LEASE ACQUISITION AGREEMENT between
GRANITE FINANCIAL, INC. (the "Company")
and
GF FUNDING CORP. III (the "Transferor")
Dated as of March 1, 1997
TABLE OF CONTENTS
Page
ARTICLE 1DEFINITIONS 2
Section 1.01 Defined Terms 2
ARTICLE 2ACQUISITION OF LEASE ASSETS 4
Section 2.01 Authorization and Issuance of Common
Stock by the Transferor 4
Section 2.02 Lease Asset Acquisitions 4
Section 2.03 Assumption of Indebtedness by the
Transferor; Payment of Removal Price 4
Section 2.04 Delivery of Lease Contracts; Filing of
Financing Statements 4
Section 2.05 Servicing of Lease Contracts and Equipment 5
Section 2.06 Review of Lease Contracts 5
Section 2.07 Nature of Transfer 5
ARTICLE 3REPRESENTATIONS AND WARRANTIES 6
Section 3.01 Representations and Warranties of the
Company 6
Section 3.02 Representations and Warranties of the
Transferor 13
Section 3.03 Purchase or Substitution Required
Upon Breach of Certain
Representations and Warranties 14
Section 3.04 Requirements for Purchase or
Substitution of Lease Contracts and
Acquisition of Additional Lease Contracts 15
ARTICLE 4COVENANTS OF THE TRANSFEROR AND COMPANY 17
Section 4.01 Company Covenants 17
Section 4.02 Transferor Covenants 20
Section 4.03 Assignment of Lease Assets 20
ARTICLE 5CONDITIONS PRECEDENT 22
Section 5.01 Conditions to the Transferor's
Obligations 22
ARTICLE 6TERM AND TERMINATION 23
Section 6.01 Term 23
Section 6.02 Default by the Company 23
ARTICLE 7MISCELLANEOUS 24
Section 7.01 Amendments 24
Section 7.02 Governing Law 24
Section 7.03 Notices 24
Section 7.04 Separability Clause 24
Section 7.05 Assignment 24
Section 7.06 Further Assurances 24
Section 7.07 No Waivers; Cumulative Remedies 24
Section 7.08 Binding Effect; Third Party
Beneficiaries 25
Section 7.09 Set-Off 25
Section 7.10 MBIA Default or Termination 25
EXHIBITS
A FORM OF COMPANY CERTIFICATE
B FORM OF LEASE CONTRACTS
C POOL CONCENTRATION LIMIT EXCEPTIONS
D CONCENTRATION LIMITS
E FORM OF BROKER ASSIGNMENT AGREEMENTS
LEASE ACQUISITION AGREEMENT
This LEASE ACQUISITION AGREEMENT (the "Lease Acquisition
Agreement"), dated as of March 1, 1997, is by and between Granite
Financial, Inc. (the "Company") and GF Funding Corp. III (the
"Transferor").
PRELIMINARY STATEMENT
The Transferor has entered into a Trust and Security
Agreement, dated as of March 1, 1997 (as amended from time to
time, the "Trust and Security Agreement"), with Norwest Bank
Minnesota, National Association as the Trustee (the "Trustee")
and back-up servicer (the "Back-up Servicer") and
Granite Financial, Inc., as servicer (the "Servicer"), pursuant
to which the Transferor intends to issue the Certificates.
In furtherance thereof, the Transferor and the Company
are entering into this Lease Acquisition Agreement to provide
for, among other things, the acquisition by the Transferor of
all of the right, title and interest in and to certain
Lease Assets, which the Transferor is and will from time to
time convey to the Trustee for the benefit of MBIA and the
Certificateholders. As a precondition to the effectiveness
of this Lease Acquisition Agreement, the Transferor, the
Trustee, the Servicer and the Back-up Servicer will enter
into the Servicing Agreement to provide for the servicing of
the Lease Assets.
In addition, under the Trust and Security Agreement,
the Transferor is conveying to the Trustee, among other
things, all of the Transferor's rights derived under this
Lease Acquisition Agreement and the Servicing Agreement, and
the Company agrees that all covenants and agreements made
by it in this Lease Acquisition Agreement with respect to
the Lease Assets shall also be for the benefit of the Trustee,
MBIA and all Holders from time
to time of the Certificates. In consideration for
its
contribution and sale of the Lease Assets and
its
representations, warranties, covenants and other agreements
under this Lease Acquisition Agreement, the Company has
received all of the Common Stock of the Transferor and such
other consideration as may from time to time be paid hereunder.
ARTICLE 1
DEFINITIONS
Section 1.01 Defined Terms. For purposes of this
Lease Acquisition Agreement the following terms shall have the
meanings specified herein. Capitalized terms used herein
but not
otherwise defined shall have the respective meanings assigned
to such terms in the Trust and Security Agreement, or if not
defined therein, in the Servicing Agreement.
"Common Stock": All of the issued and outstanding shares
of common stock of the Transferor, which consists of 1,000
shares having a par value of $.01 per share.
"Company Certificate": The Company
Certificate substantially in the form attached hereto as
Exhibit A, one of which shall be entered into on any
Acquisition Date.
"Computer Tape": The diskette or other computer
readable medium, prepared by the Company, containing
descriptions and payment information on each Lease Contract on
the Lease Schedule.
"Concentration Limits": The limitations as to
the
composition of the Lease Contracts acquired by the
Transferor hereunder, as described on Exhibit D hereto, and as
amended from time to time with the prior written consent of
MBIA and with notice to the Rating Agencies and the
Certificateholders.
"Eligible Lease Contract": A Lease Contract that
satisfies the selection criteria set forth in Section 3.01(a)
hereof as of the Closing Date and each Acquisition Date.
"Existing Indebtedness": With respect to the
Certificates, the indebtedness that the Company shall incur
from time to time which relates to financings of the Lease
Receivables and which shall be assumed by the Transferor on
the Closing Date as set forth in Schedule II attached hereto
or on a Funding Date as set forth on Schedule II to a Company
Certificate.
"Closing Date": March 25, 1997.
"Initial Lease Schedule": The list of Lease Contracts
and Lease Receivables attached hereto as Schedule I.
"Lease Assets": All right, title and interest in and
to (a) the Lease Contracts, including the proceeds of the
Lease Contracts and all payments received on or with respect
to the Lease Contracts on or after the Cut-Off Date or any
Acquisition Date, other than payments due on the Lease
Contracts before the Cut-Off Date or Acquisition Date, (b)
the Lease Contract Files, (c) the Company's rights and
interests in the Equipment, (d) all rights and interests of
the Company under each Insurance Policy related to the
Lease Contracts and related Equipment
and
Insurance Proceeds, (e) the Servicing Charges with respect to
the Lease Contracts and (f) all income and proceeds of the
foregoing or relating thereto.
"Lease Contract File": With respect to each Lease
Contract,
the following documents:
(i) the one and only executed
original counterpart of the Lease Contract that
constitutes "chattel paper" for purposes of
Sections 9-105(1)(b) and 9-305 of the UCC;
(ii) copies of any evidence of insurance and
any other copies of documents evidencing or related
to any Insurance Policy;
(iii) copies of such documents, if any,
that
the Company keeps on file indicating that the
lessor has a perfected security interest in the
related Equipment in accordance with its customary
procedures relating to an individual Lease Contract,
Customer or Equipment, including, in the case of
titled Equipment a certificate of title or
application for certificate of title assigning all
of the Company's interest in the related Equipment
to the Transferor and the Trustee, as applicable,
naming the Transferor as the owner of the titled
Equipment (if the related Lease Contract is not a
Loan Contract) and naming the Trustee as first
lienholder;
(iv) copies of evidence that the Customer
received the Equipment and that the Equipment
was in good working order and acceptable to the
Customer at the time of receipt by the Customer;
and
(v) copies of any Broker Assignment Agreements
whereby the Company acquired the Lease Contract from a
broker.
"Lien": Any security interest, lien, charge, pledge,
equity or encumbrance of any kind other than liens for taxes
due and payable after the Closing Date or any
Acquisition Date,
mechanic's liens filed after the Closing Date or any
Acquisition Date and any liens that attach after the Closing
Date or any Acquisition Date by operation of law.
"Servicing Agreement": The Servicing Agreement dated as
of March 1, 1997 by and among the Servicer, the Transferor, the
Backup Servicer and the Trustee, as amended or supplemented from
time to time.
"PUT": A provision in a Lease Contract obligating the
lessee to purchase the related Equipment upon termination.
"Substitute Lease Contract": The meaning set forth
in Section 3.04(b) hereof.
ARTICLE 2
ACQUISITION OF LEASE ASSETS
Section 2.01 Authorization and Issuance of Common Stock
by the Transferor. Subject to all the terms and conditions
hereof and in reliance upon the representations,
warranties and covenants set forth in this Lease Acquisition
Agreement, as of the Closing Date the Transferor hereby
issues to the Company the Common Stock. Such Common Stock shall
be issued in the name of, and delivered directly to, the
Company and the Company hereby agrees to obtain directly from
the Transferor such Common Stock, all in accordance with the
terms hereof.
Section 2.02 Lease Asset Acquisitions. In return for
the
Common Stock and other rights created by this Lease
Acquisition Agreement, as of the Closing Date the Transferor is
acquiring the Lease Assets listed on the Initial Lease
Schedule. The Company, from time to time hereafter, shall
transfer to the Transferor or originate on behalf of the
Transferor, and the Transferor shall acquire from the Company
additional Lease Assets pursuant to a Company Certificate in
the case of Substitute Lease Contracts and Funded Lease
Contracts acquired on a Funding Date, with the applicable
Amended Lease Schedule attached thereto. The Company agrees
that all Lease Contracts transferred, assigned and
originated on behalf of the Transferor hereunder shall
be Eligible Lease Contracts and that all Lease Assets
acquired by the Transferor shall conform with all of the
requirements hereof. The Company hereby acknowledges that its
transfer and assignment of the
Lease Assets to the Transferor is absolute and
irrevocable, without reservation or retention of any
interest whatsoever by the Company.
To the extent that the Company shall retain any files
or documentation pertaining to the Lease Assets, it shall hold
such documents in trust for the benefit of the Trustee as the
owner thereof. The possession of any documents or files
pertaining to the Lease Assets by the Company is at the will
of the Transferor for the sole purpose of servicing such
Lease Assets, and such retention and possession by the
Company is in a custodial capacity only. The documents
and files retained by the Company relating to the Lease
Assets shall be segregated from the books and records of the
Company and shall be marked appropriately to reflect clearly
the sale of the related Lease Assets to the Transferor and
the assignment from the Transferor to the Trustee.
Section 2.03 Assumption of Indebtedness by the
Transferor; Payment of Removal Price. Subject to all
the terms and
conditions hereof and in reliance upon the
representations, warranties and covenants set forth herein, on
the Closing Date the Transferor hereby agrees to assume the
Existing Indebtedness and to repay the Existing Indebtedness
with the proceeds of the sale of the Certificates on the
Closing Date simultaneously with the issuance of the
Certificates. In addition, on any Funding Date the
Transferor hereby agrees to assume and repay any Existing
Indebtedness relating to the Funded Lease Contracts with the
proceeds of the Funding and any amounts released from the
Cash Collateral Account in connection therewith and to remit
any such excess proceeds to the Company as additional
consideration.
Section 2.04 Delivery of Lease Contracts; Filing
of Financing Statements.
(a) In connection with the Transferor's acquisition of
the Lease Assets, the Company, on behalf of the Transferor,
shall deliver the original Lease Contracts and all other items
included in the Lease Contract Files to the Trustee so that
the Trustee may retain possession thereof as provided in
the Transaction Documents. In addition, the Company agrees
to record and file prior to the Closing Date or within the
time period set forth in the Trust and Security Agreement,
at its own expense, financing statements (and thereafter
timely continuation statements with respect to such financing
statements) with respect to the Lease Assets, meeting the
requirements of the Transaction Documents.
(b) In connection with each acquisition of Lease Assets
by the Transferor hereunder, the Company shall promptly, at
its own expense, cause any Electronic Ledger maintained by
it to be marked to show that the Lease Assets have been
acquired by the Transferor in accordance with this Lease
Acquisition Agreement and transferred by the Transferor to
the Trustee in accordance
with the Transaction Documents.
Section 2.05 Servicing of Lease Contracts and
Equipment. The Servicer shall service the Lease Assets for the
benefit of the Transferor (and its successors and assigns),
the Trustee, MBIA and the Certificateholders, in accordance
with the terms and conditions of the Transaction Documents.
Notwithstanding the foregoing, the Company acknowledges
and agrees that its
obligations under this Lease Acquisition Agreement
are
independent of any obligations it may have as Servicer and
that its obligations under this Lease Acquisition
Agreement will continue in full force and effect, whether or
not it is acting as Servicer, until termination of this Lease
Acquisition Agreement in accordance with Section 6.01
hereof.
Section 2.06 Review of Lease Contracts. If the
Company discovers or is notified by the Trustee, MBIA
or the
Certificateholders that any Lease Contracts are missing
or defective (that is, mutilated, damaged, defaced,
incomplete, improperly dated, clearly forged or otherwise
physically altered) in any material respect, or, with respect
to titled Equipment, that the certificate of title naming the
Transferor as owner (if the related Lease Contract is not a
Loan Contract) and naming the Trustee as first lienholder is
not in the Lease Contract File, as of the Funding Termination
Date, the Company shall correct or cure such omission,
defect or other irregularity within 30 days from the date
the Company discovered, or is notified by the Trustee, MBIA
or the Certificateholders of, such omission or defect.
Otherwise, the Company shall repurchase such Lease
Contract from the Transferor or replace such Lease Contract
with a Substitute Lease Contract in accordance with Section
3.04(c) hereof.
Section 2.07 Nature of Transfer.
(a) In the event that the transfer of the Lease Assets
from the Company to the Transferor is deemed to be a
secured financing, the Company shall be deemed hereunder to
have conveyed to the Transferor, and the Company does hereby
convey to the Transferor, a security interest in all of the
Company's right, title and interest in, to and under the Lease
Assets, whether now owned or hereafter acquired. For
purposes of such conveyance, this Lease Acquisition
Agreement shall constitute a security agreement under
applicable law.
(b) In the event that the transfer contemplated by
this Lease Acquisition Agreement is deemed for any reason to
be less than a transfer of complete legal title of all of
the Company's right, title and interest in, to and under the
Lease Assets, the parties hereto intend that this Lease
Acquisition Agreement operate to transfer all of the Company's
equitable interests in, to and under the Lease Assets to the
Transferor.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of
the
Company.
(a) The Company hereby makes the following
representations and warranties as to each Lease Contract to
the Transferor and for the benefit of MBIA, the Trustee
and Holders of the Certificates, on which the Transferor
relies in acquiring the Lease Assets. Such representations
and warranties speak as of the Closing Date with respect to
Lease Contracts listed on the
Initial Lease Schedule or the Acquisition Date with respect
to Additional Lease Contracts unless otherwise indicated, but
shall survive any subsequent transfer, assignment,
contribution or conveyance of the Lease Assets:
(i) The information set forth in the Lease Schedule
is true and correct as of the Closing Date or Acquisition
Date as applicable.
(ii) The Lease Contract is by its terms an absolute
and unconditional obligation of the Customer, non-
cancelable and, except in certain instances involving loss
or damage to the Equipment, non-prepayable prior to the
expiration of the initial term of such Lease Contract;
no Lease Contract provides for the substitution,
exchange or addition of any other items of Equipment
pursuant to such Lease Contract; and the rights with
respect to such Lease Contract are assignable by the
lessor thereunder without the consent of or notice to
any Person. Each Lease Contract is net to the lessor of
any maintenance, taxes, insurance or other expenses
and contains provisions requiring the Customer to assume
all risk of loss or malfunction of the related
Equipment.
(iii) The Company has heretofore provided to
the Trustee the sole original counterpart of each of the
Lease Contracts, as amended, and except for
amendments and
supplements already reflected in the Lease Contracts on
the Closing Date or Acquisition Date as applicable
and as reflected in the Lease Schedule, the Lease
Contracts have not been amended, waived or modified.
All such documents constitute the entire agreement
between the lessor and the lessee in respect of the
Equipment.
(iv) There is only one original executed counterpart
of the Lease Contract and it constitutes "chattel paper"
for purposes of section 9-105(1)(b) and 9-308 of the UCC
which has been delivered to the Trustee and the
Company's Electronic Ledgers have been marked as provided
in Section 2.04(b) hereof.
(v) The Lease Contract was not originated in, nor
is
it subject to the laws of, any jurisdiction, the laws
of which would make unlawful the sale, transfer or
assignment of such document under any of the
Transaction Documents, including any repurchase in
accordance with the Transaction Documents.
(vi) The Lease Contract is, and on the Closing Date
or Acquisition Date, as applicable, will be, in full force
and effect in accordance with its terms and neither the
Company nor any other obligated party has or will have
suspended or reduced any payments or obligations due or
to become due thereunder by reason of a default by the
other party to such Lease Contract; as of the Closing
Date or Acquisition Date, as applicable, none of the
Customers is more than 30 days delinquent in making a
Scheduled Payment (without regard to advances, if any,
made by the Servicer) and there are no proceedings
pending, or to the best of the Company's knowledge,
threatened asserting insolvency of a Customer; there has
been no other default, breach or violation and no event
permitting acceleration under the Lease Contract;
there are no proceedings pending, or to the best of
the Company's knowledge, threatened, wherein the
Customer, any other obligated party or any governmental
agency has alleged that any such Lease Contract is
illegal or unenforceable;
and none of the Scheduled Payments are subject to any
set-off or credit of any kind.
(vii) The Lease Contract is the valid, binding and
legally enforceable full recourse obligation of the parties
thereto, enforceable in accordance with its terms, subject,
as to enforcement, to applicable bankruptcy, insolvency,
reorganization and other similar laws of general
applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of
whether enforcement is sought in a court of law or equity.
(viii) All filings (including Uniform Commercial
Code filings), notices, transfers and recordings as required
under the Trust and Security Agreement or applicable law and
that may be necessary to perfect the first priority security
interest of the Transferor and the Trustee in the Lease
Contracts and the related Lease Receivables being acquired
hereunder, have been accomplished and are in full force and
effect; provided, however, that the Company shall not be
required to file any assignments of financing statements
with respect to the Equipment underlying the Lease
Contracts. The Company has a first priority perfected
security interest in the Equipment underlying all Loan
Contracts and in any Equipment exceeding $50,000 in value
underlying any other Lease Contracts. The Company has filed
or will file within thirty calendar days of the Closing
Date, an application for certificate of title for each item
of titled Equipment, naming the Trustee as first lienholder
and with respect to Lease Contacts which are not Loan
Contracts also naming the Transferor as owner of such titled
Equipment.
(ix) Each Lease Contract being acquired by the
Transferor is substantially in the form of lease contracts
attached hereto as Exhibit B (which may include addendums in
the forms included in such Exhibit B), except for immaterial
modifications or deviations from the form lease contracts
which appear in certain Lease Contracts or which may appear
in the future form Lease Contracts of the Company, which
immaterial modifications or deviations will not have a
material adverse effect on the Holders of the Certificates
or MBIA and will not reduce the Scheduled Payments or other
payments due under the Lease Contracts; provided, however,
that some Lease Contracts may include a rider providing
additional or alternate terms regarding the purchase of the
equipment upon the expiration of such Lease Contract. The
Broker Assignment Agreement pursuant to which Lease
Contracts were acquired by the Company from brokers is
substantially in the form of Exhibit E attached hereto.
(x) The Lease Contract was either (A) originated by
the Company on behalf of itself or the Transferor or
purchased from a broker in the ordinary course of business
and meets the Company's origination and underwriting
criteria used in originating the Lease Contracts delivered
to the Transferor on the Closing Date, or (B) purchased
from a leasing company that originated such leases pursuant
to agreed upon and well-articulated underwriting and
documentation standards acceptable to MBIA and with whom the
Company has regularly dealt in the past and underwritten
consistent with the criteria used to originate Lease
Contracts delivered to the Transferor on the Closing Date.
The origination and collection practices used by the Company
with respect to each Lease Contract have been in all
respects legal, proper, prudent and customary in the
equipment financing and servicing business. None of the
Lease Contracts is a consumer lease. Any acquisition from a
broker is a true sale or absolute transfer and not a loan to
the broker or a joint venture/co-ownership arrangement with
the broker.
(xi) In determining whether to lease Equipment to any
particular Customer, the Company considered each Customer's
ability to pay any PUT Payments included in the terms of the
Lease Contract. In determining whether to lease Equipment
to any particular Customer, the Company considered each
Customer's ability to pay any increases in the rental
payments due under the terms of the Lease Contract.
(xii) The Equipment related to the Lease Contract
was properly delivered to the Customer in good repair,
without defects and in satisfactory order and, to the best
knowledge of the Company, is currently in proper working
order as of the Closing Date or Acquisition Date as
applicable. Each Customer has accepted the Equipment leased
to it and, after reasonable opportunity to inspect and test
such Equipment, has not notified the Company of any defects
therein.
(xiii) Except as approved in writing by MBIA, each
Lease Receivable derives from a Lease Contract that has an
original stated term of at least 12 months and not more than
60 months. Each such Lease Contract is within its original
term and has not had any extensions.
(xiv) Except with respect to (A) any Additional
Lease Contract, (B) the Lease Contracts described in
Exhibit C hereto, and (C) such other Lease Contracts as
approved by MBIA (provided that the aggregate IPB of such
Lease Contracts approved by MBIA by this clause (C) does not
exceed 2% of the Aggregate IPB), each Customer under each
Lease Contract will have made at least one lease payment
with respect to such Lease Contract, including any security
deposit or advance payment made by the Customer upon the
execution of the Lease Contract or the delivery of the
Equipment, and each Initial Lease Contract will have a
Scheduled Payment due in April 1997. Each Lease Contract
obligates the related Customer to make all Scheduled
Payments thereunder in full notwithstanding the collection
by the lessor of a security deposit with respect thereto.
The calculation of the Implicit Principal Balance of each
Lease Receivable does not include any security deposits or
advance payments collected by or on behalf of the lessor
which are applied to Scheduled Payments.
(xv) None of the Customers is a lessee that is a
merchant with respect to the Equipment leased under any
Lease Contract, and none of the Customers is the United
States of America or any state, or agency, department or
instrumentality or political subdivision of the United
States of America or any state. Each Lease Contract is
payable in U.S. dollars and the obligor thereon is a United
States resident with a billing address in the U.S.
(xvi) All requirements of applicable Federal, state
and local laws, and regulations thereunder in respect of the
Lease Contract have been complied with in all material
respects, including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, and any other
applicable consumer credit, equal opportunity and disclosure
laws if any, and each Lease Contract complied in all
material respects at the time it was originated or made and
now complies in all material respects with all legal
requirements of the jurisdiction in which it was originated.
(xvii) With the sole exception of the Customer's
right to quiet enjoyment, the Lease Contract is not and will
not be subject to any right of rescission, set-off, claim,
counterclaim or defense, including the defense of usury and
the operation of any of the terms of the Lease Contract or
the exercise by the Company or the Customer of any right
under the Lease Contract will not render such Lease Contract
unenforceable in whole or in part nor subject to any right
of rescission, setoff, claim, counterclaim or defense, and
no such right of rescission, set-off, claim, counterclaim or
defense, including a defense arising out of a breach of the
Customer's right of quiet enjoyment of the Equipment, has
been asserted with respect thereto.
(xviii) The Company has duly fulfilled all
obligations on the lessor's part to be fulfilled under or in
connection with the origination, acquisition and assignment
of the Lease Assets including, without limitation, giving
any notices or consents necessary to effect the acquisition
of the Lease Assets by the Transferor and the Company has
done nothing to impair the rights of the Trust Estate and
the Holders of the Certificates in the Lease Contract or
payments with respect thereto. The Company has obtained all
necessary licenses, permits and charters required to be
obtained by the Company, which failure to obtain would
render any portion of the Transaction Documents
unenforceable and would have a material adverse effect on
MBIA or the Certificateholders.
(xix) The Lease Contract and the Company's interest
in the Equipment have not been sold, transferred, assigned
or pledged by the Company to any Person other than the
Transferor (except for security interests in the Lease
Assets which shall be terminated on or prior to the Closing
Date or Acquisition Date as applicable), and upon execution
and delivery of this Lease Acquisition Agreement by the
Company and the repayment by the Transferor of any Existing
Indebtedness, the Transferor will have all of the right,
title and interest in and to the Lease Assets, free and
clear of all liens and encumbrances and any interest of the
Company or its successors, except for the interests of the
Customer pursuant to the Lease Contract and the interest of
the Trustee under the Trust and Security Agreement, and upon
the Transferor's conveyance of the Lease Assets to the
Trustee, the Trustee will either be the owner thereof or
have a first perfected security interest therein.
(xx) Each Lease Contract requires that the Customer
maintain the Equipment in good and workable order and that
the Customer obtain and maintain physical damage insurance
or purchase insurance from the Company covering the
Equipment. Insurance coverage required to be maintained by
the Customer under each Lease Contract is of a type
customary for the equipment covered thereby and consistent
with industry practice for monitoring compliance thereof.
Insurance and the loss payee endorsement on Equipment having
a purchase price in excess of $50,000 is in full force and
effect.
(xxi) The Company purchased each item of Equipment
from either (A) the manufacturer or other supplier or broker
following receipt of an invoice from such manufacturer,
supplier or broker or (B) a Customer following confirmation
that such item of Equipment was on such Customer's premises.
The sale to the Transferor of the Lease Assets does not
violate the terms or provisions of any lease or any other
agreement to which the Company is a party or by which it is
bound.
(xxii) Each item of Equipment is of a type described
in Exhibit D attached hereto under the category Equipment
type.
(xxiii) The transfer, assignment and conveyance of
the Lease Assets by the Company pursuant to this Lease
Acquisition Agreement and the assignment of the Lease Assets
by the Transferor to the Trustee are not subject to and will
not result in any tax, fee or governmental charge payable by
the Company or the Transferor to any federal, state or local
government ("Transfer Taxes") other than Transfer Taxes
which have or will be paid by the Company as due. In the
event that the Transferor or the Trustee receives actual
notice of any Transfer Taxes arising out of the transfer,
assignment and conveyance of the Lease Assets, on written
demand by the Transferor, or upon the Company otherwise
being given notice thereof, the Company shall pay, and
otherwise indemnify and hold the Transferor, the Trustee,
MBIA and the Trust Estate harmless, on an after-tax basis,
from and against any and all such Transfer Taxes (it being
understood that the holders of the Certificates, the
Trustee, MBIA and the Trust Estate shall have no obligation
to pay such Transfer Taxes).
(xxiv) Each Lease Contract File delivered to the
Trustee contains each applicable item described in the
definition of Lease Contract File.
(xxv) As of the Closing Date, approximately one
half of the Lease Contracts are Loan Contracts.
(b) The Company hereby makes the following representations
and warranties to the Transferor, and for the benefit of MBIA,
the Trustee and the Holders of the Certificates, on which the
Transferor relies in acquiring the Lease Assets and issuing the
Certificates. Such representations and warranties speak as of
the Closing Date with respect to Lease Contracts listed on the
Initial Lease Schedule or the Acquisition Date with respect to
Additional Lease Contracts, unless otherwise indicated, but shall
survive any subsequent transfer, assignment, contribution or
conveyance of the Lease Assets:
(i) Except as described in Exhibit C hereto, with
respect to all Lease Assets acquired by the Transferor on
the Closing Date and any Acquisition Date, each of the
Concentration Limits as set forth on Exhibit D hereto are
true and correct as of the Closing Date and any Acquisition
Date.
(ii) The Company used no selection procedures that
identified the Lease Contracts being acquired on the Closing
Date or any Acquisition Date as being less desirable or
valuable than other comparable equipment leases owned by the
Company.
(iii) The Computer Tape from which the selection of
the Lease Contracts being acquired on the Closing Date was
derived, was made available to the Transferor's accountants
that are providing any comfort letter to MBIA, any
Certificateholders or the Placement Agent in connection with
any information contained in the Private Placement
Memorandum, and such information was complete and accurate
as of its date and includes a description of the same Lease
Contracts that are described in the Lease Schedule and the
payments due thereunder as of the Cut-Off Date.
(c) The Company hereby makes the following representations
and warranties to the Transferor and for the benefit of MBIA, the
Trustee and the Holders of the Certificates on which the
Transferor relies in acquiring the Lease Assets and issuing the
Certificates. Such representations and warranties speak as of
the Closing Date and each Acquisition Date unless otherwise
indicated, but shall survive any subsequent transfer, assignment,
contribution or conveyance of the Lease Assets:
(i) As of the Closing Date, the Company has been duly
organized and is validly existing and in good standing as a
corporation under the laws of the state of Delaware with
corporate power and authority to own its properties and to
transact the business in which it is now engaged, and the
Company is duly qualified to do business in and is in good
standing under the laws of each State in which any Equipment
or any Customer is located or is not required under
applicable law to effect such qualification, except where
failure to so qualify would not have a material adverse
effect on the ability of the Company to perform its
obligations under the Transaction Documents or on any of the
Lease Contracts, the Lease Receivables or the Equipment.
(ii) The performance of the obligations of the Company
under this Lease Acquisition Agreement and the other
Transaction Documents and the consummation of the
transactions herein and therein contemplated will not
conflict with or result in any breach of any of the terms or
provisions of, or constitute with or without notice, lapse
of time or both, a default under the Certificate of
Incorporation or Bylaws of the Company, or any material
indenture, agreement, mortgage, deed of trust or other
instrument to which the Company is a party or by which it is
bound, or result in the creation or imposition of any lien,
charge or encumbrance (except the lien created by the
Transaction Documents) upon any of the property or assets of
the Company pursuant to the terms of such indenture,
mortgage, deed of trust, or other agreement or instrument to
which the Company is a party or by which the Company is
bound or to which any of the Company's property or assets is
subject, nor will such action result in any violation of the
provisions of the Company's Certificate of Incorporation or
Bylaws or any statute or any order, rule or regulation of
any court or any regulatory authority or other governmental
agency or body having jurisdiction over the Company or any
of its properties; and no consent, approval, authorization,
order, registration or qualification of or with or other
action of any court, or any such regulatory authority or
other governmental agency or body is required for
consummation of the transactions contemplated by this Lease
Acquisition Agreement and the other Transaction Documents
except such consents, approvals and authorizations which
have been obtained or such registrations or qualifications
which have been made.
(iii) This Lease Acquisition Agreement and each
other Transaction Document to which the Company is a party
have been duly authorized, executed and delivered by the
Company by all necessary corporate action and such
agreements are the valid and legally binding obligations of
the Company, enforceable against the Company in accordance
with their respective terms, subject as to enforcement to
applicable bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or
affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is
sought in a court of law or equity.
(iv) As of the Closing Date, the Company's address
indicated in Section 7.03 hereof is the chief executive
office, principal place of business and the office where the
Company keeps its records concerning the Lease Contracts,
Lease Receivables and the Equipment, and the Company has
done business only under the name "Granite Financial, Inc."
or "Granite Financial, LLC."
(v) The Company does not believe, nor does it have any
reasonable cause to believe, that it cannot perform each and
every covenant contained in this Lease Acquisition
Agreement.
(vi) The transactions contemplated by the Transaction
Documents are being consummated by the Company in
furtherance of its ordinary business purposes, with no
contemplation of insolvency and with no intent to hinder,
delay or defraud any of its present or future creditors.
(vii) The consideration received by the Company
pursuant to this Lease Acquisition Agreement is fair
consideration having value reasonably equivalent to or in
excess of the value of the Lease Assets and the performance
of the Company's obligations hereunder.
(viii) Neither on the date of the transactions
contemplated by the Transaction Documents or immediately
before or after such transactions, nor as a result of the
transactions, will the Company:
(A) be insolvent such that the sum of
its debts is greater than all of its respective
property, at a fair valuation;
(B) be engaged in or about to engage
in, business or a transaction for which any property
remaining with the Company will be
an unreasonably small capital or the
remaining assets of the Company will be
unreasonably small in relation to its
respective business or the transaction;
or
(C) have intended to incur or believed
it would incur, debts that would be beyond
its respective ability to pay as such debts
mature or become due. The Company's assets
and cash flow enable it to meet its present
obligations in the ordinary course of
business as they become due.
(ix) Both immediately before and after the transactions
contemplated by the Transaction Documents (A) the present
fair salable value of the Company's assets was or will be in
excess of the amount that will be required to pay its
probable liabilities as they then exist and as they become
absolute and matured; and (B) the sum of the Company's
assets was or will be greater than the sum of its debts,
valuing its assets at a fair salable value.
(x) The acquisition of the Lease Assets by the
Transferor pursuant to this Lease Acquisition Agreement is
not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
(xi) There are no proceedings or investigations
pending, or to the knowledge of the Company, threatened,
against or affecting the Company in or before any court,
governmental authority or agency or arbitration board or
tribunal (including, but not limited to any such proceeding
or investigation with respect to any environmental or other
liability resulting from the ownership or use of any of the
Equipment) which, individually or in the aggregate, involve
the possibility of materially and adversely affecting the
properties, business, prospects, profits or condition
(financial or otherwise) of the Company, or the ability of
the Company to perform its obligations under this Lease
Acquisition Agreement. The Company is not in default with
respect to any order of any court, governmental authority or
agency or arbitration board or tribunal.
(xii) All tax returns or extensions required to be
filed by the Company in any jurisdiction have in fact been
filed, and all taxes, assessments, fees and other
governmental charges upon the Company, or upon any of the
respective properties, income or franchises of the Company,
shown to be due and payable on such returns have been, or
will be, paid when due. All such tax returns are true and
correct and the Company has no knowledge of any proposed
additional tax assessment against it in any material amount
nor of any basis therefor. The provisions for taxes on the
books of the Company are in accordance with generally
accepted accounting principles.
(xiii) The Company (A) is not in violation of any
laws, ordinances, governmental rules or regulations to which
it is subject, (B) has not failed to obtain any licenses,
permits, franchises or other governmental authorizations
necessary to the ownership of its property or to the conduct
of its business, and (C) is not in violation in any material
respect of any term of any agreement, charter instrument,
bylaw or instrument to which it is a party or by which it
may be bound which violation or failure to obtain might
materially adversely affect the business or condition
(financial or otherwise) of the Company.
(xiv) As of the date thereof, the Private Placement
Memorandum does not contain any untrue statement of fact
that would have a material effect on the Lease Contracts or
on the ability of the Trust Estate to realize the benefits
thereof.
(xv) It is the intention of the Company that the Lease
Assets be acquired by the Transferor and that the beneficial
interest in and title to the Lease Assets not be part of the
Company's estate in the event of the filing of a bankruptcy
petition by or against the Company under any bankruptcy law.
(xvi) Immediately prior to the acquisition of the
Lease Assets by the Transferor pursuant to this Lease
Acquisition Agreement, the Company was the sole owner of the
Lease Assets and with respect to each Loan Contract and each
Lease Contract as to which the underlying Equipment had a
purchase price in excess of $50,000, had a valid first
perfected security interest in the related Equipment, and
had good and marketable title thereto, free and clear of all
liens, claims and encumbrances (except for the Existing
Indebtedness and security interests in the Lease Assets
which shall be terminated on or prior to the Closing Date
with respect to Lease Contracts listed on the Initial Lease
Schedule or the Acquisition Date with respect to Additional
Lease Contracts); and the acquisition of the Lease Assets by
the Transferor does not violate the terms or provisions of
any Lease Asset.
(xvii) Upon the issuance of the Common Stock to the
Company in accordance with the terms of this Lease
Acquisition Agreement, the Company will be the registered
owner of all of the issued and outstanding common stock of
the Transferor, all of which Common Stock will be validly
issued, fully paid and nonassessable.
(xviii) The Company intends to treat the transfer of
the Lease Assets to the Transferor as a sale for accounting
purposes and a contribution to the Transferor for federal,
state and local income tax purposes.
(xix) The present value of all benefits vested
under all "employee pension benefit plans," as such term is
defined in Section 3 of ERISA, maintained by the Company, or
in which employees of the Company are entitled to
participate, as from time to time in effect (herein called
to "Pension Plans"), does not exceed the value of the assets
of the Pension Plans allocable to such vested benefits
(based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated
funding deficiencies, withdrawals or reportable events have
occurred with respect to any Pension Plans that, in the
aggregate, could subject the Company to any material tax,
penalty or other liability. No notice of intent to
terminate a Pension Plan has been filed, nor has any Pension
Plan been terminated under Section 4041(f) of ERISA, nor has
the Pension Benefit Guaranty Corporation instituted
proceedings to terminate, or appoint a trustee to
administer, a Pension Plan and no event has occurred or
condition exists which might constitute grounds under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan.
(xx) The transfer of the Lease Assets pursuant to this
Lease Acquisition Agreement constitutes the valid transfer
by the Company to the Transferor of all of the Company's
right, title and interest in the Lease Assets. The Company
has valid business reasons for contributing and selling the
Lease Assets to the Transferor pursuant to this Lease
Acquisition Agreement rather than obtaining a loan secured
by the Lease Assets. The Company will be operated generally
so as to not be substantively consolidated with the
Transferor.
(xxi) As of the Closing Date, the Company has in
place committed revolving credit facilities in an aggregate
amount greater than $17 million.
Section 3.02 Representations and Warranties of the
Transferor. The Transferor hereby represents and warrants to,
and agrees with the Company for the benefit of, MBIA, the Trustee
and Holders of the Certificates, on which representations and
warranties the Company relies in entering into this Lease
Acquisition Agreement with the Transferor. The Company agrees
that any breach by the Transferor of any such representations and
warranties shall not limit or excuse the full performance of the
Company's obligations hereunder. Such representations and
warranties speak as of the Closing Date and each Acquisition Date
unless otherwise indicated, but shall survive any subsequent
transfer, assignment, contribution or conveyance of the Lease
Assets:
(a) The Transferor has been duly organized and is validly
existing in good standing as a corporation under the laws of the
State of Delaware, with corporate power and authority to own its
properties, perform its obligations under the Transaction
Documents and to transact the business in which it is now engaged
or in which it proposes to engage; the Transferor is duly
qualified to do business and is in good standing in each State in
which the nature of its business requires it to be so qualified,
except where failure to so qualify would not have a material
adverse effect on the ability of the Transferor to perform its
obligations under the Transaction Documents.
(b) The transfer to and receipt by the Transferor of the
Lease Contracts and the related Lease Receivables and the
Equipment pursuant to this Lease Acquisition Agreement and the
consummation of the transactions contemplated herein and in the
Transaction Documents will not conflict with or result in breach
of any of the terms or provisions of, or constitute (with or
without notice, lapse of time or both) a default under the
Certificate of Incorporation or By-laws of the Transferor or any
material indenture, agreement, mortgage, deed of trust or other
instrument to which the Transferor is a party or by which it is
bound, or result in the creation or imposition of any lien,
charge or encumbrance (except for the lien created by the Trust
and Security Agreement) upon any of the property or assets of the
Transferor pursuant to the terms of, such indenture, mortgage,
deed of trust, or other agreement or instrument to which the
Transferor is a party or by which it is bound or to which any of
the property or assets of the Transferor is subject, nor will
such action result in any violation of the provisions of the
Certificate of Incorporation or By-laws of the Transferor or any
statute or any order, rule or regulation of any court or
regulatory authority or other governmental agency or body having
jurisdiction over the Transferor or any of its properties; and no
consent, approval, authorization, order, registration or
qualification of or with or other action of any court or any such
regulatory authority or other governmental agency or body is
required for the acquisition of the Lease Contracts and the
related Lease Receivables and the Company's interest in the
Equipment hereunder.
(c) The Transaction Documents have been duly authorized,
executed and delivered by the Transferor by all necessary
corporate action and constitute valid and legally binding
obligations of the Transferor enforceable against the Transferor
in accordance with their terms, subject as to enforcement to
bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights
generally and to general principles of equity regardless of
whether enforcement is sought in a court of equity or law.
(d) There are no proceedings or investigations to which the
Transferor is a party pending or, to the knowledge of the
Transferor, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality (i) asserting the invalidity of this Lease
Acquisition Agreement, (ii) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Lease Acquisition Agreement, or (iii)
seeking any determination or ruling that would materially and
adversely affect the performance by the Transferor of its
obligations under, or the validity or enforceability of, this
Lease Acquisition Agreement.
(e) All approvals, authorizations, consents, orders or
other actions of any Person or of any court, governmental agency
or body or official, required in connection with the execution
and delivery of this Lease Acquisition Agreement, have been or
will be taken or obtained on or prior to the Closing Date.
(f) The Transferor's address indicated in Section 7.03
hereof is the principal place of business and chief executive
office of the Transferor.
Section 3.03 Purchase or Substitution Required Upon Breach
of Certain Representations and Warranties. If (i) the Company,
the Transferor, the Trustee, the Servicer, the Back-up Servicer
or MBIA discovers the breach of any representations or warranties
set forth in Section 3.01 hereof which materially and adversely
affects the value of a Lease Contract, the related Equipment, or
the interests of the Holders of the Certificates or MBIA, or a
breach of any of the representations and warranties set forth in
Sections 3.01(a)(ii), 3.01(a)(v), 3.01(a)(vii), 3.01(a)(xix) or
3.01(c)(iii), or (ii) the Company or the Transferor discovers the
occurrence of any missing or defective document as specified in
Section 2.06 hereof, or (iii) the Trustee shall fail to receive
evidence acceptable to MBIA that each assignment of a financing
statement required under Section 3.01(a)(viii) hereof or vehicle
lien application required under Section 3.01(a)(viii) has been
filed within the time period set forth therein, then the party
discovering such breach or condition shall give prompt written
notice to the other parties and the Company shall, within 30 days
from the date the Company was notified of, or otherwise
discovers, such breach or condition, cure such breach or
condition. If the Company fails to cure such breach in the
applicable time period, the Company shall either (1)(a) purchase
such Lease Contract and related Equipment from the Transferor at
the Removal Price or (b) provide a Substitute Lease Contract and
Equipment or (2) if the breach relates to a representation or
warranty regarding the selection criteria of the Lease Contracts
as a whole and is not cured (as the liquidated damages remedy
therefor) by the Company, either (a) purchase such non-conforming
Lease Contracts and related Equipment from the Transferor or (b)
provide Substitute Lease Contracts as set forth above, so that
the representations and warranties with respect to the selection
criteria are correct, as evidenced by a certificate of an officer
of the Company to the Trustee and MBIA. The Removal Price for a
purchased Lease Contract and the related Equipment shall be paid,
and any Substitute Lease Contract shall be delivered, by the
Company to the Transferor in accordance with Section 3.04(c)
hereof. It is understood and agreed that the obligation of the
Company to cure or purchase or replace any Lease Contract as to
which such a breach has occurred shall constitute the sole remedy
respecting such breach available to the Transferor, the Holders
of Certificates or the Trustee on behalf of such Holders (except
for any indemnities provided under Section 4.01(j) hereof or
under the Trust and Security Agreement) for any losses, claims,
damages and liabilities arising from the Transferor's ownership
of such Lease Contract or the inclusion of such Lease Contract in
the Trust Estate.
Section 3.04 Requirements for Purchase or Substitution of
Lease Contracts and Acquisition of Additional Lease Contracts.
(a) If the Company purchases any Lease Contract under
Sections 2.06 or 3.03 hereof, or if the Transferor removes any
Lease Contract under Section 4.03(d) of the Trust and Security
Agreement, or removes any Lease Contract under Section 3.09 of
the Servicing Agreement, such Lease Contract shall be purchased
or removed by the Company or the Transferor, as applicable, at
the Removal Price. All purchases shall be accomplished at the
times specified in subsection (c) below.
(b) (1) If the Company substitutes any Lease Contract under
Section 2.06 or 3.03 hereof, or if the Transferor substitutes any
Lease Contract under Section 4.03(d) of the Trust and Security
Agreement or under Section 3.09 of the Servicing Agreement (a
"Substitute Lease Contract"), or (2) if the Company conveys to
the Transferor or originates on behalf of the Transferor any
Additional Lease Contract, each such Substitute Lease Contract
and Funded Lease Contract (i) shall be an Eligible Lease
Contract; (ii) shall be with a Customer whose credit is equal to
or better than that of the Customer under any other Lease
Contract; (iii) shall be written on one of the Company's standard
lease forms; (iv) shall be accompanied by (A) a Company
Certificate substantially in the form of Exhibit A hereto
subjecting such Lease Contract to the provisions hereof and
providing with respect to such Substitute Lease Contract or
Funded Lease Contract, an Amended Lease Schedule and (B) evidence
of the UCC filings required, as set forth in the Trust and
Security Agreement; (v) shall not have been selected using any
other procedures that identified the Lease Contract as being less
desirable or valuable than other comparable equipment leases
owned by the Company; and (vi) shall not cause the Concentration
Limits to be violated.
In addition to the above criteria, the following shall apply
in connection with any Substitute Lease Contract and Funded Lease
Contract, as applicable: (1) any Substitute Lease Contracts
assigned by the Company on any date in substitution for Lease
Contracts on the Lease Schedule shall have an aggregate Implicit
Principal Balance at least equal to the aggregate Implicit
Principal Balance of the Lease Contracts on such Lease Schedule
being withdrawn, computed as to both the Substitute Lease
Contracts and the withdrawn Lease Contracts using the Discount
Rate; and (2) a Substitute Lease Contract or Funded Lease
Contract may have Scheduled Payments that are due after the last
day of the month preceding the Stated Maturity of the
Certificates, but such payments shall not be counted in any
Implicit Principal Balance computation.
Upon the substitution of any Substitute Lease Contract or
the addition of any Funded Lease Contract pursuant to the
provisions of this Section 3.04(b), the Company hereby agrees
that such Substitute Lease Contract or Funded Lease Contract will
be subject to all the terms and provisions of this Lease
Acquisition Agreement, the Servicing Agreement and the Trust and
Security Agreement just as if such Substitute Lease Contract or
Funded Lease Contract had been one of the original Lease
Contracts acquired on the Closing Date. Upon the substitution of
a Substitute Lease Contract or the addition of a Funded Lease
Contract pursuant to this Section 3.04(b), the Transferor and the
Company shall also comply with the provisions and limitations set
forth in the Trust and Security Agreement. All substitutions
shall be accomplished at the time specified in subsection (c)
below.
(c) Any purchase or substitution of a Lease Contract by the
Company in accordance with Sections 2.06 or 3.03 hereof or this
Section 3.04 shall be made either by remittance of the Removal
Price to the Servicer for deposit into the Collection Account in
accordance with Section 3.03(c) of the Servicing Agreement or by
substitution of a Substitute Lease Contract, as applicable, on or
prior to the Determination Date next following the expiration of
the cure period set forth in Sections 2.06 or 3.03 hereof, as
applicable. Such substitution or purchase shall be effective as
of the Payment Date immediately following such Determination
Date.
(d) Any voluntary purchase or substitution of a Lease
Contract by the Company pursuant to the terms of the Servicing
Agreement or Trust and Security Agreement in the event of a
default, delinquency, prepayment or modification with respect to
such Lease Contract shall satisfy the same requirements for a
purchase or substitution, as the case may be, as are set forth in
this Section 3.04.
ARTICLE 4
COVENANTS OF THE TRANSFEROR AND COMPANY
Section 4.01 Company Covenants. The Company hereby
covenants and agrees with the Transferor as follows:
(a) Except as hereinafter provided, the Company will keep
in full effect its existence, rights and franchises as a
corporation, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which
such qualification is or shall be necessary to protect the
validity and enforceability of this Lease Acquisition Agreement
or any of the Lease Contracts and to perform its duties
hereunder; provided, however, that the Servicer may reorganize as
a corporation in another state provided that the Transferor has
provided to MBIA and the Certificateholders an Officer's
Certificate to the effect that such action will not cause the
Company to breach any obligation hereunder. Any person into
which the Company may be merged or consolidated, or to whom the
Company has sold substantially all of its assets, or any
corporation resulting from any merger, conversion or
consolidation to which the Company shall be a party, or any
Person succeeding to the business of the Company shall be the
successor of the Company hereunder, without the execution or
filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding;
provided, however, that (u) MBIA shall have given its prior
written consent, (v) immediately after giving effect to such
transaction, the substance of each representation or warranty
made pursuant to Section 3.01(c) shall be accurate, (w) such
successor meets the Net Worth Requirement and executes an
agreement or assumption, in form reasonably satisfactory the
Trustee and MBIA, to perform every obligation under this Lease
Acquisition Agreement, (x) such successor has a net worth that is
sufficient to perform in accordance with the Transaction
Documents and at least approximately equivalent to the net worth
of the Company immediately prior to such sale, merger or
consolidation, (y) the Company shall have delivered to the
Transferor a certificate of an officer of the Company and an
Opinion of Counsel each stating that such consolidation, merger,
or succession and such agreement of assumption complies with this
Section 4.01 and that all conditions precedent, if any, provided
for in this Lease Acquisition Agreement relating to such
transaction have been complied with, and (z) the Company shall
have delivered to the Transferor and MBIA and the Trustee an
Opinion of Counsel either (1) stating that, in the opinion of
such Counsel, all financing statements, continuation statements
and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the
Transferor in the Lease Contracts and reciting the details of
such filings, or (2) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and
protect such interest.
(b) Neither the Company nor any of the directors, officers,
employees or agents of the Company shall be under any liability
to the Transferor, the Trustee or the Holders of Certificates for
any action taken or for refraining from the taking of any action
in good faith pursuant to this Lease Acquisition Agreement, or
for errors in judgment not involving recklessness or gross
negligence; provided, however, that this provision shall not
protect the Company against any breach of warranties or
representations made herein, or failure to perform its
obligations in strict compliance with this Lease Acquisition
Agreement, or any liability which would otherwise be imposed by
reason of any breach of the terms and conditions of this Lease
Acquisition Agreement. The Company, and any director, officer,
employee or agent of the Company, may rely in good faith on any
document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The
Company shall not be under any obligation to appear in,
prosecute, or defend any legal action that is not incidental to
its obligations as the contributor of the Lease Assets under this
Lease Acquisition Agreement and that in its opinion may involve
it in any expense or liability.
(c) The Company, from time to time, at its own expense,
shall execute and file such additional financing statements
(including continuation statements) as may be necessary to
preserve the security interests and liens described in Section
3.01(a)(viii) hereof as may be reasonably requested by the
Transferor, MBIA or the Trustee and are reasonably satisfactory
in form and substance to the Trustee and MBIA.
(d) The Company will not change its name, identity or
corporate structure in any manner that would, could, or might
make any financing statement or continuation statement misleading
within the meaning of section 9-402 (7) of the UCC, unless it
shall have given the Transferor and the Trustee at least 30 days'
prior written notice thereof and shall have provided evidence of
appropriate UCC filings.
(e) The Company will give the Transferor, MBIA and the
Trustee at least 30 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 and the
Company shall provide evidence of appropriate UCC filings.
(f) The Company will duly fulfill all obligations on its
part to be fulfilled under or in connection with each Lease
Contract, will not change or modify the terms of the Lease
Contracts except as expressly permitted by the terms of the
Transaction Documents and will do nothing to impair the rights of
the Transferor, MBIA or the Trustee in the Lease Contract or the
Equipment. In the event that the rights of the Company under any
Lease Contract, any guaranty of the related Customer's
obligations under any Lease Contract, or any Insurance Policy are
not assignable or have not, in fact, been assigned to the
Transferor or to the Trustee, the Company will enforce such
rights on behalf of the Transferor and the Trustee.
(g) The Company will comply, in all material respects, with
all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Lease Assets or any
part thereof; provided, however, that the Company may contest any
act, regulation, order, decree or direction in any reasonable
manner which shall not materially and adversely affect the rights
of the Transferor, MBIA or the Trustee in the Lease Assets.
(h) The Company will advise the Transferor, MBIA and the
Trustee promptly, in reasonable detail, of the occurrence of any
breach by the Company following discovery by the Company of such
breach of any of its representations, warranties and covenants
contained herein.
(i) The Company will execute or endorse, acknowledge, and
deliver to the Transferor and the Trustee from time to time such
schedules, confirmatory assignments, conveyances, powers of
attorney, and other reassurances or instruments and take such
further similar actions relating to the Lease Contracts, the
related Lease Receivables, Equipment and the rights covered by
the Transaction Documents, as the Transferor or the Trustee may
reasonably request to preserve and maintain title to the Lease
Assets and the rights of the Trustee, MBIA and the Holders of
Certificates therein against the claims of all persons and
parties.
(j) The Company agrees to indemnify, defend and hold the
Transferor, the Trustee, MBIA and the Certificateholders
harmless from and against any and all loss, liability, damage,
judgment, claim, deficiency or expense (including interest,
penalties, reasonable attorney's fees and amounts paid in
settlement) that is caused by (i) a breach at any time by the
Company of its representations, warranties and covenants
contained in Section 3.01 hereof or this Section 4.01 or (ii) any
material information furnished by the Company which is set forth
in any schedule delivered hereunder, being untrue in any respect
when any such representation was made or schedule delivered,
provided that the Company shall not have any liability with
respect to a representation or warranty as to any specific Lease
Contract, Lease Receivable or Equipment other than to purchase
such Lease Contract or substitute for such Lease Contract in
accordance with Section 3.03 hereof unless such breach of
representation or warranty is the result of the Company's fraud,
gross negligence, bad faith or willful misconduct. The Company
shall also indemnify the Trustee, the Servicer, MBIA and the
Certificateholders for any cost or expenses incurred by them in
the enforcement of this Lease Acquisition Agreement or as a
result of the Company's failure to perform its obligations
hereunder. The obligations of the Company under this Section
4.01(j) shall be considered to have been relied upon by the
Transferor, the Trustee and MBIA and shall survive the execution,
delivery and performance of this Lease Acquisition Agreement,
regardless of any investigation made by or on behalf of the
Transferor, until termination of the Trust and Security
Agreement. If the Company has made any indemnity payments
pursuant to this Section 4.01(j) and thereafter any Person
recovers the amount of the related loss or any portion thereof
from others, such Person will promptly repay the amount recovered
to the Company, without interest.
(k) The Company will do nothing to disturb or impair the
acquisition hereunder by the Transferor of the Lease Contracts
and the related Lease Receivables and Equipment.
(l) The Company (i) will (A) maintain its books and records
separate from the books and records of the Transferor and (B)
maintain bank accounts separate from those of the Transferor and
its shareholders, (C) prepare (and issue to its creditors) only
financial statements which are separate from those of its
shareholders, (D) maintain two Independent directors on the
Transferor's board of directors, so long as the Company is a
shareholder of the Transferor, (E) maintain an arm's length
relationship with the Transferor, (F) conduct its business solely
in its own name so as not to mislead others as to the identity of
the company with which those others are concerned, (G) disclose
the effects of these transactions on its annual financial
statements in accordance with generally accepted accounting
principles and will also disclose on such financial statements
that the Trust Estate and the assets of the Transferor are not
available to pay creditors of the Company, and (ii) will not (V)
hold itself out or permit itself to be held out as having agreed
to pay or as being liable for the debts of the Transferor, (W)
commingle its assets or funds with those of the Transferor, (X)
take any action that would cause the dissolution or liquidation
of the Transferor, (Y) guarantee (directly or indirectly),
endorse or otherwise become contingently liable (directly or
indirectly) for the obligations of the Transferor, or (Z)
institute against the Transferor, or join any other person in
instituting against the Transferor, any case, proceeding or other
action under any existing or future bankruptcy, insolvency or
similar laws. This subsection (l) shall survive termination of
this Lease Acquisition Agreement.
(m) The Company shall notify the Transferor, the Trustee
and MBIA promptly after becoming aware of any Lien on any Lease
Asset.
(n) On each date as of which the Company substitutes a
Substitute Lease Contract or assigns Funded Lease Contracts to
the Transferor in accordance with Sections 2.06 or 3.04(b)
hereof, or otherwise assigns Lease Contracts to the Transferor,
the Company shall provide to the Transferor a Company Certificate
substantially in the form of Exhibit A hereto subjecting such
Lease Contract to the provisions hereof and providing with
respect to such Lease Contracts the information required in the
Amended Lease Schedule.
(o) For financial accounting purposes (and notwithstanding
the tax treatment of the transactions contemplated by the
Transaction Documents), the annual financial statements of the
Company will disclose the effects of the transactions
contemplated by the Transaction Documents as a sale by the
Company to the Transferor and a sale by the Transferor to the
Trustee in accordance with generally accepted accounting
principles. The financial statements of the Company and the
Transferor will also disclose that the Trust Estate and the
assets of the Transferor are not available to pay creditors of
the Company. The resolutions, agreements and other instruments
underlying the Transaction Documents will be continuously
maintained by the Company as official records.
(p) The Company shall comply with Section 2.11 of the Trust
and Security Agreement concerning the treatment of this
transaction for Federal, state and local income tax purposes.
(q) The Company as Servicer will, at its own cost and
expense, (i) retain the Electronic Ledger as a master record of
the Lease Contracts and Equipment and copies of all documents
relating to each Lease Contract (other than the original executed
Lease Contracts) as custodian for the Transferor, the Trust and
other Persons, if any, with interests in the Lease Contracts and
Equipment and (ii) ▇▇▇▇ the Electronic Ledger to the effect that
the Lease Contracts and Equipment have been acquired by the
Transferor and that they have been transferred and assigned to
the Trustee pursuant to the Trust and Security Agreement.
(r) In the event that the Company elects to transfer the
Common Stock to an affiliate or pledge a security interest in the
Common Stock, the Company agrees that each of the following
conditions shall be satisfied: (i) such transfer or pledge shall
be made in connection with a financing by such affiliate or the
Company, as applicable, secured by the Common Stock, (ii) if
transferred, the Common Stock shall be held by one entity and if
that entity is an affiliate, such entity shall be organized as a
bankruptcy remote special purpose entity, (iii) the Company
shall, on behalf of the Transferor, obtain an agreement from the
transferee or the secured party substantially to the effect that
(x) it will take no action that would cause the Transferor to
breach any of its covenants under any Transaction Document,
(y) that for a period of one year and one day after the
termination of the Trust and Security Agreement, it will not file
any involuntary petition or otherwise institute any bankruptcy,
reorganization, insolvency or liquidation proceeding or other
proceeding under any federal or state bankruptcy or similar law
against the Transferor and (z) the transferee agrees to pay any
tax or ERISA liabilities imposed upon the Transferor or the Trust
Estate to the extent attributable to the Transferor or the Trust
Estate becoming a member of the consolidated tax group of such
transferee or secured party, and (iv) the Company shall provide
such bankruptcy and tax opinions as MBIA may reasonably request.
Section 4.02 Transferor Covenants. The Transferor hereby
covenants and agrees with the Company as follows:
(a) The Transferor hereby acknowledges and agrees that its
rights in the Equipment are expressly subject to the rights of
the related Customers in such Equipment pursuant to the
applicable Lease Contract. The Transferor covenants and agrees
that, so long as a Customer shall not be in default of any of the
provisions of the applicable Lease Contract, neither the
Transferor nor any assignee of the Transferor will disturb the
Customer's quiet and peaceful possession of the related Equipment
and the Customer's unrestricted use thereof for its intended
purpose.
(b) If in any enforcement suit or legal proceeding it is
held that the Company may not enforce a Lease Contract on the
ground that it is not a real party in interest or holder entitled
to enforce the Lease Contract, the Transferor shall, at the
Transferor's expense, take such steps as the Transferor deems
necessary to enforce the Contract, including bringing suit in the
Transferor's name or causing the Trustee to bring suit in the
Trustee's name.
(c) The Transferor warrants that, until the transfer of the
Equipment to the Trustee, it will own and possess the Equipment
subsequent to its acquisition thereof and that it will warrant
and defend its title to such Equipment against all Persons,
claims and demands whatsoever. The Transferor shall not assign,
sell, pledge, or exchange, or in any way encumber or otherwise
dispose of the Equipment, except as permitted under the Trust and
Security Agreement.
(d) The Transferor shall comply with Section 2.11 of the
Trust and Security Agreement concerning the treatment of this
transaction for Federal, state and local income tax purposes.
Section 4.03 Assignment of Lease Assets. The Company
understands that the Transferor will convey to the Trustee all of
its right, title and interest in and to this Lease Acquisition
Agreement and the Lease Assets. The Company consents to such
conveyance and further agrees that all representations,
warranties, covenants and agreements the Company made herein
shall also be for the benefit of and inure to the Trustee, MBIA
and all Holders from time to time of the Certificates.
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.01 Conditions to the Transferor's Obligations.
The obligations of the Transferor to provide the Company with the
consideration provided for in this Lease Acquisition Agreement
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of the Company
contained in Section 3.01(a) and (b) of this Lease Acquisition
Agreement and all information provided in the Lease Schedule or
Amended Lease Schedule, as applicable, shall be true and correct
on the Closing Date with respect to Lease Contracts listed on the
Initial Lease Schedule or the Acquisition Date with respect to
Additional Lease Contracts, all representations and warranties in
Sections 3.01(c) hereof, shall be true and correct as of the
Closing Date with respect to Lease Contracts listed on the
Initial Lease Schedule or the Acquisition Date with respect to
Additional Lease Contracts, and the Company shall have delivered
to the Transferor, the Trustee, MBIA and each original purchaser
of the Certificates an Officer's Certificate to such effect;
(b) The Company shall have delivered all other information
theretofore required or reasonably requested by the Transferor to
be delivered by the Company hereunder, duly certified by an
officer of the Company, and the Company shall have substantially
performed all other obligations required to be performed by the
provisions of this Lease Acquisition Agreement;
(c) On or prior to the Closing Date with respect to Lease
Contracts listed on the Initial Lease Schedule or the Acquisition
Date with respect to Additional Lease Contracts, the Company
shall have delivered the Lease Contracts and the other items in
the Lease Contract Files to the Trustee and there shall have been
made all filings, recordings and/or registrations, and there
shall have been given, or taken, any notice or any other similar
action, as may be necessary in the opinion of the Transferor, in
order to establish and preserve the right, title and interest of
the Transferor in the Lease Assets;
(d) On or before the Closing Date, the Transferor, the
Servicer, the Back-Up Servicer and the Trustee shall have entered
into the Servicing Agreement;
(e) All of the Certificates shall be issued and sold on the
Closing Date and the Transferor shall receive the full
consideration due it upon the issuance of such Certificates and
the Existing Indebtedness shall have been satisfied.
ARTICLE 6
TERM AND TERMINATION
Section 6.01 Term. This Lease Acquisition Agreement shall
commence as of the date of execution and delivery hereof and
shall continue in full force and effect until the later of
(i) payment with respect to the last Lease Asset or
(ii) termination of the Trust and Security Agreement.
Section 6.02 Default by the Company. If the Company
breaches its representations and warranties set forth in Section
3.01 of this Lease Acquisition Agreement or its covenants set
forth in Section 4.01 of this Lease Acquisition Agreement and
such default shall not have been cured for a period of 30 days
(or such other cure period as may be specified in Section 3.03),
or if the Company shall become insolvent or make an assignment
for the benefit of its creditors or have a receiver appointed for
all or substantially all of its properties, or if any proceedings
are commenced, or consented to, by the Company are not stayed or
dismissed within 60 days after being commenced against the
Company under any bankruptcy, insolvency or other law for the
relief of debtors, the Transferor shall have the right, with the
prior written consent of the Trustee and MBIA, in addition to any
other rights it may have under any applicable law, to terminate
its obligations under this Lease Acquisition Agreement upon prior
written notice to the Company; provided that any termination of
this Lease Acquisition Agreement shall not release the Company
from any obligation under this Lease Acquisition Agreement.
ARTICLE 7
MISCELLANEOUS
Section 7.01 Amendments. This Lease Acquisition Agreement
and the rights and obligations of the parties hereunder may not
be changed orally but only by an instrument in writing signed by
the party against which enforcement is sought together with the
prior written consent of the Trustee and MBIA but without the
consent of any Certificateholder. Promptly after the execution
of any amendment, the Transferor shall send to the Trustee, MBIA,
each Holder of the Certificates, and each Rating Agency, a
conformed copy of each such amendment.
Section 7.02 Governing Law. This Lease Acquisition
Agreement shall be construed in accordance with the internal laws
of the State of New York, without regard to choice of law
principals.
Section 7.03 Notices. All demands, notices and
communications hereunder shall be in writing and shall be
delivered or mailed by registered or certified United States
mail, postage prepaid, and addressed, in the case of the Company,
to ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
President, and in the case of the Transferor, to ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President,
and in the case of MBIA to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Structured Finance - Insured Portfolio
Management (SF-IPM). All notices and demands shall be deemed to
have been given either at the time of the delivery thereof to any
officer of the Person entitled to receive such notices and
demands at the address of such Person for notices hereunder, or
on the third day after the mailing thereof to such address, as
the case may be. Any Person may change the address for notices
hereunder by giving notice of such change to the other Person.
Section 7.04 Separability Clause. Any provisions of this
Lease Acquisition Agreement which are prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 7.05 Assignment. Except as provided in Section
4.01(a) hereof, this Lease Acquisition Agreement may not be
assigned or delegated by the Company without the prior written
consent of the Transferor, MBIA and the Trustee and, except as
provided in Section 4.03 hereof, may not be assigned or delegated
by the Transferor without the prior written consent of the
Company, MBIA and Trustee.
Section 7.06 Further Assurances. Each of the Company and
the Transferor agrees to do such further acts and things and to
execute and deliver to the Trustee and MBIA such additional
assignments, agreements, powers and instruments as are required
by the Trustee to carry into effect the purposes of this Lease
Acquisition Agreement or to better assure and confirm unto the
Trustee, MBIA or the Holders of the Certificates their rights,
powers or remedies hereunder. If any Customer shall be in
default under any Lease Contract, upon reasonable request from
the Servicer, the Company will take all reasonable steps to
assist in enforcing such Lease Contract and preserving and
maintaining title to the Lease Assets and the rights of the
Trustee, MBIA and the Holders of the Certificates therein against
the claims of all persons and parties to the extent the Company
is capable of performing such requested steps and the Servicer
reasonably determines that the assistance of the Company is
necessary to effect the intent and purposes hereof.
Section 7.07 No Waivers; Cumulative Remedies. No failure
to exercise and no delay in exercising, on the part of the
Transferor or the Company, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any right, remedy, or privilege hereunder
preclude any other or further exercise hereof or the exercise of
any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative
and not exhaustive of any rights, remedies, powers and privilege
provided by law.
Section 7.08 Binding Effect; Third Party Beneficiaries.
This Lease Acquisition Agreement will inure to the benefit of and
be binding upon the parties hereto, and shall inure to the
benefit of the Trustee, MBIA, the Holders of Certificates, and
their respective successors and permitted assigns.
Section 7.09 Set-Off.
(a) The Company hereby irrevocably and unconditionally
waives all right of set-off that it may have under contract
(including this Lease Acquisition Agreement), applicable law or
otherwise with respect to any funds or monies of the Transferor
or the Trust Estate at any time held by or in the possession of
the Company.
(b) The Transferor shall have the right to set-off against
the Company any amounts to which the Company may be entitled and
to apply such amounts to any claims the Transferor may have
against the Company from time to time under this Lease
Acquisition Agreement. Upon any such set-off the Transferor
shall give notice of the amount thereof and the reasons therefor.
Section 7.10 MBIA Default or Termination. If an MBIA
Default or Termination occurs and is continuing, MBIA's right to
consent hereunder and to direct the Trustee shall be void and, in
such event, in all provisions of this Agreement wherein MBIA's
consent or direction is required or permitted, the consent or
direction of the Controlling Holders shall be required or
permitted unless a larger number of Holders is required under the
relevant provisions of this Agreement.
IN WITNESS WHEREOF, the Company and the Transferor have
caused this Lease Acquisition Agreement to be duly executed by
their respective officers thereunto duly authorized as of the
date and year first above written.
GRANITE FINANCIAL, INC.,
Company
By:_________________________
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title:
President
GF FUNDING CORP. III,
Transferor
By:_________________________
Name:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title:
President
Schedule I
Attach Initial Lease Schedule
Schedule II
Attach List of Existing Indebtedness
CoreStates Bank, N.A.
$14,331,458.66
EXHIBIT A
FORM OF COMPANY CERTIFICATE
_______________, 19__
Pursuant to Section 3.04(b) of the Lease Acquisition Agreement
dated as of March 1, 1997 by and between Granite Financial, Inc.
and GF Funding Corp. III (the "Lease Acquisition Agreement"),
attached hereto as Schedule I is an Amended Lease Schedule for
the Certificates, which includes information regarding Lease
Assets that are hereby sold, assigned, transferred and delivered
by the Company to the Transferor in accordance with the Lease
Acquisition Agreement. [The Existing Indebtedness in respect of
such Lease Assets is listed on Schedule II attached hereto.]
Terms used herein and not otherwise defined have the meanings
given them in the Lease Acquisition Agreement.
GRANITE FINANCIAL, INC.
By:_________________________
Name:
Title:
GF FUNDING CORP. III
By:_________________________
Name:
Title:
SCHEDULE I
AMENDED LEASE SCHEDULE SCHEDULE II
LIST OF EXISTING INDEBTEDNESS
EXHIBIT B
FORM OF LEASE CONTRACTS
PLEASE SEE THE FORM OF LEASE CONTRACT ATTACHED AS EXHIBIT C TO
THE PRIVATE PLACEMENT MEMORANDUM
EXHIBIT C
SCHEDULE OF POOL CONCENTRATION LIMIT EXCEPTIONS
none
EXHIBIT D
CONCENTRATION LIMITS
Type Limit
State Customers
located in any single state are
obligated with respect to Lease
Contracts for no more than 5% of
the Aggregate IPB except for CA,
TX, FL, MA, NY and CO; Customers
located in such States are
obligated with respect to the Lease
Contracts accounting for no more
than 30%, 10%, 10%, 10%, 10% and 6%
respectively of the Aggregate IPB
Zip Code Lease Contracts with
Customers located in a particular
zip code do not account for more
than 4% of the Aggregate IPB
Customer No single Customer
accounts for more than 1% of the
Aggregate IPB
Industry Lease Contracts with
Customers in a particular SIC
industry category do not account
for more than 15% of the Aggregate
IPB, except for eating and drinking
establishments which shall not
account for more than 20% of the
Aggregate IPB
Broker Lease Contracts
originated by a particular broker
do not account for more than 10% of
the Aggregate IPB, except for C&W
Leasing which may account for up to
17%, Northcoast Capital Leasing
which may account for up to 15%,
Lexington Capital Corporation which
may account for up to 15%, ▇▇▇▇▇▇▇▇
Financial which may account for up
to 8% and Prolease which may
account for up to 5%. Lease
Contracts originated by brokers
noted on Exhibit I attached hereto
are not permitted in this
transaction.
Scheduled Payments Lease Contracts that
have rental payments that are not
fixed for the remaining term (other
than PUT payments) do not exceed 5%
of the Aggregate IPB
Program Lease Contracts
originated under Granite's "Market
(or Lease) Enhancement" Program and
the Specialty Programs with
Broker/Vendors in the aggregate do
not exceed 15% of the Aggregate
Implicit Principal Balance
PUT Clause Lease Contracts
containing a PUT clause account for
no more than 5% of the Aggregate
IPB and each PUT payment shall be
equal to or less than 10% of the
cost of the equipment underlying
the Lease Contract
Equipment type Lease Contracts of
the following Equipment types
account for no more than the listed
percent of the Aggregate IPB:
Peripherals/Computers 24%
Manufacturing 16%
Restaurant 20%
Dry Cleaning/Washing 13%
Radio/TV/Photographic 10%
Office Equipment 10%
Heavy Equipment 15%
Coin Op Equip 12%
Health/Sports 10%
Automotive 3%
Beauty/▇▇▇▇▇▇ Shop 12%
Printing 10%
Software 3%
Titled Vehicles
3%
All other Equipment types 5%
As of any Acquisition Date during the Funding Period, in addition
to the Concentration limits listed above, the pool of Lease
Contracts will also meet the following criteria: the sum of the
aggregate Implicit Principal Balance of all Lease Contracts
originated by a broker not listed on Schedule I attached hereto
do not account for more than 10% of the Aggregate IPB and Lease
Contracts originated by any broker not listed on Schedule I
attached hereto do not account for more than 5% of the Aggregate
IPB.
Schedule I to Concentration Limits
list of brokers
EXHIBIT E
FORM OF BROKER ASSIGNMENT AGREEMENTS
