Exhibit 4.2
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CONTRIBUTION AND SERVICING AGREEMENT
AMONG
GREEN TREE LEASE FINANCE 1998-1, LLC
ISSUER
GREEN TREE LEASE FINANCE II, INC.
CONTRIBUTOR
GREEN TREE VENDOR SERVICES CORPORATION
IN ITS INDIVIDUAL CAPACITY AND AS SERVICER
U.S. BANK TRUST NATIONAL ASSOCIATION
TRUSTEE
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DATED AS OF DECEMBER 1, 1998
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TABLE OF CONTENTS
Page
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INTRODUCTION................................................................................... 1
ARTICLE I DEFINITIONS.................................................... 1
SECTION 1.1. Definitions............................................... 1
SECTION 1.2. Usage of Terms............................................ 8
SECTION 1.3. Calculations.............................................. 8
SECTION 1.4. Section References........................................ 8
SECTION 1.5. No Recourse............................................... 8
ARTICLE II CONVEYANCE OF LEASES........................................... 9
SECTION 2.1. Conveyance of Leases and Related Assets................... 9
SECTION 2.2. Custody of Lease Files.................................... 10
SECTION 2.3. Further Assurances........................................ 11
SECTION 2.4. Representations and Warranties of Contributor............. 12
SECTION 2.5. Nonpetition Covenant...................................... 14
SECTION 2.6. Repurchase of Leases Upon Breach of Representations and
Warranties................................................ 14
ARTICLE III ADMINISTRATION AND SERVICING OF LEASES......................... 15
SECTION 3.1. Duties of the Servicer.................................... 15
SECTION 3.2. Collection of Lease Payments; Modifications of Leases..... 16
SECTION 3.3. Realization Upon Leases................................... 18
SECTION 3.4. Insurance, Maintenance and Taxes.......................... 19
SECTION 3.5. Maintenance of Security Interests in Equipment............ 21
SECTION 3.6. Covenants, Representations, and Warranties of Servicer.... 22
SECTION 3.7. Sub-Servicers............................................. 23
SECTION 3.8. Total Servicing Fee; Payment of Expenses by Service....... 24
SECTION 3.9. Servicer's Certificate.................................... 24
SECTION 3.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event......................................... 24
SECTION 3.11. Annual Independent Accountants' Report.................... 25
SECTION 3.12. Access to Certain Documentation and Information
Regarding Leases.......................................... 25
SECTION 3.13. Certain Duties of the Servicer............................ 26
SECTION 3.14. Duties of the Servicer under the Indenture................ 26
SECTION 3.15. Fidelity Bond............................................. 27
ARTICLE IV COLLECTIONS AND DEPOSITS....................................... 27
SECTION 4.1. Initial Deposit........................................... 27
SECTION 4.2. Collections............................................... 27
SECTION 4.3. Application of Collections................................ 28
SECTION 4.4. Net Deposits.............................................. 29
SECTION 4.5. Servicer Advances......................................... 29
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ARTICLE V TERMINATION.................................................... 30
SECTION 5.1. Optional Purchase of All Leases; Liquidation of Trust
Assets.................................................... 30
ARTICLE VI THE CONTRIBUTOR................................................ 30
SECTION 6.1. Liability of Contributor.................................. 30
SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of, Contributor; Amendment of Certificate of
Incorporation............................................. 30
SECTION 6.3. Limitation on Liability of Contributor and Others......... 31
SECTION 6.4. Contributor May Own Notes................................. 31
SECTION 6.5. Covenants of the Contributor.............................. 32
ARTICLE VII THE SERVICER................................................... 32
SECTION 7.1. Liability of Servicer; Indemnities........................ 32
SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer.............................. 33
SECTION 7.3. Limitation on Liability of Servicer and Others............ 34
SECTION 7.4. Servicer Not to Resign.................................... 34
SECTION 7.5. Corporate Existence....................................... 34
ARTICLE VIII SERVICER TERMINATION EVENTS.................................... 35
SECTION 8.1. Servicer Termination Event................................ 35
SECTION 8.2. Consequences of a Servicer Termination Event.............. 36
SECTION 8.3. Trustee to Act; Appointment of Successor.................. 37
SECTION 8.4. Notification to Noteholders............................... 37
SECTION 8.5. Waiver of Past Defaults................................... 37
ARTICLE IX SUBSTITUTION OF LEASES......................................... 38
SECTION 9.1. Substitution.............................................. 38
SECTION 9.2. Procedure................................................. 39
SECTION 9.3. Objection and Repurchase.................................. 40
SECTION 9.4. Vendor Services' and Servicer's Subsequent Obligations.... 40
ARTICLE X MISCELLANEOUS PROVISIONS....................................... 40
SECTION 10.1. Amendment................................................. 40
SECTION 10.2. Protection of Title to Trust Assets....................... 41
SECTION 10.3. Governing Law............................................. 43
SECTION 10.4. Severability of Provisions................................ 43
SECTION 10.5. Assignment................................................ 43
SECTION 10.6. Third-Party Beneficiaries................................. 43
SECTION 10.7. Counterparts.............................................. 44
SECTION 10.8. Intention of Parties...................................... 44
SECTION 10.9. Notices................................................... 44
SECTION 10.10. Income Tax Characterization............................... 44
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EXHIBITS
Exhibit A -- Schedule of Leases and Equipment
Exhibit B -- Form of Servicer's Certificate
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THIS CONTRIBUTION AND SERVICING AGREEMENT, dated as of December 1,
1998, is made among GREEN TREE LEASE FINANCE 1998-1, LLC, a Delaware limited
liability company (the "Issuer"), GREEN TREE LEASE FINANCE II, INC., a Minnesota
corporation, as Contributor (the "Contributor"), GREEN TREE VENDOR SERVICES
CORPORATION, a Delaware corporation, in its individual capacity and as Servicer
(in its individual capacity, "Vendor Services"; in its capacity as Servicer, the
"Servicer"), and U.S. Bank Trust National Association, a national banking
association organized and existing under the laws of the United States of
America, as trustee under the Indenture (the "Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. All terms defined in the Indenture (as
defined below) shall have the same meaning in this Agreement. Whenever
capitalized and used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
Accountants' Report: The report of a firm of nationally recognized
independent accountants described in Section 3.11.
Accounting Date: With respect to a Payment Date, the last day of the
preceding calendar month.
Adjusted Lease: A Lease that has had one or more terms adjusted or
modified by the Servicer, other than modifications permitted by Section 3.2.
Administrative Fee: With respect to any Collection Period, all
administrative fees, expenses and charges collected in respect of the Leases
during such Collection Period, including late fees, late payment interest,
documentation fees, insurance administration charges and any Extension Fees.
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agreement or "this Agreement": This Contribution and Servicing
Agreement, all amendments and supplements thereto and all exhibits and schedules
to any of the foregoing.
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Book Value: With respect to any Equipment, the value of such
Equipment as shown on the accounting books and records of Vendor Services as of
the Cut-Off Date. The Book Value for each item of Equipment shall be set forth
on Exhibit A hereto (as the same may be revised from time to time).
Business Day: Any day (other than a Saturday, Sunday or legal
holiday) on which commercial banking institutions in St. Xxxx, Minnesota, or any
other location of any successor Servicer or successor Trustee, are open for
regular business.
Collection Account: The account designated as such in, and
established and maintained pursuant to, Section 8.02 of the Indenture.
Collection Period: With respect to a Payment Date, the calendar month
preceding the month in which such Payment Date occurs (such calendar month being
referred to as the "related" Collection Period with respect to such Payment
Date). With respect to an Accounting Date, the Collection Period in which such
Accounting Date occurs is referred to herein as the "related" Collection Period
with respect to such Accounting Date.
Collection Records: All manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Leases.
Contributor: Green Tree Lease Finance II, Inc., a Minnesota
corporation, or its successor in interest pursuant to Section 6.2.
Cut-Off Date: The Initial Cut-Off Date or, in the case of a
Substitute Lease, the first day of the month of transfer of such Substitute
Lease to the Issuer.
Deposit Date: With respect to any Collection Period, the Business Day
immediately preceding the related Determination Date.
Determination Date: With respect to any Collection Period, the first
Business Day immediately preceding the related Payment Date.
Eligible Lease: A Lease satisfying the Representations and
Warranties.
Eligible Servicer: Vendor Services, the Trustee or another Person
which at the time of its appointment as Servicer (i) is servicing a portfolio of
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables comparable to
the Leases, (ii) is legally qualified and has the capacity to service the
Leases, (iii) has demonstrated the ability professionally and competently to
service a portfolio of equipment lease contracts, installment sale contracts,
promissory notes, loan and security agreements and other similar types of
receivables comparable to the Leases with reasonable skill and care, (iv) has
available software which is adequate to perform its duties and responsibilities
under this Agreement, and (v) satisfies the Rating Agency Condition.
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Equipment: The Equipment subject to a Lease, as more particularly
described on Exhibit A hereto (as the same may be revised from time to time).
Extension Fees: Any fee received by the Servicer in consideration for
the granting of an extension on the payment of any Scheduled Payment due under a
Lease.
Indenture: The Indenture, dated as of December 1, 1998, between the
Issuer and the Trustee, as the same may be amended and supplemented from time to
time.
Initial Cut-Off Date: December 1, 1998.
Initial Pool Principal Balance: $394,619,948.
Insurance, Maintenance and Tax Accounts: The accounts which are
established and maintained pursuant to Section 3.4(a).
Insurance Policy: Any insurance policy benefiting the lessor or
secured party under a Lease providing loss or physical damage, theft or similar
coverage with respect to the Equipment.
Issuer: Green Tree Lease Finance 1998-1, LLC.
Lease File: The documents, electronic entries, instruments and
writings listed in Section 2.2 pertaining to a particular Lease.
Lease Pool Principal Balance: With respect to any Payment Date, the
sum of the Principal Balances (computed as of the related Accounting Date) for
all Leases.
Leases: The lease contracts listed on Exhibit A hereto (excluding any
such lease contract which has become a Purchased Lease but including all
Substitute Leases) and all rights and obligations under such contracts,
including, without limitation, all monies at any time paid or payable thereon or
in respect thereof from and after the Cut-Off Date (whether in the form of (i)
Scheduled Payments (including those Scheduled Payments due prior to, but not
received as of, the Cut-Off Date, but excluding those Scheduled Payments due on
or after, but received prior to, the Cut-Off Date), (ii) Prepayments, (iii)
Liquidation Proceeds (including all net proceeds from the disposition of the
related Equipment), (iv) Extension Fees, (v) payments to be applied by the
Servicer to the payment of insurance charges, maintenance, taxes or other
similar obligations, (vi) payments to be retained by the Servicer in payment of
Administrative Fees, or otherwise), and all rights of the lessor in the related
Equipment (other than any ownership interest of the lessor in such Equipment),
Insurance Policies and any other security for the payment of amounts due under
such contracts.
Lien: Any security interest, lien, charge, pledge, preference, equity
or encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
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Liquidated Lease: With respect to any Collection Period, (i) a Lease
which, during such Collection Period, was charged off as uncollectible by the
Servicer in accordance with its credit and collection policies and procedures
(which shall be no later than the date as of which the Servicer has repossessed
and disposed of the related Equipment and otherwise collected all proceeds
(including any proceeds of insurance to be applied as described in Section
3.4(c)(ii)) which, in the Servicer's reasonable judgment, can be collected under
such Lease) following a default thereunder or upon damage to or destruction of
such Equipment (if such Equipment is not to be replaced or repaired in
accordance with Section 3.4(c)(i)), or (ii) a Lease as to which, during such
Collection Period, 10% or more of a Scheduled Payment shall have become 180 days
delinquent.
Liquidation Proceeds: All amounts received by the Servicer (i) in
connection with the liquidation of any Lease and disposition of the related
Equipment or (ii) as insurance proceeds with respect to any damaged or destroyed
Equipment to be applied as described in Section 3.4(c)(ii), in each case net of
(a) reasonable out-of-pocket expenses incurred by or on behalf of the Servicer
in connection with the collection of such Lease and the maintenance,
repossession, repair, storage and disposition of the related Equipment
(including taxes and insurance charges, to the extent in excess of amounts
available therefor and relating to such Lease in the Insurance, Maintenance and
Tax Accounts, as well as attorneys' fees) and (b) amounts that are required to
be refunded to the Obligor on such Lease; provided, however, that the
Liquidation Proceeds with respect to any Lease and disposition of the related
Equipment shall in no event be less than zero.
Monthly Records: All records and data maintained by the Servicer with
respect to the Leases in accordance with its customary standards, policies and
procedures.
Note Majority: Holders of Notes representing a majority of the
Principal Balance of each Class of the Notes then Outstanding.
Obligor: The lessee, borrower, purchaser or any other Person or
Persons who are obligated to make payments under a Lease.
Opinion of Counsel: A written opinion of counsel acceptable in form
and substance and from counsel acceptable to the Issuer and, if such opinion or
a copy thereof is required to be delivered to the Trustee, to the Trustee.
Original Term: The term of a Lease as of the Cut-Off Date (which
shall include any renewals or extensions of the original term thereof prior to
the Cut-Off Date), as such term may be extended in accordance with Section
3.2(c) or as a result of a bankruptcy proceeding with respect to the related
Obligor, but excluding, in the case of any Lease, any other extensions or
renewals thereof.
Payment Date: The twentieth day of each calendar month (or, if such
twentieth day is not a Business Day, the next succeeding Business Day),
commencing January 20, 1999.
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Person: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
Pledged Revenues: (i) All Scheduled Payments on the Leases received
on or after the Cut-Off Date (including all Scheduled Payments due prior to, but
not received as of, the Cut-Off Date, but excluding any Scheduled Payments due
on or after, but received prior to, the Cut-Off Date); (ii) any Prepayments
received on the Leases on or after the Cut-Off Date (to the extent Vendor
Services has not delivered a Substitute Lease); (iii) the Purchase Amount of any
Leases repurchased by Vendor Services (to the extent Vendor Services has not
delivered a Substitute Lease) in accordance with Section 2.6 (other than any
portion thereof attributable to the Book Value of the Equipment); (iv) the
amount paid by the Contributor to repurchase the Leases pursuant to Section 5.1;
(v) Liquidation Proceeds received in respect of any Leases and the disposition
of the related Equipment on or after the Cut-Off Date (to the extent Vendor
Services has not delivered a Substitute Lease); and (vi) any earnings on the
investment of amounts credited to the Collection Account.
Predecessor Lease: As defined in Section 9.1.
Prepaid Lease: With respect to any Collection Period, a Lease that has
been prepaid in full, whether pursuant to its terms or with the Servicer's
consent in accordance with Section 3.2(d).
Prepayment: With respect to any Collection Period for any Lease, a
voluntary prepayment during such Collection Period of amounts due and owing
under such Lease.
Principal Balance: As of any Accounting Date,
(1) in the case of any Lease that does not by its terms permit
prepayment or early termination, the present value of the unpaid Scheduled
Payments due on such Lease after such last day of the Collection Period
(excluding all Scheduled Payments due on or prior to, but not received as
of, such last day, as well as any Scheduled Payments due after such last
day and received on or prior thereto), after giving effect to any
Prepayments received on or prior to such last day, discounted monthly
(assuming, for purposes of such calculation, that each Scheduled Payment is
due on the last day of the applicable Collection Period) at the rate of
6.539% per annum;
(2) in the case of any Lease that permits prepayment or early
termination only upon payment of a premium that is at least equal to the
present value (calculated in the manner described in clause (1) above) of
the unpaid Scheduled Payments due on such Lease after the date of such
prepayment, the amount specified in clause (1) above; and
(3) in the case of any Lease that permits prepayment or early
termination without payment of a premium at least equal to the amount
specified in clause (2) above, the lesser of (a) the outstanding principal
balance of such Lease after giving effect to Scheduled Payments due on or
prior to such last day of the Collection Period, whether or
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not received, as well as any Prepayments, and any Scheduled Payments due
after such last day, received on or prior to such last day, and (b) the
amount specified in clause (1) above;
provided that the Principal Balance of any Lease which became a Liquidated Lease
during the related Collection Period or was required to be repurchased by Vendor
Services as of the last day of the related Collection Period in accordance with
Section 2.6, will be deemed to be zero on and after the last day of such
Collection Period.
Purchase Amount: With respect to a Lease and related Equipment
required to be repurchased by Vendor Services in accordance with Section 2.6,
the sum of (i) the Required Payoff Amount for such Lease as of the Accounting
Date on which such obligation to so repurchase arises, plus (ii) the Book Value
(if any) of the related Equipment.
Purchased Lease: As of any Deposit Date, any Lease which Vendor
Services has repurchased (or substituted with a Substitute Lease therefor) as of
the related Accounting Date, as required by Section 2.6.
Related Assets: The assets, in addition to the Leases, transferred by
the Contributor to the Issuer pursuant to Section 2.1(a).
Related Documents: The Indenture, the Underwriting Agreement with the
Underwriters of the Notes, the Notes and the Transfer Agreement. The Related
Documents executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
Representations and Warranties: As defined in Section 2.6.
Required Payoff Amount: With respect to any Collection Period for any
Lease, the sum of (i) the Scheduled Payment due in such Collection Period,
together with any Scheduled Payments due in prior Collection Periods but not yet
received, plus (ii) the Principal Balance of such Lease (after taking into
account the Scheduled Payment due in such Collection Period, whether or not
received).
Reserve Account: The account designated as such in, and established
and maintained pursuant to, Section 8.07 of the Indenture.
Residual Account: The account designated as such in, and established
and maintained pursuant to, Section 8.06 of the Indenture.
Residual Realizations: Cash flows realized from the sale or re-lease
of the Equipment following the scheduled expiration dates or voluntary early
termination of the Leases, other than Equipment subject to (i) Liquidated Leases
or (ii) Prepaid Leases for which Vendor Services has delivered a Substitute
Lease in accordance with Section 9.2.
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Responsible Officer: When used with respect to the Servicer, the
Contributor or any other Person, the President, any Vice-President or Assistant
Vice-President or the Controller of such Person, or any other officer or
employee having similar functions.
Schedule of Leases: Collectively, the schedules of Leases (which
shall be made available to the parties hereto on a computer disk or other data
storage medium) attached hereto as (or described in) Exhibit A, as such
schedules may be revised from time to time in accordance with Sections 2.6 and
9.2(a).
Scheduled Payment: With respect to any Collection Period for any
Lease during the Original Term of such Lease, the required payment or payments
due under such Lease in such Collection Period other than those portions of such
payments which (i) under such Lease, are to be applied by the Servicer to the
payment of insurance charges, maintenance, taxes and other similar obligations,
or (ii) are retained by the Servicer in payment of Administrative Fees or are
late payments as to which Servicer Advances were made on a Payment Date.
Servicer: Green Tree Vendor Services Corporation, its successor in
interest pursuant to Section 8.2 or, after any termination of the Servicer upon
a Servicer Termination Event, any successor Servicer.
Servicer Advance: As defined in Section 4.5.
Servicer Termination Event: An event described in Section 8.1.
Servicer's Certificate: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached hereto as Exhibit B.
Servicing Account: The account designated as such in, and established
and maintained pursuant to, Section 8.05 of the Indenture.
Servicing Fee: With respect to any Collection Period, the fee payable
to the Servicer for services rendered during such Collection Period, which shall
be equal to one-twelfth of the Servicing Fee Rate multiplied by the Lease Pool
Principal Balance determined as of the last day of the second preceding
Collection Period (or, in the case of the Servicing Fee with respect to the
Collection Period commencing on the Initial Cut-Off Date, an amount equal to the
product of (i) the Servicing Fee Rate, (ii) the Initial Lease Pool Principal
Balance, and (iii) a fraction, the numerator of which is 27 and the denominator
of which is 360.
Servicing Fee Rate: 0.75% per annum.
Sub-Servicer: The Person named as servicer or sub-servicer in any
agreement between the Servicer and such Person by which such Person is
contractually obligated to perform on the Servicer's behalf all or a part of the
servicing obligations described herein.
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Substitute Lease: An Eligible Lease substituted by Vendor Services
for (a) a Liquidated Lease, (b) a Prepaid Lease, (c) a Warranty Lease or (d) an
Adjusted Lease, in accordance with Section 9.2.
Total Servicing Fee: The sum of the Servicing Fee, the Administrative
Fees and any earnings on the investment of amounts in the Servicing Account.
Transfer Agreement: The Transfer Agreement, dated as of December 1,
1998, among Vendor Services and the Contributor.
Trust Accounts: The Collection Account, the Servicing Account, the
Residual Account, the Reserve Account, the Insurance, Maintenance and Tax
Accounts and such other accounts as may be established in the name of the Issuer
or the Trustee pursuant to the Indenture or this Agreement.
Trustee: The Person acting as Trustee under the Indenture, its
successors in interest and any successor Trustee under the Indenture.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
Vendor Services: Green Tree Vendor Services Corporation, a Delaware
corporation.
Warranty Lease: A Lease subject to repurchase by Vendor Services
pursuant to Section 2.6.
SECTION 1.2. Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.3. Calculations. All calculations of the Principal Balance
of any Lease and of the amount of the Servicing Fee shall be made on the basis
of a 360-day year consisting of twelve 30-day months. All references to the
Principal Balance of a Lease as of any date shall refer to the close of business
on such date.
SECTION 1.4. Section References. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.
SECTION 1.5. No Recourse. No recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or
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therewith, against any stockholder, officer or director, as such, of the
Contributor, Vendor Services, the Servicer or the Trustee or of any predecessor
or successor of the Contributor, Vendor Services, the Servicer or the Trustee.
ARTICLE II
CONVEYANCE OF LEASES
SECTION 2.1. Conveyance of Leases and Related Assets. (a) Subject
to the terms and conditions of this Agreement, the Contributor, pursuant to the
mutually agreed upon terms contained herein, hereby transfers, assigns, and
otherwise conveys to the Issuer, without recourse (but without limitation of its
obligations in this Agreement), as of the Closing Date, all of the right, title
and interest, including any security interest, whether now owned or hereafter
acquired, of the Contributor in and to the following:
(i) the Leases, including, without limitation, (A) all monies at any
time paid or payable thereon or in respect thereof from and after the
Initial Cut-Off Date or, in the case of Substitute Leases, the applicable
Cut-Off Date, in the form of (1) Scheduled Payments (including those
Scheduled Payments due prior to, but not received as of, the Cut-Off Date,
but excluding those Scheduled Payments due on or after, but received prior
to, the Cut-Off Date), (2) Prepayments, (3) Liquidation Proceeds (including
all net proceeds from the disposition of the related Equipment), (4)
Extension Fees, (5) payments to be applied by the Servicer to the payment
of insurance charges, maintenance, taxes or other similar obligations, and
(6) payments to be retained by the Servicer in payment of Administrative
Fees, (B) all rights of the lessor or the secured party, as the case may
be, in all present or future leases and other contracts relating to the
Equipment and all revenues, payments, rights to payment, profits, accounts,
chattel paper, products and contract rights arising from or related to such
Equipment or any use thereof or from any such lease or other contract, (C)
all rights of the lessor or secured party, as the case may be, in all
Insurance Policies and any other security (other than any ownership
interest of the lessor in the Equipment) for the payment of amounts due
under the Leases (including all rights, if any, the lessor or the secured
party may have against vendors and other third parties for payments of such
amounts) and (D) all items contained in the related Lease Files and any and
all other documents that are kept on file in accordance with Vendor
Services's customary procedures relating to the Leases;
(ii) all funds on deposit from time to time in the Trust Accounts and
all investments therein and proceeds thereof;
(iii) the Transfer Agreement;
(iv) the Residual Realizations; and
(v) any and all proceeds of the foregoing;
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The foregoing does not constitute, nor is it intended to result in, the creation
or assumption by the Issuer, the Trustee or any Noteholder of any obligation of
the Contributor, the Servicer or any other Person in connection with the Leases
or the related Equipment or any agreement or instrument relating thereto,
including any obligation to the Obligors.
(b) As security for the payment of amounts described in Section
2.1(a)(i)(3) and 2.1(a)(iv), the Contributor hereby grants to the Issuer a
security interest in all of the right, title and interest, whether now owned or
hereafter acquired, of the Contributor in and to the Equipment and all proceeds
thereof.
(c) The execution and delivery of this Agreement shall constitute an
acknowledgment by each of the Contributor and the Issuer that they intend that
each assignment and transfer herein contemplated constitute an assignment
outright, and not for security, of the property described in Section 2.1(a),
conveying good title thereto free and clear of any Liens, from the Contributor
to the Issuer, and that all such property shall not be a part of the estate of
the Contributor in the event of the bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, or the occurrence of another similar event, of,
or with respect to the Contributor. In the event that such conveyance is
determined to be made as security for a loan made by the Issuer or the
Noteholders to the Contributor, the Contributor hereby grants to the Issuer a
security interest in all of the Contributor's right, title and interest in and
to the property described in Section 2.1(a) to secure the loan determined to
have been made to the Contributor and the payment and performance of the other
obligations of the Contributor under this Agreement, and agrees that in such
event this Agreement shall constitute a security agreement under applicable law.
SECTION 2.2. Custody of Lease Files.
(a) The Issuer hereby appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Issuer as custodian of the
following documents or instruments (with respect to each Lease), which will be,
as of the Closing Date (or, in the case of a Substitute Lease, as of the date of
substitution in accordance with Section 9.2), in the possession of the Servicer
or its agents:
(i) the fully executed original of the Lease (together with any
agreements modifying the Lease, including, without limitation, any
extension agreements);
(ii) all documents related to the Leases;
(iii) documents evidencing or related to any Insurance Policy,
or copies thereof; and
(iv) such documents, if any, that Vendor Services keeps on file
in accordance with its customary procedures indicating that the Equipment
is owned or leased by the Obligor and subject to the interest of the lessor
or secured party.
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(b) The Servicer agrees to maintain the Lease Files at the locations
where they are currently maintained, or at such other locations as shall from
time to time be identified to the Trustee by written notice. The Servicer may
temporarily move individual Lease Files or any portion thereof without notice as
necessary to conduct collection and other servicing activities in accordance
with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Lease Files on behalf of the Contributor, the
Issuer, the Noteholders and the Trustee, maintain accurate records
pertaining to each Lease to enable it to comply with the terms and
conditions of this Agreement and the Related Documents, maintain a current
inventory thereof and certify to the Trustee annually that it continues to
maintain possession of such Lease Files;
(ii) implement written policies and procedures with respect to
persons authorized to have access to the Lease Files and the receipting for
Lease Files taken from their storage area by an employee of the Servicer
for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining
custody of the Lease Files on behalf of the Contributor, the Issuer, the
Noteholders and the Trustee.
(d) In performing its duties under this Section, the Servicer agrees
to service the Leases in accordance with customary and usual procedures of
institutions which service equipment Leases, installment sale contracts,
promissory notes, loan and security agreements and other similar types of
receivables comparable to the Leases and, to the extent more exacting, the
degree of skill and attention that the Servicer exercises from time to time with
respect to all comparable such contracts that it services for itself or others.
The Servicer shall promptly report to the Trustee any failure by it to hold the
Lease Files as herein provided and shall promptly take appropriate action to
remedy any such failure. In acting as custodian of the Lease Files, the
Servicer agrees further not to assert any beneficial ownership interests in the
Leases or the Lease Files. The Servicer agrees to indemnify the Contributor,
the Issuer, the Noteholders and the Trustee for any and all liabilities,
obligations, losses, damages, payments, costs or expenses of any kind whatsoever
which may be imposed on, incurred or asserted against the Contributor, the
Issuer, the Noteholders or the Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Lease Files;
provided, however, that the Servicer will not be liable for any portion of any
such amount resulting from the negligence or willful misconduct of the
Contributor, the Issuer, any Noteholder or the Trustee.
SECTION 2.3. Further Assurances. Following the Closing Date, the
Contributor shall, at the reasonable request of the Trustee or the Servicer, and
at the Contributor's expense, execute and deliver any further instruments of
transfer or other documents, and shall take all such other actions that may be
necessary, appropriate or desirable, to fully convey the Leases and the Related
Assets to the Issuer or otherwise to evidence, effectuate or implement the
transactions contemplated hereby. In addition, the Contributor, as agent for
the Issuer, shall defend the
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Leases and the Related Assets against any and all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to that of
the Issuer.
SECTION 2.4. Representations and Warranties of Contributor. By its
execution of this Agreement, the Contributor makes the following representations
and warranties. Unless otherwise specified, such representations and warranties
speak as of the Closing Date.
(a) Organization and Good Standing. The Contributor has been
duly organized and is validly existing as a corporation in good standing
under the laws of the State of Minnesota, with power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
transfer the Leases and the other property transferred to the Issuer.
(b) Due Qualification. The Contributor is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the performance of its
obligations under this Agreement and the Related Documents.
(c) Power and Authority. The Contributor has the power and
authority to execute and deliver this Agreement and the Contributor's
Related Documents and to carry out the terms hereof and thereof; the
Contributor has full power and authority to transfer and assign the Trust
Assets to be transferred and assigned to and deposited with the Issuer by
it and has duly authorized such transfer and assignment to the Issuer by
all necessary corporate action; and the execution, delivery and performance
of this Agreement and the Contributor's Related Documents have been duly
authorized by the Contributor by all necessary corporate action.
(d) No Consent Required. No consent, license, approval or
authorization of, or registration or declaration with, any Person or any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made or as
described in paragraph (n) below.
(e) Valid Transfer; Binding Obligations. This Agreement effects,
as of the Closing Date, a valid transfer and assignment of the Leases and
the other Trust Assets, enforceable against the Contributor and creditors
of and purchasers from the Contributor; and this Agreement and the
Contributor's Related Documents, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Contributor
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
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(f) No Violation. The execution and delivery of this Agreement
and the Related Documents, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents shall
not conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice or lapse of time, or both) a
default under the articles of incorporation or by-laws of the Contributor,
or any indenture, agreement, mortgage, deed of trust or other instrument to
which the Contributor is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or
other instrument, other than this Agreement, or violate any law, order,
rule or regulation applicable to the Contributor of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Contributor or
any of its properties.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the Contributor's knowledge, threatened against the
Contributor, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over the
Contributor or its properties (A) asserting the invalidity of this
Agreement or any of the Related Documents, (B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Contributor of
its obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents, or (D) seeking to adversely affect (i) the
federal income tax or other federal, state or local tax attributes of the
Notes or (ii) the federal, state or local tax treatment of any of the
transactions contemplated by this Agreement and the Related Documents.
(h) Place of Business. The principal executive offices of the
Contributor, and the offices where the Contributor keeps its records
concerning the Leases and related documents, are located at 1100 Landmark
Towers, 000 Xx. Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000.
(i) Registration Statement. No stop order suspending the
effectiveness of the Registration Statement relating to the Notes has been
issued, and no proceeding for that purpose has been instituted or is
threatened, by the Securities and Exchange Commission.
(j) Filings. Since the effective date of the Registration
Statement relating to the Notes, there has occurred no event required to be
set forth in an amendment or supplement to the Registration Statement or
Prospectus that has not been so set forth, and there has been no document
required to be filed under the Securities Exchange Act of 1934 and the
rules and regulations of the Securities and Exchange Commission thereunder
that upon such filing would be deemed to be incorporated by reference in
the Prospectus that has not been so filed.
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(k) Good Title. Immediately prior to the transfer and assignment
of the Leases and Related Assets to the Issuer pursuant to Section 2.1(a),
the Contributor had good title thereto and was the sole owner thereof
(subject, in the case of amounts in the Insurance, Maintenance and Tax
Accounts, to the rights of the Obligors therein), free of any Lien. Upon
the transfer and assignment of the Leases and Related Assets to the Issuer
pursuant to Section 2.1(a), the Issuer will have good title thereto and
will be the sole owner thereof (subject, in the case of amounts in the
Insurance, Maintenance and Tax Accounts, to the rights of the Obligors
therein), free of any Lien.
(l) No Impairment. No person has a participation in or other
right to receive Scheduled Payments under any Lease, and the Contributor
has taken no action to convey any right to any Person that would result in
such Person having a right to Scheduled Payments received with respect to
any Lease.
(m) Lawful Assignment. No Lease was originated in, or is subject
to the laws of, any jurisdiction the laws of which would make unlawful,
void or voidable the transfer and assignment of such Lease from the
Contributor to the Issuer under this Agreement. Each Lease may be sold,
assigned and transferred by the Contributor to the Issuer without the
consent of, or prior approval from, or any notification to, the applicable
Obligor, other than (i) certain Leases (which, in proportion to the
aggregate of all of the Leases, are not material) that require notification
of the assignment to the Obligor, which notification will be given by the
Servicer not later than 10 days following the Closing Date, and (ii)
certain Leases (which, in proportion to the aggregate of all of the Leases,
are not material) that require the consent of the Obligor, which consent
will be obtained by the Servicer not later than 10 days following the
Closing Date.
(n) All Filings Made. All filings and other actions required to
be made, taken or performed by any Person in any jurisdiction to give the
Issuer a first priority perfected lien or ownership interest in the Leases
has been made, taken or performed.
(o) Schedule of Leases Accurate. The information with respect to
the Leases contained in the Schedule of Leases is true and correct in all
material respects.
SECTION 2.5. Nonpetition Covenant. None of the Contributor, the
Servicer, nor Vendor Services shall petition or otherwise invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Issuer or the Contributor under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or the Contributor or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer or the Contributor.
SECTION 2.6. Repurchase of Leases Upon Breach of Representations and
Warranties. Concurrently with the execution and delivery of this Agreement,
Vendor Services and the Contributor have entered into the Transfer Agreement,
the rights of the Contributor under which have been assigned by the Contributor
to the Issuer pursuant to Section 2.1(a). Under the
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Transfer Agreement, Vendor Services has made certain representations and
warranties to the Contributor with respect to the Leases (the "Representations
and Warranties"). As of the second Deposit Date following its discovery or its
receipt of notice of any breach of the Representations and Warranties that
materially and adversely affects the value of any Lease (including any
Liquidated Lease), Vendor Services shall, unless such breach shall have been
cured in all material respects, either (A) (i) repurchase such Lease from the
Issuer and (ii) repurchase the related Equipment from the Contributor or (B)
substitute a Substitute Lease for such Lease and the related Equipment. On or
before the related Deposit Date, Vendor Services shall pay the Purchase Amount
to the Servicer and the Contributor, as their interests may appear, or
substitute a Substitute Lease. The obligations of the Contributor with respect
to any such breach of representations and warranties shall be limited to taking
any and all actions necessary to enable the Issuer or the Trustee to enforce
directly the obligations of Vendor Services to repurchase the applicable Lease
and Equipment under the Transfer Agreement. It is understood and agreed that,
except as set forth in the following paragraph, the obligation of Vendor
Services to repurchase or substitute another Lease for any Lease, together with
the related Equipment, as to which a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against
Vendor Services for such breach available to the Contributor or the Trustee on
behalf of the Noteholders and to the Contributor, as their interests may appear.
In addition to the foregoing and notwithstanding whether the Lease and
related Equipment shall have been repurchased by Vendor Services, Vendor
Services shall indemnify the Contributor, the Issuer, the Noteholders and the
Trustee against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted against
or incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach.
ARTICLE III
ADMINISTRATION AND SERVICING OF LEASES
SECTION 3.1. Duties of the Servicer. The Servicer is hereby
authorized to act as agent for the Issuer and the Contributor and in such
capacity shall manage, service, administer and make collections on the Leases,
and perform the other actions required by the Servicer under this Agreement.
The Servicer agrees that its servicing of the Leases shall be carried out in
accordance with customary and usual procedures of institutions which service
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and other similar types of receivables comparable to the
Leases and, to the extent more exacting, the degree of skill and attention that
the Servicer exercises from time to time with respect to all comparable such
contracts that it services for itself or others. In performing such duties, so
long as Vendor Services is the Servicer, it shall comply in all material
respects with its customary standards, policies and procedures in effect from
time to time. The Servicer may at any time change its customary standards,
policies and procedures; provided that any such change shall not materially
impair the collectibility of any Lease nor the Servicer's ability to perform its
obligations under this Agreement and the Related Documents. The Servicer's
duties shall include, without limitation, billing, collection and posting of all
payments, responding to inquiries of Obligors on
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the Leases, investigating delinquencies, sending invoices to Obligors,
accounting for collections and furnishing monthly and annual statements to the
Issuer and the Trustee with respect to distributions, monitoring the status of
Insurance Policies with respect to the Equipment and performing the other duties
specified herein. The Servicer shall also administer and enforce all material
rights and responsibilities of the lessor or secured party under the Leases and
provided for in the Insurance Policies, to the extent that such Insurance
Policies relate to the Leases, the Equipment or the Obligors. To the extent
consistent with the standards, policies and procedures otherwise required
hereby, the Servicer shall follow its customary standards, policies and
procedures and shall have full power and authority to do any and all things in
connection with such managing, servicing, administration and collection that it
may deem necessary or desirable, including the authority to forego collection
efforts under circumstances deemed appropriate by the Servicer in accordance
with its customary standards, policies and procedures. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered by
the Issuer to execute and deliver, on behalf of the Contributor and the Issuer
or either of them, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Leases and with respect to the Equipment in accordance with
its customary standards, policies and procedures. The Servicer is hereby
authorized to commence, in its own name (or in the name of the Issuer, provided
the Servicer has obtained the Issuer's consent, which consent shall not be
unreasonably withheld), a legal proceeding to enforce a Lease pursuant to
Section 3.3 or to commence or participate in any other legal proceeding
(including, without limitation, a bankruptcy proceeding) relating to or
involving a Lease, an Obligor or the related Equipment. If the Servicer
commences or participates in such a legal proceeding in its own name, the Issuer
shall thereupon be deemed to have automatically assigned such Lease to the
Servicer solely for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Servicer is authorized and empowered
by the Issuer to execute and deliver in the Servicer's name any notices,
demands, claims, complaints, responses, affidavits or other documents or
instruments in connection with any such proceeding. The Issuer shall furnish the
Servicer with any powers of attorney and other documents which the Servicer may
reasonably request and which the Servicer deems necessary or appropriate and
take any other steps which the Servicer may deem necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement.
SECTION 3.2. Collection of Lease Payments; Modifications of Leases.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Leases as and when the
same shall become due, and shall follow such collection procedures as it follows
with respect to all comparable contracts that it services for itself or others
and otherwise act with respect to the Leases, the related Equipment, the
Insurance Policies and the other Trust Assets in such manner as will, in the
reasonable judgment of the Servicer, maximize the amount to be received by the
Issuer and the Contributor with respect thereto. The Servicer is authorized in
its discretion to waive any Administrative Fees or Extension Fees that may be
collected in the ordinary course of servicing any Lease.
(b) The Servicer may at any time agree to a modification or amendment
of a Lease in accordance with its credit and collection policies and procedures
(it being acknowledged
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that any modification or amendment of a Lease resulting from a bankruptcy
proceeding with respect to the Obligor will not be deemed to have been agreed to
by the Servicer hereunder):
(i) in order to (A) change the Obligor's regular due date to a
date within the Collection Period in which such due date occurs or (B) re-
amortize (over the remainder of the original term) the Scheduled Payments
on a Lease following a partial Prepayment (provided that the sum of such
partial Prepayment and the Principal Balance of the Lease after the re-
amortization is at least equal to the Required Payoff Amount for such Lease
prior to the partial Prepayment), or
(ii) for any other purpose, provided that no such modification or
amendment shall:
(A) change the amount or the due date of any Scheduled Payment
(except as provided in clauses (i)(A) and (B) above, Section 3.2(c) or
Section 3.2(d)),
(B) release the related Equipment from the Lease, unless (1)
equipment of equal or greater value is substituted, (2) the remaining
related Equipment has a value at least equal to the Required Payoff
Amount of the Lease, or (3) the release is pursuant to a partial
Prepayment (which, in the case of a partial Prepayment on a Lease,
meets the requirements of Section 3.2(d)) and the ratio of the value
of the related Equipment to the Principal Balance of the Lease after
such Prepayment and release is at least equal to such ratio prior to
such Prepayment and release;
(C) cause any of the representations or warranties contained in
the Representations and Warranties to cease to be true; or
(D) except as provided in clause (ii)(A) above, result in the
Principal Balance or Required Payoff Amount of the Lease being less
than it would have been absent such modification or amendment.
(c) The Servicer may grant payment extensions on a Lease in accordance
with its credit and collection policies and procedures (it being acknowledged
that any extensions on a Lease resulting from a bankruptcy proceeding with
respect to the Obligor will not be deemed to have been granted by the Servicer
hereunder) if the Servicer believes in good faith that such extension is
necessary to avoid a termination and liquidation of such Lease and will maximize
the amount to be received by the Issuer with respect to such Lease; provided,
however, that:
(i) the aggregate period of all extensions granted on a Lease
shall not exceed six months; and
(ii) in no event may any Lease be extended beyond the Collection
Period immediately preceding the final Stated Maturity Date.
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Nothing in this Section 3.2(c) shall be deemed to prevent the Servicer from
extending or renewing, or otherwise accepting the continued performance by the
Obligor under, a Lease after expiration of its stated term.
(d) The Servicer may, in its discretion, allow a Prepayment, in whole
or in part, of any Lease which, by its terms, is not prepayable, but only if the
amount of such Prepayment (or, in the case of a partial Prepayment, the sum of
such Prepayment and the remaining Principal Balance of the Lease after
application of such Prepayment), together with such additional amounts as are
(i) available to the Servicer for the purpose of prepaying such Lease (excluding
any monies otherwise constituting Pledged Revenues) and (ii) deposited in the
Collection Account in respect of such Lease contemporaneously with the deposit
therein of such Prepayment, is at least equal to the Required Payoff Amount for
such Lease.
(e) The Servicer shall remit all payments by or on behalf of the
Obligors (other than amounts constituting Administrative Fees) received by the
Servicer to the Servicing Account as soon as practicable, but in no event later
than the second Business Day after receipt thereof.
(f) If the Servicer agrees to a modification, amendment or extension
of a Lease not permitted by Sections 3.2(b) or 3.2(c), the Servicer shall, on
the next Deposit Date, either (i) repurchase such Adjusted Lease in accordance
with Section 2.6, or (ii) deliver a Substitute Lease therefor in accordance with
Article IX.
SECTION 3.3. Realization Upon Leases. Consistent with the standards,
policies and procedures required by this Agreement, the Servicer shall, except
as provided in the following paragraph, take such action as is reasonably
necessary (including making commercially reasonable efforts to repossess (or
otherwise comparably convert the ownership of) and dispose of the related
Equipment) to collect from the Obligor or otherwise all amounts payable under
any Lease as to which the Obligor is in default in the making of one or more
Scheduled Payments thereunder, if the Servicer has determined such default is
not likely to be cured. The Servicer will not be required to repossess (or
otherwise comparably convert the ownership of) any Equipment the repossession of
which, in accordance with the Servicer's credit and collection policies and
procedures, and based on the Servicer's good faith estimate of the value of the
Equipment and its availability, would not be reasonable. The Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by Section
3.1, which practices and procedures may include the sale of the related
Equipment at public or private sale, the submission of claims under an Insurance
Policy and other actions by the Servicer in order to realize upon such a Lease.
The foregoing is subject to the provision that, in any case in which the
Equipment shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Equipment unless
it shall determine in its reasonable judgment that such repair and/or
repossession shall increase the proceeds of liquidation of the related Lease by
an amount greater than the amount of such expenses. All amounts received upon
liquidation of a Lease (except as otherwise provided below), including any
proceeds derived from the disposition of the related Equipment, shall be
remitted by the Servicer to the Servicing Account as soon as practicable, but in
no event later than the second Business Day after receipt thereof. The Servicer
shall, to the
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extent the proceeds of such liquidation are sufficient therefor, be entitled to
recover all reasonable out-of-pocket expenses incurred by it in the course of
liquidating a Lease, which amounts may be retained by the Servicer from such
proceeds (and shall not be required to be deposited as provided in Section
3.2(e)) to the extent of such expenses. The Servicer shall be entitled to retain
in the Servicing Account, from liquidation proceeds, a reserve for out-of-pocket
liquidation expenses in an amount equal to such expenses, in addition to those
previously incurred, as it reasonably estimates will be incurred. Upon
completion of such liquidation, the remainder of any such reserve, after
reimbursement to the Servicer of all out-of-pocket liquidation expenses, shall
constitute Liquidation Proceeds and be transferred as provided in Section
4.2(a). The Servicer shall, in accordance with Section 3.4(f), pay on behalf of
the Issuer and the Contributor any sales, use, personal property and other taxes
assessed on repossessed Equipment, as well as any sales or similar taxes on the
disposition thereof, and shall be entitled to reimbursement of any such tax from
liquidation proceeds with respect to the related Lease as provided in Section
3.4(b).
The Servicer will use its best efforts to sell or re-lease any
Equipment upon the termination of the Lease to which such Equipment is subject
(whether as a result of early termination following an Obligor default or upon
scheduled expiration of the Lease), in a timely manner and in a manner so as to
maximize, to the extent possible under the prevailing market conditions, the net
proceeds of such Equipment. The Servicer may, in its discretion, choose to
dispose of Equipment through a new lease or in some other manner which provides
for payment for the Equipment over time. In any such event (other than
permitting continued payments by the Obligor beyond the scheduled expiration
date of the Lease), the Servicer will be required to pay from its own funds, and
deposit in the Servicing Account, an amount which, in its reasonable judgment,
is equal to the fair market value of such Equipment (less any related out-of-
pocket liquidation expenses), and the Servicer will be entitled to all payments
received thereafter in respect of such Equipment. Any such amounts so deposited
by the Servicer shall be treated as additional Liquidation Proceeds, or Residual
Realizations, depending on the reason for the disposition of the Equipment, with
respect to the related Lease and Equipment.
SECTION 3.4. Insurance, Maintenance and Taxes.
(a) The Servicer shall establish one or more insurance, maintenance
and tax accounts (collectively, the "Insurance, Maintenance and Tax Accounts")
in the name of the Servicer and for the benefit of the respective Obligors and,
to the extent provided herein, the Issuer and the Contributor. The Servicer
shall deposit into the Insurance, Maintenance and Tax Accounts any payments made
by or on behalf of Obligors which constitute (i) insurance charges paid by an
Obligor to the lessor or secured party under a Lease (unless paid directly by
such insurance company or comparable third party directly to the Obligor), (ii)
any insurance payments or recoveries paid by an insurance company or comparable
third party and related to the damage to, or destruction of, the Equipment
related to such Lease (unless paid directly by such insurance company or
comparable third party directly to the Obligor), (iii) any payments made by or
on behalf of Obligors which constitute amounts paid by an Obligor to the lessor
or secured party under a Lease in respect of the maintenance of the related
Equipment, and (iv) taxes paid by the Obligor with respect to the related Lease
or Equipment (except for any such payments in respect of taxes which were paid
by Vendor Services prior to the Cut-Off Date,
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which payments shall constitute Scheduled Payments hereunder). None of the
foregoing payments shall constitute Pledged Revenues except under the
circumstances described in clause (c)(ii) below.
(b) The Servicer may pay from its own funds, or may withdraw amounts
from the Insurance, Maintenance and Tax Accounts, when and if appropriate, to
pay, when due (i) all insurance charges in the amounts received under clause
(a)(i) above, (ii) any amounts payable under any applicable maintenance contract
or otherwise with respect to the maintenance of the related Equipment in the
amounts received under clause (a)(iii) above, and (iii) all taxes in the amounts
received under clause (a)(iv) above. If the Servicer has paid any such
insurance charges, maintenance costs or taxes from its own funds (including any
such amounts that may have been paid prior to the Closing Date), the Servicer
shall be entitled to reimbursement therefor from any appropriate amounts
available therefor in the Insurance, Maintenance and Tax Accounts, from payments
thereafter received from the applicable Obligor in respect thereof or from
liquidation proceeds in the event such Lease is liquidated. The Servicer is
authorized in its discretion to waive its right to receive reimbursement of any
such amount.
(c) Amounts on deposit in the Insurance, Maintenance and Tax Accounts
which represent amounts received by the Servicer pursuant to clause (a)(ii)
above shall be applied by the Servicer as follows: (i) if equipment is
purchased to replace the Equipment that was damaged or destroyed, and such
replacement equipment is (in the reasonable opinion of the Servicer) of
comparable use and equivalent value to the Equipment that was damaged or
destroyed, or if the Equipment is to be repaired, the Servicer shall release
such amount so received from the insurance company or comparable third party in
payment or reimbursement for such replacement equipment or such repair; and (ii)
if such replacement option is not exercised or the Equipment is not to be
repaired, then the Servicer shall treat such amount as Liquidation Proceeds
(after netting any amounts therefrom as is provided pursuant to the definition
of "Liquidation Proceeds" herein) and transfer such amount from the Insurance,
Maintenance and Tax Accounts to the Collection Account.
(d) The Servicer may xxx to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Issuer and the
Contributor. If the Servicer elects to commence a legal proceeding to enforce
an Insurance Policy, the act of commencement shall be deemed to be an automatic
assignment of the rights of the Issuer and the Contributor under such Insurance
Policy to the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce an Insurance Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Insurance Policy, the Issuer, on
behalf of the Contributor, shall take such steps as the Servicer deems necessary
to enforce such Insurance Policy, including bringing suit in its name or the
name of the Trustee for the benefit of the Noteholders.
(e) Consistent with its customary standards, policies and procedures,
with respect to each Lease, the Servicer shall maintain insurance against
casualty loss with respect to any Equipment financed by or leased pursuant to
the Lease, to the extent the Lease requires the lessor or secured party under
the Lease to maintain such insurance, and shall otherwise require the Obligor
under the Lease to maintain such insurance, to the extent the Lease requires
that such
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insurance be maintained by the Obligor. The Servicer shall not otherwise be
liable to the Issuer, the Trustee, the Contributor or any Noteholder for any
casualty loss with respect to any Equipment related to a Lease, except to the
extent otherwise explicitly provided in this Agreement.
(f) The Servicer shall determine and pay when due all sales, use,
personal property and other taxes payable in respect of the Equipment related to
each Lease. To the extent the Servicer has previously received from the related
Obligor payments with respect to such taxes and has deposited such payments in
the Insurance, Maintenance and Tax Accounts in accordance with clause (a)(iv)
above, the Servicer shall, in accordance with clause (b)(iii) above, either (i)
pay such taxes from amounts withdrawn from the Insurance, Maintenance and Tax
Accounts, or (ii) pay such taxes from its own funds and thereafter reimburse
itself from amounts withdrawn from the Insurance, Maintenance and Tax Accounts.
In the event the Servicer has not previously received payments from the Obligor
for this purpose, or to the extent any such payments received were insufficient
to pay the taxes due, the Servicer shall nonetheless pay such taxes from its own
funds and shall xxxx the Obligor for any amounts so paid. The Servicer shall be
entitled to reimbursement for any taxes so paid from its own funds, as provided
in clause (b)(iii) above. Failure on the part of the Servicer to perform its
duties in a timely fashion under this clause shall constitute a breach of this
Agreement by the Servicer for which indemnity will be available in accordance
with Section 7.1.
(g) The Servicer shall give prompt written notice to the Trustee of
the Servicer's failure to pay when due any insurance charge or tax payment
required to be paid pursuant to this Section 3.4 and the reason for such
failure. Upon receipt of any such notice, or if the Trustee has otherwise
received notice of any such failure to pay an insurance charge or tax payment,
the Trustee shall take such actions as are reasonably necessary (including the
withdrawal of monies, if any, available therefor in the Insurance, Maintenance
and Tax Accounts and attributable to payments previously made by the related
Obligor and payment of such insurance charge or tax payment) to cause any such
amounts to be paid. The Trustee shall be permitted to withdraw monies from the
Insurance, Maintenance and Tax Accounts for purposes of performing its
obligations under this paragraph, but shall not, in any event, be required to
use its own funds for such purposes.
SECTION 3.5. Maintenance of Security Interests in Equipment. To the
extent the Servicer's credit and collection policies and procedures in this
regard would so require (it being acknowledged that, in certain instances, such
credit and collection policies and procedures would not so require), the
Servicer shall take such steps as are necessary to maintain perfection of any
security interest created by each Lease in the related Equipment on behalf of
the Issuer and the Contributor, including, but not limited to, obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements
and continuation statements as are necessary to maintain such security interest
granted by the Obligors under the respective Leases. The Issuer hereby
authorizes the Servicer, and the Servicer agrees (to the extent the Servicer's
credit and collection policies and procedures in this regard would so require),
to take any and all steps necessary to re-perfect such security interest on
behalf of the Issuer and the Contributor as necessary because of the relocation
of Equipment or for any other reason.
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SECTION 3.6. Covenants, Representations, and Warranties of Servicer.
By its execution and delivery of this Agreement, the Servicer makes the
following representations, warranties and covenants.
(a) The Servicer covenants as follows:
(i) Liens in Force. The Equipment securing each Lease shall not
be released in whole or in part from any interest the lessor or secured
party may have in such Equipment under the terms of the Lease, except upon
payment in full of the Lease or as otherwise contemplated herein;
(ii) No Impairment. The Servicer shall do nothing to impair the
rights of the Issuer, the Contributor or the Noteholders in the Leases, the
Insurance Policies or the other Trust Assets; and
(iii) No Amendments. The Servicer shall not extend or
otherwise amend the terms of any Lease with respect to the Scheduled
Payments thereon, except (A) in accordance with Section 3.2, or (B) at such
time as the Notes are no longer Outstanding, with the consent of the
Issuer.
(b) The Servicer represents, warrants and covenants as of the
date of execution and delivery of this Agreement:
(i) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, with power, authority and legal right to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement and the Servicer's Related
Documents;
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the performance of its
obligations under this Agreement and the Related Documents;
(iii) Power and Authority. The Servicer has the power
and authority to execute and deliver this Agreement and to carry out the
terms hereof; and the execution, delivery and performance of this Agreement
and the Servicer's Related Documents have been duly authorized by the
Servicer by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the Servicer's
Related Documents shall each constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its terms, except
as enforceability
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may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless
of whether such enforceability is considered in a proceeding in equity or
at law;
(v) No Violation. The execution and delivery of this Agreement,
the consummation of the transactions contemplated by this Agreement and the
Servicer's Related Documents, and the fulfillment of the terms hereof,
shall not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time, or
both) a default under, the articles of incorporation or bylaws of the
Servicer, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement or any Related
Document, or violate any law, order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or any of its properties;
(vi) No Proceedings. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Servicer or
its properties (A) asserting the invalidity of this Agreement or any of the
Servicer's Related Documents, (B) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or any of the Servicer's Related Documents, or (C) 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 or any of the Servicer's Related
Documents or (D) seeking to adversely affect (i) the federal income tax or
other federal, state or local tax attributes of the Notes or (ii) the
federal, state or local tax treatment of any of the transactions
contemplated by this Agreement and the Related Documents; and
(vii) No Consents. The Servicer is not required to
obtain the consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the
Servicer's Related Documents.
SECTION 3.7. Sub-Servicers. The Servicer may, without the Issuer's
or the Trustee's consent, maintain or enter into one or more agreements with
Sub-Servicers for the servicing and administration of the Leases by such Sub-
Servicers. Notwithstanding the terms or existence of any such agreement between
the Servicer and a Sub-Servicer, the Servicer shall not be relieved of any of
its obligations under this Agreement by reason of such agreement and shall
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be obligated to the same extent and under the same terms and conditions as if
the Servicer alone was servicing and administering the Leases, and neither the
Issuer nor the Trustee shall have any obligation to deal with anyone other than
the Servicer with respect to the servicing of the Leases.
SECTION 3.8. Total Servicing Fee; Payment of Expenses by Servicer.
On each Payment Date, the Servicer shall be entitled to receive out of the
Collection Account the Servicing Fee for the related Collection Period and any
unreimbursed Servicer Advances in respect of a prior Payment Date, pursuant to
Section 8.03 of the Indenture. The Servicer shall be entitled to retain, as
additional servicing compensation under this Agreement, any Administrative Fees
and any earnings on the investment of amounts in the Servicing Account. The
Servicer shall be required to pay all expenses incurred by it in connection with
its activities under this Agreement (including taxes imposed on the Servicer and
all expenses incurred in connection with reports to Noteholders). In addition,
the Servicer shall pay to the Trustee, and the Trustee shall be entitled to,
certain annual fees and shall reimburse the Trustee for all ordinary and
reasonable out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under the Indenture (excluding those incurred or made
in the performance of its duties under Article V of the Indenture, as referred
to in Section 6.07(b) of the Indenture).
SECTION 3.9. Servicer's Certificate. No later than 10:00 a.m. St.
Xxxx, Minnesota time on each Determination Date, the Servicer shall deliver to
the Issuer, the Trustee and each Rating Agency a Servicer's Certificate executed
by a Responsible Officer of the Servicer containing, among other things, (i) all
information necessary to enable the Trustee to make the withdrawals and
distributions required by Section 8.03 of the Indenture, (ii) all information
necessary to enable the Trustee to send the statements to Noteholders required
by Section 7.05 of the Indenture, and (iii) all information necessary to enable
the Trustee to reconcile all deposits to, and withdrawals from, the Servicing
Account, the Collection Account, the Residual Account and the Reserve Account
for the related Collection Period and Payment Date, including the accounting
required by Section 4.4. Leases repurchased (or for which a Substitute Lease
was substituted) by Vendor Services on the related Deposit Date or by the
Contributor on the related Accounting Date and each Lease which became a
Liquidated Lease or which was paid in full during the related Collection Period,
shall be identified by account number (as set forth in the Schedule of Leases),
and information regarding each Substitute Lease shall be provided. A copy of
such certificate may be obtained by any Noteholder (or by any Note Owner, upon
certification that such Person is a Note Owner and payment of any expenses
associated with the distribution thereof) by a request in writing to the Trustee
addressed to the Corporate Trust Office.
SECTION 3.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, on or before March 31 (or 90 days after the end of the Servicer's
fiscal year, if other than December 31) of each year, beginning on March 31,
1999, a certificate signed by any Responsible Officer of the Servicer, dated as
of December 31 (or other applicable date) of the immediately preceding year,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or such other period as shall have elapsed from the Closing
Date to
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the date of the first such certificate) and of its performance under this
Agreement has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than two Business Days thereafter, written notice in a certificate signed
by any Responsible Officer of the Servicer of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Termination Event
under Section 8.1(a). The Contributor or the Servicer shall deliver to the
Issuer, the Trustee, the Servicer or the Contributor (as applicable) and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than three Business Days thereafter, written notice in a certificate
signed by any Responsible Officer of the Servicer of any event which with the
giving of notice or lapse of time, or both, would become a Servicer Termination
Event under any other clause of Section 8.1.
SECTION 3.11. Annual Independent Accountants' Report.
(a) On or before May 1 of each year, commencing May 1, 1999, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
issue to the Servicer a report that such firm has examined selected documents,
records and management's assertions relating to leases and loans serviced by the
Servicer and stating that, on the basis of such examination, such servicing has
been conducted in compliance with the minimum servicing standards identified in
the Mortgage Bankers Association of America's Uniform Single Attestation Program
for Mortgage Bankers, or any successor uniform program, except for such
significant exceptions or errors in records that, in the opinion of such firm,
generally accepted attestation standards requires it to report.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Contributor and the Servicer within the meaning of the Code
of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) A copy of the Accountants' Report may be obtained by any
Noteholder (or by any Note Owner, upon certification that such Person is a Note
Owner and payment of any expenses associated with the distribution thereof) by a
request in writing to the Trustee addressed to the Corporate Trust Office.
SECTION 3.12. Access to Certain Documentation and Information
Regarding Leases. The Servicer shall provide to representatives of the Issuer
and the Trustee reasonable access to the documentation regarding the Leases. In
each case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours. Nothing in this Section shall
derogate from the obligation of the Servicer to observe any applicable law, rule
or contractual provision with an Obligor prohibiting disclosure of information
regarding the
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Obligors, and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
SECTION 3.13. Certain Duties of the Servicer. The Servicer shall,
and hereby agrees that it will, monitor the Issuer's compliance with all
applicable provisions of federal securities laws, notify the Issuer of any
actions to be taken by the Issuer necessary for compliance with such laws and
prepare on behalf of the Issuer all notices, filings or other documents or
instruments required to be filed under such laws.
SECTION 3.14. Duties of the Servicer under the Indenture. The
Servicer shall, and hereby agrees that it will, perform on behalf of the Issuer
the following duties of the Issuer under the Indenture (references are to the
applicable Sections in the Indenture):
(a) the direction to the Paying Agents, if any, to deposit moneys
with the Trustee (Section 3.03);
(b) the obtaining and preservation of the Issuer's qualification
to do business in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Indenture,
the Notes and each other instrument and agreement included in the Trust
Estate (Section 3.04);
(c) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.05 of the Indenture,
necessary to protect the Trust Estate (Section 3.05);
(d) the annual delivery of Opinions of Counsel, in accordance
with Section 3.06 of the Indenture, as to the Trust Estate, and the annual
delivery of the Officers' Certificate and certain other statements, in
accordance with Section 3.09 of the Indenture, as to compliance with the
Indenture (Sections 3.06 and 3.09);
(e) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 4.01);
(f) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate and the obtaining of the Opinion of Counsel and the
Independent Certificate relating thereto (Section 4.01);
(g) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee and
any written instruments necessary in connection with the resignation or
removal of any co-trustee or separate trustee (Sections 6.08 and 6.11);
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(h) the opening of one or more accounts in the Issuer's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of
Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.02, 8.04, 8.05 and
8.06);
(i) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures (Sections 9.01, 9.02 and 9.03);
(j) the preparation of all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the
Issuer to the Trustee to take any action under the Indenture (Section
11.01); and
(k) the recording of the Indenture, if applicable (Section
11.15).
SECTION 3.15. Fidelity Bond. Within 30 days after the Closing Date,
the Servicer shall obtain, and shall thereafter maintain, (i) a policy or
policies of insurance covering errors and omissions by the Servicer, and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among persons that service a portfolio
of equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables having an
unpaid balance of at least $100,000,000 and which are generally regarded as
servicers acceptable to institutional investors. Each such policy shall name
the Issuer, the Trustee and the Contributor as parties insured thereunder as
their respective interests may appear.
ARTICLE IV
COLLECTIONS AND DEPOSITS
SECTION 4.1. Initial Deposit. No later than the second Business Day
following the Closing Date, the Servicer shall deposit in the Servicing Account
(i) all Scheduled Payments and Prepayments of Leases received by the Servicer on
or after the Initial Cut-Off Date (including those Scheduled Payments due prior
to, but not received as of, the Initial Cut-Off Date, but excluding those
Scheduled Payments due on or after, but received prior to, the Cut-Off Date) and
on or prior to the second Business Day immediately preceding such date and (ii)
all Liquidation Proceeds (including proceeds of Insurance Policies to be treated
as such in accordance with Section 3.4) realized in respect of the Leases and
related Equipment and applied by the Servicer on and after the Initial Cut-Off
Date.
SECTION 4.2. Collections.
(a) Pursuant to the Indenture, the Trustee has established the
Servicing Account. The Servicer shall make deposits to and transfers from the
Servicing Account, and shall be entitled to make withdrawals therefrom, as
provided in this Agreement. The Servicer shall remit to the Servicing Account
all payments by or on behalf of the Obligors on the Leases
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(other than amounts constituting Administrative Fees), all Residual Realizations
and all Liquidation Proceeds (including (1) proceeds of Insurance Policies to be
treated as such in accordance with Section 3.4 and (2) deficiency amounts paid
by the Servicer with respect to the disposition of Equipment to be treated as
such in accordance with the last paragraph of Section 3.3) received by the
Servicer, in each case, as soon as practicable, but in no event later than the
second Business Day after receipt thereof. Within three Business Days after the
deposit of such payments and proceeds therein, the Servicer shall transfer all
amounts credited to the Servicing Account on account of such payments and
proceeds (i) to the extent they constitute Pledged Revenues, to the Collection
Account and (ii) to the extent they represent Residual Realizations, to the
Residual Account. Notwithstanding the foregoing, the Servicer may utilize an
alternative remittance schedule acceptable to the Servicer if the Servicer
provides to the Trustee written confirmation from each Rating Agency that such
alternative remittance schedule will not result in the downgrading or withdrawal
by the Rating Agency of the rating then assigned to the Notes. Amounts from time
to time in the Servicing Account shall be invested in accordance with Section
8.07 of the Indenture, and the Servicer shall be entitled to any earnings on
such investments as additional servicing compensation hereunder. In the event of
any losses on such investments, the Servicer shall deposit in the Servicing
Account the amount thereof, net of any earnings otherwise distributable to the
Servicer.
(b) The Servicer shall remit to the Collection Account (i) no later
than the second Business Day prior to a Payment Date, that portion of any
Purchase Amount relating to the Required Payoff Amount received by the Servicer
upon the repurchase by Vendor Services of any Lease pursuant to Section 2.6, and
(ii) that portion of the amount paid by the Contributor to repurchase the Leases
pursuant to Section 5.1 as is required to be deposited in the Collection Account
pursuant to such Section.
(c) Notwithstanding the provisions of subsections (a) and (b) hereof,
the Servicer will be entitled to be reimbursed from amounts on deposit in the
Servicing Account or the Collection Account with respect to a Collection Period
for amounts previously deposited in the Servicing Account or the Collection
Account but later determined by the Servicer in good faith to (i) have resulted
from mistaken deposits or postings or checks returned for insufficient funds, or
(ii) be required to be repaid to an Obligor. The amount to be reimbursed
hereunder may be retained pursuant to Section 4.4 at any time or may otherwise
be paid to the Servicer on the related Payment Date pursuant to Section 8.03(i)
of the Indenture upon certification by the Servicer of such amounts and the
provision of such information to the Trustee as may be necessary to verify the
accuracy of such certification.
SECTION 4.3. Application of Collections. For the purposes of this
Agreement, all collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Lease, payments by or on behalf of the
Obligor thereof (other than Administrative Fees with respect to such Lease,
to the extent collected) shall be applied to Scheduled Payments and
Prepayments in accordance with the terms of such Lease and the Servicer's
credit and collection policies and procedures. With respect to each
Liquidated Lease, the Liquidation Proceeds shall be applied, for purposes
of this Agreement and the Indenture only, to Scheduled Payments and
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Prepayment on the Lease as if the Liquidation Proceeds had been paid by the
Obligor on the Accounting Date, and then to any other amounts due and
payable with respect to such Lease. The Servicer shall not be entitled to
any Administrative Fees with respect to a Liquidated Lease unless the
Required Payoff Amount for such Lease has been deposited in the Collection
Account.
(b) With respect to each Lease that has become a Purchased Lease
as of any Deposit Date, the Purchase Amount shall be applied, for purposes
of this Agreement and the Indenture only, to Scheduled Payments and
Prepayment on the Lease as if the Purchase Amount had been paid by the
Obligor on the related Accounting Date. All payments by or on behalf of an
Obligor received with respect to any Purchased Lease after the Accounting
Date immediately preceding the Deposit Date on which the Purchase Amount
was paid by Vendor Services, shall be paid to Vendor Services and shall not
be included in Pledged Revenues.
(c) With respect to each Lease that has been repurchased by the
Contributor pursuant to Section 5.1, the purchase price shall be applied,
for purposes of this Agreement and the Indenture only, to Scheduled
Payments and Prepayments on the Lease as if such purchase price had been
paid by the Obligor on the Accounting Date. All payments by or on behalf
of an Obligor received with respect to any Lease so repurchased after the
Accounting Date on which the purchase price was paid by the Contributor,
shall be paid to the Contributor and shall not be included in the Amount
Available.
SECTION 4.4. Net Deposits. So long as no Servicer Termination Event
shall have occurred and be continuing with respect to the Servicer, the Servicer
may make the remittances or transfers to be made by it pursuant to Section 4.2
net of amounts (which amounts may be netted prior to any such remittance or
transfer) that would otherwise be distributed to it pursuant to Section 8.03(i)
of the Indenture; provided, however, that the Servicer shall account for all of
such amounts in the related Servicer's Certificate as if such amounts were
deposited and distributed separately. If an error is made by the Servicer in
calculating the amount to be deposited or retained by it, with the result that
an amount less than required is deposited in the Collection Account, the
Servicer shall make a payment of the deficiency to the Collection Account
immediately upon becoming aware, or receiving notice from the Trustee, of such
error.
SECTION 4.5. Servicer Advances. On each Determination Date, the
Servicer may, but will not be required to, advance and remit to the Trustee, in
such manner as will ensure that the Trustee will have immediately available
funds on account thereof by 11:00 a.m. St. Xxxx, Minnesota time on the second
Business Day prior to the next succeeding Payment Date, an amount (a "Servicer
Advance") equal to any Scheduled Payments due during the prior Collection Period
but unpaid prior to such Determination Date with respect to any Lease. In
consideration of each Servicer Advance the Servicer will be entitled to retain
any late payment fees recovered from the Obligor with respect to any Lease
Payment covered by a Servicer Advance. In addition, the Servicer will be
reimbursed for Servicer Advances from funds in the Collection Account in
accordance with the Indenture on the second following Payment Date.
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ARTICLE V
TERMINATION
SECTION 5.1. Optional Purchase of All Leases; Liquidation of Trust
Assets.
(a) At such time as the sum of the Aggregate Principal Balance of the
Notes is less than 10% of the Initial Pool Principal Balance, the Contributor
shall have the option to purchase all of the Leases from the Issuer; provided,
however, that the amount to be paid for such purchase (as set forth in the
following sentence) shall, in any event, be sufficient to pay the full amount of
unpaid principal of and interest payable on the Notes on the related Payment
Date. To exercise such option, the Contributor shall, on any Accounting Date,
pay to the Servicer the aggregate purchase price for the Leases (which shall be
an amount equal to the sum of the Required Payoff Amounts for all of the
Leases), plus the appraised value of any other property (including the right to
receive any future recoveries) held as Trust Assets, such appraisal to be
conducted by an appraiser mutually agreed upon by the Contributor and the
Trustee (or, if the Notes are no longer Outstanding, the Issuer), and shall
succeed to all interests in and to the Trust Assets. The fees and expenses
related to such appraisal shall be paid by the Contributor. The Servicer shall
immediately deposit the purchase price so paid into the Collection Account, to
be treated as Available Pledged Revenues and distributed in accordance with
Section 8.03 of the Indenture.
(b) Notice of any termination of the Issuer shall be given by the
Servicer to the Issuer and the Trustee as soon as practicable (but in no event
more than three Business Days) after the Servicer has received notice thereof.
ARTICLE VI
THE CONTRIBUTOR
SECTION 6.1. Liability of Contributor. The Contributor shall be
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Contributor and the representations made by the
Contributor.
SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of, Contributor; Amendment of Certificate of Incorporation.
(a) The Contributor shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the Contributor's
business except in accordance with the requirements of this Section. The
certificate of incorporation of any corporation (i) into which the Contributor
may be merged or consolidated, (ii) resulting from any merger or consolidation
to which the Contributor shall be a party, or (iii) succeeding to the business
of Contributor, shall contain provisions relating to limitations on business and
other matters substantively identical to those contained in the Contributor's
certificate of incorporation. Any such successor corporation shall execute an
agreement of assumption of every obligation of
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the Contributor under this Agreement and each Related Document and, whether or
not such assumption agreement is executed, shall be the successor to the
Contributor under this Agreement without the execution or filing of any document
or any further act on the part of any of the parties to this Agreement. The
Contributor shall provide prompt notice of any merger, consolidation or
succession pursuant to this Section 6.2 to the Issuer, the Trustee and the
Rating Agencies. Notwithstanding the foregoing, the Contributor shall not merge
or consolidate with any other Person or permit any other Person to become a
successor to the Contributor's business, unless (w) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 2.4 shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time, or both, would
become an Event of Default or a Servicer Termination Event shall have occurred
and be continuing, (x) the Contributor shall have delivered to the Issuer and
the Trustee a certificate of a Responsible Officer of the Contributor and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 6.2 and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (y) the Contributor shall have delivered to
the Issuer and the Trustee an Opinion of Counsel, stating that, in the opinion
of such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Issuer in the Trust Assets and reciting
the details of the filings or (B) no such action shall be necessary to preserve
and protect such interest, and (z) the Rating Agency Condition shall have been
satisfied.
(b) The Contributor hereby agrees that it shall not (i) take any
action prohibited by Article VIII of its certificate of incorporation or (ii)
without the prior written consent of the Issuer and the Trustee and without
satisfaction of the Rating Agency Condition, amend Article III, Article V,
Article VI or Article VIII of its certificate of incorporation.
SECTION 6.3. Limitation on Liability of Contributor and Others. The
Contributor and any director or officer or employee or agent of the Contributor
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 under this Agreement. The Contributor shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations as transferor of the Leases under this Agreement and that in its
opinion may involve it in any expense or liability.
SECTION 6.4. Contributor May Own Notes. Each of the Contributor and
any Affiliate of the Contributor may in its individual or any other capacity
become the owner or pledgee of Notes with the same rights as it would have if it
were not the Contributor or an Affiliate thereof except as otherwise
specifically provided herein or in the Related Documents. Notes so owned by or
pledged to the Contributor or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement or any Related
Document, without preference, priority, or distinction as among all of Notes;
provided that any Notes owned by the Contributor or any Affiliate thereof,
during the time such Notes are owned by them, shall be without voting rights for
any purpose set forth in this Agreement or any Related Document. The
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Contributor shall notify the Issuer and the Trustee promptly after it or any of
its Affiliates become the owner or pledgee of a Note.
SECTION 6.5. Covenants of the Contributor. The Contributor hereby
covenants that:
(a) Separate Business. The Contributor will not permit its assets to
be commingled with those of Vendor Services and the Contributor shall maintain
separate corporate records, books of accounts and bank accounts from those of
Vendor Services. The Contributor will not conduct its business in the name of
Vendor Services and will cause Vendor Services to conduct its business solely in
its own name so as not to mislead others as to the identity of the entity with
which those others are concerned. The Contributor will provide for its own
operating expenses and liabilities from its own funds, except that the
organizational expenses of the Contributor may be paid by Vendor Services. The
Contributor will not hold itself out, or permit itself to be held out, as having
agreed to pay, or as generally being liable for, the debts of Vendor Services.
The Contributor shall cause Vendor Services not to hold itself out, or permit
itself to be held out, as having agreed to pay, or as generally being liable
for, the debts of the Contributor except that the organizational expenses of the
Contributor may be paid by Vendor Services. The Contributor will maintain an
arm's length relationship with Vendor Services with respect to any transactions
between the Contributor, on the one hand, and Vendor Services, on the other.
(b) Adequate Capitalization. The Contributor shall at all times
remain adequately capitalized for the normal obligations reasonably foreseeable
in the conduct of its business, and shall not make any dividend or other
distribution to its shareholders unless the net worth of the Contributor
following such distribution is adequate for the normal obligations reasonably
foreseeable in the conduct of its business.
ARTICLE VII
THE SERVICER
SECTION 7.1. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such and, in the case of Vendor
Services, without limitation of its obligations under the Transfer Agreement)
shall be liable hereunder only to the extent of the obligations in this
Agreement specifically undertaken by the Servicer and the representations made
by the Servicer.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Contributor, their respective officers, directors, agents and
employees and the Noteholders from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon the Issuer,
the Trustee, the Contributor or the Noteholders through the Servicer's breach of
this Agreement, the gross negligence, willful misfeasance or bad faith of the
Servicer in the
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performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
in its individual capacity, its officers, directors, agents and employees, from
and against all costs, taxes, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the acceptance or performance of
the trusts and duties contained in the Related Documents, except to the extent
that such cost, taxes (other than income taxes), expense, loss, claim, damage or
liability is due to the willful misfeasance or gross negligence of the Issuer.
(d) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, together with any
interest earned thereon.
(e) Vendor Services, in its individual capacity, hereby acknowledges
that the indemnification provisions in the Transfer Agreement benefiting the
Issuer and the Trustee are enforceable by each hereunder.
(f) The provisions of this Section shall survive the termination of
the Related Documents.
SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not merge or consolidate with
any other Person, convey, transfer or lease substantially all its assets as an
entirety to another Person, or permit any other Person to become the successor
to the Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be an
Eligible Servicer and shall be capable of fulfilling the duties of the Servicer
contained in this Agreement. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; provided,
however, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section to the Issuer, the Trustee
and each Rating Agency. Notwithstanding the foregoing, the Servicer shall not
merge or consolidate with any other Person or permit any other Person to become
a successor to the Servicer's business, unless (a) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 3.6 shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction) and no event that, after notice or lapse of time, or both, would
become a Servicer Termination Event shall have occurred and be continuing, (b)
the
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Servicer shall have delivered to the Issuer and the Trustee a certificate of
a Responsible Officer of the Servicer 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, (c) the
Servicer shall have delivered to the Issuer and the Trustee an Opinion of
Counsel, stating that, in the opinion of such counsel, either (1) all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary to preserve and protect the interest of the Issuer
in the Trust Assets and reciting the details of the filings or (2) no such
action shall be necessary to preserve and protect such interest, and (d) the
Rating Agency Condition has been satisfied.
SECTION 7.3. 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 Contributor, the
Noteholders or the Trustee except as provided in this Agreement, for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement; 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 a breach of this Agreement or willful misfeasance, bad
faith or gross negligence (excluding errors in judgment) in the performance of
duties, by reason of reckless disregard of obligations and duties under this
Agreement or any violation of law by the Servicer or such person, as the case
may be; provided further, that this provision shall not affect any liability to
indemnify the Issuer and the Trustee for costs, taxes, expenses, claims,
liabilities, losses or damages paid by the Issuer or the Trustee, each in its
individual capacity. The Servicer and any director, officer, employee or agent
of the Servicer 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 under this Agreement.
SECTION 7.4. Servicer Not to Resign. Subject to the provisions of
Section 7.2, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer except upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer, and a Note
Majority does not elect to waive the obligations of the Servicer to perform the
duties which render it legally unable to act or to delegate those duties to
another Person. Any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Issuer and the Trustee. No resignation of the Servicer shall become
effective until a successor Servicer that is an Eligible Servicer shall have
assumed the responsibilities and obligations of the Servicer; provided, however,
that in the event a successor Servicer is not appointed within 60 days after the
Servicer has given notice of its resignation and has provided the Opinion of
Counsel required by this Section, the Servicer may petition a court for its
removal.
SECTION 7.5. Corporate Existence. The Servicer shall maintain its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which the failure to so qualify would have an adverse effect on the validity or
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enforceability of any Lease or this Agreement or on the ability of the Servicer
to perform its duties under this Agreement.
ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deposit within the time
periods specified in this Agreement in the Collection Account for
distribution to Noteholders, or to distribute to the Contributor, any
proceeds or payment required to be so deposited or distributed under the
terms of this Agreement (or, if Vendor Services is the Servicer, the
Transfer Agreement) that continues unremedied for a period of five Business
Days (three Business Days with respect to payment of Purchase Amounts)
after written notice is received by the Servicer from the Trustee or after
discovery of such failure by a Responsible Officer of the Servicer; or
(b) Failure by the Servicer to deliver to the Trustee and the
Issuer the Servicer's Certificate by the third Business Day prior to the
related Payment Date, or failure on the part of the Servicer to observe its
covenants and agreements set forth in Section 7.2; or
(c) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement (or, if Vendor Services is the
Servicer, the Transfer Agreement), which failure (i) materially and
adversely affects the rights of the Issuer or Noteholders, and (ii)
continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Issuer, the Trustee or any
Noteholder; or
(d) (i) The commencement of an involuntary case under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (ii) the entry of a decree or order for
relief by a court or regulatory authority having jurisdiction in respect of
the Servicer in an involuntary case under the federal bankruptcy laws, as
now or hereafter in effect, or another present or future, federal or state,
bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Servicer or of any substantial part of their respective
properties or ordering the winding up or liquidation of the affairs of the
Servicer; or
(e) The commencement by the Servicer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future,
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federal or state, bankruptcy, insolvency or similar law, or the consent by
the Servicer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Servicer or of any substantial part of its property or the
making by the Servicer of an assignment for the benefit of creditors or the
failure by the Servicer generally to pay its debts as such debts become due
or the taking of corporate action by the Servicer in furtherance of any of
the foregoing; or
(f) Any representation, warranty or statement of the Servicer
made in this Agreement or any certificate, report or other writing
delivered by the Servicer pursuant hereto shall prove to be incorrect in
any material respect as of the time when the same shall have been made, the
incorrectness of such representation, warranty or statement has a material
adverse effect on the Issuer or Noteholders, and, within 30 days after
written notice thereof shall have been given to the Servicer or the
Contributor by the Issuer, the Trustee or any Noteholder, the circumstances
or condition in respect of which such representation, warranty or statement
was incorrect shall not have been eliminated or otherwise cured.
SECTION 8.2. Consequences of a Servicer Termination Event. If a
Servicer Termination Event shall occur and be continuing, the Trustee may, and
at the direction of a Note Majority shall, by notice given in writing to the
Servicer and the Issuer, terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes, the Trust
Assets or otherwise, shall be terminated and automatically shall pass to, be
vested in and become obligations and responsibilities of the Trustee (unless and
until a successor Servicer is appointed in accordance with Section 8.3);
provided, however, that the Trustee shall have no liability with respect to any
obligation which was required to be performed by the terminated Servicer prior
to the date that the Trustee becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The Trustee
is authorized and empowered by this Agreement to execute and deliver, on behalf
of the terminated 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.
The terminated Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the terminated Servicer under
this Agreement, including, without limitation, the transfer to the Trustee for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in any of the Trust Accounts or thereafter received with respect to
the Leases and the delivery to the Trustee of all Lease Files, Monthly Records
and Collection Records and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the Trustee
or a successor Servicer to service the Leases and the other Trust Assets. The
terminated Servicer shall grant the Issuer, the Trustee and the successor
Servicer reasonable access to the terminated Servicer's premises at the
terminated Servicer's expense.
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SECTION 8.3. Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.2, the Trustee shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for in this Agreement, and shall be
subject to all the responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Servicer by the terms and
provisions of this Agreement. As compensation therefor, the Trustee shall be
entitled to receive the Total Servicing Fee. The Issuer and the Trustee shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Notwithstanding the foregoing, the Trustee may, if it shall be
unwilling to so act, or shall, if it is legally unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any Eligible Servicer as
the successor to the Servicer hereunder in the performance of all or any part of
the responsibilities, duties or liabilities of the Servicer hereunder. Pending
appointment of a successor pursuant to the preceding sentence, the Trustee shall
act as successor Servicer unless it is legally unable to do so, in which event
the outgoing Servicer shall continue to act as Servicer until a successor has
been appointed and accepted such appointment.
(c) In connection with such appointment and assumption, the Trustee
may make such arrangements for the compensation of such successor out of
payments on the Leases as it and such successor shall agree; provided, however,
that no such monthly compensation shall, without the written consent of the
Contributor and 100% of the Noteholders, exceed the Total Servicing Fee. The
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(d) If a successor Servicer is acting as Servicer hereunder, it shall
be subject to termination under Section 8.2 upon the occurrence of any Servicer
Termination Event applicable to it as Servicer.
SECTION 8.4. Notification to Noteholders. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article VIII,
the Issuer shall give prompt written notice thereof to each Rating Agency, and
the Trustee shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register.
SECTION 8.5. Waiver of Past Defaults. A Note Majority may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Termination Event arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
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ARTICLE IX
SUBSTITUTION OF LEASES
SECTION 9.1. Substitution.
(a) Subject to the satisfaction of the requirements set forth in
Section 9.1(b) hereof, the Contributor will have the right (but not the
obligation) at any time to substitute one or more Substitute Leases for a Lease
(for purposes of this Section 9.1, such Lease referred to as a "Predecessor
Lease") if:
(i) the Predecessor Lease became (A) a Liquidated Lease, (B) a
Prepaid Lease, (C) a Warranty Lease or (D) an Adjusted Lease during
the immediately preceding Collection Period; and
(ii) the aggregate Principal Balance of the Liquidated Leases,
Adjusted Leases and Warranty Leases that are Predecessor Leases shall
not in the aggregate exceed 10% of the Initial Pool Principal Balance.
(b) Each transfer of Substitute Leases will be subject to the
satisfaction of the following conditions precedent:
(i) after giving effect to such substitutions and any adjustments
pursuant to Section 3.2, the aggregate Book Value of such Leases must
be not less than 90% of the Book Value of the Leases substituted or
adjusted since the Closing Date.
(ii) either the final payment on such Substitute Lease must be on
or prior to September 30, 2005 or, to the extent the final payment on
such Lease is due subsequent to September 30, 2005 only scheduled
payments due on or prior to such date may be included in the Principal
Balance of such Lease for the purpose of making any calculation under
the Indenture.
(iii) the Lease Pool Principal Balance, after giving effect to
such adjustments and substitutions, must not be less than the Lease
Pool Principal Balance prior to such adjustment or substitution
(without giving effect to the proviso to the definition of "Principal
Balance").
(iv) the weighted average life of the Notes, after giving effect
to such adjustments and substitutions, must not differ materially from the
weighted average life of the Notes prior to such adjustments and
substitutions.
(v) after giving effect to such adjustments and substitutions,
the aggregate Principal Balance of the Leases that were originated by
Vendor Services must not be less than the aggregate Principal Balance
of the Leases that were originated by Vendor Services prior to such
adjustment or substitution.
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SECTION 9.2. Procedure.
(a) By 11:00 a.m. on the Business Day prior to each Deposit Date, the
Contributor shall give written notice to the Servicer of any substitution of
Substitute Leases for Predecessor Leases during the preceding Collection Period.
By 11:00 a.m. on the Deposit Date, the Contributor shall deliver to the Servicer
and the Trustee and, to the extent not included in the Servicer's Certificate,
the Trustee shall promptly deliver to each Rating Agency (i) a supplement to
Exhibit A hereto setting forth the information shown thereon for each such
Substitute Lease, (ii) an Officer's Certificate (A) certifying that each such
Substitute Lease is an Eligible Lease, (B) specifying each Predecessor Lease for
which a substitution has been made and the Principal Balance and the Book Value
under each such Predecessor Lease and the Principal Balance and the Book Value
under each Substitute Lease being transferred thereby and (C) that all
conditions precedent to such addition or substitution have been satisfied and
(iii) such additional information concerning such Substitute Leases or
Predecessor Leases as may be needed for the Servicer to prepare its Servicer's
Certificates pursuant to Section 3.9 and to otherwise carry out its duties as
servicer hereunder.
(b) Subject to the provisions of Section 9.3, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section 9.2(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Collection Period and as of the related Cut-Off Date (i)
Vendor Services assigned to the Contributor pursuant to Section 2.2 of the
Transfer Agreement all of Vendor Services' right, title and interest in and to
the Substitute Leases identified in such supplement and the related rights
described in Section 2.1(a) of the Transfer Agreement, (ii) Vendor Services
transferred to the Contributor, as a contribution to capital pursuant to Section
2.2 of the Transfer Agreement, all of Vendor Services' right, title and interest
in and to the Equipment subject to such Substitute Leases and the related rights
described in Section 2.1(a) of the Transfer Agreement, and (iii) the Contributor
assigned and transferred to Vendor Services, without representation or warranty,
all of the Contributor's right, title and interest in and to the Predecessor
Leases identified in such Officer's Certificate and the Equipment subject
thereto. The Contributor shall promptly deliver or cause to be delivered to the
Servicer the original executed copy of each Substitute Lease assigned to the
Contributor pursuant to Section 9.1 hereof and the related Lease File and the
Contributor shall promptly request the Servicer to deliver to Vendor Services
the original executed copy of each Predecessor Lease for which substitution has
been made pursuant to Section 9.1 hereof and the related Lease File.
(c) Subject to the provisions of Section 9.3, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section 9.2(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Collection Period and as of the related Cut-Off Date (i)
the Contributor assigned to the Issuer pursuant to Section 9.1 hereof all of the
Contributor's right, title and interest in and to the Substitute Leases
identified in such supplement and the related rights described in Section 2.1
hereof, (ii) the Contributor transferred to the Issuer, as a contribution to
capital, all of the Contributor's right, title and interest in and to the rights
described in Section 2.1 hereof as they relate to the Equipment subject to such
Substitute Leases, and (iii) the Issuer assigned and transferred to the
Contributor, without representation or warranty, all of the Issuer's right,
title and interest in and to the Predecessor Leases identified in such Officer's
Certificate and the Equipment subject thereto. Upon such
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assignment of a Substitute Lease, the Issuer shall be deemed to have appointed
and the Servicer shall be deemed to have accepted appointment as Custodian of
the related Lease File pursuant to Section 2.2.
SECTION 9.3. Objection and Repurchase. If any holder of the Notes
objects to any substitution of Leases within ten days of receipt of the
Servicer's Certificate providing notice thereof pursuant to Section 3.9, on the
grounds either that any Substitute Lease is not an Eligible Lease or that such
substitution or addition is otherwise not permitted under the provisions of
Section 9.1 hereof, the Contributor shall be entitled to present such additional
information as it deems appropriate in an effort to demonstrate that such Lease
is an Eligible Lease and that such substitution is permitted under the
provisions of Section 9.1 hereof. Following such presentation, the substitution
shall remain effective if each person originally objecting to the substitution
withdraws his objection. If the conditions specified in the preceding sentence
are not satisfied, or if at any time it is established that any lease was not,
at the time of substitution, an Eligible Lease, then Vendor Services shall be
required to repurchase such Lease in accordance with the provisions of Section
2.6 hereof.
SECTION 9.4. Vendor Services' and Servicer's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of this
Section 9, Vendor's Services', the Contributor and the Servicer's obligations
hereunder with respect to the Predecessor Lease shall cease but Vendor Services,
the Contributor and the Servicer shall each thereafter have the same obligations
with respect to the Substitute Lease substituted as it has with respect to all
other Leases subject to the terms hereof.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment.
(a) This Agreement may be amended by the Contributor, the Servicer,
the Issuer and the Trustee without the consent of any of the Noteholders, (i) to
cure any ambiguity, (ii) to correct or supplement any provisions in this
Agreement that may be inconsistent with any other provision herein, or (iii) to
make any other provisions with respect to matters or questions arising under
this Agreement that are not inconsistent with the provisions hereof; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of the Noteholders.
(b) This Agreement may also be amended from time to time by the
Contributor, the Servicer, the Issuer and the Trustee with the consent of a Note
Majority (which consent of any Holder of a Note given pursuant to this Section
or pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Note and of any Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Note) for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this
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Agreement, or of modifying in any manner the rights of the Holders of Notes;
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 Leases or distributions required to be made on any Note or the rate
of interest payable thereon, (b) amend any provisions of Section 5.06 or 8.03 of
the Indenture in such a manner as to affect the priority of payment of interest
or principal to Noteholders, or (c) reduce the aforesaid percentage required to
consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all Notes then Outstanding and affected thereby; and provided,
further, that no such amendment shall be effective unless and until the Rating
Agency Condition has been satisfied.
(c) Promptly after the execution of any such amendment or consent, the
Issuer or the Trustee, as appropriate, shall furnish written notification of the
substance of such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant
to Section 10.1(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the Issuer or Trustee, as applicable, may prescribe, including
the establishment of record dates.
(e) Prior to the execution of any amendment to this Agreement, the
Issuer 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, in addition to the Opinion of Counsel referred to in Section 10.2(h).
The Issuer may, but shall not be obligated to, enter into any such amendment
which affects the Issuer's own rights, duties or immunities under this Agreement
or otherwise.
SECTION 10.2. Protection of Title to Trust Assets.
(a) The Contributor shall execute and file such financing statements
and cause to be executed and filed such continuation and other statements
(including those prepared by the Servicer pursuant to Section 3.14(c)), all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer, the Issuer and the Trustee in
the Trust Assets and in the proceeds thereof; except that (i) UCC-1 financing
statements and continuation statements, listing the Obligor as debtor and the
related Equipment as collateral, need be filed only as required by Section 3.5;
and (ii) no assignments of any such financing statements relating to the
Equipment shall be filed to reflect the assignment of the Leases by Vendor
Services to the Contributor and by the Contributor to the Issuer. The
Contributor shall deliver (or cause to be delivered) to the Issuer and the
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 Contributor nor the Issuer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Contributor in
accordance with paragraph (a) above seriously
-41-
misleading within the meaning of Section 9-402(7) of the UCC, unless it shall
have given the Issuer and the Trustee at least 60 days' prior written notice
thereof, and shall promptly file appropriate amendments to all previously filed
financing statements and continuation statements.
(c) Each of the Contributor, the Servicer and the Issuer shall give
the Issuer and the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. The Servicer shall at all times maintain each office from
which it services Leases and its principal executive office within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each Lease
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Lease, including payments and recoveries made and
payments owing (and the nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Lease and the amounts from time to
time deposited in the Collection Account in respect of such Lease.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of transfer and assignment under this Agreement of the Leases to
the Issuer, the Servicer's master computer records (including any backup
archives) that refer to any Lease indicate clearly that the Lease is owned by
the Issuer. Indication of the Issuer's ownership of a Lease shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
Lease has been paid in full, liquidated (including receipt of all recoveries
reasonably expected to be collected), a Substitute Lease substituted therefor,
or purchased by the Contributor or Vendor Services.
(f) Upon receipt by the Servicer of reasonable prior notice, Servicer
shall permit the Issuer, the Trustee and their respective agents, at any time
during the Servicer's normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Leases or any other
portion of the Trust Assets.
(g) The Servicer shall furnish to the Issuer and the Trustee at any
time upon request a list (which may, at the option of the Servicer, be on a
computer disk or other electronic storage medium) of all Leases then held as
part of the Trust Assets, together with a reconciliation of such list to the
Schedule of Leases and to each of the Servicer's Certificates furnished before
such request indicating removal of Leases from the Issuer. Upon request, the
Servicer shall furnish a copy of any list to the Contributor. Subject to the
following sentence, the Issuer shall hold any such list and Schedule of Leases
for examination by interested parties during normal business hours at the
Corporate Trust Office upon reasonable notice by such Persons of their desire to
conduct an examination. The Issuer shall and shall cause its representatives to
hold in confidence all information thereon relating to the identity of the
Obligors except to the extent disclosure may be required by (S) 9-208 of the UCC
or by other applicable law (and all reasonable applications for confidential
treatment are unavailing) and except to the extent that the Issuer may
reasonably determine that such disclosure is consistent with its obligations
under the Indenture.
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(h) The Contributor and the Servicer shall deliver to the Issuer and
the Trustee simultaneously with the execution and delivery of this Agreement and
of each amendment thereto and upon the occurrence of the events giving rise to
an obligation to give notice pursuant to Section 10.2(b) or (c), an Opinion of
Counsel either (a) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and the
Trustee in the Leases and the other Trust Assets, 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 is
necessary to preserve and protect such interest.
(i) The Servicer shall deliver to the Issuer and the Trustee, within
90 days after the beginning of each calendar year beginning with the first
calendar year beginning more than three months after the Closing Date, an
Opinion of Counsel, either (a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Issuer and
the Trustee in the Leases, 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 action shall be necessary to preserve
and protect such interest.
SECTION 10.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
SECTION 10.4. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
respective rights of the Holders thereof.
SECTION 10.5. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer), this Agreement may not be assigned by the Contributor or the
Servicer without (i) the prior written consent of the Issuer, the Trustee and a
Note Majority, and (ii) satisfaction of the Rating Agency Condition.
SECTION 10.6. Third-Party Beneficiaries. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
-43-
SECTION 10.7. Counterparts. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 10.8. Intention of Parties. The parties hereto intend that,
in the event that the conveyance of the Leases and other Trust Assets pursuant
to this Agreement is determined to be made as security for a loan made by the
Issuer or the Noteholders to the Contributor, the Contributor hereby grants to
the Issuer to secure such loan a first priority security interest in all of the
Contributor's right, title and interest in and to the rights and property
intended to be conveyed to the Issuer pursuant to Section 2.1(a). This
Agreement shall, in such event, constitute a security agreement under applicable
law.
SECTION 10.9. Notices. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, or by facsimile transmission, and shall be deemed
to have been duly given upon receipt (a) in the case of Vendor Services, the
Contributor, the Issuer or the Servicer, at the following address: 1100
Landmark Towers, 000 Xx. Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000, Attention:
General Counsel and (b) in the case of the Trustee, at its Corporate Trust
Office, or at such other address as shall be designated by any such party in a
written notice to the other parties.
SECTION 10.10. Income Tax Characterization. The Contributor has
structured the Indenture and the Notes with the intention that the Notes will
qualify under applicable federal, state, local and foreign tax law as
indebtedness of the Contributor secured by the Leases. The Contributor and the
Servicer agree to treat and to take no action inconsistent with the treatment of
the Notes as such indebtedness for purposes of federal, state, local and foreign
income or franchise taxes and any other tax imposed on or measured by income.
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IN WITNESS WHEREOF, the Issuer, the Contributor, Vendor Services, the
Servicer and the Trustee have caused this Contribution and Servicing Agreement
to be duly executed by their respective officers as of the day and year first
above written.
ISSUER:
GREEN TREE LEASE FINANCE 1998-1, LLC
By GREEN TREE LEASE FINANCE II, INC.
By /s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
-------------------------------------
Title: Senior Vice President and Secretary
------------------------------------
CONTRIBUTOR:
GREEN TREE LEASE FINANCE II, INC.
By /s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
-------------------------------------
Title: Senior Vice President and Secretary
------------------------------------
GREEN TREE VENDOR SERVICES
CORPORATION
In its individual capacity and as Servicer
By /s/ Xxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxxxx
-------------------------------------
Title: Senior Vice President and Secretary
------------------------------------
TRUSTEE:
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Trustee
By /s/ Xxxxxx Xxxxxxx-Xxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx-Xxxx
-------------------------------------
Title: Assistant Vice President
------------------------------------
-45-
EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
--------------------------------
A-1
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
------------------------------
The undersigned, on behalf of Green Tree Vendor Services Corporation,
in its capacity as servicer (the "Servicer") under the Contribution and
Servicing Agreement, dated as of December 1, 1998 (the "Contribution and
Servicing Agreement"), among Green Tree Lease Finance 1998-1, LLC, Green Tree
Lease Finance II, Inc., U.S. Bank Trust National Association, as trustee under
the Indenture, and Green Tree Vendor Services Corporation, in its individual
capacity and as Servicer, DOES HEREBY CERTIFY that he/she is a Responsible
Officer of the Servicer and, pursuant to Section 3.9 of the Contribution and
Servicing Agreement, DOES HEREBY FURTHER CERTIFY the following with respect to
the Payment Date occurring on ___________________________________:
B-1
This Certificate shall constitute the Servicer's Certificate required
by Section 3.9 of the Contribution and Servicing Agreement with respect to the
above Payment Date. Any term capitalized but not defined herein shall have the
meaning ascribed thereto in the Contribution and Servicing Agreement.
IN WITNESS WHEREOF the undersigned has hereunto set his/her hand this
_______________ day of ____________________________, ____________.
GREEN TREE VENDOR SERVICES
CORPORATION
By
------------------------------------
Name:
-------------------------------
Title:
-------------------------------
B-2
