Exhibit 4.3
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SALE AND SERVICING AGREEMENT
among
CATERPILLAR FINANCIAL ASSET TRUST 1998-A
Issuer
CATERPILLAR FINANCIAL FUNDING CORPORATION
Seller
and
CATERPILLAR FINANCIAL SERVICES CORPORATION
Servicer
Dated as of July 1, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.02. Other Definitional Provisions. . . . . . . . . . . . . . . . . 20
ARTICLE II CONVEYANCE OF RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.01. Conveyance of Receivables. . . . . . . . . . . . . . . . . . . 21
SECTION 2.02. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.03. Books and Records. . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III THE RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.01. Representations and Warranties of Seller . . . . . . . . . . . 22
SECTION 3.02. Repurchase by Seller or CFSC Upon Breach . . . . . . . . . . . 23
SECTION 3.04. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.05. Acceptance by Issuer and the Indenture Trustee of the
Receivables; Certification by the Indenture Trustee. . . . . . 25
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES. . . . . . . . . . . . . . 26
SECTION 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.02. Collection of Receivable Payments. . . . . . . . . . . . . . . 27
SECTION 4.03. Realization upon Receivables . . . . . . . . . . . . . . . . . 27
SECTION 4.04. Physical Damage Insurance. . . . . . . . . . . . . . . . . . . 28
SECTION 4.05. Maintenance of Security Interests in Financed Equipment. . . . 28
SECTION 4.06. Covenants of Servicer. . . . . . . . . . . . . . . . . . . . . 28
SECTION 4.07. Purchase by Servicer of Receivables upon Breach. . . . . . . . 28
SECTION 4.08. Servicing Fee. . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.09. Servicer's Certificate . . . . . . . . . . . . . . . . . . . . 29
SECTION 4.10. Annual Statement as to Compliance; Notice of Default . . . . . 29
SECTION 4.11. Annual Independent Certified Public Accountants' Report. . . . 29
SECTION 4.12. Servicer Expenses. . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V DISTRIBUTIONS; RESERVE ACCOUNT; YIELD SUPPLEMENT ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS . . . . . . . . .. . . 30
SECTION 5.01. Establishment of Trust Accounts. . . . . . . . . . . . . . . . 30
SECTION 5.02. Collections. . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 5.03. Additional Deposits. . . . . . . . . . . . . . . . . . . . . . 32
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TABLE OF CONTENTS
(continued)
PAGE
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SECTION 5.04. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.05. Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.06. Yield Supplement Account . . . . . . . . . . . . . . . . . . . 35
SECTION 5.07. Statements to the Subordinated Interest Holders and
Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.08. Net Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.01. Representations of Seller. . . . . . . . . . . . . . . . . . . 38
SECTION 6.02. Liability of Seller; Indemnities . . . . . . . . . . . . . . . 39
SECTION 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . . . . . . . 40
SECTION 6.04. Limitation on Liability of Seller and Others . . . . . . . . . 40
SECTION 6.05. Seller May Own the Certificates or Notes . . . . . . . . . . . 41
ARTICLE VII THE SERVICER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.01. Representations of Servicer. . . . . . . . . . . . . . . . . . 41
SECTION 7.02. Indemnities of Servicer. . . . . . . . . . . . . . . . . . . . 42
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . . . . . . 43
SECTION 7.04. Limitation on Liability of Servicer and Others . . . . . . . . 44
SECTION 7.05. CFSC Not To Resign as Servicer . . . . . . . . . . . . . . . . 44
ARTICLE VIII DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.01. Servicer Default . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.02. Appointment of Successor . . . . . . . . . . . . . . . . . . . 46
SECTION 8.03. Notification to Noteholders and Certificateholders . . . . . . 47
SECTION 8.04. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . 47
SECTION 8.05. Appointment of Custodians. . . . . . . . . . . . . . . . . . . 47
ARTICLE IX TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.01. Optional Purchase of All Receivables; Trust Termination. . . . 48
ARTICLE X FASIT PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.01. FASIT Administration. . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.02. Servicer and FASIT Administrator Indemnification. . . . . . . 52
ARTICLE XI MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 53
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TABLE OF CONTENTS
(continued)
PAGE
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SECTION 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.02. Protection of Title to Trust. . . . . . . . . . . . . . . . . 54
SECTION 11.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.04. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.05. Limitations on Rights of Others . . . . . . . . . . . . . . . 56
SECTION 11.06. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.07. Separate Counterparts . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.08. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.10. Assignment to Indenture Trustee . . . . . . . . . . . . . . . 57
SECTION 11.11. Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . .. 57
SCHEDULE A - Schedule of Receivables . . . . . . . . . . . . . . . . . . . . . A-1
SCHEDULE B - Location of Receivables Files . . . . . . . . . . . . . . . . . . B-1
SCHEDULE C-1 - Form of Indenture Trustee's Initial Certification. . . . . . . . C-1-1
SCHEDULE C-2 - Form of Indenture Trustee's Final Certification. . . . . . . . .C-2-1
SCHEDULE D - Servicer's Certificate. . . . . . . . . . . . . . . . . . . . . . D-1
SCHEDULE E - Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . E-1
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SALE AND SERVICING AGREEMENT dated as of July 1, 1998, among CATERPILLAR
FINANCIAL ASSET TRUST 1998-A, a Delaware business trust (the "Issuer"),
CATERPILLAR FINANCIAL FUNDING CORPORATION, a Nevada corporation (the "Seller"),
and CATERPILLAR FINANCIAL SERVICES CORPORATION, a Delaware corporation (the
"Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables arising
in connection with (i) retail installment sale contracts for the purchase of
machinery or equipment and (ii) equipment finance lease contracts for the lease
of machinery or equipment, in each case acquired or originated by Caterpillar
Financial Services Corporation in the ordinary course of its business;
WHEREAS the Seller has purchased such portfolio of receivables from
Caterpillar Financial Services Corporation and desires to sell such portfolio of
receivables to the Issuer; and
WHEREAS Caterpillar Financial Services Corporation desires 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:
"Administration Agreement" means the Administration Agreement dated as of
July 1, 1998 among the Trust, the Seller, CFSC, as Administrator, and The First
National Bank of Chicago, as indenture trustee, as the same may be amended and
supplemented from time to time.
"Administrator" means the administrator under the Administration Agreement.
"Adjusted Contract Balance" shall mean the Contract Balance of a Receivable
reduced by the Contract Balance Adjustment.
"Adjusted Pool Balance" shall mean the aggregate Adjusted Contract Balance
for all Receivables.
"Adverse FASIT Event" has the meaning assigned thereto in SECTION 10.01(F).
"Affiliate" has the meaning assigned thereto in SECTION 1.01 of the
Indenture.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended and supplemented from time to time.
"Amount Financed" with respect to a Receivable related to a Lease, the
original Net Investment with respect to such Lease, and with respect to a
Receivable related to an Installment
Sales Contract, the sum of the amount advanced under the Receivable toward the
purchase price of the related Financed Equipment, plus any related costs.
"APR" or "Annual Percentage Rate" with respect to any Receivable related to
an Installment Sales Contract means the annual percentage rate of interest of
such Receivable as set forth on the Schedule of Receivables for such Receivable
and with respect to any Receivable related to a Lease, the Implicit Interest
Rate.
"Basic Documents" has the meaning assigned to such term in the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York, Nashville,
Tennessee, Las Vegas, Nevada and Wilmington, Delaware are authorized or
obligated by law, regulation or executive order to remain closed.
"Caterpillar" means Caterpillar Inc., a Delaware corporation, and its
successors.
"Certificates" means the Interest Only Certificates, the Fixed-Rate
Certificates and the Residual Certificate.
"Certificate Balance" equals, on the Closing Date, $16,388,534 and,
thereafter, equals $16,388,534, reduced by all amounts allocable to principal
previously distributed to the Holders of the Fixed-Rate Certificates pursuant to
Section 5.02(a)(ii) of the Trust Agreement.
"Certificate Distribution Account" has the meaning assigned to such term in
the Trust Agreement.
"Certificate Pool Factor" means 1.0000000 as of the Closing Date, and as of
the close of business on any Distribution Date thereafter a seven-digit decimal
figure equal to the Certificate Balance as of such date (after giving effect to
reductions of the Certificate Balance on such date) divided by the Certificate
Balance at the Closing Date.
"CFSC" means Caterpillar Financial Services Corporation, a Delaware
corporation, and its successors.
"Class" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
or the Class B Notes, as applicable.
"Class A Noteholders" has the meaning assigned to such term in SECTION 1.01
of the Indenture.
"Class A Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Class A Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Class A Noteholders' Interest
Carryover Shortfall on such preceding Distribution Date, over (B) the amount in
respect of interest that is actually distributed to the Class A Noteholders on
such preceding Distribution Date, and (ii) interest on the amount of interest
due but not paid to Class A Noteholders on the preceding Distribution Date, to
the extent
3
permitted by law, at the Class A-1 Note Interest Rate, the Class A-2 Note
Interest Rate and the Class A-3 Note Interest Rate, as applicable, from and
including such preceding Distribution Date to, but excluding, the current
Distribution Date.
"Class A Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of (a) the Class A Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (b) the Class A Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Class A Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the aggregate amount of
interest accrued on the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes at the Class A-1 Note Interest Rate, the Class A-2 Note Interest Rate and
the Class A-3 Note Interest Rate, respectively, from and including the preceding
Distribution Date (or, in the case of the initial Distribution Date, with
respect to the Class A-1 Notes, from and including the Closing Date and with
respect to the Class A-2 Notes and Class A-3 Notes, from and including July 25,
1998), to but excluding such Distribution Date (with respect to the Class A-1
Notes, based on a 360-day year and the actual number of days elapsed, and with
respect to the Class A-2 Notes and the Class A-3 Notes, in each case based upon
a 360-day year of twelve 30-day months).
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes, and the
Class A-3 Notes, collectively.
"Class A-1 Note Final Scheduled Distribution Date" means the Distribution
Date occurring in July 1999.
"Class A-1 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A-1 Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on any Distribution Date thereafter means a seven digit
decimal figure equal to the Outstanding Principal Amount of the Class A-1 Notes
as of such date (after giving effect to payments in reduction of the principal
amount of the Class A-1 Notes on such date) divided by the original Outstanding
Principal Amount of the Class A-1 Notes.
"Class A-2 Note Final Scheduled Distribution Date" means the Distribution
Date occurring in September 2001.
"Class A-2 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A-2 Note Pool Factor" means 1.0000000 as of the Closing Date and as
of the close of business on any Distribution Date thereafter means a seven digit
decimal figure equal to the Outstanding Principal Amount of the Class A-2 Notes
as of such date (after giving effect to payments in reduction of the principal
amount of the Class A-2 Notes on such date) divided by the original Outstanding
Principal Amount of the Class A-2 Notes.
"Class A-3 Note Final Scheduled Distribution Date" means the Distribution
Date occurring in April 2003.
"Class A-3 Note Interest Rate" has the meaning assigned to such term in the
Indenture.
4
"Class A-3 Note Pool Factor" means 1.0000000 as of the Closing Date and, as
of the close of business on any Distribution Date thereafter means a seven digit
decimal figure equal to the Outstanding Principal Amount of the Class A-3 Notes
as of such date (after giving effect to payments in reduction of the principal
amount of the Class A-3 Notes on such date) divided by the original Outstanding
Principal Amount of the Class A-3 Notes.
"Class B Note Final Scheduled Distribution Date" means the Distribution
Date occurring in July 2004.
"Class B Noteholders" has the meaning assigned to such term in Section 1.01
of the Indenture.
"Class B Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of (a) the Class B Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (b) the Class B Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Class B Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the aggregate interest
accrued on the Class B Notes at the Class B Note Interest Rate from and
including the preceding Distribution Date (or from and including July 25, 1998
in the case of the initial Distribution Date) to but excluding such Distribution
Date (based on a 360-day year of twelve 30-day months).
"Class B Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Class B Noteholders' Monthly Interest Distributable Amount for the preceding
Distribution Date and (2) any outstanding Class B Noteholders' Interest
Carryover Shortfall on such preceding Distribution Date, over (B) the amount in
respect of interest that is actually distributed to the Class B Noteholders on
such preceding Distribution Date, and (ii) interest on the amount of interest
due but not paid to Class B Noteholders on the preceding Distribution Date, to
the extent permitted by law, at the Class B Note Interest Rate from and
including such preceding Distribution Date to but excluding the current
Distribution Date.
"Class B Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class B Note Pool Factor" means 1.0000000 as of the Closing Date and, as
of the close of business on any Distribution Date thereafter means a seven digit
decimal figure equal to the Outstanding Principal Amount of the Class B Notes as
of such date (after giving effect to payments in reduction of the principal
amount of the Class B Notes on such date) divided by the original Outstanding
Principal Amount of the Class B Notes.
"Closing Date" means July 31, 1998.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.01 (a)(i).
5
"Collection Period" means, with respect to the first Distribution Date, the
calendar month ending on and including July 31, 1998 and, with respect to each
subsequent Distribution Date, the immediately preceding calendar month. Any
amount stated "as of the close of business on the last day of a Collection
Period" shall give effect to the following calculations as determined as of the
end of the day on such last day: (1) all applications of collections and (2) all
distributions to be made on the following Distribution Date.
"Commission" means the Securities and Exchange Commission.
"Components" means, with respect to the Interest Only Certificates,
Component X-0, Xxxxxxxxx X-0, Xxxxxxxxx X-0 and Component B.
"Component A-1" has the meaning given in the Trust Agreement.
"Component A-1 Notional Amount" means, with respect to any date of
determination, the Outstanding Principal Amount of the Class A-1 Notes.
"Component A-1 Rate" means, with respect to any Distribution Date, a per
annum rate equal to the excess of (i) the weighted average (by Adjusted Contract
Balance) of the Net APRs of the Receivables during the preceding Collection
Period over (ii) the Class A-1 Note Interest Rate.
"Component A-2" has the meaning given in the Trust Agreement.
"Component A-2 Notional Amount" means, with respect to any date of
determination, the Outstanding Principal Amount of the Class A-2 Notes.
"Component A-2 Rate" means, with respect to any Distribution Date, a per
annum rate equal to the excess of (i) the weighted average (by Adjusted Contract
Balance) of the Net APRs of the Receivables during the preceding Collection
Period over (ii) the Class A-2 Note Interest Rate.
"Component A-3" has the meaning given in the Trust Agreement.
"Component A-3 Notional Amount" means, with respect to any date of
determination, the Outstanding Principal Amount of the Class A-3 Notes.
"Component A-3 Rate" means, with respect to any Distribution Date, a per
annum rate equal to the excess of (i) the weighted average (by Adjusted Contract
Balance) of the Net APRs of the Receivables during the preceding Collection
Period over (ii) the Class A-3 Note Interest Rate.
"Component B" has the meaning given in the Trust Agreement.
"Component B Notional Amount" means, with respect to any date of
determination, the Outstanding Principal Amount of the Class B Notes.
6
"Component B Rate" means, with respect to any Distribution Date, a per
annum rate equal to the excess of (i) the weighted average (by Adjusted Contract
Balance) of the Net APRs of the Receivables during the preceding Collection
Period over (ii) the Class B Note Interest Rate.
"Component Notional Amounts" means, with respect to Component X-0,
Xxxxxxxxx X-0, Xxxxxxxxx X-0 and Component B of the Interest Only Certificates,
the Component A-1 Notional Amount, the Component A-2 Notional Amount, the
Component A-3 Notional Amount and the Component B Notional Amount, respectively.
"Component Rate" means any of the Component A-1 Rate, the Component A-2
Rate, the Component A-3 Rate and the Component B Rate.
"Contract" means, with respect to any Receivable, an Installment Sale
Contract or a Lease, as applicable, and shall include all documents relating to
an amendment or modification of such Contract.
"Contract Balance" of a Receivable, as of the close of business on the last
day of a Collection Period or as of the Cut-off Date, as applicable, means the
Amount Financed minus the sum of (i) that portion of all Scheduled Payments paid
on or prior to such day allocable to principal using the actuarial method, (ii)
any payment of the Purchase Amount with respect to such Receivable purchased by
the Servicer or repurchased by the Seller and allocable to principal and (iii)
any prepayment in full or any partial prepayments (including any Liquidation
Proceeds) applied to reduce the Contract Balance of such Receivable, in each
case plus (A) accrued interest on delinquent Receivables, (B) accrued interest
on Variable Frequency Receivables which did not make a payment in the preceding
Collection Period and (C) accrued interest for the Collection Period ending on
June 30, 1998 on Receivables originated in June 1998 prior to any payment
required thereunder in June 1998. With respect to each Lease, the Servicer shall
allocate all Scheduled Payments thereon between "principal" and "interest" based
upon each such Lease's Implicit Interest Rate.
"Contract Balance Adjustment" shall mean the sum of the amounts described
in clauses (A), (B) and (C) of the definition of Contract Balance.
"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 the execution of this Agreement is
located at Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, Attention:
Corporate Trust Services Division, except that for purposes of Section 3.02 of
the Indenture, such term shall mean the office or agency of the Indenture
Trustee in the Borough of Manhattan in the City of New York which office at the
date hereof is located at 00 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000; or at such other address as the Indenture Trustee may designate from time
to time by notice to the Noteholders, the Owner Trustee and the Seller, or the
principal corporate trust office of any successor Indenture Trustee (the address
of which the successor Indenture Trustee will notify the Noteholders, the Owner
Trustee and the Seller); provided that for purposes of Section 3.02 of the
Indenture, the address of any such office shall be in the Borough of Manhattan
in the City of New York.
7
"Cross-Collateralized Equipment" means, with respect to any Contract, an
item of machinery or equipment, other than the related Financed Equipment, which
is owned or leased by the related Obligor and which also secures an Obligor's
indebtedness or obligations under the respective Receivable in addition to the
related Financed Equipment.
"Custodian" means The First National Bank of Chicago, as custodian of the
Receivable Files, and each successor thereto pursuant to the Custodial
Agreement.
"Custodial Agreement" means the Custodial Agreement, dated as of July 1,
1998, among CFSC, as originator and Servicer, the Seller, as depositor, the
Issuer, and The First National Bank of Chicago, as Indenture Trustee and
Custodian, as the same may be amended and supplemented from time to time.
"Cut-off Date" means the beginning of business on July 1, 1998.
"Cut-off Date APR" means 7.53% per annum, which is the weighted average APR
of the Receivables (based on the respective Contract Balances) as of the Cut-off
Date.
"Dealer" means each Caterpillar dealer who sold an item of Financed
Equipment relating to a Receivable.
"Dealer Receivable" means a Receivable originated by a Dealer and acquired
by CFSC from such Dealer.
"Determination Date" means, with respect to any Distribution Date, the
fifth Business Day prior to such Distribution Date.
"Discount Receivables" means, with respect to any Distribution Date, those
Receivables that have APRs which are less than the Required Rate.
"Distribution Date" means the 25th day of each calendar month or, if such
day is not a Business Day, the immediately following Business Day, commencing on
August 25, 1998.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee, The Chase Manhattan Bank as long as it is
paying agent under the Trust Agreement or The First National Bank of Chicago, so
long as it is a paying agent under the Indenture, or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank) (i)(A) which has either (1) a long-term unsecured debt rating of
AAA or better by Standard & Poor's and Aaa or better by Xxxxx'x or (2) a
short-term unsecured debt rating or a certificate of deposit rating of A-1+ by
Standard & Poor's and P-1 or better by Xxxxx'x, or any other long-term,
short-term or certificate of deposit rating acceptable to the Rating Agencies
and (B) whose deposits-are insured by the FDIC or (ii)(A) the parent of which
has a long-term or short-term unsecured debt rating acceptable to the Rating
Agencies and (B) whose deposits are insured by the FDIC. If so qualified, the
Indenture Trustee, the Owner Trustee, The Chase Manhattan Bank or The First
National Bank of Chicago may be considered an Eligible Institution for the
purposes of clause (b) of this definition.
8
"Eligible Investments" mean the following investment property, instruments,
money, or other property, book-entry securities, negotiable instruments or
securities (other than any investment property issued by CFSC, the holder of the
Certificates or any of their respective Affiliates):
(a) direct obligations of, and obligations fully guaranteed as to
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 Rating Agency 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 Rating Agency in
the highest investment category granted thereby;
(d) investments in money market funds having a rating from each
Rating Agency in the highest investment category granted thereby (including
funds for which the Indenture Trustee or the Owner Trustee or any of their
respective Affiliates is investment manager or advisor);
(e) investments in common trust funds having a rating from each
Rating Agency in the highest investment category granted thereby maintained and
operated by Eligible Institutions (including the Indenture Trustee or the Owner
Trustee);
(f) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(g) 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 (i) a depository institution or trust company (acting as principal)
described in clause (b) or (ii) a depository institution or trust company the
deposits of which are insured by FDIC; or
(h) any other investment that constitutes a "cash equivalent," a
"debt instrument," or otherwise a "permitted asset" within the meaning of
Section 860L(c)(1) of the Code, and that is permitted by each of the Rating
Agencies.
"Eligible Securities 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
9
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 such depository institution shall have a senior unsecured
rating of at least investment grade from each Rating Agency in one of its
generic rating categories.
"EO Property" has the meaning assigned thereto in SECTION 10.01(N).
"FASIT" means a "financial asset securitization investment trust" within
the meaning of Section 860L of the Code.
"FASIT Administrator" means the Servicer, and if the Servicer is found by a
court of competent jurisdiction to no longer be able to fulfill its obligations
as FASIT Administrator under this Agreement, the Servicer shall appoint a
successor FASIT Administrator, subject to assumption of the obligations of the
FASIT Administrator under this Agreement.
"FASIT Provisions" shall mean the provisions of the federal income tax law
relating to financial asset securitization investment trusts, which appear at
Sections 860I through 860L of Subchapter M of Chapter 1 of the Code, and related
provisions, and temporary and final regulations (or, to the extent not
inconsistent with such temporary or final regulations, proposed regulations) and
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
"Final Maturity Date" means June 30, 2004.
"Final Scheduled Distribution Date" means any of the Class A-1 Note Final
Scheduled Distribution Date, the Class A-2 Note Final Scheduled Distribution
Date, Class A-3 Note Final Scheduled Distribution Date or the Class B Note Final
Scheduled Distribution Date.
"Financed Equipment" means an item of machinery or equipment, together with
all accessions thereto, which was purchased, in the case of an Installment Sales
Contract or leased, in the case of a Lease, by an Obligor pursuant to the terms
of the related Contract, and in either case which secures such related Obligor's
indebtedness or obligations under the respective Receivable.
"First Priority Principal Distribution Amount" means, with respect to any
Distribution Date, an amount equal to the excess, if any, of (i) the Outstanding
Principal Amount of all Class A Notes as of the preceding Distribution Date
(after giving effect to any principal payments made on the Class A Notes on such
preceding Distribution Date) over (ii) the Pool Balance at the end of the
Collection Period preceding such Distribution Date; provided, however, that the
First Priority Principal Distribution Amount shall not be less than the
aggregate of (i) on and after the Class A-1 Note Final Scheduled Distribution
Date, the amount that is necessary to reduce the Outstanding Principal Amount of
the Class A-1 Notes to zero, (ii) on and after the Class A-2 Note Final
Scheduled Distribution Date, the amount that is necessary to reduce the
Outstanding Principal Amount of the Class A-2 Notes to zero and (iii) on and
after the Class A-3 Note Final Scheduled Distribution Date, the amount that is
necessary to reduce the Outstanding Principal Amount of the Class A-3 Notes to
zero.
"Fixed-Rate Certificates" has the meaning assigned to such term in the
Trust Agreement.
10
"Fixed-Rate Certificate Rate" means, with respect to the Fixed-Rate
Certificates on any Distribution Date, a per annum rate equal to the weighted
average (by Adjusted Contract Balance) of the Net APRs of the Receivables
during the preceding Collection Period.
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" with respect to a Note has the meaning assigned to such term in
Section 1.01 of the Indenture or with respect to a Certificate has the meaning
assigned to such term in Section 1.01 of the Trust Agreement. "Noteholder" and
"Certificateholder" have correlative meanings and, with respect to the Reserve
Regular Interest or the YSA Regular Interest, means the Reserve Regular Interest
Holder or the YSA Regular Interest Holder, respectively.
"Implicit Interest Rate" means with respect to any Receivable related to a
Lease, the rate set forth with respect to such Receivable on the Schedule of
Receivables.
"Indenture" means the Indenture dated as of July 1, 1998, between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"Indenture Trustee" means The First National Bank of Chicago, a national
banking association in its capacity as indenture trustee under the Indenture,
its successors in interest and any successor indenture trustee under the
Indenture.
"Initial Pool Balance" means the Pool Balance as of the Cut-off Date, which
is $605,678,534.
"Insolvency Event" means, with respect to a specified Person, (a) the entry
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 90 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.
"Installment Sales Contract" means a fixed rate retail installment sales
contract for the purchase of machinery or equipment related to a Receivable.
"Interest Only Certificates" has the meaning assigned to such term in the
Trust Agreement.
11
"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 Caterpillar Financial Asset Trust 1998-A, a Delaware
business trust.
"Lease" means the equipment finance lease contract related to a Receivable.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind with respect to any Receivable other than mechanics'
liens and any liens which attach to such Receivable by operation of law as a
result of any act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable which has been liquidated by
the Servicer through the sale or other disposition of the related Financed
Equipment.
"Liquidation Proceeds" means, with respect to any Liquidated Receivable,
the moneys collected in respect thereof, from whatever source (including the
proceeds of insurance policies with respect to the related Financed Equipment or
Obligor on 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, excluding (i)
Recoveries and (ii) moneys collected in respect of any Liquidated Receivable in
excess of the Contract Balance therefor.
"Maximum Note Rate" means, as of any date of determination, the highest of
the Class A-1 Note Interest Rate, the Class A-2 Note Interest Rate, the Class
A-3 Note Interest Rate and the Class B Note Interest Rate.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Net APR" means, with respect to any Receivable, the APR therefor less the
Servicing Fee Rate.
"Net Investment" with respect to a Lease equals the present value of the
sum of (i) Scheduled Payments due thereunder and (ii) the residual payment
amount at the end of the Lease term, discounted at the Implicit Interest Rate
for such Lease.
"New York UCC" means the Uniform Commercial Code in effect in the State of
New York.
"Note Register" or "Note Registrar" have the meanings specified in Section
2.04 of the Indenture.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Class A Noteholders' Interest
Distributable Amount and (b) the Class B Noteholders' Interest Distributable
Amount for such Distribution Date.
"Notes" means the Class A Notes and the Class B Notes, collectively.
12
"Notes of a Class" or "Class of Notes" means all Notes included in Class
A-1 Notes, all Notes included in Class A-2 Notes, all Notes included in Class
A-3 Notes, or all Notes included in Class B Notes, whichever is appropriate.
"Obligor" on a Receivable means (a) the purchaser, co-purchasers or lessees
of the Financed Equipment and (b) any other Person, including the related
Dealer, who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, the president, the vice chairman of the board, the executive vice
president, any vice president, a treasurer or any assistant treasurer and (b)
the controller (or chief accounting officer) or a secretary or assistant
secretary, in each case of the Seller 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 Seller, CFSC or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee and/or the
Rating Agencies, as applicable.
"Original Contract" means with respect to each Receivable, a related
Contract that satisfies the following conditions:
(a) (i) Such Contract states as part of its terms:
"Although multiple counterparts of this document may be signed,
only the counterpart accepted, acknowledged and certified by
CFSC on the signature page thereof as the original will
constitute original chattel paper."; and
(ii) CFSC has accepted, acknowledged and certified one originally
executed copy or version of such Contract (and no other) by
stamping on the signature page thereon the following legend and
executing the same where indicated (which execution will be
effected in red by use of a stamp containing a replica of an
authorized signatory of CFSC):
ACCEPTED, ACKNOWLEDGED AND CERTIFIED
BY CATERPILLAR FINANCIAL SERVICES
CORPORATION AS THE ORIGINAL.
By:
-------------------------------
Title: ; or
-------------------------------
(b) Such Contract is in "snap-set" or other form for which only one
original may be produced.
"Outstanding" has the meaning assigned to such term in Section 1.01 of the
Indenture.
"Outstanding Principal Amount" means the aggregate principal amount of all
Notes, or a Class of Notes, as applicable, Outstanding at the date of
determination.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
13
"Owner Trustee" means Chase Manhattan Bank Delaware in its capacity as
owner trustee under the Trust Agreement, its successors in interest and any
successor owner trustee under the Trust Agreement.
"Pool Balance" means, at any time, the aggregate of the Contract Balances
of the Receivables at the end of the preceding Collection Period, after giving
effect to (i) all payments received from Obligors and Purchase Amounts remitted
by the Seller or the Servicer, as the case may be, for such Collection Period,
(ii) Liquidation Proceeds (not in excess of the Contract Balance of any
Liquidated Receivable) received with respect to any Liquidated Receivables
received during such Collection Period and (iii) all Realized Losses on
Liquidated Receivables during such Collection Period.
"Pool Factor" means 1.0000000 as of the Cut-off Date and, as of the close
of business on the last day of a Collection Period thereafter means a seven
digit decimal figure equal to the Pool Balance as of such date divided by the
Initial Pool Balance.
"Principal Distribution Account" means the administrative subaccount within
the Collection Account for the benefit of the Noteholders and the
Certificateholders established by the Indenture Trustee pursuant to Section
5.01.
"Principal Distribution Amount" means, with respect to any Distribution
Date, the sum of the First Priority Principal Distribution Amount, the Second
Priority Principal Distribution Amount and the Regular Principal Distribution
Amount for such Distribution Date.
"Purchase Agreement" means the Purchase Agreement dated as of July 1, 1998,
between the Seller and CFSC, as the same may be amended and supplemented from
time to time.
"Purchase Amount" means, with respect to an Installment Sales Contract or a
Lease, the Contract Balance calculated as of the close of business on the last
day of a Collection Period, required to prepay in full the respective Receivable
under the terms thereof, in each case plus interest at the related APR to the
end of the month during which the Installment Sales Contract or Lease became a
Purchased Receivable; provided however, that such amounts shall be paid to the
Trust in the form of Eligible Investments which constitute debt for federal
income tax purposes maturing after the date remitted but on or before the next
succeeding Distribution Date and not in cash unless (i) the Seller is the
Residual Certificateholder or (ii) the FASIT Administrator has determined that
payment of such cash would not cause the imposition of any "prohibited
transaction" tax with respect to such transaction as described in Code section
860L(e).
"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 repurchased as of such time by the Seller or CSFC pursuant to
SECTION 3.02.
"Rating Agencies" means Moody's and Standard & Poor's. If no such
organization or successor is in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Seller, notice of which designation shall be given to the Indenture
Trustee, the Owner Trustee and the Servicer.
14
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Seller, the Servicer, the Owner Trustee and the
Indenture Trustee in writing that such action will not result in a reduction or
withdrawal of the then current rating of any Class of Notes.
"Realized Loss" means, with respect to any Collection Period, for any
Liquidated Receivable the excess of the Contract Balance of such Liquidated
Receivable over the Liquidation Proceeds with respect to such Receivable for
such Collection Period to the extent allocable to principal.
"Receivable" means any Contract listed on the Schedule of Receivables.
"Receivable Files" means the documents specified in SECTIONS 3.03(A) AND
(B).
"Recoveries" means, with respect to any Liquidated Receivable, (a) monies
collected in respect thereof, from whatever source, but after (i) such
Receivable became a Liquidated Receivable and (ii) the proceeds from the sale or
other disposition of the related Financed Equipment have been received by the
Servicer for deposit in the Collection Account, net of (b) 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 any
Distribution Date, an amount, not less than zero, equal to (i) the excess of (A)
the sum of the Outstanding Principal Amount of all Notes and the Certificate
Balance as of the preceding Distribution Date (in each case, after giving effect
to any principal payments made on the Notes and Certificates on such preceding
Distribution Date) over (B) the Pool Balance at the end of the Collection Period
preceding such Distribution Date, minus (ii) the sum of (A) the First Priority
Principal Distribution Amount and (B) the Second Priority Principal Distribution
Amount for such Distribution Date.
"Required Rate" means, with respect to any Receivable, the sum of (i) the
Maximum Note Rate and (ii) the Servicing Fee Rate.
"Reserve Account" means the account designated as such, established and
maintained pursuant to SECTION 5.01(A)(II).
"Reserve Account Initial Deposit" means the initial deposit by the Seller
on the Closing Date of $7,570,982.
"Reserve Regular Interest" means the uncertificated interest entitled to
distributions of interest and principal under the Trust Agreement equal to the
Reserve Regular Interest Principal Balance and interest thereon at the Reserve
Regular Interest Rate.
"Reserve Regular Interest Principal Balance" means an amount equal to the
Reserve Account Initial Deposit reduced (but not below zero) by payments of
principal in respect thereof pursuant to the Section 5.02(a)(vi) of the Trust
Agreement.
15
"Reserve Regular Interest Rate" means, with respect to any Distribution
Date, a rate equal to the weighted average interest rate or implicit yield
(without regard to losses) of the Eligible Investments on deposit in the Reserve
Account during the preceding Collection Period.
"Reserve Regular Interest Holder" initially means the Seller and,
subsequently, its successors and permitted assignees under the Trust Agreement.
"Residual Certificate" has the meaning assigned to such term in the Trust
Agreement.
"Schedule of Receivables" means the schedule of Receivables (which schedule
may be in the form of microfiche) attached hereto as Schedule A.
"Scheduled Payment" on a Receivable means the scheduled periodic payment
required to be made by the Obligor.
"Second Priority Principal Distribution Amount" means, with respect to any
Distribution Date, an amount, not less than zero, equal to (i) the excess, if
any, of (A) the Outstanding Principal Amount of all Notes as of the preceding
Distribution Date (after giving effect to any principal payments made on the
Notes on such preceding Distribution Date) over (B) the Pool Balance at the end
of the Collection Period preceding such Distribution Date minus (ii) the First
Priority Principal Distribution Amount for such Distribution Date; provided,
however that on and after the Class B Note Final Scheduled Distribution Date,
the "Second Priority Principal Distribution Amount" shall be not less than an
amount that is necessary to reduce the Outstanding Principal Amount of the Class
B Notes to zero.
"Security Entitlement" has the meaning specified in Section 8-102 of the
applicable UCC.
"Securities Intermediary" has the meaning specified in Section
5.01(c)(ii)(B) and initially means The First National Bank of Chicago.
"Seller" means Caterpillar Financial Funding Corporation, a Nevada
corporation, and its successors in interest to the extent permitted hereunder.
"Servicer" means CFSC, as the servicer of the Receivables, and each
successor to CFSC (in the same capacity) 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, substantially in the form of SCHEDULE D or
in such other form that is acceptable to the Indenture Trustee, the Owner
Trustee and the Servicer.
"Servicer's Yield" means, with respect to any Receivable, any late fees,
taxes, extension fees and other administrative fees or similar charges allowed
by applicable law with respect to such Receivable.
16
"Servicing Fee" means the fee payable to the Servicer for services rendered
during the respective Collection Period, determined pursuant to SECTION 4.08.
"Servicing Fee Rate" means 1.0% per annum.
"Specified Reserve Account Balance" with respect to any Distribution Date,
means an amount equal to the lesser of (a) the Outstanding Principal Amount of
the Notes and (b) $7,570,982; provided, however, that on and after the date on
which the Seller eliminates the Reserve Account in accordance with the
provisions of Section 5.05(e), the "Specified Reserve Account Balance" shall be
zero.
"Specified Yield Supplement Account Balance" means for any Distribution
Date, an amount equal to the net present value (discounted monthly at a rate of
2.50% per annum) of the aggregate amount, as of the last day of the related
Collection Period, by which interest on the Contract Balance of each Discount
Receivable (other than any such Receivable that is in default and for which the
Servicer has made a determination that such Receivables will likely become a
Liquidated Receivable) for the remaining term of such Receivable (assuming no
prepayments or delinquencies) at the Required Rate exceeds interest on such
Contract Balance at the APR for each such Receivable; provided, however, that on
and after the date on which the Seller eliminates the Yield Supplement Account
in accordance with the provisions of Section 5.06(f), the "Specified Yield
Supplement Account Balance" shall be zero.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc., or its successor.
"Subordinated Holders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of (i) the excess, if any, of (A) the sum of (1)
the Subordinated Holders' Monthly Interest Distributable Amount for the
preceding Distribution Date and (2) any outstanding Subordinated Holders'
Interest Carryover Shortfall on such preceding Distribution Date, over (B) the
amount in respect of interest on the Subordinated Interests that is actually
deposited in the Certificate Distribution Account on such preceding Distribution
Date, and (ii) interest on the amount of interest due but not paid to any of the
Fixed-Rate Certificateholders, the Reserve Regular Interest Holder, the YSA
Regular Interest Holder or Interest Only Certificateholders on the preceding
Distribution Date, to the extent permitted by law, at the Fixed-Rate Certificate
Rate in the case of the Fixed-Rate Certificates, the Reserve Regular Interest
Rate in the case of the Reserve Regular Interest, the YSA Regular Interest Rate
in the case of the YSA Regular Interest, and at the applicable Component Rate in
the case of each Component of the Interest Only Certificates from such preceding
Distribution Date through the current Distribution Date.
"Subordinated Holders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of (a) the Subordinated Holders' Monthly
Interest Distributable Amount for such Distribution Date and (b) the
Subordinated Holders' Interest Carryover Shortfall for such Distribution Date.
"Subordinated Holders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the aggregate interest
accrued on (i) the Certificate
17
Balance of the Fixed-Rate Certificates at the Fixed-Rate Certificate Rate, (ii)
the Reserve Regular Interest Principal Balance of the Reserve Regular Interest
at the Reserve Regular Interest Rate, (iii) the YSA Regular Interest Principal
Balance of the YSA Regular Interest at the YSA Regular Interest Rate, and (iv)
the Component Notional Amounts of each Component of the Interest Only
Certificates at the respective Component Rates, in each case from and including
the preceding Distribution Date (or from and including July 25, 1998 in the case
of the initial Distribution Date) to but excluding such Distribution Date (based
on a 360-day year of twelve 30-day months).
"Subordinated Interests" means the Fixed Rate Certificates, the Reserve
Regular Interest, the YSA Regular Interest, and the Interest Only Certificates.
"Subordinated Interest Holders" means the Holders of the Fixed Rate
Certificates, the Reserve Regular Interest, the YSA Regular Interest, and the
Interest Only Certificates.
"Tax Returns" shall mean the federal income tax return, on the form to be
specified by the Internal Revenue Service, to be filed on behalf of the Owner
Trust Estate due to its classification as a FASIT under the FASIT Provisions,
together with any and all other information, reports or returns that may be
required to be furnished to the Noteholders or the Certificateholders or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
"Total Available Amount" means, for each Distribution Date, the sum of the
aggregate collections in respect of Receivables (including any Liquidation
Proceeds, any Purchase Amounts paid by the Seller, CFSC and/or the Servicer and
any amounts received from Dealers with respect to Receivables) received during
the related Collection Period, the Yield Supplement Deposit Amount, if any, for
such Distribution Date, Investment Earnings on the Trust Accounts during such
Collection Period, and the amounts, if any, deposited to the Collection Account
pursuant to Section 5.02(a)(viii) of the Trust Agreement, but shall not include
any payments or proceeds (including any Liquidation Proceeds and any amounts
received from Dealers with respect to Receivables) of (i) any Receivables the
Purchase Amount of which has been included in the Total Available Amount in a
prior Collection Period, (ii) any Liquidated Receivable after and to the extent
of the reassignment of such Liquidated Receivable by the Trust to the Seller in
accordance with Section 4.02 and (iii) any Servicer's Yield.
"Total Distribution Amount" means, with respect to any Distribution Date,
the sum of (i) the Total Available Amount for such Distribution Date, (ii) the
amount, if any withdrawn from the Reserve Account and deposited into the
Collection Account on such Distribution Date pursuant to Section 5.05(b) on such
Distribution Date and (iii) the amount, if any withdrawn from the Yield
Supplement Account and deposited into the Collection Account pursuant to Section
5.06(c) on such Distribution Date (excluding any Yield Supplement Deposit Amount
included in the Total Available Amount).
"Total Required Payment" means, for each Distribution Date, the amounts
payable pursuant to Section 5.04(b)(i) through 5.04(b)(v).
18
"Transaction Equipment" means, collectively, the Financed Equipment and, if
applicable, the Cross-Collateralized Equipment.
"Transfer Date" means, with respect to any Distribution Date, the Business
Day preceding such Distribution Date.
"Trust" means the Issuer.
"Trust Accounts" has the meaning assigned thereto in SECTION 5.01(B).
"Trust Account Property" means the Trust Accounts, all amounts and
investments or other investment property held from time to time in any Trust
Account, including the Reserve Account Initial Deposit and the Yield Supplement
Account Deposit, and all proceeds of the foregoing.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as
of July 1, 1998, between the Seller and the Owner Trustee, as the same may be
amended and supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of the
Indenture for the benefit of the Noteholders (including, without limitation, all
property and interests Granted (as defined in the Indenture) to the Indenture
Trustee), including all proceeds thereof.
"Trust Officer" means, (a) 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, Trust Officer, 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 officers' knowledge of and
familiarity with the particular subject, and (b) with respect to the Owner
Trustee, any officer in the Corporate Trustee 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.
"Variable Frequency Receivable" means any Receivable which has a monthly
payment schedule but which, by the terms of the related Contract, permits the
Obligors thereon to skip or reduce payments during certain specified months,
which months are specified at origination of the Contract.
"Yield Supplement Account" means the account designated as such,
established and maintained pursuant to SECTION 5.01(A)(II).
"Yield Supplement Account Deposit" means the initial deposit by the Seller
into the Yield Supplement Account on the Closing Date of $2,339,486 (which
amount is equal to the Specified Yield Supplement Account Balance as of the
Cut-off Date).
"Yield Supplement Deposit Amount" means, with respect to any Distribution
Date, the sum of (i) the amount by which one month's interest on each Class of
Notes at a rate equal to the
19
Class A-1 Note Interest Rate, Class A-2 Note Interest Rate, Class A-3 Note
Interest Rate, or Class B Note Interest Rate, as applicable, exceeds one month's
interest on such Class computed based on a rate equal to the weighted average
(by Adjusted Contract Balance) net APRs of the Receivables during the preceding
Collection Period, (ii) the amount by which one month's interest at a rate equal
to the sum of the Fixed Rate Certificate Rate and the Servicing Fee Rate on the
Pool Balance exceeds one month's interest at such rate determined with respect
to the Adjusted Pool Balance and (iii) the amount by which one month's interest
at the Class A-1 Note Rate on the Class A-1 Notes exceeds one month's interest
at such rate on such Notes computed on the basis of a 360-day year of twelve
30-day months.
"YSA Regular Interest" means the uncertificated interest entitled to
distributions of interest and principal under the Trust Agreement equal to the
YSA Regular Interest Principal Balance and interest thereon at the YSA Regular
Interest Rate.
"YSA Regular Interest Principal Balance" means an amount equal to the Yield
Supplement Account Deposit reduced (but not below zero) by (i) payments of
principal in respect thereof pursuant to the Section 5.02(a)(iv)(y) of the Trust
Agreement (including by reason of Section 5.02(d)), (ii) the aggregate amount of
withdrawals of Yield Supplement Deposit Amount from the Yield Supplement Account
as of the close of the preceding Distribution Date pursuant to section 5.06(b)
of the Sale and Servicing Agreement, and (iii) the aggregate amount of
withdrawals of Certificate Yield Supplement Deposit Amount from the Certificate
Yield Supplement Account as of the close of the preceding Distribution Date
pursuant to Section 5.02(d) of the Trust Agreement.
"YSA Regular Interest Rate" means, with respect to any Distribution Date,
a rate equal to the weighted average interest rate or implicit yield (without
regard to losses) of the Eligible Investments on deposit in the Yield Supplement
Account and the Certificate Yield Supplement Account during the preceding
Collection Period.
"YSA Regular Interest Holder" initially means the Seller and, subsequently,
its successors and permitted assignees under the Trust Agreement.
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS. (a) Capitalized terms used
herein 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 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 generally accepted accounting principles,
20
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; Section, Schedule and Exhibit
references contained in this Agreement are references to 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.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. CONVEYANCE OF RECEIVABLES. In consideration of the Issuer's
delivery to or upon the order of the Seller of (i) Class A-1 Notes with an
aggregate Outstanding Principal Amount of $164,000,000, (ii) Class A-2 Notes
with an aggregate Outstanding Principal Amount of $218,000,000, (iii) Class A-3
Notes with an aggregate Outstanding Principal Amount of $183,114,000, (iv) Class
B Notes with an aggregate Outstanding Principal Amount of $24,176,000, (v) the
Fixed-Rate Certificates with a Certificate Balance of $16,388,534, (vi) the
Interest Only Certificates with an aggregate Component Notional Amount of
$589,290,000 (vii) the Residual Certificate without a principal balance, (viii)
the Reserve Regular Interest and (ix) the YSA Regular Interest, the Seller does
hereby sell, transfer, assign, set over and otherwise convey to the Issuer,
without recourse (subject to the obligations herein) all right, title and
interest of the Seller in and to the following, whether now owned or hereafter
acquired:
(a) the Receivables, and all moneys (including accrued interest) due
thereunder on or after the Cut-off Date;
(b) the interest of the Seller in the Trust Account Property;
(c) the interest of the Seller in the security interests in the
Transaction Equipment granted by Obligors pursuant to the Receivables and any
other interest of the Seller in the Transaction Equipment, including any
Liquidation Proceeds;
(d) the interest of the Seller in any proceeds with respect to the
Receivables from claims on any physical damage, credit life, liability or
disability insurance policies covering Financed Equipment or Obligors;
(e) all right, title and interest of the Seller in and to the
Purchase Agreement, including the right of the Seller to cause CFSC to
repurchase Receivables from the Seller under certain circumstances;
21
(f) the interest of the Seller in any proceeds from recourse to or
other payments by Dealers; and
(g) the proceeds of any and all of the foregoing.
SECTION 2.02. CLOSING.
The conveyance of the Receivables shall take place at the offices of
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, on the Closing Date, simultaneously with the closing of the
transactions contemplated by the Purchase Agreement, the underwriting agreements
relating to the Notes and the other Basic Documents. Upon the acceptance by the
Seller of the proceeds of the sale of the Notes and the Certificates, the
ownership of each Receivable and the contents of the related Receivable File is
vested in the Issuer, subject only to the lien of the Indenture.
SECTION 2.03. BOOKS AND RECORDS.
The transfer of each Receivable shall be reflected on the Seller's balance
sheets and other financial statements prepared in accordance with generally
accepted accounting principles as a transfer of assets by the Seller to the
Issuer. The Seller shall be responsible for maintaining, and shall maintain, a
complete and accurate set of books and records and computer files for each
Receivable which shall be clearly marked to reflect the ownership of each
Receivable by the Issuer.
ARTICLE III
THE RECEIVABLES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller makes
the following representations and warranties as to the Receivables 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, 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) TITLE. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Seller to the Issuer and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. No
Receivable has been sold, transferred, assigned or pledged by the Seller to any
Person other than the Issuer. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable, 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 such Receivable, free and clear of all Liens and rights of others; and the
transfer has been perfected under the applicable UCC.
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(b) ALL ACTIONS TAKEN. All actions necessary in any jurisdiction to
be taken (i) to give the Issuer a first priority perfected ownership interest in
the Receivables (exclusive of Receivables for which a governmental entity is the
Obligor) (including without limitation delivery of the Receivables Files
pursuant to the Custodial Agreement), and (ii) to give the Indenture Trustee a
first priority perfected security interest therein (including, without
limitation, UCC filings with the Delaware and Nevada Secretaries of State and
precautionary UCC filings with the Tennessee Secretary of State) have been
taken.
(c) POSSESSION OF RECEIVABLE FILES. All of the Receivables Files
have been or will be delivered to the Custodian on or prior to the Closing Date,
subject to Section 3.05(b).
(d) NO CONSENTS REQUIRED. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority required
in connection with the execution and delivery by the Seller of this Agreement or
any other Basic Document, the performance by the Seller of the transactions
contemplated by this Agreement or any other Basic Document and the fulfillment
by the Seller of the terms hereof or thereof, have been obtained or have been
completed and are in full force and effect (other than approvals,
authorizations, consents, orders or other actions which if not obtained or
completed or in full force and effect would not have a material adverse effect
on the Seller or the Issuer or upon the collectability of any Receivable or upon
the ability of the Seller to perform its obligations under this Agreement).
SECTION 3.02. REPURCHASE BY SELLER OR CFSC UPON BREACH. (a) The Seller,
the Servicer, CFSC or the Owner Trustee, as the case may be, shall inform the
other parties to the Agreement, CFSC and the Indenture Trustee promptly, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to SECTION 3.01 or any breach of CFSC's representations
and warranties made pursuant to Section 3.02(b) of the Purchase Agreement.
Unless any such breach shall have been cured by the last day of the second month
following the month of the discovery thereof by the Owner Trustee or receipt by
the Owner Trustee of written notice from the Seller or the Servicer of such
breach, the Seller shall be obligated, and, if necessary, the Seller or the
Owner Trustee shall enforce, the obligation of CFSC, if any, under Section
6.02(a)(i) of the Purchase Agreement to repurchase any Receivable materially and
adversely affected by any such breach as of such last day (or, at the Seller's
option, as of the last day of the first month following the month of the
discovery).
(b) In consideration of the repurchase of the Receivable, the Seller
shall remit the Purchase Amount in the manner specified in SECTION 5.03;
PROVIDED, HOWEVER, that the obligation of the Seller to repurchase any
Receivable arising solely as a result of a breach of CFSC's representations and
warranties pursuant to Section 3.02(b) of the Purchase Agreement is subject to
the receipt by the Seller of the Purchase Amount from CFSC. Subject to the
provisions of SECTION 6.02, the sole remedy of the Issuer, the Owner Trustee,
the Indenture Trustee, the Noteholders or the Certificateholders with respect to
a breach of representations and warranties pursuant to SECTION 3.01, Section
3.02(b) of the Purchase Agreement and the agreement contained in this Section
shall be to require the Seller to repurchase Receivables pursuant to this
Section, subject to the conditions contained herein, or to enforce CFSC's
obligation, if any, to the Seller to repurchase such Receivables pursuant to the
Purchase Agreement. The Owner Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section.
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SECTION 3.03. CUSTODY OF RECEIVABLE FILES. The Seller, the Issuer and the
Indenture Trustee have appointed the Custodian pursuant to the Custodial
Agreement, and the Custodian has thereby accepted such appointment, to act as
custodian of the following documents:
(a) the Original Contract related to each Receivable; and
(b) with respect to each Dealer Receivable, any documents used to
assign such Dealer Receivable and the related Dealer's security interest in the
Transaction Equipment to CFSC.
SECTION 3.04. DUTIES OF SERVICER.
(a) RECEIVABLE FILES. The Servicer shall maintain such accurate and
complete accounts, records and computer systems pertaining to each Receivable
File as shall enable itself and the Issuer to comply with this Agreement. In
performing its duties, 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 receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic audits 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 maintain its accounts, records and computer systems as herein provided and
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, the Owner Trustee or the Indenture Trustee.
(b) ACCESS TO RECORDS. The Servicer shall notify the Owner Trustee
and the Indenture Trustee of any change in the location of its principal place
of business in writing not later than 90 days after any such change. The
Servicer shall make available to the Owner Trustee and the Indenture Trustee, or
their respective duly authorized representatives, attorneys or auditors, a list
of locations of the related accounts, records and computer systems maintained by
the Servicer at such times as the Owner Trustee or the Indenture Trustee shall
instruct. The Indenture Trustee shall have access to such accounts, records and
computer systems.
(c) SAFEKEEPING. The Servicer shall hold on behalf of the Issuer (i)
all file stamped copies of UCC financing statements evidencing the security
interest of CFSC in Transaction Equipment, and (ii) any and all documents, other
than the Receivable Files, that CFSC or the Seller shall keep on file, in
accordance with its customary procedures, relating to a Receivable, an Obligor
or Transaction Equipment, and shall maintain such accurate and complete records
pertaining to each Receivable as shall enable the Issuer to comply with this
Agreement. Upon instruction from the Indenture Trustee, the Servicer shall
release any such UCC Filing or other document 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.
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SECTION 3.05. ACCEPTANCE BY ISSUER AND THE INDENTURE TRUSTEE OF THE
RECEIVABLES; CERTIFICATION BY THE INDENTURE TRUSTEE.
(a) The Issuer hereby acknowledges constructive receipt, through the
Custodian, for each Receivable, of a Receivable File in the form delivered to it
by the Seller and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets delivered to
it, in trust upon and subject to the conditions set forth in the Trust Agreement
for the benefit of the Certificateholders, subject to the terms and conditions
of the Indenture and this Agreement. By its acknowledgment of this Agreement,
the Indenture Trustee agrees to execute and deliver on the Closing Date an
acknowledgement of receipt by it, or by the Custodian on its behalf, of a
Receivables File for each Receivable in the form attached as Schedule C-1
hereto, and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets delivered to it
in trust upon and subject to the conditions of the Indenture for the benefit of
the Noteholders and, to the extent set forth therein and herein, for the benefit
of the Certificateholders. The Indenture Trustee agrees to review (or cause to
be reviewed) each Receivable File within 45 days after the Closing Date and to
deliver to the Seller, the Issuer, the Owner Trustee, each Rating Agency and the
Servicer a final certification in the form attached hereto as Schedule C-2 to
the effect that, as to each Receivable listed on the Schedules of Receivables
(other than any Receivable paid in full or any Receivable specifically
identified in such certification as not covered by such certification): (i) all
documents required to be delivered to it pursuant to this Agreement (including
without limitation each of the items listed in Section 3.03(a) and (b)) are in
its possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered (handwritten additions,
changes or corrections shall not constitute physical alteration if initialed by
the Obligor) and relate to such Receivable, and (iii) based on its examination
and only as to the foregoing documents, the information set forth on the
Schedule of Receivables accurately reflects the information set forth on the
Receivable Files. The Indenture Trustee shall be under no duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate for
the represented purpose or that they are other than what they purport to be on
their face.
(b) If the Indenture Trustee during the process of reviewing the
Receivable Files finds any document constituting a part of a Receivable File
which is not executed, has not been received, is unrelated to the related
Receivable identified on Schedule A hereto, or does not conform to the
requirements of Section 3.03 or substantively to the description thereof as set
forth on the Schedule of Receivables, the Indenture Trustee shall promptly so
notify the Servicer, the Owner Trustee and the Seller. In performing any such
review, the Indenture Trustee may conclusively rely on the Servicer as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Indenture Trustee's review of the Receivable
Files is limited solely to confirming that the documents listed in Section 3.03
have been executed and received and relate to the Receivable Files identified on
the Schedule of Receivables. The Servicer agrees to use reasonable efforts to
cause to be remedied a material defect in a document constituting part of a
Receivable File of which it is so notified by the Indenture Trustee. If,
however, the Servicer has not caused to be remedied any defect described in such
final certification by the last day of the second month following the month of
receipt by it of the final certification referred to in paragraph (a) of this
Section 3.05, and such defect
25
materially and adversely affects the interests of the Noteholders or the
Certificateholders in the related Receivable, the Seller shall remit the
Purchase Amount in the manner specified in Section 5.03; PROVIDED, HOWEVER, that
the obligation of the Seller to repurchase any Receivable is subject to the
receipt by the Seller of the Purchase Amount from CFSC. Subject to the
provisions of Section 5.03, the sole remedy of the Issuer, the Owner Trustee,
the Indenture Trustee, the Noteholders or the Certificateholders with respect to
such a defect and the agreement contained in this Section shall be to require
the Seller to repurchase Receivables pursuant to this Section, subject to the
conditions contained herein, or to enforce CFSC's obligation to the Seller to
repurchase such Receivables pursuant to the Purchase Agreement. The Owner
Trustee shall have no duty to conduct any affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Receivable pursuant
to this Section.
(c) Upon receipt by the Indenture Trustee of a certification of the
Servicer of a repurchase of a Receivable described in Section 3.05(b) above and
receipt of the Purchase Amount, the Indenture Trustee is required to release to
CFSC the related Receivables File and shall execute, without recourse, and
deliver such instruments of transfer as may be necessary to transfer such
Receivable to CFSC.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. DUTIES OF SERVICER. The Issuer hereby engages the Servicer
and the Servicer hereby agrees to 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 receivables that it services for itself
or others. The Servicer's duties shall include calculating, billing, collection
and posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, reporting tax information to Obligors
(to the extent required under the related Contracts), accounting for
collections, and furnishing monthly and annual statements to the Owner Trustee
and the Indenture Trustee with respect to distributions. 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 such
Receivables or to the Transaction 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
26
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 OF RECEIVABLE PAYMENTS. (a) 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
machinery receivables that it services for itself or others. The Servicer shall
not reduce the principal balance of, reduce the APR of, reduce the aggregate
amount of Scheduled Payments or the amount of any Scheduled Payment due under
any Receivable, release or modify CFSC's security interest in the Financed
Equipment securing such Receivable, or otherwise amend or modify a Receivable in
a manner that would have a material adverse effect on the interests of the
Noteholders. Notwithstanding the foregoing, the Servicer may grant extensions
on a Receivable; PROVIDED, HOWEVER, that if the Servicer extends the due date of
any Scheduled Payment to a date beyond the Final Maturity Date, it shall
promptly purchase the Receivable from the Issuer in accordance with the terms of
SECTION 4.07. The Servicer shall allocate payments made by or on behalf of the
Obligor with respect to the Receivables first to any overdue scheduled payment
(including taxes and miscellaneous billables), second to the current scheduled
payment (including taxes and miscellaneous billables) and third to late fees.
The Servicer may in its discretion waive any other amounts of Servicer's Yield
that may be collected in the ordinary course of servicing a Receivable.
Notwithstanding anything in this Agreement to the contrary, in the event a
Receivable becomes a Liquidated Receivable, any Recoveries relating thereto
shall be paid to the Servicer and such Liquidated Receivable shall be assigned
by the Trust to the Seller.
(b) Notwithstanding anything in this Agreement to the contrary (but
subject to the immediately succeeding sentence), the Servicer may refinance any
Receivable only if (i) such Obligor executes a new installment sales contract or
lease and (ii) the proceeds of such refinancing are used to pre-pay all
obligations in full of such Obligor under such Receivable (which amount shall be
applied in accordance with Section 5.02). The new receivable created by the
refinancing shall not be property of the Trust. The parties hereto intend that
the Servicer will not refinance a Receivable pursuant to this SECTION 4.02(B) in
order to provide direct or indirect assurance to the Seller, the Indenture
Trustee, the Owner Trustee, the Noteholders, or the Certificateholders, as
applicable, against loss by reason of the bankruptcy or insolvency (or other
credit condition) of, or default by, the Obligor on, or the uncollectibility of,
any Receivable.
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 realize upon the Transaction Equipment
securing any Receivable as to which the Servicer shall have determined eventual
payment in full is unlikely or, with respect to Financed Equipment relating to
any Lease, as to which the related Obligor has returned the Financed Equipment.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of comparable receivables,
which may include selling the Transaction Equipment at public or private sale.
The foregoing shall be subject to the provision that, in any case in which any
item of Transaction Equipment shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such
Transaction Equipment unless it shall determine in its discretion that such
repair and/or
27
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 Transaction 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 (including each Receivable on which a governmental entity is
the Obligor) in the related Financed Equipment. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such security
interest or to maintain such perfected security interest on behalf of the Issuer
and the Indenture Trustee in the event of the relocation of Financed Equipment,
or for any other reason.
SECTION 4.06. COVENANTS OF SERVICER. The Servicer shall not: (i) release
the Transaction Equipment securing any Receivable from the security interest
granted by such Receivable in whole or in part or modify such security interest
except (A) in accordance with SECTION 4.03 or (B) in the event of payment in
full by the Obligor thereunder; (ii) impair the rights of the Issuer, the
Indenture Trustee, the Certificateholders or the Noteholders in any Receivable;
(iii) modify or refinance a Receivable except in accordance with the terms of
SECTION 4.02; or (iv) fail to return a Receivable File released to it pursuant
to Section 3.3 of the Custodial Agreement within five (5) Business Days of such
release.
SECTION 4.07. PURCHASE BY SERVICER OF RECEIVABLES UPON BREACH. The Servicer
or the Owner Trustee shall inform the other party and the Indenture Trustee, the
Seller and CFSC promptly, in writing, upon the discovery of any breach pursuant
to SECTION 4.02, 4.05 or 4.06. Unless the breach shall have been cured by the
last day of the second month following such discovery (or, at the Seller's
election, the last day of the first following month) (except for the failure to
return a released Receivable File, for which there is no grace period beyond the
specified five (5) Business Days), the Servicer shall purchase any Receivable
materially and adversely affected by such breach. If the Servicer takes any
action pursuant to SECTION 4.02 that impairs the rights of the Issuer, the
Indenture Trustee, the Certificateholders or the Noteholders in any Receivable
or as otherwise provided in SECTION 4.02, the Servicer shall purchase such
Receivable. 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 5.03. Subject to SECTION 7.02, 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 any affirmative investigation as to the occurrence of any condition
requiring the purchase of any Receivable pursuant to this Section. The parties
hereto intend that the Servicer will not intentionally breach or cause a breach
pursuant to SECTION 4.02, 4.05 or 4.06 in order to provide direct or indirect
assurance to the Seller, the Indenture Trustee, the Owner Trustee, the
Noteholders, or the Certificateholders, as applicable, against loss by reason of
the bankruptcy or insolvency (or other credit condition) of, or default by, the
Obligor on, or the uncollectibility of, any Receivable.
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SECTION 4.08. SERVICING FEE. On each Determination Date, the Servicer
shall be entitled to receive the Servicing Fee in respect of the immediately
preceding Collection Period equal to the product of (a) one-twelfth of the
Servicing Fee Rate and (b) the Pool Balance as of the first day of such
preceding Collection Period. The Servicer shall also be entitled to any
Servicer's Yield with respect to Receivables, collected (from whatever source)
on the Receivables, which Servicer's Yield shall be paid to the Servicer
pursuant to SECTION 5.08. In addition, the Servicer shall also be entitled to
Investment Earnings on the Collection Account (but not the Reserve Account or
the Yield Supplement Account) and Liquidation Proceeds in excess of the Contract
Balance of any Contract in the priority set forth in Section 5.04(b) hereof.
SECTION 4.09. SERVICER'S CERTIFICATE. On each Determination Date, the
Servicer shall deliver to the Owner Trustee (and each Paying Agent of the Owner
Trustee), the Indenture Trustee and the Seller, with a copy to the Rating
Agencies, a Servicer's Certificate containing all information necessary to make
the distributions pursuant to SECTIONS 5.04, 5.05 and 5.06 for the Collection
Period preceding the date of such Servicer's Certificate. Neither the Owner
Trustee nor the Indenture Trustee shall be required to determine, confirm or
recalculate the information contained in the Servicer's Certificate.
Receivables to be purchased by the Servicer or to be repurchased by the Seller
shall be identified by the Servicer by account number with respect to such
Receivable as specified in SCHEDULE A.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Owner Trustee and the Indenture Trustee
and the Rating Agencies, on or before April 30 of each year beginning April 30,
1999, an Officers' Certificate stating that (i) a review of the activities of
the Servicer during the preceding 12-month period ending on December 31 (or, in
the case of April 30, 1999, the period from the Closing Date to December 31,
1998) and of its performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based on
such review, the Servicer has fulfilled in all material respects all its
obligations under this Agreement throughout such period or, if there has been a
default in the fulfillment of any such obligation in any material respect,
specifying each such default known to such officers and the nature and status
thereof. 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 by a request in writing to the Owner Trustee at its address in
SECTION 11.03.
(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).
SECTION 4.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT. In
order to confirm that the servicing of the Receivables has been conducted in
compliance with the terms of this Agreement, the Servicer shall cause a firm of
independent certified public accountants, which may also render other services
to the Servicer, the Seller or CFSC, to deliver to the Owner Trustee and the
Indenture Trustee on or before April 30 of each year beginning April 30, 1999, a
report addressed to the Board of Directors of the Servicer, the Owner Trustee
and the Indenture
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Trustee, to the effect that such firm has examined the financial statements of
CFSC and issued its report thereon and that such examination (a) was made in
accordance with generally accepted auditing standards and accordingly included
such tests of the accounting records and such other auditing procedures as such
firm considered necessary in the circumstances; (b) included tests relating to
machinery installment sale contracts serviced for others in accordance with
requirements agreed to by the Servicer and the Indenture Trustee, to the extent
the tests are applicable to the servicing obligations set forth in this
Agreement; and (c) discloses the results of such tests during the preceding
12-month period ended December 31 (or in the case of the report due on or before
April 30, 1999, the period from the Closing Date to December 31, 1998) that, in
the firm's opinion, such program requires such firm to report.
Such report will also indicate that the firm is independent of the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
SECTION 4.12. 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 the Owner Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT; YIELD SUPPLEMENT ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNTS.
(a) (i) The Servicer, for the benefit of the Noteholders, the
Certificateholders and the Subordinated Interest Holders, shall establish and
maintain in the name "Caterpillar Financial Asset Trust 1998-A, subject to the
security interest of The First National Bank of Chicago, as Indenture Trustee"
an Eligible Securities Account (the "Collection Account"). The Indenture Trustee
shall establish and maintain an administrative subaccount within the Collection
Account for the benefit of the Noteholders and the Certificateholders (the
"Principal Distribution Account").
(ii) The Seller, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name "Caterpillar
Financial Asset Trust 1998-A, subject to the security interest of The First
National Bank of Chicago, as Indenture Trustee" an Eligible Securities
Account (the "Reserve Account").
(iii) The Seller, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name "Caterpillar
Financial Asset Trust 1998-A, subject to the security interest of The First
National Bank of Chicago, as Indenture Trustee" an Eligible Securities
Account (the "Yield Supplement Account").
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(b) Funds on deposit in the Collection Account, the Reserve Account
and the Yield Supplement Account (collectively the "Trust Accounts") shall be
invested by the Indenture Trustee in Eligible Investments selected by the
Servicer; PROVIDED, HOWEVER, it is understood and agreed that the Indenture
Trustee shall not be liable for any loss arising from such investment in
Eligible Investments (other than losses from nonpayment of investments in
obligations of The First National Bank of Chicago). All such Eligible
Investments shall be held by the Indenture Trustee for the benefit of the
applicable Noteholders and, if applicable, the Certificateholders. Other than as
permitted by the Rating Agencies, funds on deposit in the Trust Accounts shall
be invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Transfer Date preceding the
immediately following Distribution Date; PROVIDED, HOWEVER, that funds on
deposit in Trust Accounts may be invested in Eligible Investments of the
Indenture Trustee which may mature so that such funds will be available on the
Distribution Date. Funds deposited in a Trust Account on a Transfer Date which
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be invested overnight, but if so invested, such
investments must meet the conditions of the immediately preceding sentence.
(c) (i) The Trust Accounts shall be under the control (within the
meaning of Section 8-106 of the applicable UCC) of the Indenture Trustee for the
benefit of the Noteholders and the Certificateholders or the Noteholders, as
applicable. If, at any time, any of the Trust Accounts ceases to be an Eligible
Securities 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 Securities Account and shall transfer any cash and/or any investments
to such new Trust Account. So long as The First National Bank of Chicago is an
Eligible Institution, any Trust Account may be maintained with it in an Eligible
Securities Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee and The First National Bank of Chicago, as Securities
Intermediary, agree, and each subsequent Securities Intermediary shall
agree, by its acceptance hereof, that:
(A) any Trust Account Property held in securities
accounts shall be held solely in the Eligible Securities
Accounts; and each such Eligible Securities Account shall be
subject to the control (within the meaning of Section 8-106 of
the UCC) of the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect thereto;
(B) all Trust Account Property shall be delivered to the
Indenture Trustee by causing the financial institution then
maintaining the related Trust Account (each such institution
being referred to herein as a "Securities Intermediary") to
create a Security Entitlement in such Trust Account with respect
to such Trust Account Property by indicating by book-entry that
such Trust Account Property has been credited to such Trust
Account. Each Trust Account shall only be established at a
financial institution which agrees (i) to comply with entitlement
orders with respect to such Trust Account issued by the Indenture
Trustee without further
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consent of the Seller, Servicer or Issuer and (ii) that
each item of property credited to such Trust Account shall
be treated as a "financial asset" within the meaning of
Section 8-102(a)(9) of the UCC.
(C) Upon release of the lien of the Indenture Trustee
under the Indenture in accordance with the terms thereof, each of
the Trust Accounts shall be put in the name of the Trust and the
Trust shall have all rights granted to the Indenture Trustee
pursuant to this Agreement.
(iii) 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.
(iv) The Indenture Trustee is hereby authorized to execute
purchase and sales directed by the Servicer through the facilities of
its own trading or capital markets operations. The Indenture Trustee
shall send statements to the Servicer and the Issuer monthly
reflecting activity for each amount created hereunder for the
preceding month. Although the Issuer recognizes that it may obtain a
broker confirmation at no additional cost, the Issuer hereby agrees
that confirmations of investments are not required to be issued by the
Indenture Trustee for each month in which a monthly statement is
rendered. No statement need be rendered pursuant to the provision
hereof if no activity occurred in the account for such month.
SECTION 5.02. COLLECTIONS. Subject to SECTION 5.03, the Servicer shall
remit to the Collection Account (i) all payments by or on behalf of the Obligors
with respect to the Receivables (other than Purchased Receivables) and (ii) all
Liquidation Proceeds (except to the extent of Recoveries applied in accordance
with SECTION 4.02), in each case as collected during each Collection Period
within two Business Days of receipt and identification thereof. Notwithstanding
the foregoing, if (i) CFSC is the Servicer, (ii) a Servicer Default shall not
have occurred and be continuing and (iii) CFSC maintains a short-term rating of
at least A-1 by Standard & Poor's and P-1 by Moody's, the Servicer may remit
such collections with respect to each Collection Period to the Collection
Account on or before the second Business Day prior to the following 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 or CFSC.
SECTION 5.03. ADDITIONAL DEPOSITS. (a) The Servicer and the Seller shall
deposit or cause to be deposited in the Collection Account the Purchase Amounts
with respect to Purchased Receivables as set forth in the immediately following
sentence, and the Servicer shall deposit in the Collection Account all amounts
to be paid under SECTION 9.01 as set forth therein. The Servicer and the Seller
will deposit the Purchase Amount with respect to each Purchased Receivable when
such obligations are due, unless, with respect to Purchase Amounts to be
remitted by the Servicer, the Servicer shall be permitted to make deposits
monthly prior to each
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Distribution Date pursuant to SECTION 5.02, in which case such deposits shall be
made in accordance with such Section. The Servicer shall account for Purchase
Amounts paid by itself and the Seller separately.
SECTION 5.04. DISTRIBUTIONS. (a) On each Determination Date, the
Servicer shall calculate all amounts required to determine the amounts to be
remitted to the Class A Noteholders, the Class B Noteholders, the
Certificateholders, the Reserve Regular Interest and the YSA Regular Interest.
(b) On the second Business Day prior to each Distribution Date, the
Servicer shall instruct the Indenture Trustee, which instruction shall be in the
form of EXHIBIT B to SCHEDULE E (or such other form that is acceptable to the
Indenture Trustee and the Servicer), to make the following deposits and
distributions for receipt by the Servicer, the Noteholders, or for deposit in
the applicable Trust Account or Certificate Distribution Account by 11:00 A.M.
(New York time) on such following Distribution Date to the extent of the Total
Distribution Amount on deposit in the Collection Account, in the following order
of priority:
(i) to the Servicer (if CFSC or an Affiliate is not the
Servicer), the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Class A Noteholders pro rata based upon the amount
of interest accrued on each such Class of Class A Notes, the Class A
Noteholders' Interest Distributable Amount;
(iii) to the Principal Distribution Account, the First Priority
Principal Distribution Amount, if any;
(iv) to the Class B Noteholders, the Class B Noteholders'
Interest Distributable Amount;
(v) to the Principal Distribution Account, the Second Priority
Principal Distribution Amount, if any;
(vi) to the Yield Supplement Account, an amount equal to the
excess of the Specified Yield Supplement Account Balance over the amount on
deposit in the Yield Supplement Account on such Distribution Date;
(vii) to the Reserve Account, an amount equal to the excess of
the Specified Reserve Account Balance over the amount on deposit in the
Reserve Account on such Distribution Date;
(viii) if any Class of Notes is Outstanding prior to giving
effect to distributions on such Distribution Date, to the Principal
Distribution Account, the Regular Principal Distribution Amount;
(ix) to the Servicer (if CFSC or an affiliate is the Servicer),
the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;
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(x) to the Certificate Distribution Account, the remaining
Total Distribution Amount.
(c) On the second Business Day prior to each Distribution Date, the
Servicer shall instruct the Indenture Trustee, which instruction shall be in the
form of EXHIBIT B to SCHEDULE E (or such other form that is acceptable to the
Indenture Trustee and the Servicer), to make the following distributions from
the Principal Distribution Account by 11:00 A.M. (New York time) on such
following Distribution Date in the following order of priority:
(i) to the Class A-1 Noteholders in reduction of the
Outstanding Principal Amount of the Class A-1 Notes until the Outstanding
Principal Amount thereof has been reduced to zero;
(ii) to the Class A-2 Noteholders in reduction of the
Outstanding Principal Amount of the Class A-2 Notes until the Outstanding
Principal Amount thereof has been reduced to zero;
(iii) to the Class A-3 Noteholders in reduction of the
Outstanding Principal Amount of the Class A-3 Notes until the Outstanding
Principal Amount thereof has been reduced to zero;
(iv) to the Class B Noteholders in reduction of the Outstanding
Principal Amount of the Class B Notes until the Outstanding Principal
Amount thereof has been reduced to zero; and
(v) to the Certificate Distribution Account, any funds
remaining on deposit in the Principal Distribution Account.
(d) Notwithstanding anything in this Section 5.04 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the Notes
are accelerated pursuant to Section 5.02 of the Indenture, all amounts on
deposit in the Collection Account shall be applied in accordance with Section
5.04(b) of the Indenture.
SECTION 5.05. RESERVE ACCOUNT. (a) On the Closing Date, the Seller
shall deposit the Reserve Account Initial Deposit into the Reserve Account. The
Servicer shall determine the Specified Reserve Account Balance for each
Distribution Date.
(b) On each Determination Date, the Servicer shall determine if the
Total Required Payment exceeds the Total Available Amount for the related
Distribution Date, and if such an excess exists the Servicer shall instruct the
Indenture Trustee to withdraw from the Reserve Account on the related
Distribution Date, to the extent of funds available therein, an amount equal to
such excess and deposit such funds into the Collection Account for inclusion as
part of the Total Distribution Amount for distribution on such Distribution Date
in accordance with the priorities set forth in Section 5.04(b).
(c) On each Determination Date, the Servicer shall determine if the
amount on deposit in the Reserve Account (after taking into account any deposits
thereto pursuant to Sections 5.04(b) and any withdrawals therefrom pursuant to
Section 5.05(b)) is greater than the
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Specified Reserve Account Balance for such Distribution Date (which shall be
calculated to give effect to the reduction in the Outstanding Principal Amount
of the Notes to result from payments to Noteholders pursuant to Section 5.04(c)
on such Distribution Date) and the Servicer shall instruct the Indenture Trustee
to deposit such amounts in the Certificate Distribution Account.
(d) Notwithstanding anything in this Section 5.05 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the Notes
are accelerated pursuant to Section 5.02 of the Indenture, amounts on deposit in
the Reserve Account shall be applied by the Indenture Trustee in accordance with
Section 5.04(b) of the Indenture.
(e) Upon satisfaction of the Rating Agency Condition and delivery to
the Indenture Trustee of an Opinion of Counsel to the effect that such action
will not adversely affect the status of the Trust as a FASIT under the Code and
the transferee or assignee of the Reserve Account, if any, agrees in writing to
tax positions for tax purposes consistent with the Seller's position, the Seller
may eliminate the Reserve Account and replace it with an alternative
arrangement; provided, however, that any funds released from the Reserve Account
shall be applied solely towards and in reduction (but not below zero) of the
Reserve Regular Interest principal balance and interest thereon through the date
of such release at the Reserve Interest Rate.
SECTION 5.06. YIELD SUPPLEMENT ACCOUNT.
(a) On the Closing Date, the Seller shall deposit into the Yield
Supplement Account from the proceeds of the sale of the Notes an amount equal to
the Yield Supplement Account Deposit.
(b) On each Determination Date, the Servicer shall instruct the
Indenture Trustee to withdraw on the related Distribution Date from the Yield
Supplement Account and deposit to the Collection Account the Yield Supplement
Deposit Amount for inclusion as part of the Total Distribution Amount for such
Distribution Date.
(c) On each Determination Date, the Servicer shall determine if (i)
the Total Required Payment exceeds (ii) the sum of the Total Available Amount
for the related Distribution Date and the amounts on deposit in the Reserve
Account (prior to giving effect to withdrawals therefrom on such Distribution
Date), and if such an excess exists the Servicer shall instruct the Indenture
Trustee to withdraw from the Yield Supplement Account (to the extent of amounts
available therein and after giving effect to withdrawals therefrom pursuant to
Section 5.06(b)) on the related Distribution Date, an amount equal to such
excess and deposit such funds into the Collection Account for inclusion as part
of the Total Distribution Amount for distribution on such Distribution Date in
accordance with the priorities set forth in Section 5.04(b).
(d) On each Determination Date, the Servicer shall calculate the
Specified Yield Supplement Account Balance for the related Distribution Date and
shall notify the Indenture Trustee of such amount. The Servicer shall instruct
the Indenture Trustee to withdraw on the related Distribution Date from the
Yield Supplement Account the excess, if any, of the amount then on deposit in
the Yield Supplement Account (after giving effect to withdrawals therefrom
35
for such Distribution Date pursuant to Section 5.06(b) and (c)) over the
Specified Yield Supplement Account Balance and (i) apply pursuant to (and in
order of) Sections 5.04(b)(vii) through 5.04(b)(x) that portion of such excess
equal to the amount by which (x) the cumulative aggregate deposits to the Yield
Supplement Account pursuant to section 5.04(b)(vi) exceeds (y) the cumulative
aggregate excess amounts applied through the preceding Distribution Date
pursuant to this Section 5.06(d)(i), and (ii) deposit any remaining excess to
the Certificate Distribution Account; provided, however that no such withdrawals
from the Yield Supplement Account shall be made pursuant to this Section 5.06(d)
if the Reserve Account Balance for such Distribution Date (after giving effect
to deposits thereto and withdrawals therefrom on such Distribution Date) is less
than the Specified Reserve Account Balance.
(e) Notwithstanding anything in this Section 5.06 to the contrary, if
an Event of Default under the Indenture occurs and the maturities of the Notes
are accelerated pursuant to Section 5.02 of the Indenture, amounts on deposit in
the Yield Supplement Account shall be applied by the Indenture Trustee in
accordance with Section 5.04(b) of the Indenture.
(f) Upon satisfaction of the Rating Agency Condition and delivery to
the Indenture Trustee of an Opinion of Counsel to the effect that such action
will not adversely affect the status of the Trust as a FASIT under the Code, the
Seller may eliminate the Yield Supplement Account and the Certificate Yield
Supplement Account and replace them with an alternative arrangement; provided,
however, that any funds released from the Yield Supplement Account and the
Certificate Yield Supplement Account shall be applied first towards and in
reduction (but not below zero) of the YSA Regular Interest principal balance and
interest thereon through the date of such release at the YSA Regular Interest
Rate and thereafter as collections in respect of Receivables to be included in
the Total Distribution Amount.
SECTION 5.07. STATEMENTS TO THE SUBORDINATED INTEREST HOLDERS AND
NOTEHOLDERS. On the second Business Day prior to each Distribution Date, the
Servicer shall provide to the Indenture Trustee (for the Indenture Trustee to
forward to each Noteholder of record) and to the Owner Trustee (for the Owner
Trustee to forward to each requesting Subordinated Interest Holder of record) a
statement (with a copy to the Rating Agencies) substantially in the form of
EXHIBIT A to SCHEDULE E (or such other form that is acceptable to the Indenture
Trustee, the Owner Trustee and the Servicer) setting forth at least the
following information as to the Notes (separately stating such information as to
the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class B
Notes) and the Subordinated Interests (separately setting forth such information
as to the Fixed-Rate Certificates, the Interest Only Certificates, the Reserve
Regular Interest and the YSA Regular Interest), to the extent applicable:
(i) the amount to be deposited to the Principal Distribution
Account and the amounts to be paid to the Noteholders and the requesting
Subordinated Interest Holders therefrom;
(ii) the Class A Noteholders' Interest Distributable Amount,
the Class B Noteholders' Interest Distributable Amount and the amounts paid
to such Noteholders in respect thereof;
36
(iii) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(iv) the Outstanding Principal Amount of each class of the
Notes, the Class A-1 Note Pool Factor, the Class A-2 Note Pool Factor, the
Class A-3 Note Pool Factor, the Class B Note Pool Factor, the Certificate
Balance, in each case 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 (i) above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the aggregate amount of the Purchase Amounts for Purchased
Receivables with respect to the related Collection Period paid by each of
the Seller and the Servicer (accounted for separately);
(vii) the amount of Realized Losses, if any, for such Collection
Period;
(viii) the balance of the Reserve Account on such Distribution
Date, after giving effect to withdrawals made on such Distribution Date;
(ix) the Specified Reserve Account Balance for such
Distribution Date;
(x) the amount, if any, to be withdrawn from the Reserve
Account and deposited into the Collection Account on such Distribution Date
pursuant to Section 5.05(b);
(xi) the amount, if any, to be withdrawn from the Reserve
Account and deposited to the Certificate Distribution Account pursuant to
Section 5.05(c);
(xii) the Certificate Balance for such Distribution Date and the
aggregate amount to be deposited to the Certificate Distribution Account
pursuant to Section 5.04(c);
(xiii) the Subordinated Holders' Interest Distributable
Amount, the portion thereof to be distributed to the Fixed-Rate
Certificates, the Reserve Regular Interest, the YSA Regular Interest and
the Components of the Interest Only Certificates and the amounts paid to
the Subordinated Interest Holders in respect thereof;
(xiv) the balance of the Yield Supplement Amount on such
Distribution Date, after giving effect to withdrawals made on such
Distribution Date;
(xv) the Specified Yield Supplement Account Balance for such
Distribution Date; and
(xvi) the amount, if any, withdrawn from the Yield Supplement
Account pursuant to Section 5.06(b), (c) and (d), stated separately.
37
Each amount set forth pursuant to paragraph (i), (ii) or (iv) above shall
be expressed as a dollar amount per $1,000 of original principal balance of a
Note.
The Indenture Trustee shall only be required to provide to the Noteholders
the information furnished to it by the Servicer. The Indenture Trustee shall
not be required to determine, confirm or recompute any such information.
SECTION 5.08. NET DEPOSITS. As an administrative convenience, so long
as CFSC is the Servicer, if the Servicer is permitted to remit collections
monthly rather than within two Business Days of their receipt and identification
pursuant to SECTION 5.02, the Servicer will be permitted to make the deposit of
collections on the Receivables and Purchase Amounts for or with respect to the
Collection Period net of distributions to be made to the Servicer with respect
to such Collection Period (including any Servicer's Yield and the Servicing Fee
to the extent of amounts available for payment thereof); provided, that if the
Servicer is required to remit collections within two Business Days, the Servicer
shall be paid the Servicer's Yield by means of the Servicer making the deposit
of such collections net of the Servicer's Yield and deposits of such amounts may
not be made net of the Servicing Fee. The Servicer, however, will account to
the Owner Trustee, the Indenture Trustee, the Noteholders and the Subordinated
Interest Holders as if the Servicing Fee was paid individually.
ARTICLE VI
THE SELLER
SECTION 6.01. REPRESENTATIONS OF SELLER. The Seller 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 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 Seller is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Nevada with the 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 power, authority and
legal right to acquire and own the Receivables.
(b) DUE QUALIFICATION. The Seller 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 failure to so qualify
or to obtain any such license or approval would render any Receivable
unenforceable that would otherwise be enforceable by the Seller or the Owner
Trustee.
(c) POWER AND AUTHORITY. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the Receivables and other property
to be sold and assigned to and deposited with the Issuer and has duly authorized
such sale and assignment to the Issuer by all necessary corporate
38
action; and the execution, delivery and performance of this Agreement has been
duly authorized by the Seller by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of the Seller enforceable in accordance with its terms,
except to the extent that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and the remedy of specific
performance and injunctive relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought.
(e) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof do not (i) 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 by-laws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it shall be bound; (ii)
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); or (iii) or violate any law or, to
the best of the Seller's knowledge, any order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Seller or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or to the Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, the Notes, the Certificates or any
of the other Basic Documents, (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 Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, the Notes, the Certificates or
any other of the Basic Documents or (iv) which might adversely affect the
Federal or state income tax attributes of the Notes or the Certificates.
SECTION 6.02. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Custodian and the Indenture Trustee and their officers,
directors and agents from and against any taxes that may at any time be asserted
against the Issuer, the Owner Trustee, the Custodian or the Indenture Trustee or
their respective officers, directors, and agents with respect to the sale of the
Receivables to the Issuer or the issuance and original sale of the Certificates
and the Notes, including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, in the case of the
Issuer, not including any taxes asserted with respect to ownership of the
Receivables or Federal or other income taxes arising out of the transactions
contemplated by this Agreement) and costs and expenses in defending against the
same.
39
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Custodian and the Indenture Trustee and their officers,
directors, and agents from and against any loss, liability or expense incurred
by reason of (i) the Seller's willful misfeasance, bad faith or negligence in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation or alleged violation of Federal or state
securities laws in connection with the offering and sale of the Notes and the
Certificates.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee, the Custodian or the Indenture Trustee and the termination
of this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this SECTION 6.02 and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to the Seller, without interest.
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, shall be the successor to the Seller 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 Seller 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 Seller 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 actions necessary
to perfect the interests of the Owner Trustee and the Indenture Trustee have
been taken, including that all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the 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 clause (a), (b) or (c)
above.
SECTION 6.04. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller
and any director or officer or employee or agent of the Seller 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 Seller shall not be under any obligation to
40
appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 6.05. SELLER MAY OWN THE CERTIFICATES OR NOTES. The Seller and
any Affiliate (other than CFSC) thereof may in its individual or any other
capacity become the owner or pledgee of the Certificates, the Subordinated
Interests or Notes with the same rights as it would have if it were not the
Seller or an Affiliate thereof, except as expressly provided herein (including,
without limitation, the definition of "Outstanding" contained in each of the
Indenture and the Trust Agreement) or in any Basic Document.
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 the Agreement (or as of the date a Person (other than the Indenture
Trustee) becomes Servicer pursuant to SECTIONS 7.03 and 8.02, in the case of a
successor to the Servicer) 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 a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has the corporate power and authority to
own its properties and to conduct the business in which it is currently engaged,
and had at all relevant times, and has, the power, authority and legal right to
acquire, own, sell and service the Receivables.
(b) POWER AND AUTHORITY. The Servicer has the 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.
(c) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with its terms,
except that such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and the remedy of specific performance
and injunctive relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(d) 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, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or by-laws of the Servicer, or any indenture, agreement or other
instrument to which the Servicer is a party or by which it shall be bound; nor
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 as contemplated by the Basic Documents); nor violate any law or, to
the best of the Servicer's knowledge, any order, rule or
41
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.
(e) 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, the Notes, the Certificates or any
of the other Basic Documents; (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 Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, the Notes, the Certificates or
any of the other Basic Documents; or (iv) relating to the Servicer and which
might adversely affect the Federal or state income tax attributes of the Notes
or the Certificates.
(f) NO CONSENTS REQUIRED. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority required
in connection with the execution and delivery by the Servicer of this Agreement
or any other Basic Document, the performance by the Servicer of the transactions
contemplated by this Agreement or any other Basic Document and the fulfillment
by the Servicer of the terms hereof or thereof, have been obtained or have been
completed and are in full force and effect (other than approvals,
authorizations, consents, orders or other actions which if not obtained or
completed or in full force and effect would not have a material adverse effect
on the Servicer or the Issuer or upon the collectability of any Receivable or
upon the ability of the Servicer to perform its obligations under this
Agreement).
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 defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Custodian, the
Noteholders, the Certificateholders and the Seller and any of the officers,
directors and agents of the Issuer, the Owner Trustee, the Indenture Trustee,
the Custodian and the Seller 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 (other than the
Seller or the Issuer) thereof of any Transaction Equipment.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Custodian and the Seller
and their respective officers, directors and agents from and against (i) any
taxes that may at any time be asserted against any such Person with respect to
the transactions contemplated herein, including any sales, gross receipts,
general corporation, tangible personal property, privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the sale of the Receivables to the Issuer or the
issuance and original sale of the Certificates and the Notes, or asserted with
respect to ownership of the Receivables, or Federal or other income taxes
arising
42
out of distributions on the Certificates or the Notes) and (ii) costs and
expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Seller, the Custodian, the
Certificateholders and the Noteholders and any of the officers, directors and
agents of the Issuer, the Owner Trustee, the Indenture Trustee and the Seller
from and against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that any 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 or on account of the failure of the
Servicer to be qualified to do business as a foreign corporation or to have
obtained a license or approval in any jurisdiction.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee, the Custodian and the Indenture Trustee and their respective officers,
directors and agents from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein, and in the case of
the Owner Trustee, in the Trust Agreement, in the case of the Custodian, the
Custodial Agreement and in the case of the Indenture Trustee, the Indenture,
except to the extent that any such cost, expense, loss, claim, damage or
liability: (i) shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Owner Trustee or the Indenture Trustee,
as applicable; or (ii) shall arise from the breach by the Owner Trustee of any
of its representations or warranties set forth in Section 7.03 of the Trust
Agreement.
(e) The Servicer shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate, other than any taxes asserted with
respect to, and as of the date of, the sale of the Receivables to the Issuer or
the issuance and original sale of the Certificates, the Subordinated Interests
and the Notes, or Federal or other income taxes imposed on the Issuer because of
its classification or reclassification for tax purposes, or Federal or other
income taxes arising out of distributions on or holding the Certificates, the
Subordinated Interests or the Notes.
For purposes of this Section, in the event of the termination of the rights
and obligations of CFSC (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) (i) into which the Servicer may be
merged or consolidated, (ii) which
43
may result from any merger or consolidation to which the Servicer shall be a
party, (iii) which may succeed to the properties and assets of the Servicer
substantially as a whole, or (iv) which is a corporation 50% or more of the
voting stock of which is owned, directly or indirectly, by Caterpillar, and (b)
in the case of any of (i), (ii), (iii) or (iv), which has 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 (w)
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, (x) 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 relating to
such transaction have been complied with, (y) the Rating Agency Condition shall
have been satisfied with respect to such transaction and (z) the Servicer 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 the 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 (w), (x), (y) and
(z) above shall be conditions to the consummation of the transactions referred
to in clause (a), (b), (c) or (d) above.
SECTION 7.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders, the
Subordinated Holders 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 or officer or employee or agent of the Servicer as the case may be, 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
incidental 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 other Basic
Documents and the rights and duties of the parties to this Agreement and the
other Basic Documents and the interests of the Certificateholders under this
Agreement and the Noteholders under the Indenture.
SECTION 7.05. CFSC NOT TO RESIGN AS SERVICER. Subject to the provisions
of SECTION 7.03, CFSC shall not resign from the obligations and duties hereby
imposed on it as
44
Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement shall no longer be permissible under applicable
law (if it is also determined that such determination may not be reversed).
Notice of any such determination permitting the resignation of CFSC 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
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 CFSC 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 (i) to deliver to the Indenture
Trustee for deposit in any of the Trust Accounts or the Certificate Distribution
Account any required payment or (ii) to direct the Indenture Trustee to make any
required distribution therefrom that shall continue 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 on the part of the Servicer or the Seller, 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 Seller (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 the Certificateholders, the
Subordinated Interest Holders or Noteholders and (ii) continues 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 Seller (as the case may be) by the Owner Trustee or the Indenture Trustee or
(B) to the Servicer or the Seller (as the case may be), and to the Owner Trustee
and the Indenture Trustee by the Holders of Notes evidencing not less than 25%
of the Outstanding Principal Amount of the Notes or the "Holders" (as defined in
the Trust Agreement) of Fixed-Rate Certificates evidencing not less than 25% of
the Certificate Balance thereof; or
(c) an Insolvency Event occurs with respect to the Seller or the
Servicer;
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 Class A Notes
evidencing not less than 25% of the Outstanding Principal Amount of such Notes,
or if no Class A Notes are Outstanding, the Holders of Class B Notes evidencing
not less than 25% of the Outstanding Principal Amount of such Notes, or if no
Notes are Outstanding, either the Owner Trustee or the Holders of the Fixed-Rate
Certificates evidencing not less than 25% of the Certificate Balance thereof, by
notice then given in writing to the Servicer (and to the Indenture Trustee and
the Owner Trustee if given by
45
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, the Subordinated Interests 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, on behalf 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 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 a Receivable. All reasonable costs and expenses (including reasonable
attorneys' fees) incurred in connection (x) with transferring the computer or
other records to the successor Servicer in the form requested and (y) 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 (x) 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 (y) 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, pending the appointment of and
acceptance by a successor Servicer, the Indenture Trustee without further action
shall automatically be appointed and serve as the successor Servicer and the
Indenture Trustee shall be entitled to the Servicing Fee and the Servicer's
Yield. 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 who has demonstrated its capability to
service the Receivables to the satisfaction of the Indenture Trustee, as the
successor to the Servicer under this Agreement, having a net worth of not less
than $50,000,000 and whose regular business shall include the servicing of
receivables comparable with the Receivables, as the successor to the Servicer
under this Agreement.
46
The Indenture Trustee, acting in its capacity as successor Servicer, and
any successor Servicer appointed by it, shall have no responsibility or
obligation (i) for any breach by any predecessor Servicer of any of its
representations and warranties, or (ii) any acts or omissions of CFSC or any
other Servicer prior to its termination.
(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 the
Servicer's Yield and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement.
(c) Subject to the Indenture Trustee's right to appoint a successor
Servicer pursuant to SECTION 8.02(A) after the Indenture Trustee has become the
Servicer pending the appointment of and acceptance by a successor Servicer, the
Servicer may not resign unless it is prohibited from serving as such by law.
(d) Notwithstanding any other provision of this Agreement, neither
the Indenture Trustee nor any successor Servicer shall be deemed in default,
breach or violation of this Agreement as a result of the failure of CFSC or any
Servicer (i) to cooperate with the Indenture Trustee or any successor Servicer
pursuant to SECTION 8.01, (ii) to deliver funds required to be deposited to any
Trust Account, or (iii) to deliver files or records relative to the Receivables
as may be requested by the Indenture Trustee or successor Servicer.
SECTION 8.03. 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
the Certificateholders, the Subordinated Interest Holders and the Indenture
Trustee shall give prompt written notice thereof to Noteholders and the Rating
Agencies.
SECTION 8.04. WAIVER OF PAST DEFAULTS. The Holders of Class A Notes
evidencing more than a 50% of the Outstanding Principal Amount of such Notes or,
if no Class A Notes are Outstanding, the Holders of Class B Notes evidencing
more than 50% of the Outstanding Principal Amount of such Notes or, if no Notes
are Outstanding, the holders of a majority of the Certificate Balance of the
Fixed-Rate Certificates, may, on behalf of all Noteholders and the
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.
SECTION 8.05. APPOINTMENT OF CUSTODIANS. CFSC, the Seller, the Issuer
and the Indenture Trustee may, with the consent of the Servicer and notice to
the Rating Agencies, appoint The First National Bank of Chicago, as Custodian
to hold all or a portion of the Receivable Files as agent for such Person during
such time as such Person owns or has an interest in the Receivables, in
accordance with the Custodial Agreement. The First National
47
Bank of Chicago is appointed Custodian and, for so long as it shall be the
Custodian thereunder, agrees to comply with the terms of the Custodial
Agreement applicable to it. The Indenture Trustee agrees to comply with the
terms of the Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Noteholders and the
Certificateholder.
ARTICLE IX
TERMINATION
SECTION 9.01. OPTIONAL PURCHASE OF ALL RECEIVABLES; TRUST
TERMINATION. (a) If on the last day of any Collection Period the Pool
Balance is 10% or less of the Initial Pool Balance, the Servicer shall have the
option to purchase the Owner Trust Estate, other than the Trust Accounts, which
purchase shall be effective as of such last day by depositing in the Collection
Account on or prior to the second Business Day prior to the next succeeding
Distribution Date an amount equal to the aggregate Purchase Amount for the
Receivables (including defaulted Receivables but not including Liquidated
Receivables) pursuant to SECTION 5.03; PROVIDED, HOWEVER, that the aggregate
Purchase Amount for the Receivables, after payment of all amounts due pursuant
to Section 5.04 on such next succeeding Distribution Date, is an amount at least
equal to the aggregate Redemption Price for the Class A-3 Notes and the Class B
Notes. Upon the exercise of such option, the Servicer shall succeed to all
interests in and to the Trust, subject to payment of principal, interest and
other amounts owing with respect to the Subordinated Interests and the Residual
Certificate.
(b) Notice of any termination of the Trust shall be given by the Servicer
to the Owner Trustee and the Indenture Trustee as soon as practicable after the
Servicer has received notice thereof. Upon the receipt of such notice, the
Servicer, the Indenture Trustee and the Trust shall take such steps as are
necessary to cause such termination to qualify as a "qualified liquidation" of
the FASIT comprising the Trust under the provisions of Section 860L(e)(3)(A) and
Section 860F(a)(4) of the Code, including, without limitation, the adoption of a
plan of liquidation for the Trust, the designation of a starting day for the
liquidation period, the sale of the assets of the Trust within the 90 day period
commencing on the starting day of the liquidation period, the distribution of
the proceeds of the liquidation to the holders of the regular and ownership
interests in the Trust (except for amounts held to meet claims against the
Trust, the filing of a final tax return for the Trust and designating thereon
the starting day of the liquidation period and any other action not contrary to
the provisions of this Agreement that is required by an applicable FASIT
Provisions.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders and the Subordinated Interest Holders will succeed to the
rights of the Noteholders hereunder, and the Owner Trustee will succeed to the
rights of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement.
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ARTICLE X
FASIT PROVISIONS
SECTION 10.01. FASIT ADMINISTRATION.
(a) The FASIT Administrator shall make an election to treat the Trust
as a FASIT under the Code and, if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal tax or
information return (including Form 8811) or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the Notes, the
Subordinated Interests and the Certificates are issued. For the purposes of the
FASIT election in respect of the Trust, each of the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes, the Class B Notes, the Fixed Rate Certificates,
the Reserve Regular Interest, the YSA Regular Interest, Component X-0, Xxxxxxxxx
X-0, Xxxxxxxxx X-0 and Component B shall be and hereby are designated as the
"regular interests" and the Residual Certificate shall be designated as the sole
"ownership interest" in the FASIT; provided, however, that if and to the extent
that the Reserve Regular Interest, the YSA Regular Interest, the Fixed Rate
Certificate and the Components are not treated as issued on the Closing Date for
purposes of Section 860L of the Code, the designation of the Reserve Regular
Interest, the YSA Regular Interest, the Fixed-Rate Certificates and the
Components as "regular interests" in the FASIT represented by the Trust shall be
effective immediately upon each such interests' being treated as issued for such
purposes. The FASIT Administrator and the Trust shall not permit the creation
of any "interests" (within the meaning of Section 860L of the Code) in the Trust
other than the Notes, the Fixed Rate Certificates, the Reserve Regular Interest,
the YSA Regular Interest, Component X-0, Xxxxxxxxx X-0, Xxxxxxxxx X-0 and
Component B unless they first receive an Opinion of Counsel at the expense of
the party seeking the creation of such interests to the effect that such
creation will not cause an Adverse FASIT Event.
(b) The Closing Date is hereby designated as the "startup day" of the
Trust within the meaning of Section 860L(d))(1) of the Code.
(c) The FASIT Administrator shall (i) act on behalf of the Trust in
relation to any tax matter or controversy involving the Trust and (ii) represent
the Trust in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority with respect thereto.
The legal expenses, including without limitation attorneys' or accountants'
fees, and costs of any such proceeding and any liability resulting therefrom
shall be expenses of the FASIT Administrator. If the FASIT Administrator is no
longer the Servicer hereunder, at its option the FASIT Administrator may
continue its duties as FASIT Administrator and shall be paid reasonable
compensation not to exceed $10,000 per year by any successor Servicer hereunder
for so acting as the FASIT Administrator.
(d) The FASIT Administrator shall prepare or cause to be prepared all
of the Tax Returns that it determines are required with respect to the Trust
and, subject to any Internal Revenue Service procedures or FASIT Provisions,
shall deliver such Tax Returns in a timely manner to the Owner Trustee (or to
the Administrator if the Administrator may sign the Tax Returns as attorney-in-
fact of the Owner Trustee under applicable provisions of the Code) and the Owner
Trustee or the Administrator, as the case may be, shall sign such Tax Returns
and
49
return them to the FASIT Administrator for filing in a timely manner. The
expenses of preparing such returns shall be borne by the FASIT Administrator
without any right of reimbursement therefor. The FASIT Administrator agrees to
indemnify and hold harmless the Owner Trustee with respect to any tax or
liability arising from the Owner Trustee's signing of Tax Returns that contain
errors or omissions. The Owner Trustee and the Servicer shall promptly provide
the FASIT Administrator with such information in the possession of such Person
as the FASIT Administrator may from time to time request for the purpose of
enabling the FASIT Administrator to prepare Tax Returns.
(e) The FASIT Administrator shall provide (i) to the Owner Trustee
and the Owner Trustee shall forward to the Noteholders, the Subordinated
Interest Holders and the Certificateholders such information or reports as are
required by the Code or the FASIT Provisions including reports relating to
interest, original issue discount and market discount or premium and (ii) if
required by Internal Revenue Service announcement or regulation, to the Internal
Revenue Service the name, title, address and telephone number of the Person who
will serve as the representative of the Trust.
(f) The Servicer and the FASIT Administrator shall take such actions
and shall cause the Trust to take such actions as are reasonably within the
Servicer's or the FASIT Administrator's control and the scope of its duties more
specifically set forth herein as shall be necessary or desirable to maintain the
status of the Trust as a FASIT under the FASIT Provisions (and the Owner Trustee
shall assist the Servicer and the FASIT Administrator, to the extent reasonably
requested by the Servicer and the FASIT Administrator to do so). The Servicer
and the FASIT Administrator shall not knowingly or intentionally take any
action, cause the Trust to take any action or fail to take (or fail to cause to
be taken) any action reasonably within their respective control that, under the
FASIT Provisions, if taken or not taken, as the case may be, could (i) endanger
the status of the Trust as a FASIT or (ii) result in the imposition of a tax
upon the Trust (including but not limited to the tax on prohibited transactions
as defined in Section 860L(e) of the Code) (either such event, in the absence of
an Opinion of Counsel or the indemnification referred to in this sentence, an
"Adverse FASIT Event") unless the Servicer or the FASIT Administrator, as
applicable, has received an Opinion of Counsel (at the expense of the party
seeking to take such action) to the effect that the contemplated action will not
endanger the status of the Trust as a FASIT. The Owner Trustee shall not take
or fail to take any action (whether or not authorized hereunder) as to which the
Servicer or the FASIT Administrator, as applicable, has advised it in writing
that it has received an Opinion of Counsel to the effect that an Adverse FASIT
Event could occur with respect to such action or such failure to act. In
addition, prior to taking any action with respect to the Trust or its assets, or
causing the Trust to take any action, which is not expressly permitted under the
terms of the Basic Documents, unless the Owner Trustee shall have received an
Opinion of Counsel that such action will not result in an Adverse FASIT Event,
the Owner Trustee will consult with the Servicer or the FASIT Administrator, as
applicable, or its designee, in writing, with respect to whether such action
could cause an Adverse FASIT Event to occur with respect to the Trust, and the
Owner Trustee shall not take any such action or cause the Trust to take any such
action as to which the Servicer or the FASIT Administrator, as applicable, has
advised it in writing that an Adverse FASIT Event could occur. The Servicer or
the FASIT Administrator, as applicable, may consult with counsel to make such
written advice, and the cost of same shall be borne by the party seeking to take
the action not expressly permitted by this Agreement. At all times as may be
required by
50
the Code, the Servicer will to the extent within its control and the scope of
its duties more specifically set forth herein, maintain substantially all of the
assets of the Trust as "permitted assets" as defined in Section 860L(c)(1) of
the Code.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust as defined in Section 860L(e) of the Code, or any other tax is
imposed by the Code or any applicable provisions of state or local tax laws, the
Servicer shall indemnify and hold harmless the Residual Certificateholder, if
such tax arises out of or results from a breach by the Servicer of any of its
obligations under this Agreement.
(h) The Owner Trustee and the Servicer shall, for federal income tax
purposes, maintain books and records with respect to the Trust on a calendar
year and on an accrual basis or as otherwise may be required by the FASIT
Provisions.
(i) Following the Startup Day, neither the Servicer nor the Owner
Trustee shall accept any contributions of assets to or otherwise acquire assets
for the Trust unless (subject to Section 10.01(f)) the Servicer and the Owner
Trustee shall have received an Opinion of Counsel (at the expense of the party
seeking to make such contribution) to the effect that the inclusion of such
assets in the Trust will not cause the Trust to fail to qualify as a FASIT at
any time that any Notes, the Subordinated Interests or the Certificates are
outstanding or subject the Trust to any tax under the FASIT Provisions or other
applicable provisions of federal, state and local law or ordinances.
(j) Neither the Servicer nor the Owner Trustee shall (subject to
Section 10.01(f)) enter into any arrangement by which the Trust will receive a
fee or other compensation for services or will originate any loan nor permit the
Trust to receive any income from assets other than "permitted assets" as defined
in Section 860L(c) of the Code.
(k) Solely for the purposes of Section 860L(b)(1)(A)(iii) of the
Code, the "stated maturity" by which the principal balance of each Class of
Notes, the Reserve Regular Interest, the YSA Regular Interest, and the Fixed-
Rate Certificates and the Notional Amounts of the Components of the Interest
Only Certificates representing regular interests in the FASIT would be reduced
to zero is August 25, 2005.
(l) Within 30 days after the Closing Date, the FASIT Administrator
shall prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of
Collateralized Debt Obligations" or other appropriate form, if required, for the
Trust.
(m) Neither the Owner Trustee nor the Servicer shall sell, dispose of
or substitute for any of the Receivables (except in connection with (i) the
default, imminent default or foreclosure of a Receivable, including but not
limited to, the acquisition or sale of Financed Equipment acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust, (iii) the termination of
the Trust pursuant to Article IX of this Agreement or (iv) a repurchase of
Receivables pursuant to Article IX or Section 3.02 of this Agreement) nor
acquire any assets for the Trust, nor sell or dispose of any investments in the
Trust Accounts for gain nor accept any contributions to the Trust after the
Closing Date unless it has received an Opinion of Counsel
51
that such sale, disposition, substitution or acquisition will not affect
adversely the status of the Trust as a FASIT.
(n) The Trust shall not acquire any Financed Equipment except in
connection with a default or imminent default of a Receivable. The Trust shall
not acquire any other property (including personal property) that is not a
"permitted asset" within the meaning of Section 860L(c)(1)(A), (B), (D), (E),
(F) or (G) unless the Servicer obtains an Opinion of Counsel that such property
qualifies as "foreclosure property" within the meaning of Section 860L(c)(1)(C)
of the Code. In the event that any Financed Equipment is acquired in a
repossession (an "EO Property"), the Servicer shall sell any EO Property within
three years (or such shorter term provided in regulations not yet issued) of its
acquisition by the Trust, unless (i) at least 60 days prior to the expiration of
such period, the Servicer applies for an extension of such period pursuant to
Sections 856(e)(3) and 860L(c)(3) of the Code, in which case the Servicer shall
sell such EO Property within the applicable extension period or (ii) the
Servicer seeks, and subsequently receives, an Opinion of Counsel, addressed to
the Owner Trustee and the Servicer, to the effect that the holding by the Trust
of such EO Property subsequent to three years (or the end of any other
applicable period) after its acquisition will not result in the imposition of
taxes on "prohibited transactions" of the Trust as defined in Section 860L(e) of
the Code or cause the Trust to fail to qualify as a FASIT at any time that any
Notes or the Certificates are outstanding. The Servicer shall manage, conserve,
protect and operate each EO Property solely for the purpose of its prompt
disposition and sale in a manner that does not cause any such EO Property to
fail to qualify as "foreclosure property" within the meaning of Section
860L(c)(3) of the Code or result in the receipt by the Trust of any "income
derived from any asset that is not a permitted asset" within the meaning of
Section 860L(e)(2)(A) of the Code or any "net income from foreclosure property"
which is subject to taxation under the FASIT Provisions. In connection with its
efforts to sell such EO Property, the Servicer shall either itself or through an
agent selected by the Servicer protect and conserve such EO Property in the same
manner and to such extent as is customary in the locality where such EO Property
is located and may, incident to its conservation and protection of the interests
of the Noteholders and the Certificateholders, rent the same, or any part
thereof, as the Servicer deems to be in the best interest of the Servicer and
the Noteholders, the Subordinated Interest Holders and the Certificateholders
for the period prior to the sale of such EO Property, subject to the condition
that such rental not be on terms that would cause such EO Property to fail to
qualify as "foreclosure property" within the meaning of Sections 856(e) and
860L(c) of the Code.
The disposition of EO Property shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its general servicing activities.
SECTION 10.02. SERVICER AND FASIT ADMINISTRATOR INDEMNIFICATION.
(a) The FASIT Administrator agrees to indemnify the Trust, the
Seller, the Servicer and the Owner Trustee for any taxes and costs (including,
without limitation, any reasonable attorneys' fees) imposed on or incurred by
the Trust, the Seller, the Servicer or the Owner Trustee, as a result of a
breach of the FASIT Administrator's covenants set forth in this Article X and
with respect to compliance with the FASIT Provisions, including without
limitation, any penalties arising from the Owner Trustee's execution of Tax
Returns prepared by
52
the FASIT Administrator that contain errors or omissions; PROVIDED, HOWEVER,
that such liability will not be imposed to the extent such breach is a result of
an error or omission in information provided to the FASIT Administrator by the
Servicer in which case Section 10.02(b) will apply.
(b) The Servicer agrees to indemnify the Trust, the Seller, the FASIT
Administrator and the Owner Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust,
the Seller, the FASIT Administrator or the Owner Trustee, as a result of a
breach of the Servicer's covenants set forth in this Article X or in Article III
with respect to compliance with the FASIT Provisions.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. AMENDMENT. The Agreement may be amended by the Seller,
the Servicer and the Trust, with the consent of the Indenture Trustee, but
without the consent of any of the Noteholders, the Subordinated Interest Holders
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, the Subordinated
Interest Holders or the Certificateholders or for the purpose of enabling the
Trust to continue to qualify as a FASIT and the Notes, the Fixed-Rate
Certificates, Reserve Regular Interest, YSA Regular Interest and the Components
of the Interest Only Certificates to continue to qualify as "regular interests"
in the FASIT constituted by the Trust (including, without limitation, compliance
with regulations that have not yet been issued); PROVIDED, HOWEVER, that such
amendment 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 the federal tax characterization of
the Notes.
This Agreement may also be amended from time to time by the Seller, the
Servicer and the Trust, with the consent of the Indenture Trustee, the consent
of the Holders of Notes evidencing at least a majority of the Outstanding
Principal Amount of the Notes and the consent of the holders of the Fixed-Rate
Certificates evidencing at least a majority of the Certificate Balance thereof,
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, the Subordinated Interest Holders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a) 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 (b) reduce the aforesaid
percentage of the Outstanding Principal Amount of the Notes, the holders of
which are required to consent to any such amendment, without the consent of the
Holders of all the Outstanding Notes.
Prior to 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 of the Rating Agencies. 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 the Indenture Trustee.
53
It shall not be necessary for the consent of the Certificateholders or the
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
11.02(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 11.02. PROTECTION OF TITLE TO TRUST. (a) The Seller shall take
all actions necessary to perfect, and maintain perfection of, the interests of
the Owner Trustee and the Indenture Trustee in the Receivables. In the event it
is determined that the Indenture Trustee's or the Issuer's interests are no
longer perfected, such actions shall include but shall not be limited to
enforcement of the terms of the Custodial Agreement and of Section 6.02 of the
Purchase Agreement. In addition, without limiting the rights of the Indenture
Trustee or the Issuer specified in the immediately preceding sentence, the
Seller 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 present, maintain, and protect the interest of
the Issuer and the interest of the Indenture Trustee in the Receivables and in
the proceeds thereof. The Seller 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 Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above or otherwise seriously misleading within the meaning of
Section 9-402(7) of the applicable UCC (regardless of whether such a filing was
ever made), unless it shall have given the Owner Trustee and the Indenture
Trustee at least five days' prior written notice thereof and, if applicable,
shall have timely filed appropriate amendments to any and all previously filed
financing statements or continuation statements (so that the Lien of the Issuer
or the Indenture Trustee is not adversely affected).
(c) Each of the Seller 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 applicable UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement (regardless of whether such a filing
was ever made) and shall promptly, if applicable, file any such amendment. 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
54
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 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 (which interest
has been acquired from the Seller) 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 interest (which interest has been
acquired from the Seller) 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 Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in receivables
comparable with the 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 at
any time during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(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 Seller shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all actions have been taken
that are necessary fully to perfect the interests of the Owner Trustee and
the Indenture Trustee in the Receivables, and reciting the details of such
action or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to perfect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-off Date, an Opinion of Counsel, dated as of a date during
such 120-day period, either (A) stating that, in the opinion of such
counsel, all actions have been taken, and, if applicable, all financing
statements and continuation
55
statements have been executed and filed, that are necessary fully to
perfect the interests 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) stating
that, in the opinion of such counsel, no such action shall be necessary
to perfect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to perfect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
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 11.03. NOTICES. All demands, notices and communications upon or
to the Seller, the Servicer, the Issuer, 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
Seller, to Caterpillar Financial Funding Corporation, Greenview Plaza, 0000 Xxxx
Xxxxxxxx Xxxx, Xxxxx X-0X, Xxx Xxxxx, Xxxxxx 00000, (702-735-2514), (b) in the
case of the Servicer, to Caterpillar Financial Services Corporation, 0000 Xxxx
Xxx Xxxxxx, Xxxxxxxxx, XX 00000-0000 (615-386-5800), (c) the case of the Issuer
or the Owner Trustee, at the "Corporate Trust Office" (as defined in the Trust
Agreement), (d) in the case of the Indenture Trustee, at the Corporate Trust
Office, (e) in the case of Moody's, to Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (f) in the
case of Standard & Poor's, to Standard & Poor's Ratings Services, 00 Xxxxxxxx
(00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention of Asset Backed Surveillance
Department, or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
SECTION 11.04. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in SECTIONS 6.03 and 7.03 and as provided
in the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer.
SECTION 11.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee, the
Subordinated Interest Holders 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 11.06. 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 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.
56
SECTION 11.07. 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 11.08. 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 11.09. 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, REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.10. ASSIGNMENT TO INDENTURE TRUSTEE. The Seller 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 the other property constituting
the Owner Trust Estate and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Indenture Trustee.
SECTION 11.11. NONPETITION COVENANTS. (a) Notwithstanding any prior
termination of this Agreement, the Servicer, the Seller, the Owner Trustee and
the Indenture Trustee shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Issuer under any Federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer, the Issuer, the Owner Trustee and the Indenture Trustee shall not,
prior to the date which is one year and one day after the termination of this
Agreement with respect to the Seller, acquiesce, petition or otherwise invoke or
cause the Seller to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Seller under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 11.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Chase Manhattan Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer,
and in no event shall Chase Manhattan Bank Delaware 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
57
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.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by The First National Bank of
Chicago not in its individual capacity but solely as Indenture Trustee, and in
no event shall The First National Bank of Chicago 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.
58
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.
CATERPILLAR FINANCIAL ASSET TRUST 1998-A
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely as Owner
Trustee on behalf of the Trust,
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name:
Title:
CATERPILLAR FINANCIAL FUNDING
CORPORATION,
Seller,
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Treasurer
CATERPILLAR FINANCIAL SERVICES
CORPORATION,
Servicer,
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
Acknowledged and Accepted:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as Indenture Trustee, as Custodian and as Securities Intermediary
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President and Assistant Secretary
SCHEDULE A
SCHEDULE OF RECEIVABLES
A-1
SCHEDULE B
LOCATION OF RECEIVABLE FILES
Greenview Plaza
0000 Xxxx Xxxxxxxx Xxxx, Xxxxx X-0X
Xxx Xxxxx, Xxxxxx 00000
B-1
SCHEDULE C-1
FORM OF INDENTURE TRUSTEE INITIAL CERTIFICATION
[DATE]
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing
Agreement"), dated as of July 1, 1998 among Caterpillar Financial
Services Corporation as Servicer, Caterpillar Financial Funding
Corporation and Caterpillar Financial Asset Trust 1998-A
Gentlemen:
In accordance with Section 3.05 of the Sale and Servicing Agreement, the
undersigned, as Indenture Trustee under the Indenture, hereby certifies that it
or the Custodian on its behalf has received a Receivable File with respect to
each Receivable listed in the Schedule of Receivables and the documents
contained therein appear to bear original signatures.
Neither the Indenture Trustee nor the Custodian on its behalf has made any
independent examination of any such documents beyond the review specifically
required in the above-referenced Sale and Servicing Agreement. The Indenture
Trustee makes no representations as to: (i) the validity, legality, sufficiency,
enforceability or genuineness of any such documents contained in the Receivables
Files, or (ii) collectability, insurability, effectiveness or suitability of any
Receivable identified on the Schedule of Receivables.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Sale and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By:
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C-1-1
SCHEDULE C-2
FORM OF INDENTURE TRUSTEE FINAL CERTIFICATION
[DATE]
[Trust]
[Servicer]
[Seller]
Re: Sale and Servicing Agreement (the "Sale and Servicing Agreement"),
dated as of July 1, 1998 among Caterpillar Financial Services
Corporation, as Servicer, Caterpillar Financial Funding Corporation
and Caterpillar Financial Asset Trust 1998-A
Gentlemen:
In accordance with the provisions of Section 3.05 of the above-referenced
Sale and Servicing Agreement, the undersigned, as Indenture Trustee under the
Indenture, hereby certifies that as to each Receivable listed on the Schedule of
Receivables (other than any Receivable paid in full or any Receivable listed on
the exception report attached hereto), it or the Custodian on its behalf has
reviewed the Receivables Files delivered to it or the Custodian on its behalf
pursuant to Section 3.03 of the Sale and Servicing Agreement and has determined
that (i) all such documents are in its possession or in the possession of the
Custodian on its behalf, (ii) all documents to be included in the Receivables
Files pursuant to the Sale and Servicing Agreement including, without
limitation, the Original Contract have been reviewed by it or the Custodian on
its behalf and have not been mutilated, damaged, torn or otherwise physically
altered and relate to such Receivable and (iii) based on its examination, or the
examination of the Custodian on its behalf, and only as to the foregoing
documents, the information set forth on the Schedule of Receivables respecting
such Receivables accurately reflects the information set forth in the
Receivables.
Neither the Indenture Trustee nor the Custodian on its behalf has made any
independent examination of such documents beyond the review specifically
required in the above-referenced Sale and Servicing Agreement. The Indenture
Trustee makes no representations as to: (i) the validity, legality,
enforceability or genuineness of any documents contained in the Receivable
Files, or (ii) the collectability, insurability, effectiveness or suitability of
any Receivable identified on the Schedule of Receivables.
C-2-1
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-referenced Sale and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee
By:
---------------------------------------------
Name:
Title:
C-2-2
SCHEDULE D
SERVICER'S CERTIFICATE
The undersigned hereby certify that (i) they are, respectively, a duly
elected [title] and [title] of Caterpillar Financial Services Corporation and
(ii) this Servicing Certificate complies with the requirements of, and is being
delivered pursuant to, Section 4.09 of the Sale and Servicing Agreement (the
"Sale and Servicing Agreement") dated as of July 1, 1998 between Caterpillar
Financial Asset Trust 1998-A, Caterpillar Financial Funding Corporation and
Caterpillar Financial Services Corporation.
Dated:
------------------------------------- ----------------------------------
Name:
Title:
----------------------------------
Name:
Title:
D-1
Distribution Date: ______________
(i) Servicing Fee;
(ii) Total Available Amount;
(iii) Total Distribution Amount;
(iv) the weighted average Net APR for the related Collection
Period;
(v) Class A Noteholders' Monthly Interest Distributable
Amount;
(vi) Class A Noteholders' Interest Carryover Shortfall;
(vii) Class B Noteholders' Monthly Interest Distributable
Amount;
(viii) Class B Noteholders' Interest Carryover Shortfall;
(ix) Subordinated Holders' Monthly Interest Distributable
Amount;
(x) Subordinated Holders' Interest Carryover Shortfall;
(xi) The amount to be deposited to the Principal
Distribution Account pursuant to Section 5.04(b)(iii);
(xii) The amount to be deposited to the Principal
Distribution Account pursuant to Section 5.04(b)(v);
(xiii) The amount to be deposited to the Principal
Distribution Account pursuant to Section 5.04(b)(viii);
(xiv) The amount to be deposited to the Principal
Distribution Account pursuant to Section 5.04(b)(xi);
(xv) The amount to be remitted to each Class of Noteholders
and the holders of the Fixed-Rate Certificates from amounts on deposit in
the Principal Distribution Account;
(xvi) the amount to be withdrawn from the Reserve Account and
deposited to the Collection Account pursuant to SECTION 5.05(B);
(xvii) the Specified Reserve Account Balance;
(xviii) the amount to be deposited into the Reserve Account
pursuant to SECTION 5.04(B);
D-2
(xix) the excess, if any, of the amount in the Reserve
Account (after giving effect to SECTION 5.04(B)) over the Specified Reserve
Account Balance;
(xx) the amount to be distributed from the Reserve Account
to the Seller pursuant to SECTION 5.05(C);
(xxi) the Pool Balance as of the close of business on the
last day of the related Collection Period;
(xxii) the Outstanding Principal Amount of the Class A-1
Notes, the Class A-1 Note Pool Factor, the Outstanding Principal Amount
of the Class A-2 Notes, the Class A-2 Note Pool Factor, the Outstanding
Principal Amount of the Class A-3 Notes, the Class A-3 Note Pool Factor,
the Outstanding Principal Amount of the Class B Notes, the Class B Note
Pool Factor, the Certificate Balance and the Certificate Pool Factor as
of the close of business on the last day of the related Collection
Period, after giving effect to payments of principal on such
Distribution Date;
(xxiii) the aggregate amount of the Purchase Amounts for
Purchased Receivables with respect to the related Collection Period;
(xxiv) the amount of Realized Losses, if any, for the related
Collection Period;
(xxv) the amount to be withdrawn from the Yield Supplement
Account and deposited to the Collection Account pursuant to Section
5.06(c);
(xxvi) the Yield Supplement Deposit Amount for such
Distribution Date;
(xxvii) the balance of the Yield Supplement Account on such
Distribution Date;
(xxviii) the Specified Yield Supplement Account Balance on such
Distribution Date; and
(xxix) the amount to be distributed from the Yield Supplement
Account to the Seller pursuant to SECTION 5.06(D).
D-3
SCHEDULE E
OFFICERS' CERTIFICATE
The undersigned hereby certify that (i) they are, respectively, a duly
elected [title] and [title] of Caterpillar Financial Services Corporation, (ii)
EXHIBIT A hereto complies with the requirements of, and is being delivered
pursuant to, SECTION 5.07 of the Sale and Servicing Agreement (the "Sale and
Servicing Agreement") dated as of July 1, 1998 between Caterpillar Financial
Asset Trust 1998-A, Caterpillar Financial Funding Corporation and Caterpillar
Financial Services Corporation, and (iii) EXHIBIT B hereto complies with the
requirements of, and is being delivered pursuant to, SECTION 5.04(B) of the Sale
and Servicing Agreement.
Dated:
------------------------------ ----------------------------------
Name:
Title:
----------------------------------
Name:
Title:
E-1
EXHIBIT A
TO SCHEDULE E
Statement for Noteholders and Certificateholders
PURSUANT TO SECTION 5.07
Distribution Date:___________________
(i) Amount of principal being paid on Notes:
(a) Class A-1 Notes:_______________ ($____ per $[___]
original principal amount)
(b) Class A-2 Notes:_______________ ($____ per $[___]
original principal amount)
(c) Class A-3 Notes:_______________ ($____ per $[___]
original principal amount)
(d) Class B Notes:_______________ ($____ per $[___]
original principal amount)
(e) Total:_______________
(ii) Amount of principal being paid on
Fixed-Rate Certificates:_____________ ($____ per $[___] original
principal amount)
(ii) Amount of interest being paid or distributed:
(a) Class A-1 Notes:_____________ ($____ per $[___]
original principal amount)
(b) Class A-2 Notes:_____________ ($____ per $[___]
original principal amount)
(c) Class A-3 Notes:_____________ ($____ per $[___]
original principal amount)
(d) Class B Notes:_____________ ($____ per $[___]
original principal amount)
(e) Fixed-Rate Certificates:_____________ ($____ per $[___]
original principal amount)
(f) Interest Only
A-1
Certificates:_____________ ($____ per $[___]
original notional amount)
(e) Total:_______________
(iii) Pool Balance at end of related Collection Period:_________.
(iv) after giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class A-1 Notes:_________
(2) Class A-1 Note Pool Factor:______________
(b) (1) outstanding principal amount of Class A-2
Notes:_____________
(2) Class A-2 Note Pool Factor:__________
(c) (1) outstanding principal amount of Class A-3
Notes:_____________
(2) Class A-3 Note Pool Factor:__________
(d) (1) outstanding principal amount of Class B Notes:_____________
(2) Class B Note Pool Factor:__________
(e) (1) Certificate Balance of Fixed-Rate Certificates:__________
Certificate Pool Factor
(f) (1) Aggregate Component Notional Amount of Interest
Only Certificates:__________
(v) Amount of Servicing Fee being paid:____________.
(vi) Aggregate Purchase Amounts for Collection Period:____________.
(vii) Aggregate amount of Realized Losses for the Collection
Period:__________.
(viii) Amount in Reserve Account:___________________.
(ix) Specified Reserve Account Balance:______________.
(x) Amount in Yield Supplement Account:______________.
(xi) Specified Yield Supplement Account Balance:______________.
A-2
EXHIBIT B
TO SCHEDULE E
Instructions to the Indenture Trustee for payments and deposits pursuant to
Section 5.04(b) of the Sale and Servicing Agreement:
Date:________
(i) Payment of Servicing Fee (including any previously unpaid Servicing
Fees) to Servicer pursuant to Section 5.04(b)(i): __________.
(ii) Class A Noteholders' Interest Distributable Amount to be remitted
to the Class A Noteholders: __________.
(iii) Amount of First Priority Principal Distribution Amount to be
deposited to the Principal Distribution Account pursuant to Section
5.04(b)(iii);
(iv) Class B Noteholders' Interest Distributable Amount to be remitted
to the Class B Noteholders: __________.
(v) Amount of Second Priority Principal Distribution Amount to be
deposited to the Principal Distribution Account pursuant to Section
5.04(b)(iii);
(vi) Deposit to Yield Supplement Account pursuant to Section 5.04(b);
(vii) Deposit to Reserve Account pursuant to Section 5.04(b);
(viii) Amount to be deposited to the Principal Distribution Account
pursuant to Section 5.04(b)(viii);
(ix) Payment of Servicing Fee (including any previously unpaid Servicing
Fees) to Servicer pursuant to Section 5.04(b)(ix): _________.
(x) The amount to be deposited to the Certificate Distribution Account
in respect of the Certificateholder's Interest Distributable
Amount: __________.
(xi) Amount to be deposited to the Principal Distribution Account
pursuant to Section 5.04(b)(xi);
(xii) The amount to be deposited to the Certificate Distribution Account
pursuant to Section 5.04(b)(xii) for distribution to the holder of
the Residual Certificate: __________;
(xiii) Amount to be distributed from the Principal Distribution Account to
each Class of Noteholders, and to the holders of the Fixed-Rate
Certificates and the Residual Certificate;
B-1
(xiv) Amount to be withdrawn from the Reserve Account and deposited to
the Collection Account pursuant to Section 5.05(b);
(xv) Amount to be withdrawn from the Reserve Account and remitted to
the Seller pursuant to Section 5.05(c);
(xvi) Amount of Yield Supplement Deposit Amount to be withdrawn from
the Yield Supplement Account and deposited to the Collection
Account pursuant to Section 5.06(b);
(xvii) Amount to be withdrawn from the Yield Supplement Account and
deposited to the Collection Account pursuant to Section 5.06(c);
(xviii) Amount to be withdrawn from the Yield Supplement Account and
remitted to the Seller pursuant to Section 5.06(d);
B-2
