Account) to
the Collection Account for deposit to the Note Distribution Account
for distribution to Noteholders as an accelerated payment of
principal on such Distribution Date; provided, that the amount of
such deposit shall not exceed the outstanding principal balance of
the Notes after giving effect to all other payments of principal to
be made on such date.
(c) If the Servicer determines pursuant to Section 5.04 that it
is required to make an Advance on a Payment Determination Date and does not do
so from its own funds, the Servicer shall instruct the Indenture Trustee to
withdraw funds from the Reserve Account and deposit them in the Collection
Account to cover any shortfall. Such payment shall be deemed to have been made
by the Servicer pursuant to Section 5.04 for purposes of making distributions
pursuant to this Agreement, but shall not otherwise satisfy the Servicer's
obligation to deliver the amount of the Advances, and the Servicer shall within
two Business Days replace any funds in the Reserve Account so used.
(d) (i) In the event that the Noteholders' Distributable
Amount for a Distribution Date exceeds the sum of the amounts deposited into the
Note Distribution Account pursuant to Section 5.06(b)(ii)(B) and (C) on such
Distribution Date, the Servicer shall instruct the Indenture Trustee to withdraw
from the Reserve Account on such Distribution Date an
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amount equal to such excess, to the extent of funds available therein up to the
Available Amount, and deposit such amount into the Note Distribution Account.
In the event that the Noteholders' Principal Distributable Amount on the
Class A-1 Final Scheduled Distribution Date or the Class A-2 Final Scheduled
Distribution Date exceeds the amount deposited into the Note Distribution
Account pursuant to Section 5.06(b)(ii)(C) on such Distribution Date, the
Servicer shall instruct the Indenture Trustee to withdraw from the Reserve
Account on such Distribution Date an amount equal to such excess, to the extent
of funds available therein up to the Available Amount, and deposit such amount
into the Note Distribution Account.
(e) (i) In the event that the Certificateholders'
Distributable Amount for a Distribution Date exceeds the sum of the amounts
deposited into the Certificate Distribution Account pursuant to Section
5.06(b)(ii)(D) and (E) on such Distribution Date, the Servicer shall instruct
the Indenture Trustee to withdraw from the Reserve Account on such Distribution
Date an amount equal to such excess, to the extent of funds available therein up
to the Available Amount after giving effect to paragraphs (c) and (d) above, and
deposit such amount into the Certificate Distribution Account on such
Distribution Date.
(ii) In the event that the Certificateholders' Monthly
Interest Distributable Amount for a Distribution Date exceeds the
amount deposited in the Certificate Distribution Account pursuant to
Section 5.06(b)(ii)(D), the Servicer shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Distribution
Date an amount equal to such excess, to the extent of funds
available therein, after giving effect to paragraphs (d)(i) and
(e)(i) above, up to the Certificate Interest Reserve Amount with
respect to such Distribution Date, and deposit such amount into the
Certificate Distribution Account.
(iii) In the event that the Certificateholders' Principal
Distributable Amount on the Final Scheduled Distribution Date
exceeds the amount deposited in the Certificate Distribution Account
pursuant to Section 5.06(b)(ii)(E), the Servicer shall instruct the
Indenture Trustee to withdraw from the Reserve Account on such
Distribution Date an amount equal to such excess, to the extent of
funds available therein after giving effect to paragraphs (d) and
(e)(i) above, and deposit such amount into the Certificate
Distribution Account.
(f) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.06(b) following payment in full of the Outstanding Amount
of the Notes and the Certificate Balance until the Pool Balance is reduced to
zero. Following the payment in full of the aggregate Outstanding Amount of the
Notes and the Certificate Balance and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders and Certificateholders and the termination of the Trust, any amount
remaining on deposit in the Reserve Account shall be distributed to the Company.
(g) On the Final Scheduled Distribution Date, if the amount of
funds remaining in the Reserve Account (after all other distributions to be made
from the Reserve Account pursuant to this Section have been made, other than
paragraphs (b)(i) and (f)) is in
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excess of the amounts described below, a portion of such excess according to the
following schedule shall be deposited in the Certificate Distribution Account
for distribution to Certificateholders:
(i) with respect to all such funds in the Reserve Account
in excess of $___ but which do not exceed $_, 20% of such amount;
(ii) with respect to all such funds in the Reserve Account
in excess of $___ but which do not exceed $_, 40% of such amount;
(iii) with respect to all such funds in the Reserve Account
in excess of $___ but which do not exceed $_, 60% of such amount;
(iv) with respect to all such funds in the Reserve Account
in excess of $___ but which do not exceed $_, 80% of such amount;
and
(v) with respect to all such funds in the Reserve Account
in excess of $___, 100% of such amount.
The amounts to be deposited in the Certificate Distribution Account
pursuant to the preceding sentence are in excess of all amounts otherwise
required to be deposited in the Certificate Distribution Account pursuant to
this Agreement, notwithstanding anything to the contrary contained herein.
Section 5.08 Statements to Certificateholders and Noteholders. (a) On
each Distribution Date, the Servicer shall provide to the Indenture Trustee
(with a copy to the Rating Agencies and each Paying Agent) for the Indenture
Trustee to forward to each Noteholder of record as of the most recent Record
Date and to the Owner Trustee (with a copy to each Paying Agent) for the Owner
Trustee to forward to each Certificateholder of record as of the most recent
Record Date a statement substantially in the form of Exhibit B setting forth at
least the following information as to the Notes and the Certificates to the
extent applicable:
(i) the amount of such distribution allocable to
principal allocable to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to
interest allocable to each Class of Notes and to the Certificates;
(iii) the outstanding principal balance of each Class of
Notes, the Note Pool Factor for each such Class, the Certificate
Balance and the Certificate Pool Factor as of the close of business
on the last day of the preceding Collection Period, after giving
effect to payments allocated to principal reported under clause (i)
above;
(iv) the amount of the Servicing Fee paid to the Servicer
with respect to the related Collection Period;
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(v) the amount of Realized Losses, if any, with respect
to the related Collection Period;
(vi) the balance of the Reserve Account on such Payment
Determination Date after giving effect to deposits and withdrawals
to be made on the next following Distribution Date, if any;
(vii) the aggregate Payahead Balance; and
(viii) the Pool Balance as of the close of business on the
last day of the related Collection Period, after giving effect to
payments allocated to principal reported under subsection (a)(i)
above, as reconciled.
Each amount set forth reconciling amounts on the Distribution Date
statement under clauses (i), (ii) or (iv) above shall be expressed as a dollar
amount per $1,000 of original principal balance of a Certificate or Note, as
applicable.
Section 5.09 Net Deposits. As an administrative convenience, unless the
Servicer is required to remit collections daily, the Servicer will be permitted
to make the deposit of collections on the Receivables, aggregate Advances and
Purchase Amounts for or with respect to the Collection Period net of
distributions to be made to the Servicer with respect to the Collection Period.
The Servicer, however, will account to the Owner Trustee, the Indenture Trustee,
the Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
ARTICLE VI
THE COMPANY
Section 6.01 Representations of the Company. The Company makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date and shall survive the sale
of the Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Company is duly
organized and validly existing as a limited liability company in good standing
under the laws of the State of Delaware, with the limited liability company
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and had
at all relevant times, and has, the limited liability company power, authority
and legal right to acquire and own the Receivables.
(b) Due Qualification. The Company is duly qualified to do
business as a foreign limited liability company in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications.
(c) Power and Authority. The Company has the limited liability
company power and authority to execute and deliver this Agreement and to carry
out its terms; the
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Company has full power and authority to sell and assign the property to be sold
and assigned to and deposited with the Issuer, and the Company shall have duly
authorized such sale and assignment to the Issuer by all necessary limited
liability company action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Company by all necessary limited
liability company action.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Company enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally and to general principles of equity (whether applied in a proceeding
at law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
limited liability company agreement of the Company, or any material term of any
indenture, agreement or other instrument to which the Company is a party or by
which it is bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than pursuant to the Basic Documents); or violate any
law or, to the best of the Company's knowledge, any order, rule or regulation
applicable to the Company of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to the Company's knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties: (i) asserting the invalidity of
this Agreement, the Indenture or any of the other Basic Documents, the Notes or
the Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates or (iv) relating to the Company and
which might materially and adversely affect the federal or state income tax
attributes of the Notes or the Certificates.
Section 6.02 Limited Liability Company Existence. During the term of this
Agreement, the Company will keep in full force and effect its existence, rights
and franchises as a limited liability company under the laws of the jurisdiction
of its formation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby. In
addition, all transactions and dealings between the Company and its Affiliates
will be conducted on an arm's-length basis.
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Section 6.03 Liability of the Company. The Company shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken and the representations and warranties made by the Company under this
Agreement.
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations
of the Company. Any Person (a) into which the Company may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Company shall be a party or (c) which may succeed to substantially all of the
properties and assets of the Company, which person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Company
under this Agreement, shall be the successor to the Company hereunder without
the execution or filing of any document or any further act by any of the parties
to this Agreement; provided, however, that (i) immediately after giving effect
to such transaction, no representation or warranty made pursuant to Section 3.01
shall have been breached and no Servicer Default, and no event that, after
notice or lapse of time, or both, would become a Servicer Default shall have
occurred and be continuing, (ii) the Company shall have delivered to the Owner
Trustee and the Indenture Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (iii) the Rating Agency Condition shall have been
satisfied with respect to such transaction and (iv) the Company shall have
delivered to the Owner Trustee and the Indenture Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, 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
Owner Trustee and Indenture Trustee, respectively, in the Receivables and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of the
foregoing agreement of assumption and compliance with clauses (i), (ii), (iii)
and (iv) above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c) above.
Section 6.05 Limitation on Liability of the Company and Others. The
Company and any director, officer, employee or agent of the Company may rely in
good faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Company shall not be under any obligation to appear in, prosecute
or defend any legal action that shall not be related to its respective
obligations under this Agreement, and that in the Company's opinion may involve
it in any expense or liability.
Section 6.06 The Company May Own Certificates or Notes. The Company and
any Affiliate thereof may in their individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as they would
have if it were not the Company or an Affiliate thereof, except as expressly
provided herein or in any Basic Document.
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ARTICLE VII
THE SERVICER
Section 7.01 Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing under the laws
of the state of its incorporation with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant times,
and has, the corporate power, authority and legal right to acquire, own, sell
and service the Receivables and to hold the Receivable Files as custodian on
behalf of the Trust and the Indenture Trustee.
(b) Due Qualification. The Servicer is duly qualified to
do business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Servicer has the corporate
power and authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement have been
duly authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization and
similar laws now or hereafter in effect relating to or affecting creditor's
rights generally and to general principles of equity (whether applied in a
proceeding at law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Servicer, or any material term of any
indenture, agreement or other instrument to which the Servicer is a party or by
which it is bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than this Agreement); or violate any law or, to the best
of the Servicer's knowledge, any order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties.
(f) No Proceedings. To the Servicer's best knowledge,
there are no proceedings or investigations pending, or threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the
36
Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other Basic
Documents, (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates or (iv) relating to the
Servicer and which might materially and adversely affect the federal or state
income tax attributes of the Notes or the Certificates.
(g) No Insolvent Obligors. As of the related Cutoff Date,
no Obligor on a Receivable is shown on the Receivable Files as the subject of a
bankruptcy proceeding.
Section 7.02 Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement:
(a) The Servicer shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders,
the Certificateholders and the Company and any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee and the Indenture Trustee
from and against any and all costs, expenses, losses, damages, claims and
liabilities, arising out of or resulting from the use, ownership or operation by
the Servicer or any Affiliate thereof of an item of Financed Equipment.
(b) The Servicer shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee, the Indenture Trustee, the Company, the
Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee and the Indenture Trustee
from and against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon any such Person through, the
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Servicer (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.01, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer (other than the Indenture
Trustee) pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include reasonable fees and expenses of counsel and expenses
of litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall promptly
repay such amounts to the Servicer, without interest.
Section 7.03 Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party or (c) which may
37
succeed to substantially all of the properties and assets of the Servicer, which
Person executed an agreement of assumption to perform every obligation of the
Servicer hereunder, shall be the successor to the Servicer under this Agreement
without further act on the part of any of the parties to this Agreement;
provided, however, that (i) immediately after giving effect to such transaction,
no Servicer Default and no event which, after notice or lapse of time, or both,
would become a Servicer Default shall have occurred and be continuing, (ii) the
Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent provided for in this Agreement to
such transaction have been complied with, (iii) the Rating Agency Condition
shall have been satisfied with respect to such transaction and (iv) the Servicer
shall have delivered to the Owner Trustee and the Indenture Trustee an Opinion
of Counsel stating that, in the opinion of such counsel, either (A) 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 Owner Trustee and the Indenture Trustee, respectively, in the
Receivables and reciting the details of such filings or (B) no such action shall
be necessary to preserve and protect such interests. Notwithstanding anything
herein to the contrary, the execution of the foregoing agreement of assumption
and compliance with clauses (i), (ii), (iii) and (iv) above shall be conditions
to the consummation of the transactions referred to in clause (a), (b) or (c)
above.
Section 7.04 Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders or the Certificateholders, except as provided under
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
person respecting any matters arising under this Agreement.
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
related to its duties to service the Receivables in accordance with this
Agreement and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the Basic
Documents and the rights and duties of the parties to this Agreement and the
Basic Documents and the interests of the Certificateholders under this Agreement
and the Noteholders under the Indenture.
Section 7.05 Servicer Not To Resign. Subject to the provisions of Section
7.03, the Servicer shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of the Servicer shall be communicated to the Owner Trustee and
the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such
38
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee and the Indenture Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until the
Indenture Trustee or a successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
8.02.
ARTICLE VIII
DEFAULT
Section 8.01 Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts or the Certificate
Distribution Account any required payment or to direct the Indenture Trustee to
make any required distributions therefrom, which failure continues unremedied
for a period of three Business Days after written notice of such failure is
received by the Servicer from the Owner Trustee or the Indenture Trustee or
after discovery of such failure by an officer of the Servicer; or
(b) failure by the Servicer or the Company, as the case
may be, duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer or the Company (as the case may be) set
forth in this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of Certificateholders or Noteholders
and (ii) continue unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given (A) to the Servicer or the Company (as the case may be) by the Owner
Trustee or the Indenture Trustee or (B) to the Servicer or the Company (as the
case may be), and to the Owner Trustee and the Indenture Trustee by the Holders
of Notes or Certificates, as applicable, evidencing not less than 25% of the
Outstanding Amount of the Notes or 25% of the outstanding Certificate Balance;
or
(c) the occurrence of an Insolvency Event with respect to
the Company, the Servicer or the Company; then, and in each and every case, so
long as the Servicer Default shall not have been remedied, either the Indenture
Trustee or the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes, by notice then given in writing to the Servicer
(and to the Indenture Trustee and the Owner Trustee if given by the Noteholders)
may terminate all the rights and obligations (other than the obligations set
forth in Section 7.02 hereof) of the Servicer under this Agreement. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Receivables or otherwise, shall, without further action,
pass to and be vested in the Indenture Trustee or such successor Servicer as may
be appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Servicer, as attorney-in-fact, or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer shall
cooperate with the successor Servicer, the Indenture Trustee and the Owner
Trustee in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the
39
transfer to the successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received by it with respect to any Receivable. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section shall
be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. Upon receipt of notice of the
occurrence of a Servicer Default, the Owner Trustee shall give notice thereof to
the Rating Agencies.
Section 8.02 Appointment of Successor. (a) Upon the Servicer's receipt of
notice of termination pursuant to Section 8.01 or the Servicer's resignation in
accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the earlier of (i) the date 45
days from the delivery to the Owner Trustee and the Indenture Trustee of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (ii) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination hereunder, the Indenture Trustee shall appoint a
successor Servicer, and the successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Owner Trustee and the Indenture
Trustee. In the event that a successor Servicer has not been appointed at the
time when the predecessor Servicer has ceased to act as Servicer in accordance
with this Section, the Indenture Trustee without further action shall
automatically be appointed the successor Servicer and shall be entitled to the
Servicing Fee. Notwithstanding the above, the Indenture Trustee shall, if it
shall be legally unable so to act, appoint or petition a court of competent
jurisdiction to appoint any established institution, having a net worth of not
less than $100,000,000 and whose regular business shall include the servicing of
automotive receivables, as the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including
the Indenture Trustee acting as successor Servicer) shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.
(c) The Servicer may not resign unless it is prohibited
from serving as such by law.
Section 8.03 Repayment of Advances. If the Servicer shall change, the
predecessor Servicer shall be entitled to receive reimbursement for Outstanding
Advances pursuant to Sections 5.03 and 5.04 with respect to all Advances made by
the predecessor Servicer.
Section 8.04 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies.
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Section 8.05 Waiver of Past Defaults. The Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes or the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance (in the case of any default
which does not adversely affect the Indenture Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, waive in writing any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement. Upon any such
waiver of a past default, such default shall cease to exist, and any Servicer
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 thereto.
ARTICLE IX
TERMINATION
Section 9.01 Optional Purchase of All Receivables. (a) As of the last day
of any Collection Period immediately preceding a Distribution Date as of which
the then outstanding Pool Balance is 10% or less of the Original Pool Balance
and the Class A-1 Notes have been paid in full, the Servicer shall have the
option to purchase the Owner Trust Estate, other than the Trust Accounts and the
Certificate Distribution Account; provided, however, that, unless Moody's agrees
otherwise, the Servicer may not effect any such purchase if the rating of the
Servicer's long-term debt obligations is less than Baa3 by Moody's, unless the
Owner Trustee and the Indenture Trustee shall have received an Opinion of
Counsel to the effect that such purchase would not constitute a fraudulent
conveyance. To exercise such option, the Servicer shall deposit pursuant to
Section 5.05 in the Collection Account an amount equal to the aggregate Purchase
Amount for the Receivables (including defaulted Receivables), plus the appraised
value of any such other property held by the Trust other than the Trust Accounts
and the Certificate Distribution Account, such value to be determined by an
appraiser mutually agreed upon by the Servicer, the Owner Trustee and the
Indenture Trustee, and shall succeed to all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to exercise
such option unless the amount to be deposited in the Collection Account pursuant
to the preceding sentence is greater than or equal to the sum of the outstanding
principal balance of the Notes and the Certificate Balance and all accrued but
unpaid interest (including any overdue interest and premium) thereon.
(b) Upon any sale of the assets of the Trust pursuant to
Section 9.02 of the Trust Agreement, the Servicer shall instruct the Indenture
Trustee to deposit the proceeds from such sale after all payments and reserves
therefrom have been made (the "Insolvency Proceeds") in the Collection Account.
On the Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to make the following deposits (after the
application on such Distribution Date of the Total Distribution Amount and funds
on deposit in the Reserve Account pursuant to Sections 5.06 and 5.07) from the
Insolvency Proceeds and any funds remaining on deposit in the Reserve Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
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(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited
into the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding
principal balance of the Notes (after giving effect to the reduction
in the outstanding principal balance of the Notes to result from the
deposits made in the Note Distribution Account on such Distribution
Date and on prior Distribution Dates);
(iii) to the Certificate Distribution Account, any portion
of the Certificateholders' Interest Distributable Amount not
otherwise deposited into the Certificate Distribution Account on
such Distribution Date; and
(iv) to the Certificate Distribution Account, the
Certificate Balance after giving effect to the reduction in the
Certificate Balance to result from the deposits made in the
Certificate Distribution Account on such Distribution Date).
Any investments on deposit in the Reserve Account or Note Distribution
Account which will not mature on or before such Distribution Date shall be sold
by the Indenture Trustee at such time as will result in the Indenture Trustee
receiving the proceeds from such sale not later than the Payment Determination
Date preceding such Distribution Date. Any Insolvency Proceeds remaining after
the deposits described above shall be paid to the Company.
(c) As described in Article IX of the Trust Agreement, notice of
any termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(d) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder other
than Section 5.07(b) and the Owner Trustee will succeed to the rights of, and
assume the obligations of, the Indenture Trustee pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01 Amendment. This Agreement may be amended by the Company, the
Servicer and the Issuer, with the consent of the Indenture Trustee, but without
the consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions in this Agreement or of modifying in any manner the rights of
the Noteholders or the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee
and the Indenture Trustee, adversely affect in any material respect the
interests of any Noteholder or Certificateholder. This Agreement may also be
amended from time to time by the Company, the Servicer and the Issuer, with the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders (as defined in
the Trust Agreement) of outstanding Certificates evidencing not less than a
majority of the
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outstanding Certificate Balance, 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 Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a) except
as otherwise provided in the first paragraph of this Section, increase or reduce
in any manner the amount of, or accelerate or delay the timing of, collections
of payments on Receivables or distributions that shall be required to be made
for the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Note and the Certificate
Balance, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes and the Holders
(as defined in the Trust Agreement) of all the outstanding Certificates.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel referred to in Section
10.02(i)(1). The Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Indenture Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
Section 10.02 Protection of Title to Trust. (a) The Company and the
Servicer shall execute and file such financing statements and cause to be
executed and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
interest of the Issuer and of the Indenture Trustee in the Receivables and in
the proceeds thereof. The Company and the Servicer shall deliver (or cause to be
delivered) to the Owner Trustee and the Indenture Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) Neither the Company nor the Servicer shall change their
respective name, identity or corporate structure in any manner that would, could
or might make any financing statement or continuation statement or continuation
statement filed in accordance with paragraph (a) above seriously misleading
within the meaning of (S) 9-4.02(7) of the UCC, unless the Company or the
Servicer, as the case may be, shall have given the Owner Trustee and the
Indenture Trustee at least five days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) The Company and the Servicer shall have an obligation to
give the Owner Trustee and the Indenture Trustee at least 60 days' prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation
43
statement or of any new financing statement and shall promptly file any such
amendment or new financing statement. The Servicer shall at all times maintain
each office from which it shall service Receivables, and its principal executive
office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
and the Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer to
a Receivable shall indicate clearly the interest of the Issuer and the Indenture
Trustee in such Receivable and that such Receivable is owned by the Issuer and
has been pledged to the Indenture Trustee. Indication of the Issuer's and the
Indenture Trustee's interest in a Receivable shall be deleted from or modified
on the Servicer's computer systems when, and only when, the related Receivable
shall have been paid in full or repurchased.
(f) If at any time the Company or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its
agents to inspect, audit and make copies of and abstracts from the Servicer's
records regarding any Receivable at any time during normal business hours upon
reasonable notice.
(h) Upon request, the Servicer shall furnish to the Owner
Trustee or to the Indenture Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of this Agreement and of
each amendment hereto, an Opinion of Counsel stating that, in the opinion of
such counsel, either (A) all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Owner Trustee and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest; and
44
(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cutoff
Date to occur, an Opinion of Counsel, dated as of a date during such 90-day
period, stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Owner Trustee and
the Indenture Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (B) no such action shall be necessary to preserve and protect such
interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify any
action necessary (as o the date of such opinion) to be taken in the following
year to preserve and protect such interest.
(j) The Company shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time
periods specified in such sections.
Section 10.03 Notices. All demands, notices, communications and
instructions upon or to the Company, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Company, _, Attention _; (b) in the case of the Servicer, to _,
Attention _; (c) in the case of the Indenture Trustee, at the Corporate Trust
Office; (d) in the case of the Owner Trustee, at the Corporate Trust Office; (e)
in the case of the Rating Agencies, _; or, as to each of the foregoing, at such
other address as shall be designated -by written notice to the other parties.
Section 10.04 Assignment by the Company or the Servicer. Notwithstanding
anything to the contrary contained herein, except as provided in the remainder
of this Section, as provided in Sections 6.04 and 7.03 herein and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Company or the Servicer. The Issuer
and the Servicer hereby acknowledge and consent to the conveyance and assignment
by the Company to _, of any and all of the Company rights and interests (and
corresponding obligations, if any) hereunder with respect to receiving amounts
from the Reserve Account, and the Issuer and the Servicer hereby agree that any
such assignee of the Company, shall be entitled to enforce such rights and
interests directly against the Issuer as if such assignee of the Company, were
itself a party to this Agreement.
Section 10.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Company (and any assignee of the
Company pursuant to Section 10.04), the Servicer, the Issuer, the Owner Trustee,
the Certificateholders, the Indenture Trustee and the Noteholders, and nothing
in this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Owner Trust
Estate or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
Section 10.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such
45
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
Section 10.07 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 10.08 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 10.09 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 10.10 Assignment by Issuer. The Company hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
Section 10.11 Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, the Servicer shall not, prior to the date which is one year
and one day after the termination of this Agreement with respect to the Issuer
or the Company, acquiesce, petition or otherwise invoke or cause the Issuer or
the Company (or any assignee of the Company pursuant to Section 10.04) to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against the Issuer or the Company (or any assignee of the
Company pursuant to Section 10.04) under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or the
Company (or any assignee of the Company pursuant to Section 10.04) or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer or the Company (or any assignee of the Company
pursuant to Section 10.04).
Section 10.12 Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by not in its individual capacity but solely in
its capacity as Owner Trustee of the Issuer and in no event shall in its
individual capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
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(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by The Bank of New York, not in its individual
capacity but solely as Indenture Trustee and in no event shall The Bank of New
York have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
[ ] EQUIPMENT TRUST SECURITIES 200[] - []
By: __________, not in its individual capacity but
solely as Owner Trustee on behalf of the Trust
By:_________________________________________________
Name:_______________________________________________
Title:______________________________________________
Bond Securitization, L.L.C., as Company
By:_________________________________________________
Name:_______________________________________________
Title:______________________________________________
By:_________________________________________________
Name:_______________________________________________
Title:______________________________________________
Acknowledged and accepted as
of the day and year first above
written:
not in its individual capacity
but solely as Indenture Trustee
By: ___________________
Name: ___________________
Title: ___________________
47
Schedule of Receivables SCHEDULE I
[To be Delivered to the Trust at Closing]
Location of Receivable Files SCHEDULE II
[To be supplied]
[To be supplied] EXHIBIT A
[To be supplied] EXHIBIT B
48
APPENDIX A
REGULATION AB REPRESENTATIONS, WARRANTIES AND COVENANTS
PART I
DEFINED TERMS
Section 1.01. As used in this Appendix A, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined); unless otherwise defined
herein, terms used in this Appendix A that are defined in the Agreement to which
this Appendix A is attached shall have the same meanings herein as in the
Agreement:
"Commission": The United States Securities and Exchange Commission.
"Regulation AB": Subpart 229.1100 - Asset Backed Securities (Regulation
AB), 17 C.F.R. SS.SS.229.1100-229.1123, as such may be amended from time to
time, and subject to such clarification and interpretation as have been provided
by the Commission in the adopting release (Asset-Backed Securities, Securities
Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the
staff of the Commission, or as may be provided by the Commission or its staff
from time to time.
"Securities Act": The Securities Act of 1933, as amended.
PART II
COMPLIANCE WITH REGULATION AB
Section 2.01. Intent of the Parties; Reasonableness. Each of the Issuer,
the Company, the Sellers, the Servicer and the Indenture Trustee acknowledges
and agrees that the purpose of Part II of this Appendix A is to facilitate
compliance by the Issuer, the Company, the Sellers, the Servicer and the
Indenture Trustee with the provisions of Regulation AB and the related rules and
regulations of the Commission. Neither the Issuer nor the Sellers shall exercise
its right to request delivery of information, reports or other performance under
these provisions for purposes other than compliance with Regulation AB. Each of
the Issuer, the Sellers and the Servicer acknowledges that interpretations of
the requirements of Regulation AB may change over time, whether due to
interpretive guidance provided by the Commission or its staff. Each of the
Issuer, the Company, the Sellers, the Servicer and the Indenture Trustee hereby
agrees to reasonably comply with all reasonable requests made by any of the
other parties hereto (including any of its assignees or designees), as the case
may be, in good faith for delivery of such information or reports, including,
without limitation, any Servicer compliance statements and reports (solely with
respect to the Servicer), and assessments of compliance and attestation, as may
be required under the then-current interpretations of Regulation AB. The
servicing criteria to be addressed in the Indenture Trustee's assessment of
compliance and attestation shall be set forth on Schedule I attached hereto and
such assessments of compliance and attestations shall be provided by March 15th
and shall only be required for years in which a 10-K is required to be filed.
Appendix A-1 (Sale and Servicing Agreement)
SCHEDULE I
Servicing Criteria To Be Addressed In Assessment Of Compliance
The assessment of compliance to be delivered by the Indenture Trustee, shall
address, at a minimum, the criteria identified as below as "Applicable Servicing
Criteria":
Reference Criteria
Cash Collection and Administration
1122(d)(2)(ii) Disbursements made via wire transfer on behalf of an
obligor or to an investor are made only by
authorized personnel.
Investor Remittances and Reporting
1122(d)(3)(ii) Amounts due to investors are allocated and remitted
in accordance with timeframes, distribution priority
and other terms set forth in the transaction
agreements.
1122(d)(3)(iii) Disbursements made to an investor are posted within
two business days to the Servicer's investor
records, or such other number of days specified in
the transaction agreements.
1122(d)(3)(iv) Amounts remitted to investors per the investor
reports agree with cancelled checks, or other form
of payment, or custodial bank statements.
Sch.-1
