EXECUTION COPY
AFG CREDIT CORPORATION,
Transferor,
AMERICAN FINANCE GROUP, INC.,
Servicer,
FIRST UNION CAPITAL MARKETS CORP.,
Deal Agent
and
BANKERS TRUST COMPANY,
Trustee and Collateral Trustee
on behalf of the Series 1997-1 Noteholders
SERIES 1997-1 SUPPLEMENTAL INDENTURE
Dated as of October 14, 1997
to
POOLING AND SERVICING AGREEMENT AND INDENTURE OF TRUST
Dated as of July 1, 1995
$125,000,000
AFG MASTER TRUST
Series 1997-1
===============================================================================
TABLE OF CONTENTS
Page
Section 1. Designation. 1
Section 2. Definitions. 1
Section 3. The Notes. 6
Section 4. [Reserved]. 6
Section 5. [Reserved] 7
Section 6. Delivery. 7
Section 7. Procedure for Increasing the Principal Amount............7
Section 8. Procedure for Decreasing the Principal Amount............8
Section 9. [Reserved]. 8
Section 10. [Reserved]. 8
Section 11. Interest. 8
Section 12. Indemnification by Transferor...........................8
Section 13. Article IV of Agreement.................................9
Section 14. Article V of the Agreement.............................12
Section 15. Accelerated Payment Events; Series 1997-1 Pay Out Events..14
Section 16. Funding Costs. 15
Section 17. Conditions Precedent to Effectiveness of Supplement.......18
Section 18 Representation and Warranties of the Transferor and the Servicer..20
Section 19. Covenants of the Transferor......................................22
Section 20. Covenants of the Servicer........................................22
Section 21. Covenants of the Trustee.........................................23
Section 22. Obligations Unaffected...........................................23
Section 23. [Reserved]. 23
Section 24. Payments. 23
Section 25. Costs and Expenses..............................................23
Section 26. Amendments. 24
Section 27. Successors and Assigns...........................................25
Section 28. [Reserved]. 25
Section 29. Repurchase by Servicer...........................................25
Section 30. Repurchase by Transferor.........................................26
Section 31. Permitted Successor Servicer.....................................26
Section 32. Option to Repurchase.............................................26
Section 33. Final Distribution...............................................26
Section 34. [Reserved]. 26
Section 35. Ratification of Agreement........................................27
Section 36. Counterparts. 27
Section 37. GOVERNING LAW. 27
Section 38. The Trustee. 27
Section 39. Instructions in Writing..........................................27
EXHIBITS
Exhibit A:........ Form of Note
Exhibit B:........ [Reserved]
Exhibit C:........ Form of Monthly Noteholder's Statement
Exhibit D:........ Form of Purchaser's Certification
Exhibit E:........ Form of Seller's Certification
Exhibit F:........ Form of Commitment Transfer Supplement
SCHEDULES
Schedule 1........ Schedule of Purchasers' Commitments
SERIES 1997-1 SUPPLEMENTAL INDENTURE, dated as of October 14, 1997
(this "Supplement") among AFG CREDIT CORPORATION, a Delaware corporation, as
Transferor, AMERICAN FINANCE GROUP, INC., a Delaware corporation, as Servicer,
FIRST UNION CAPITAL MARKETS CORP., a North Carolina corporation and BANKERS
TRUST COMPANY, as Trustee (in such capacity, the "Trustee") and as Collateral
Trustee (in such capacity, the "Collateral Trustee") under the AFG Master Trust
Pooling and Servicing Agreement and Indenture of Trust dated as of July 1, 1995
among the Transferor, the Servicer, and the Trustee and Collateral Trustee (as
amended, supplemented or otherwise modified from time to time, the "Agreement").
Section 6.12 of the Agreement provides, among other things, that the
Transferor and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the delivery by the
Transferor to the Trustee for execution and authentication of one or more Series
of Notes.
Pursuant to this Supplement, the Transferor shall create a new Series
of Notes and shall specify the principal terms thereof.
Section 1. Designation.
There is hereby created a Series of Notes to be issued pursuant to the
Agreement and this Supplement to be known as the "Series 1997-1 Notes". Series
1997-1 shall be a Variable Funding Series. The Series 1997-1 Notes shall be
issued in definitive form.
Section 2. Definitions.
In the event that any term or provision contained herein shall conflict
with or be inconsistent with any provision contained in the Agreement, the terms
and provisions of this Supplement shall govern. All Article, Section or
subsection references herein shall mean Articles, Sections or subsections of the
Agreement, as amended or supplemented by this Supplement, except as otherwise
provided herein. All capitalized terms not otherwise defined herein are used
herein as defined in the Agreement. Each capitalized term defined herein shall
relate only to the Series 1997-1 Notes and no other Series of Notes issued by
the Trust.
Accelerated Funding Requirement: Shall mean, on any Distribution Date after an
Accelerated Payment Event has occurred, the Principal Amount, after giving
effect to the application of any amounts allocated under the Target Repayment
Amount.
Accelerated Payment Date: Shall mean the date on which an Accelerated Payment
Event is deemed to occur pursuant to Section 15(a) of this Supplement.
Accelerated Payment Event: Shall have the meaning set forth in Section 15(a) of
this Supplement.
Adjusted Principal Amount: Shall mean, on any date of determination, the excess
of the Principal Amount over the
Distribution Account Balance at the end of such date of determination.
Aggregate Commitment Amount: Shall mean, as of any date, the sum of the
Commitments of all Purchasers on such date.
Amortization Period: The period from but excluding the last day of the Revolving
Period through the day on which the Principal Amount of the Series 1997-1 Notes,
all accrued Series 1997-1 Note Interest and all other amounts owed to the Series
1997-1 Noteholders are indefeasably paid in full.
Average Principal Amount: Shall mean for any period the sum of the Principal
Amounts on each day of such period divided by the number of days in such period.
Change in Law: Shall have the meaning specified Section 16(c) hereof.
Closing Date: Shall mean the date on which the Principal Amount is first
increased to above zero.
Commitment: Shall mean, as to any Purchaser, its obligation to maintain and,
subject to the conditions set forth in Section 7 hereof and the Note Purchase
Agreement, increase its Principal Amount, in an aggregate amount not to exceed
at any one time outstanding the amount set forth in the Note Purchase Agreement;
collectively, as to all such Purchasers, the "Commitments".
Commitment Percentage: Shall mean, as to any Purchaser and as of any date, the
percentage equivalent of a fraction, the numerator of which is such Purchaser's
Commitment as set forth on Schedule 1 and the denominator of which is the
Aggregate Commitment Amount as of such date.
Deal Agent: First Union Capital Markets Corp., in its capacity as deal agent
under the Note Purchase Agreement.
Decrease: Shall have the meaning assigned in Section 8 hereof.
Distribution Account: Shall have the meaning specified in Section 4.2B.
Distribution Account Balance: Shall mean, on any date of determination, the
amount on deposit in the Distribution Account on such date (excluding investment
income for the Monthly Period which includes such date of determination and
amounts designated to pay Series 1997-1 Note Interest).
Effective Date: Shall have the meaning specified in Section 17 hereof.
Facility Amount: $125,000,000.
Facility Fee: Has the meaning given to such term in the Fee Letter.
Fee Letter: The fee letter agreement between the Transferor, the Servicer, the
Deal Agent and First Union, as liquidity agent, dated October 14, 1997, as
amended, modified or supplemented from time to time.
First Union: First Union National Bank, with its principal office in Charlotte,
North Carolina, and its successors and assigns.
Increase: Shall have the meaning assigned in Section 7(a) hereof.
Increase Amount: Shall have the meaning assigned in Section 7(a) hereof.
Increase Date: Shall have the meaning assigned in Section 7(a) hereof.
Increased Costs: Shall mean any amounts owing to the Purchasers pursuant to
Section 16(b) hereof.
Initial Principal Amount: Shall mean $72,133,000.
Monthly Sale Date: Shall mean (i) each Distribution Date and (ii) the last
Business Day of each month.
Noteholder: Shall mean the holder of record of any Series 1997-1 Note.
Notes: Shall mean the Series 1997-1 Notes issued pursuant to this Supplement.
Note Purchase Agreement: Shall mean the Note Purchase Agreement, dated as of
August __, 1997, among the Transferor, the Servicer, VFCC, certain investors
named therein, First Union, as liquidity agent and the Deal Agent, as amended
from time to time and relating to the Series 1997-1 Notes.
Notes: Shall have the meaning assigned in the preamble.
Optional Series 1997-1 Pay Down Amount: Shall mean on a Distribution Date, the
amount designated by the Servicer and available pursuant to Section 4.3(g)(i) in
respect of such Distribution Date.
Paired Series: Shall mean any series of Notes that is paired with Series 1997-1
in the related Supplement.
Pay Out Commencement Date: Shall mean the date on which a Trust Pay Out Event is
deemed to occur pursuant to Section 9.1 of the Agreement or a Series 1997-1 Pay
Out Event is deemed to occur pursuant to this Supplement.
Principal Amount: Shall mean, with respect to the Series 1997-1 Notes and as of
any date, an amount equal to (a) the Initial Principal Amount plus (b) all
Increase Amounts pursuant to Section 7 minus (c) the amount of any distributions
made pursuant to Section 8 and all distributions made in reduction of the
Principal Amount pursuant to Section 0.xX prior to such date of determination.
Program Agreements: Shall have the meaning specified in Section 17(a) hereof.
Program Fee: Has the meaning given to such term in the Fee Letter.
Purchaser: Shall mean each purchaser of the Series 1997-1 Notes.
Rating Agencies: Shall mean, collectively, each nationally recognized
statistical rating agency which, at the request of the Transferor or the
Servicer, has assigned a rating to one or more classes of the Series 1997-1
Notes; provided that so long as no such agency is currently rating a particular
Class of Series 1997-1, the requirement to satisfy the Rating Agency Condition
with respect to such Class shall be deemed to be a requirement to obtain the
consent of the Required Purchasers of such Class.
Record Date: Shall mean, with respect to any Distribution Date, the close of
business on the last Business Day of the preceding month.
Register: Shall mean a register maintained by the Deal Agent for recording (i)
transfers of interests in the Series 1997-1 Notes, and (ii) the date, type, and
amount of each Increase or Decrease made pursuant to this Supplement and the
date and amount of each payment or prepayment of principal thereof.
Required Purchasers: Shall mean, on any day, Purchasers having, in the
aggregate, Voting Percentages of at least 66-2/3%.
Revolving Noteholders' Interest: Shall have the meaning specified in Section 3
hereof.
Revolving Period: Shall mean the period from and including the Closing Date to
and including the earliest of (i) the latest Distribution Date that falls within
364 days after the Closing Date, (ii) the Pay Out Commencement Date and (iii)
the Accelerated Payment Date.
Scheduled Series 1997-1 Termination Date: Shall mean the Distribution Date which
occurs 12 months after the last Scheduled Payment under any Included Lease in
the Amortizing Pool related to Series 1997-1.
Series Accounts: Shall mean the Distribution Account with respect to Series
1997-1.
Series Available Amount: Shall mean on any Distribution Date the amount
allocable to Series 1997-1 in accordance with Section 4.3(e) or (f) and Section
4.3(g) or (h) of the Agreement, as the case may be.
Series Asset Base: Shall mean, on any date of determination, the Series
Percentage of the Asset Base on such date.
Series Percentage: Shall mean, on any date of determination:
(a) prior to a Pay Out Event, the percentage equivalent of a fraction
the numerator of which shall be the Adjusted Principal Amount on the preceding
Business Day and the denominator of which shall be the Aggregate Adjusted
Principal Amount on such day;
(b) after a Pay Out Event, the percentage equivalent of a fraction the
numerator of which shall be the Adjusted Principal Amount as of the end of the
day on the last day of the Revolving Period and the denominator of which shall
be the Aggregate Adjusted Principal Amount on such day.
Series 1997-1: Shall mean the Series of the AFG Master Trust represented by the
Series 1997-1 Notes.
Series 1997-1 Note Interest: Shall have the meaning specified in Section 4.4A
(a)(i).
Series 1997-1 Pay Out Event: Shall have the meaning prescribed in Section 15(b)
of this Supplement.
Series Termination Date: Shall mean the earlier to occur of (i) the day after
the Distribution Date on which the Series 1997-1 Notes are repaid in full, or
(ii) the Scheduled Series 1997-1 Termination Date.
Target Repayment Percentage: Shall mean 100%.
Taxes: Shall have the meaning specified in Section 16(d) hereof.
Unpaid Series 1997-1 Note Interest: Shall have the meaning specified in Section
11(a) hereof.
VFCC: Variable Funding Capital Corporation, a Delaware corporation, and its
successors and assigns.
VFCC's Cost of Funds: Shall have the meaning specified in the Note Purchase
Agreement.
Voting Percentage: Shall mean with respect to any Purchaser, during the
Revolving Period, the percentage equivalent of a fraction the numerator of which
equals such Purchaser's Commitment and the denominator of which equals the
Aggregate Commitment Amount and thereafter, the percentage equivalent of a
fraction the numerator of which equals such Purchaser's Principal Amount and the
denominator of which equals the Principal Amount.
Working Day: Shall mean any Business Day on which dealings in foreign currencies
and exchanges between banks may be carried on in London, England.
Section 3. The Notes.
(a) The Series 1997-1 Notes shall represent indebtedness secured by the
Trust Assets and an obligation to pay the Noteholders' Note Interest and Note
Principal out of the Trust Assets, consisting of the right of the Noteholders to
receive (i) the applicable share of Collections and (ii) all other funds on
deposit in the Collection Account allocable to the holders of the Series 1997-1
Notes and (iii) all funds on deposit in the Distribution Account (the "Revolving
Noteholders' Interest"). The Transferor Interest and any other Series of Notes
outstanding shall represent the interest in the remainder of the Trust Assets
not allocated pursuant hereto to the Revolving Noteholders' Interest.
(b) The Series 1997-1 Notes shall be issued, substantially in the form
of Exhibit A, and shall, upon issue, be executed by the Trust and delivered to
the Trustee for authentication and redelivery as provided in Section 6 hereof
and Section 6.3 of the Agreement.
(c) The Series 1997-1 Notes have not been registered under the United
States Securities Act of 1933, as amended (the "Securities Act"). By accepting
its Note, each Purchaser shall be deemed to acknowledge that it is purchasing
the Notes for investment purposes and is not acquiring the Notes with a view to,
or for offer or sale in connection with, any distribution in violation of the
Securities Act.
(d) The Purchaser of the Series 1997-1 Notes is authorized to endorse
on the schedules annexed thereto and made a part thereof or on a continuation
thereof which shall be attached thereto and made a part thereof the date, type,
and amount of each Increase or Decrease made pursuant to this Supplement and the
date and amount of each payment or prepayment of principal thereof.
(e) The Deal Agent shall maintain the Register and a subaccount therein
for each Noteholder, in which shall be recorded the date, type, and amount of
each Increase or Decrease made pursuant to this Supplement and the date and
amount of each payment or prepayment of principal thereof.
(f) The entries made in the Register and the endorsements made by each
Noteholder on the schedules attached to each Series 1997-1 Note maintained
pursuant to subsection 3(c) hereof shall, to the extent permitted by applicable
law, be prima facie evidence of the (A) existence and amounts of the obligations
of the Trust therein recorded; provided, however, that the failure of any
Noteholder or the Deal Agent to maintain the Register or any such schedule, or
any error therein, shall not in any manner affect the obligation of the Trust to
repay (with applicable interest) the Commitments made to such Trust by such
Noteholder in accordance with the terms of this Supplement.
Section 4. [Reserved].
Section 5. [Reserved]
Section 6. Delivery.
(a) On the Closing Date, the Trust shall execute and the Trustee shall
duly authenticate Series 1997-1 Notes in an aggregate denomination equal to the
Initial Principal Amount.
(b) The Trustee shall deliver the Series 1997-1 Notes when
authenticated in accordance with Section 6.2 of the Agreement.
Section 7. Procedure for Increasing the Principal Amount.
(a) Subject to subsection 7(b) hereof, on any Monthly Sale Date during
the Revolving Period, the Principal Amount may be increased by increasing each
Purchaser's pro rata share of the Principal Amount (an "Increase"), up to an
amount not exceeding each Purchaser's Commitment upon the request of the
Servicer, on behalf of the Trust, (each date on which an increase in the
Principal Amount occurs hereunder being herein referred to as the "Increase
Date"); provided that the Servicer shall have given the Deal Agent irrevocable
written notice (effective upon receipt) of such request as provided in the Note
Purchase Agreement. Such notice shall state the Increase Date, the proposed
amount of such Increase (the "Increase Amount"), and otherwise conform to the
requirements of the Note Purchase Agreement.
(b) The Purchasers shall be obligated to make an Increase only on the
terms set forth in the Note Purchase Agreement and the Purchasers shall not be
obligated to increase their respective Principal Amounts on any Increase Date
hereunder if:
(i) the related Increase Amount is less than $250,000;
(ii) after giving effect to the Increase, the Principal Amount
of any Purchaser would exceed its Commitment (determined as of the date
the notice of such Increase is given);
(iii) a Pay Out Event or an event which, with the passage of
time or the giving of notice, or both, would be a Pay Out Event, has
occurred;
(iv) an Accelerated Payment Event, or an event which, with the
passage of time or the giving of notice, would be an Accelerated
Payment Event, has occurred and is continuing; and
(v) the representations and warranties set forth in the
Agreement, this Supplement and the Asset Purchase Agreement are not
true and correct in all material respects on the Increase Date.
Section 8. Procedure for Decreasing the Principal Amount.
On any one or more Monthly Sale Dates during the Revolving Period, upon
request of the Servicer on behalf of the Trust, the Aggregate Principal Amount
may be reduced (a "Decrease") by (A)(i) a deposit by the Transferor to the
Distribution Account of the amount of such reduction or (ii) the allocation to
the Distribution Account of any amounts available pursuant to Section 4.3(g) of
the Agreement or (iii) any combination of (i) and (ii). The Servicer shall give
the Deal Agent written notice (effective upon receipt) prior to 12:00 Noon (New
York City time) three Business Days prior to the date of any Decrease stating
the amount of such Decrease; provided that each such Decrease shall be in an
amount equal to or greater than $250,000.
Section 9. [Reserved].
Section 10. [Reserved].
Section 11. Interest.
(a) Interest shall accrue in respect of each day in each Accrual Period
for the Series 1997-1 Notes at a rate equal to VFCC's Cost of Funds applicable
to such day. Interest accrued during each Accrual Period on the Series 1997-1
Notes shall be payable on the Distribution Date immediately following the last
day of such Accrual Period. If any interest that accrues on the Series 1997-1
Notes during an Accrual Period is not paid on the related Distribution Date in
accordance with the preceding sentence ("Unpaid Series 1997-1 Note Interest"),
such Unpaid Series 1997-1 Note Interest shall be payable on the immediately
following Distribution Date, plus interest thereon for the additional Accrual
Period calculated at VFCC's Cost of Funds.
(b) Calculations of per annum rates and fees under this Supplement
shall be made on the basis of a 360-day year for actual days elapsed. Each
determination of VFCC's Cost of Funds hereunder and under the Note Purchase
Agreement by the Deal Agent shall be conclusive and binding upon each of the
parties hereto in the absence of manifest error. Any change in interest payable
hereunder resulting from a change in any of the interest rates upon which VFCC's
Cost of Funds is based shall become effective as of the opening of business on
the day on which such change is announced.
Section 12. Indemnification by Transferor.
The Transferor hereby agrees to pay, and to indemnify and hold
harmless, the Deal Agent, each Purchaser, the Trustee and the Collateral Trustee
and each officer, director, employee and agent thereof from (a) all claims,
disputes, damages, penalties and losses arising from the entering into or
management of Leases or the acquisition, management or operation of the related
Equipment (including any product warranty-related claims, but excluding losses
arising out of a lessee's failure to make timely lease payments or other credit
losses) or the transactions contemplated by this Supplement or the subject
matter thereof, (b) any taxes which may at any time be asserted in respect of
this transaction or the subject matter thereof (including, without limitation,
any sales, gross receipts, general corporation, personal property, privilege or
license taxes, but not including taxes imposed upon the Deal Agent, any such
Purchaser, the Trustee or the Collateral Trustee with respect to its income
arising out of this transaction and imposed in any jurisdiction) and (c) costs,
expenses and reasonable counsel fees in defending against the same, whether
arising by reason of the acts to be performed by the Transferor or the Servicer
hereunder or imposed against the Deal Agent, any Purchaser, the Trustee, the
Collateral Trustee or any officer, director, employee or agent thereof, or the
Transferor, the property involved or otherwise (regardless of whether the Deal
Agent, the Trustee, any Purchaser, or any officer, employee or director thereof
is a party thereto); provided, however, that the Transferor shall not be liable
to or indemnify or hold harmless the Deal Agent, each Purchaser, the Trustee or
the Collateral Trustee and each officer, director and employee or agent thereof
as to any claims, disputes, damages, penalties and losses suffered or sustained
by reason of gross negligence or willful misconduct on the part of the Deal
Agent, each Purchaser, the Trustee or the Collateral Trustee, as the case may
be, or any of their respective officers, directors, employees or agents.
Section 13. Article IV of Agreement.
Sections 4.1 through 4.5, inclusive, of the Agreement shall read in
their entirety as provided in the Agreement and Sections 4.2B and Section 4.4A
shall read in their entirety as provided in this Series 1997-1 Supplement to the
Agreement. The remainder of Article IV of the Agreement shall read in its
entirety as follows and shall be applicable only to the Series 1997-1 Notes:
ARTICLE IV
RIGHTS OF NOTEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.2B The Series 1997-1 Distribution Account.
The Servicer, for the benefit of the Series 1997-1 Noteholders, shall
cause to be established and maintained in the name of the Collateral Trustee, on
behalf of the Trust, with an office or branch of a Qualified Institution a
segregated demand deposit account maintained in the corporate trust department
of such Qualified Institution, and held in trust by such Qualified Institution
(the "Distribution Account") bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Series 1997-1
Noteholders. The Paying Agent shall have the revocable authority to make
withdrawals from the Distribution Account. Funds on deposit in the Distribution
Account shall at all times be invested by the Collateral Trustee, at the written
direction of the Servicer, in Permitted Investments. Any such investments shall
mature and such funds shall be available for withdrawal on the Transfer Date
preceding the Distribution Date on which such funds are to be distributed
hereunder; provided, however, that any Permitted Investment in short-term U.S.
treasury securities may mature one day after such Transfer Date and may be sold
on such Transfer Date.
Section 4.4A Allocations.
(a) Allocations During the Revolving Period. On each Determination Date
during the Revolving Period, the Servicer shall instruct the Collateral Trustee
to deposit, and on the succeeding Distribution Date, the Collateral Trustee,
acting in accordance with such instructions, shall deposit to the Distribution
Account, the amounts required to be deposited pursuant to this Section in order
to make the following payments from the Series Available Amount for the related
Distribution Date (in each case, such deposit or payment to be made only to the
extent funds remain available therefor after all prior payments and deposits for
such Distribution Date have been made), in the following order of priority:
(i) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to interest accrued in respect of the
Series 1997-1 Notes in accordance with the provisions of Section 11
hereof ("Series 1997-1 Note Interest") for the Accrual Period ending on
such Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made, plus interest on any such amounts calculated at VFCC's Cost of
Funds;
(ii) pay to the Deal Agent, the Facility Fee and the Program
Fee for the preceding Accrual Period, together with any amounts in
respect of such fees that were due in respect of prior Accrual Periods
that remain unpaid;
(iii) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to the Optional Series 1997-1 Pay Down
Amount for such Distribution Date;
(iv) pay to each Hedging Counterparty any Hedge Termination
Payments;
(v) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to any amounts then due and payable in
respect of Increased Costs in respect of the Series 1997-1 Notes
accrued during the Accrual Period ending on such Distribution Date;
(vi) pay to the appropriate parties an amount equal to any
amounts then due and payable in respect of other fees and expenses
owing thereto in respect of Series 1997-1; and
(vii) allocate any remaining Series Available Amount to the
Excess Funding Account.
(b) Allocations During the Amortization Period and Prior to the Pay Out
Commencement Date or Accelerated Payment Date. On each Determination Date during
the Amortization Period and prior to the Pay Out Commencement Date or the
Accelerated Payment Date, the Servicer shall instruct the Trustee to deposit,
and on the succeeding Distribution Date the Trustee acting in accordance with
such instructions shall deposit to the Distribution Account, the amounts
required to be deposited pursuant to this Section in order to make the following
payments from the Series Available Amount for the related Distribution Date (in
each case, such deposit or payment to be made only to the extent funds remain
available therefor after all prior payments and deposits for such Distribution
Date have been made), in the following order of priority:
(i) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to accrued in respect of the Series
1997-1 Notes for the Accrual Period ending on such Distribution Date,
together with any such amounts that accrued in respect of prior Accrual
Periods for which no allocation was previously made, plus interest on
any such amounts calculated at VFCC's Cost of Funds;
(ii) pay to the Deal Agent, the Facility Fee and the Program
Fee for the preceding Accrual Period, together with any amounts in
respect of such fees that were due in respect of prior Accrual Periods
that remain unpaid;
(iii) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to the Percentage of the Target
Repayment Amount for Series 1997-1 for such Distribution Date, together
with any such amounts that were due on prior Distribution Dates for
which no deposit was previously made;
(iv) pay to each Hedging Counterparty any Hedge Termination
Payments;
(v) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to any amounts then due and payable in
respect of Increased Costs in respect of the Series 1997-1 Notes
accrued during the Accrual Period ending on such Distribution Date;
(vi) pay to the appropriate parties an amount equal to any
amounts then due and payable in respect of other fees and expenses
owing thereto in respect of Series 1997-1; and
(vii) allocate any remaining Series Available Amount to the
Excess Funding Account.
(c) Allocations After Pay Out Commencement Date or Accelerated Payment
Date. On each Determination Date occurring after the Pay Out Commencement Date
or the Accelerated Payment Date, the Servicer shall instruct the Trustee to
deposit, and on the succeeding Distribution Date the Trustee acting in
accordance with such instructions shall deposit to the Distribution Account, the
amounts required to be deposited pursuant to this Section in order to make the
following payments from the Series Available Amount for the related Distribution
Date (in each case, such deposit or payment to be made only to the extent funds
remain available therefor after all prior payments and deposits for such
Distribution Date have been made), in the following order of priority:
(i) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to Series 1997-1 Note Interest accrued
in respect of the Series 1997-1 Notes for the Accrual Period ending on
such Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made, plus interest on any such amounts calculated at VFCC's Cost of
Funds;
(ii) pay to the Deal Agent, the Facility Fee and the Program
Fee for the preceding Accrual Period, together with any amounts in
respect of such fees that were due in respect of prior Accrual Periods
that remain unpaid;
(iii) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to the remaining Aggregate Principal
Amount;
(iv) pay to each Hedging Counterparty any Hedge Termination
Payments;
(v) allocate to the Distribution Account for the benefit of
the Noteholders an amount equal to any amounts then due and payable in
respect of Increased Costs in respect of the Series 1997-1 Notes
accrued during the Accrual Period ending on such Distribution Date;
(vi) pay to the appropriate parties an amount equal to any
amounts then due and payable in respect of other fees and expenses
owing thereto in respect of Series 1997-1; and
(vii) allocate any remaining Series Available Amount to the
Excess Funding Account.
Section 14. Article V of the Agreement.
Article V of the Agreement shall read in its entirety as follows and
shall be applicable only to the Series 1997-1 Notes:
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
NOTEHOLDERS
Section 0.xX Distributions.
On each Distribution Date, the Paying Agent shall distribute,
in immediately available funds, to the Deal Agent, at the account specified
pursuant to the Note Purchase Agreement on behalf of the Purchasers (in
accordance with the certificate delivered by the Servicer to the Trustee
pursuant to Section 5.2A(a) of amounts on deposit in the Distribution Account as
are payable with respect to the Series 1997-1 Notes pursuant to Section 4.4A on
such Distribution Date.
Section 5.2A Noteholders' Statements.
(a) Monthly Noteholders, Statement. On or before each Distribution
Date, the Paying Agent shall forward to the Deal Agent a statement substantially
in the form of Exhibit C to this Supplement prepared by the Servicer setting
forth among other things the following information with respect to such
Distribution Date (which, in the case of subclauses (i), (ii), (iii) and (v)
shall be stated on an aggregate basis and on the basis of an original principal
amount of $1,000 per Series 1997-1 Note):
(i) the total amount distributed;
(ii) the amount of such distribution allocable to Note
Principal;
(iii) the amount of such distribution allocable to Series
1997-1 Note Interest;
(iv) the Aggregate Commitment Amount, the Principal Amount and
the Average Principal Amount; and
(v) the Adjusted Principal Amount, the Series Asset Base, the
Aggregate Adjusted Principal Amount, the Asset Base, the Discounted
Lease Balances of Included Leases that were classified as Delinquent
Leases during each of the three preceding Monthly Periods, the
Aggregate Pool Balance on the last day of the three preceding Monthly
Periods and the Discounted Lease Balances of Included Leases that
became Defaulted Leases during each of the three preceding Monthly
Periods.
(b) Annual Noteholders' Tax Statement. On or before January 31 of each
calendar year, beginning with calendar year 1998, the Paying Agent shall
distribute on behalf of the Transferor, to the Deal Agent for delivery to each
Person who at any time during the preceding calendar year was a Series 1997-1
Noteholder, a statement prepared by the Servicer and delivered to the Trustee on
or before January 31 of each calendar year containing the information required
to be contained in the regular monthly report to Series 1997-1 Noteholders, as
set forth in subclauses (i), (ii), (iii) and (iv) above, aggregated for such
calendar year or the applicable portion thereof during which such Person was a
Series 1997-1 Noteholder, together with such other customary information
(consistent with the treatment of the Series 1997-1 Notes as debt) as the
Servicer deems necessary or desirable to enable the Series 1997-1 Noteholders to
prepare their tax returns consistent with the treatment of the Series 1997-1
Notes as debt instruments. Such obligations of the Transferor and the Paying
Agent shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Internal Revenue Code of 1986, as amended (the "Code") as
from time to time in effect.
(c) Monthly Statement. With respect to each Distribution Date and the
related Monthly Period, the Servicer shall provide to the Deal Agent a copy of
the Monthly Statement.
Section 15. Accelerated Payment Events; Series 1997-1 Pay Out
Events.
(a) Accelerated Payment Events. If any one of the following events
shall occur with respect to the Series 1997-1 Notes:
(i) for any two (2) consecutive Distribution Dates after
giving effect to all transactions and distributions to occur hereunder
on such dates, the Adjusted Principal Amount on such dates shall exceed
the Series Asset Base on such date; or
(ii) for any two (2) consecutive Distribution Dates after
giving effect to all transactions and distributions to occur hereunder
on such dates, the Aggregate Adjusted Principal Amount on such dates
shall exceed the Asset Base on such date; or
(iii) on any Distribution Date after giving effect to all
transactions and distributions to occur hereunder on such date, the
aggregate Discounted Lease Balances shall be less than $20,000,000; or
(iv) for any two (2) consecutive Distribution Dates after
giving effect to all transactions and distributions to occur hereunder
on such dates, the average of the Discounted Lease Balances of Included
Leases that were classified as Delinquent Leases on the last day of
each of the three preceding Monthly Periods exceeds 5% of the average
Aggregate Pool Balance on the last day of such three preceding Monthly
Periods; or
(v) for any two (2) consecutive Distribution Dates after
giving effect to all transactions and distributions to occur hereunder
on such dates, the Discounted Lease Balances of Included Leases that
became Defaulted Leases during the three preceding Monthly Periods
exceeds 4% of the average Aggregate Pool Balance on the last day of
such three preceding Monthly Periods; or
(vi) for any two (2) consecutive Distribution Dates, Series
1997-1 Note Interest shall not have been paid with respect to the
Series 1997-1 Notes; or
(vii) an Accelerated Payment Event, as defined in the related
Supplement, has occurred with respect to any other Series;
then, and in any such event after the applicable grace period set forth in such
subparagraphs, an accelerated payment event (an "Accelerated Payment Event")
shall occur as of the date of such notice.
(b) Series 1997-1 Pay Out Events. If the following event shall occur
with respect to the Series 1997-1 Notes:
(i) for any six (6) Distribution Dates, Series 1997-1 Note
Interest shall not have been paid with respect to the Series 1997-1
Notes;
then, and in any such event after the applicable grace period set forth in such
subparagraphs, an event of default (a "Series 1997-1 Pay Out Event") shall occur
as of the date of such notice.
Section 16. Funding Costs.
(a) Breakage. The Transferor agrees to indemnify each Purchaser and to
hold each Purchaser harmless from any loss or expense arising from interest or
fees payable by such Purchaser to lenders of funds obtained by it to purchase or
maintain that portion of its Commitment hereunder with respect to which VFCC's
Cost of Funds is determined by reference to the CP Rate (as defined in the Note
Purchase Agreement) or the LIBOR Rate (as defined in the Note Purchase
Agreement) as a consequence of (i) default by the Transferor in the performance
of its obligations hereunder or under the Agreement, (ii) the occurrence of a
Servicer Default or an event which would, with the giving of notice or the
passage of time, constitute a Servicer Default, (iii) default by the Transferor
in effecting an increase in the Aggregate Principal Amount on an Increase Date
after having given notice of such Increase, or (iv) any prepayment of the
Principal Amount prior to the termination of the applicable Tranche Period. A
certificate as to any additional amounts payable pursuant to the foregoing
sentence submitted by any Purchaser to the Servicer shall show the additional
amounts payable in reasonable detail and shall be conclusive absent manifest
error.
(b) Increased Costs. If any law, treaty or governmental regulation, or
any change therein or in the interpretation or application thereof or compliance
by any Purchaser with any request or directive (whether or not having the force
of law) from any central bank or United States government (or any state or
political subdivision thereof) or any entity exercising executive, legislative,
regulatory or administrative functions of or pertaining to such government:
(i) does or shall subject any Purchaser to any tax of any kind
whatsoever with respect to this Supplement or such Purchaser's
Commitment hereunder, or change the basis of taxation of payments to
any Purchaser in respect of such Purchaser's portion of the amounts
payable hereunder (except for changes in the rate of tax on the overall
net income of such Purchaser imposed in the United States of America;
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirements
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of any Purchaser except as
provided in clause (iii) below; or
(iii) does or shall impose, modify or hold applicable any
reserves against "Eurocurrency liabilities" (including, without
limitation, basic, supplemental, marginal or emergency reserves) under
Regulation D of the Board of Governors of The Federal Reserve System
(or so long as such Purchaser may be required by such Board of
Governors or by any other Governmental Authority in the United States
having jurisdiction with respect thereto to maintain reserves
(including, without limitation, basic, supplemental, marginal or
emergency reserves) with respect to eurocurrency funding) in excess of
the amount thereof on the Closing Date; or
(iv) does or shall impose on any Purchaser any other
condition;
and the result of any of the foregoing is to increase the cost to such Purchaser
of purchasing or maintaining its portion of the Purchasers' Commitment by an
amount which such Purchaser deems to be material or to reduce the amount of any
payment by an amount which such Purchaser deems to be material, then, in any
such case, such Purchaser shall notify the Deal Agent, who will in turn notify
the Servicer and the Transferor, of such Increased Costs and the event giving
rise to such Increased Costs.
(c) Changes in Capital Requirements. In the event that any Purchaser
shall have determined that any Requirement of Law regarding capital adequacy or
interpretation or application thereof or compliance by such Purchaser with any
request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority (a "Change in Law") does or shall have
the effect of reducing the rate of return on such Purchaser's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Purchaser or such corporation could have achieved but for
such change or compliance (taking into consideration such Purchaser's or such
corporation's policies with respect to capital adequacy) by an amount deemed by
such Purchaser to be material, then from time to time, after submission by such
Purchaser to the Transferor (with a copy to the Deal Agent) of a written request
therefor, the Transferor shall indemnify such Purchaser such additional amount
or amounts as will compensate such for such reduction.
(d) Taxes on Payments
(i) All payments made under this Supplement shall be made free
and clear of, and without reduction for or on account of, any present
or future taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding, in the case of the
Deal Agent and each Purchaser, income and franchise taxes imposed on
the Deal Agent or such Purchaser (other than such income and franchise
taxes imposed by a jurisdiction other than the United States or a
subdivision thereof solely by reason of the location of the Equipment
in such jurisdiction) (such non-excluded taxes being called "Taxes").
If any Taxes are required to be withheld from any amounts payable to
the Deal Agent or any Purchaser hereunder, the amounts so payable to
the Deal Agent or such Purchaser shall be increased to the extent
necessary to yield to the Deal Agent or such Purchaser (after payment
of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Supplement. Whenever any
Taxes are payable by the Transferor, as promptly as possible
thereafter, the Transferor shall send to the Deal Agent for its own
account or for the account of such Purchaser, as the case may be, a
certified copy of an original official receipt showing payment thereof.
If the Transferor fails to remit to the Deal Agent the required
receipts or other required documentary evidence, the Transferor shall
indemnify the Deal Agent and the Purchasers for any incremental taxes,
interest or penalties that may become payable by the Deal Agent or any
Purchaser as a result of any such failure.
(ii) Each Purchaser agrees that prior to the Closing Date (or
if such Purchaser is not an Initial Purchaser, prior to or at the time
such Purchaser becomes a "Purchaser" hereunder) it will deliver to the
Transferor and the Deal Agent (A) either (1) a statement that it is
incorporated under the laws of the United States of America or a state
thereof or, (2) if its not so incorporated, two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224 or
successor applicable form, as the case may be, certifying in each case
that such Purchaser is entitled to receive payments under this
Supplement in respect of its interest in the Series 1997-1 Notes
purchased hereunder, without deduction or withholding of any United
States federal income taxes and (B) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form, as the case may be, to
establish an exemption from United States backup withholding tax. Each
such Purchaser which delivers to the Transferor and the Deal Agent any
such Form 1001 or 4224 and Form W-8 or W-9 further undertakes to
deliver to the Transferor and the Deal Agent two further copies of Form
1001 or 4224 and Form W-8 or W-9, or successor applicable forms, or
other manner of certification, as the case may be, on or before the
date that any such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Transferor and the Deal Agent and
such extensions or renewals thereof as may reasonably be requested by
the Transferor, certifying in the case of a Form 1001 or 4224 that such
Purchaser is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes,
unless in any such case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Purchaser from duly
completing and delivering any such form with respect to it and such
Purchaser advises the Transferor that it is not capable of receiving
payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(iii) The agreements in this Section 16(d) shall survive the
termination of this Supplement and the payment of all amounts payable
hereunder.
(iv) No increased amount on account of Taxes shall be payable
pursuant to this Section 16(d) to any Purchaser to the extent such
Taxes would not have been payable if such Purchaser had furnished a
form (properly and accurately completed in all material respects) which
it was otherwise required to furnish in accordance with clause (ii) of
this Section 16(d).
(v) Each Purchaser shall furnish the Deal Agent, and the Deal
Agent shall furnish the Transferor (to the extent received from the
Purchasers), with information necessary to enable the Transferor to
comply with United States federal income tax information reporting
requirements regarding payments of interest received by Purchasers
under this Supplement.
(e) Notwithstanding anything to the contrary set forth in this Section
16, the payment to the Purchasers for any amounts payable under this Section 16,
including Increased Costs, shall be limited to amounts available pursuant to
Section 4.4A and the Purchasers shall have no other recourse to the assets of
the Transferor, the Servicer, the Trust, the Trustee or the Collateral Trustee.
Section 17. Conditions Precedent to Effectiveness of Supplement.
This Supplement will become effective on the date (the "Effective
Date") on which the following conditions precedent have been satisfied:
(a) Documents. The Deal Agent shall have received an original executed
copy for each Purchaser, each executed and delivered in form and substance
satisfactory to the Deal Agent, of (i) the Agreement executed by a duly
authorized officer of each of the Transferor, the Servicer and the Trustee and
(ii) this Supplement executed by a duly authorized officer of each of the
Transferor, the Servicer, the Trustee and the Purchasers. Each of the Agreement,
the Asset Purchase Agreement, the Note Purchase Agreement and this Supplement
(collectively, the "Program Agreements") shall be in full force and effect.
(b) Corporate Proceedings of the Transferor and Servicer. The Deal
Agent shall have received, with a counterpart for each Purchaser, a copy of the
resolutions in form and substance reasonably satisfactory to the Deal Agent, of
the Board of Directors of each of the Transferor and of the Servicer authorizing
the execution, delivery and performance of each of the Program Agreements,
certified by the Secretary or an Assistant Secretary of the Transferor or the
Servicer, as the case may be, as of the date hereof, which certificate shall
state that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate. All corporate
proceedings and other legal matters incident to the authorization, form and
validity of this Agreement, the Series 1997-1 Notes and the other Program
Agreements and all other legal matters relating to such agreements and the
transactions contemplated hereby and thereby shall be reasonably satisfactory in
all material respects to counsel for the Deal Agent.
(c) Corporate Documents. The Deal Agent shall have received, with a
counterpart for each Purchaser, true and complete copies of the certificate of
incorporation and by-laws of the Transferor and of the Servicer, certified as of
the date hereof as true, complete and correct copies thereof by the Secretary or
an Assistant Secretary of the Transferor or the Servicer, as the case may be.
(d) Good Standing Certificates. The Deal Agent shall have received,
with a counterpart for each Purchaser, copies of certificates dated as of a
recent date from the Secretary of State or other appropriate authority of such
jurisdiction, evidencing the good standing of the Transferor and the Servicer in
each State where the ownership, lease or operation of property or the conduct of
business requires it to qualify as a foreign corporation, except where the
failure to so qualify would not have a material adverse effect on the business,
operations, properties, condition (financial or otherwise) or prospects of the
Transferor or the Servicer, as the case may be.
(e) Consents, Licenses, Approvals, Etc. The Deal Agent shall have
received, with a counterpart for each Purchaser, certificates dated the date
hereof of the President, Vice Chairman, Chief Financial Officer or any Vice
President of the Transferor and of the Servicer either (i) attaching copies of
all material consents, licenses and approvals required in connection with the
execution, delivery and performance by the Transferor or the Servicer, as the
case may be, of this Supplement and the validity and enforceability against the
Transferor and the Servicer of this Supplement and the Agreement, and such
consents, licenses and approvals shall be in full force and effect or (ii)
stating that no such consents licenses or approvals are so required.
(f) Filings, Registrations and Recordings. Any documents (including,
without limitation, financing statements) required to be filed in order (i) to
perfect the sale of the Original Leases and the related Equipment by each
Originator to the Transferor pursuant to the Asset Purchase Agreement and (ii)
to create, in favor of the Trustee on behalf of the Trust, a perfected first
priority interest in the Trust Assets under the Agreement with respect to which
an interest may be perfected by a filing under the UCC and which shall, in each
case, have been properly filed in each office in each jurisdiction listed in the
Agreement or the Asset Purchase Agreement, as the case may be, and such filings
are the only ones required in order to perfect the sale of the Original Leases
and the related Equipment to the Transferor under the Asset Purchase Agreement
and the transfer of such assets to the Trust, under the Agreement, as the case
may be, in the jurisdictions listed therein. The Deal Agent shall have received
evidence reasonably satisfactory to it of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto.
(g) Lien Searches. The Deal Agent shall have received the results of a
recent search by a Person satisfactory to the Deal Agent, of UCC and other
filings with respect to the Transferor, each Originator and such other parties
as it deems necessary.
(h) Legal Opinions. The Deal Agent shall have received, with a
counterpart for each Purchaser, (i) a legal opinion of internal counsel to the
Transferor and the Servicer, dated the date hereof, addressing other customary
matters in form and substance satisfactory to the Deal Agent; and (ii) a legal
opinion of , counsel to the Trustee, dated the date hereof in form and substance
satisfactory to the Deal Agent. Each such legal opinion shall be addressed the
Deal Agent, as agent for the Purchasers under the Note Purchase Agreement; and
the opinion referred to in subclause (i) above shall also be addressed to the
Trustee, in its capacity as trustee hereunder and under the Agreement.
(i) Certificates. The Deal Agent shall have received certificates of
each of the Transferor and the Servicer, dated the Closing Date, of any two of
the Chairman of the Board, the President, any Vice President, the chief
financial officer and the Treasurer of the Transferor or the Servicer, as the
case may be, stating that (i) the representations and warranties of the
Transferor or the Servicer, as the case may be, contained in the Program
Agreements, are true and correct on and as of the Closing Date, (ii) the
Transferor or the Servicer, as the case may be, has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
and under such agreements at or prior to the Closing Date, (iii) the absence of
any Pay Out Event on the Closing Date or the occurrence of any event that, with
the passage of time, could be a Pay Out Event and (iv) since June 30, 1997,
there has been no material adverse change in the financial position of the
Transferor or the Servicer, as the case may be, or the Trust or any change, or
any development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations. business or prospects of the
Transferor or the Servicer, as the case may be, or the Trust except as described
therein. Any officer making such certification may rely upon his or her
knowledge as to the proceedings pending or threatened.
(j) Series Accounts. The Deal Agent shall have received evidence
satisfactory to it that the Series Accounts shall have been established.
(k) Fees and Expenses. All fees and expenses to be paid on the Closing
Date shall have been received by the appropriate Persons, provided that the
Servicer shall have received an invoice setting forth such fees and expenses in
reasonable detail.
(n) Cancellation of Series 1995-1 Notes. All amounts due with respect
to the Series 1995-1 Notes shall have been paid in full and such Series 1995-1
Notes, Classes A and B, shall have been canceled by the Trustee and such
cancellation has been confirmed in writing to the Deal Agent.
Section 18 Representation and Warranties of the
Transferor and the Servicer.
The Transferor and Servicer severally represent and warrant as follows:
(i) Each of the representations and warranties included in the
Program Agreements shall be true and correct in all material respects
as of the Closing Date.
(ii) Each of Transferor and the Servicer has the power and
authority to execute and deliver this Supplement, the Agreement and the
Series 1997-1 Notes and to perform their respective obligations
hereunder and thereunder, and all corporate action required to be taken
for the due and proper authorization, execution and delivery of this
Supplement, the Agreement and the Series 1997-1 Notes and the
consummation of the transactions contemplated by this Supplement, the
Agreement and the Series 1997-1 Notes have been duly and validly taken.
(iii) The Supplement constitutes the legal, valid and binding
obligations of the Servicer and the Transferor, enforceable in
accordance with its terms against each of them, except as such
enforceability may be limited by Debtor Relief Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(iv) When authenticated by the Trustee in accordance with the
Agreement and delivered and paid for pursuant to this Supplement, the
Series 1997-1 Notes will be duly issued and entitled to the benefits
afforded by the Agreement and the Supplement.
(v) The execution, delivery and performance of this Supplement and the
consummation by the Transferor and the Servicer of the transactions
contemplated hereby shall not conflict with, result in any breach of
any of the terms and provisions of or constitute (with our without
notice or lapse of time) a default under, the certificate of
incorporation or by-laws of the Transferor or the Servicer, or any
indenture, agreement or other instrument to which the Transferor or the
Servicer is a party or by which it is bound, or violate and law or, to
either the Transferor's or Servicer's knowledge, any order, rule or
regulation applicable to such party of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over such party or any of its
properties; and no permit, consent, approval of, or declaration to or
filing with, any governmental authority is required in connection with
the execution, delivery and performance of this Supplement or the
consummation of the transactions contemplated hereby.
(vi) Neither the Transferor nor the Servicer (i) is in
violation of its certificate of incorporation or by-laws, (ii) is in
default, in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any indenture, agreement, mortgage, deed of trust or other
instrument to which the Transferor or the Servicer is a party or by
which the Transferor or the Servicer is bound or to which any of the
Transferor's or the Servicer's property or assets is subject or (iii)
is in violation in any respect of any law, order, rule or regulation
applicable to the Transferor or the Servicer or any of the Transferor's
or the servicer's property of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its property,
except any violation or default that would not have a material adverse
effect on the condition (financial or otherwise), results of
operations, business or prospects of the Transferor or the Servicer.
(vii) Neither the Trust nor the Transferor is an "investment
company" or under the "control" of an "investment company" within the
meaning thereof as defined in the Investment Company Act of 1940, as
amended.
(vii) Any taxes, fees and other governmental charges imposed
upon the Transferor or the Servicer or on the assets of the Trust in
connection with the execution, delivery and issuance by the Transferor
or the Servicer of this Supplement, the Agreement, the Asset Purchase
Agreement and the Series 1997-1 Notes and which are due at or prior to
the Closing Date have been or will have been paid by the Transferor at
or prior to the Closing Date.
(ix) Each of the Transferor and the Servicer possesses all
material licenses, certificates, authorizations and permits issued by,
and has made all declarations and filings with, the appropriate state,
federal or foreign regulatory agencies or bodies which are necessary or
desirable for the ownership of its respective properties or the conduct
of its respective businesses, except where the failure to possess or
make the same would not have, singularly or in the aggregate, a
material adverse effect on its condition (financial or otherwise),
results of operations, business or prospects.
Section 19. Covenants of the Transferor.
The Transferor hereby agrees that:
(i) it shall observe each and every of its respective
covenants (both affirmative and negative) contained in the
Agreement and this Supplement in all material respects;
(ii) it shall not amend, supplement or otherwise
modify or terminate the Agreement, unless in strict compliance
with the terms thereof; and
(iii) it shall not change in any material respect its
current policies, practices or guidelines relating to the
extension of credit to Lessees or the terms or provisions of
the Leases so as to adversely effect the general quality of
the Included Leases without the prior written consent of the
Required Purchasers.
Section 20. Covenants of the Servicer.
The Servicer hereby agrees that:
(i) it shall observe each and every of its covenants (both
affirmative and negative) contained in the Agreement and this
Supplement in all material respects;
(ii) it shall not amend, supplement or otherwise modify or
terminate the Agreement or this Supplement, unless in strict compliance
with the terms thereof;
(iii) it shall give prior notice to the Deal Agent of the
delegation of any of its servicing, collection, enforcement or
administrative duties with respect to the Accounts and the Receivables;
(iv) it shall not change in any material respect its current
policies, practices or guidelines relating to the extension of credit
to Lessees or the terms or provisions of the Leases so as to adversely
effect the general quality of the Included Leases without the prior
written consent of the Required Purchasers;
(v) it shall provide to the Deal Agent, simultaneously with
delivery to the Trustee, all reports, certificates, statements and
other documents required to be delivered to the Trustee pursuant to the
Agreement;
(vi) it shall provide at any time and from time to time to the
Deal Agent access to documentation regarding the Included Leases,
including the Lease Files, such access being afforded without charge
but only (a) upon reasonable request, (b) during normal business hours,
(c) subject to the Servicer's normal security and confidentiality
procedures and (iv) at offices designated by the Servicer;
(vii) it shall provide notice to the Deal Agent of the
appointment of a Successor Servicer pursuant to Section 10.2 of the
Agreement or Section 31 of this Supplement; and
(viii) to the extent, if any, that the rating provided with
respect to the Series 1997-1 Notes by a Rating Agency is conditioned
upon the furnishing of documents or the taking of actions by the
Servicer, to furnish such documents and take any such other actions.
Section 21. Covenants of the Trustee.
The Trustee hereby agrees that it shall provide at any time and from
time to time to the Deal Agent access to documentation regarding the Included
Leases, such access being afforded without charge but only (a) upon reasonable
request, (b) during normal business hours, (c) subject to the Servicer's normal
security and confidentiality procedures and (d) at offices designated by the
Custodian or the Trustee.
Section 22. Obligations Unaffected.
The obligations of the Transferor and the Servicer to the Deal Agent,
the Trustee and the Purchasers under this Supplement shall not be affected by
reason of any invalidity, illegality or irregularity of any of the Included
Leases or the related Equipment or any sale of any of the Included Leases or the
related Equipment.
Section 23. [Reserved].
Section 24. Payments.
Each payment to be made hereunder shall be made on the required payment
date in lawful money of the United States and in immediately available funds,
for the account of the Purchasers at the office of the Deal Agent set forth from
time to time in the Note Purchase Agreement.
Section 25. Costs and Expenses.
The Transferor agrees to pay all out-of-pocket costs and expenses of
the Trustee, the Deal Agent, First Union and VFCC (including, without
limitation, in all of the following cases, reasonable fees and disbursements of
counsel to such parties) in connection with (a) the preparation, execution,
delivery, administration, waiver, amendment and modification of this Supplement,
the Agreement and the Series 1997-1 Notes, and (b) the enforcement by the
Purchasers of the obligations and liabilities of the Transferor and the Servicer
under the Agreement, this Supplement or any related document.
Section 26. Amendments.
(a) Notwithstanding the provisions of Section 13.1 of the Agreement,
this Supplement may be modified, amended, waived, supplemented or terminated in
writing by the Transferor, the Servicer, the Trustee, the Collateral Trustee and
the Required Purchasers; provided that no such amendment or waiver shall, unless
signed by all Purchasers, (i) reduce in any manner the amount of or delay the
timing of distributions for the account of any Purchaser under any provision of
this Supplement, (ii) subject any Purchaser to any additional obligation
(including, without limitation, any change in the determination of any amount
payable by any Purchaser), (iii) change the Aggregate Commitment Amount or the
number of Purchasers which shall be required for any action under this
subsection or any other provision of this Supplement or (iv) change the
definition of or the manner of calculating the Required Purchasers, Principal
Amount, Aggregate Principal Amount, Average Principal Amount or the Series
Percentage.
(b) This Supplement may be amended from time to time by the Servicer,
the Transferor, the Trustee and the Collateral Trustee, without the consent of
the Required Purchasers, (i) to cure any ambiguity, to revise any Exhibits or
Schedules, to correct or supplement any provisions herein or thereon or (ii) to
add any other provisions with respect to matters or questions raised under this
Supplement which shall not be inconsistent with the provisions of this
Supplement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any of the Noteholders.
(c) Any amendment hereof can be effected without the Deal Agent being a
party thereto.
(d) With respect to any amendments to, or consents or waivers sought
under, the Pooling and Servicing Agreement and Indenture of Trust, unless the
Required Purchasers shall approve such amendment, consent, or waiver, as the
case may be, then 100% of the Principal Amount of Series 1997-1 will be deemed
to have voted in the negative with respect to such amendment, consent or waiver,
as the case may be. With respect to any such amendments, consents or waivers, if
the Required Purchasers shall approve such amendment, consent, or waiver, as the
case may be, then 100% of the Principal Amount of Series 1997-1 will be deemed
to have voted in the affirmative with respect to such amendment, consent or
waiver, as the case may be.
(e) Notwithstanding anything in this Section 26 to the contrary, no
amendment may be made to this Supplement without satisfaction of the Rating
Agency Condition.
Section 27. Successors and Assigns.
(a) This Supplement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns, except that the
Transferor may not assign or transfer any of its rights under this Supplement
without the prior written consent of the Purchasers.
(b) The Transferor and the Servicer each authorizes each Purchaser to
disclose to any Participant or Acquiring Purchaser (each, a "Transferee") and
any prospective Transferee any and all financial information in such Purchaser's
possession concerning the Transferor or the Servicer which has been delivered to
such Purchaser by the Transferor or the Servicer pursuant to this Supplement or
which has been delivered to such Purchaser by or on behalf of the Transferor in
connection with such Purchaser's credit evaluation of the Transferor, the
Servicer, the Trust and the Trust Assets prior to becoming a party to this
Supplement; provided, however, if any such information is subject to a
confidentiality agreement between such Purchaser and the Transferor or the
Servicer, the Transferee or prospective Transferee shall have agreed to be bound
by the terms and conditions of such confidentiality agreement.
(c) If, pursuant to this subsection, any interest in this Supplement or
any Series 1997-1 Note is transferred to any Transferee which is organized under
the laws of any jurisdiction other than the United States or any State thereof,
the transferor Purchaser shall cause such Transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Purchaser
(for the benefit of the transferor Purchaser, the Deal Agent, the Transferor and
the Servicer) that under applicable law and treaties no taxes will be required
to be withheld by the Deal Agent, the Transferor, the Servicer or the transferor
Purchaser with respect to any payments to be made to such Transferee in respect
of such Series 1997-1 Note, (ii) to furnish to the transferor Purchaser (and, in
the case of any Acquiring Purchaser not registered in the Register, the Deal
Agent and the Transferor) either U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 (wherein such Transferee claims entitlement
to complete exemption from U.S. federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the transferor Purchaser, the
Deal Agent, the Transferor and the Servicer) to provide the transferor Purchaser
(and, in the case of any Acquiring Purchaser not registered in the Register, the
Deal Agent, the Transferor and the servicer) a new Form 4224 or Form 1001 upon
the expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such Transferee, and to comply from
time to time with all applicable U.S. laws and regulations with regard to such
withholding tax exemption.
Section 28. [Reserved].
Section 29. Repurchase by Servicer.
Upon any repurchase of the Series 1997-1 Notes by the Servicer pursuant
to Section 10.1 of the Agreement, the Servicer shall pay, in addition to the
amounts set forth in Section 10.1 of the Agreement and any accrued and unpaid
Increased Costs and all other accrued and repaid costs, expenses or fees owing
to any Person hereunder, under any Series 1997-1 Note or under the Note Purchase
Agreement.
Section 30. Repurchase by Transferor.
Upon any repurchase of the Series 1997-1 Notes by the Transferor
pursuant to Section 2.6 or Section 12.2(a), as the case may be, of the
Agreement, the Transferor shall pay, in addition to the amounts set forth in
Section 2.6 or Section 12.2(a), as the case may be, of the Agreement and any
accrued and unpaid costs under Section 16 hereof and all other accrued and
repaid costs, expenses or fees owing to any Person hereunder, under any Series
1997-1 Note or under the Note Purchase Agreement.
Section 31. Permitted Successor Servicer.
With respect to Series 1997-1, any financial institution which does not
qualify as a permitted Successor Servicer under Section 10.2 of the Agreement
shall qualify as a permitted Successor Servicer if approved by the Required
Purchasers.
Section 32. Option to Repurchase.
Subject to the conditions set forth in Section 12.2 of the Agreement,
the Transferor may, but shall not be obligated to, on any Distribution Date on
or after the Distribution Date on which the Principal Amount is reduced to an
amount less than or equal to 10% of the highest Principal Amount outstanding
during the Revolving Period repurchase the Series 1997-1 Notes; provided that
such option shall not be exercisable upon the happening of an Insolvency Event
with respect to the Servicer or the Transferor. The deposit required in
connection with any such repurchase shall be equal to (a) the Principal Amount,
plus (b) the accrued and unpaid interest on the Series 1997-1 Notes through and
including the day preceding the day on which such repurchase occurs which will
be transferred to the Distribution Account and plus (c) all other accrued and
repaid costs, expenses or fees owing to any Person hereunder, under any Series
1997-1 Note or under the Note Purchase Agreement.
Section 33. Final Distribution.
Written notice of any termination, specifying the Distribution Date
upon which the Series 1997-1 Noteholders may surrender their Series 1997-1 Notes
for payment of the final distribution and cancellation shall be given by the
Trustee, at the written request of the Servicer, not later than the 60th day
immediately preceding the Distribution Date on which final payment of the Series
1997-1 Notes shall be made.
Section 34. [Reserved].
Section 35. Ratification of Agreement.
As supplemented by this Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement as so supplemented by this Supplement
shall be read, taken and construed as one and the same instrument.
Section 36. Counterparts.
This Supplement may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all of such
counterparts shall together constitute but one and the same instrument.
Section 37. GOVERNING LAW.
THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, PROVIDED, HOWEVER,
THAT THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE TRUSTEE AND THE COLLATERAL
TRUSTEE SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Section 38. The Trustee.
The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Supplement or for or in respect
of the recitals contained herein, all of which recitals are made solely by the
Transferor.
Section 39. Instructions in Writing.
All instructions given by the Servicer to the Trustee pursuant to this
Supplement shall be in writing, and may be included in a certificate delivered
pursuant to Section 3.4(b) of the Agreement.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties have caused this Series 1997-1
Supplement to be duly executed by their respective officers as of the day and
year first above written.
AFG CREDIT CORPORATION,
as Transferor
By:
Title:
AMERICAN FINANCE GROUP, INC.,
as Servicer
By:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:
Title:
BANKERS TRUST COMPANY,
as Collateral Trustee
By:
Title:
FIRST UNION CAPITAL MARKETS CORP.,
as Deal Agent
By:
Title:
EXHIBIT A
to
SERIES 1997-1 SUPPLEMENTAL INDENTURE
FORM OF SERIES 1997-1 NOTE
$ [New York, New York]
October ____, 1997
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED . NEITHER THIS NOTE NOR ANY PORTION HEREOF MAY BE OFFERED OR
SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS.
THIS NOTE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE
PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE INDENTURE
REFERRED TO HEREIN.
AFG MASTER TRUST
SERIES 1997-1 NOTE
FOR VALUE RECEIVED, the undersigned, the AFG Master Trust (the
"Trust"), hereby promises to pay on the Scheduled Series 1997-1 Termination
Date, to the order of at the office of [ ] located at [ ], in lawful money of
the United States of America and in immediately available funds, the aggregate
unpaid principal amount of this Note.
The undersigned further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time at the applicable
rate per annum as specified in the Indenture (as defined below) until any such
amount shall become due and payable (whether at the stated maturity, by
acceleration or otherwise), and thereafter on such overdue amount at the rate
per annum set forth in the Indenture until paid in full.
This evidences that (the "Noteholder") is the holder of this Note
secured by the assets of the Trust, which include a portfolio of leases (the
"Leases"), the related Equipment, all monies due or to become due with respect
thereto, and the other assets and interest constituting the Trust Assets as
defined in the AFG Master Trust Pooling and Servicing Agreement and Indenture of
Trust, dated as of July 1, 1995, as supplemented by the Series 1997-1
Supplemental Indenture thereto (collectively, the "Indenture"), by and among,
American Finance Group, Inc. ("AFG"), AFG Credit Corporation, and Bankers Trust
Company, as trustee and as collateral trustee.
THIS NOTE IS AN OBLIGATION OF THE TRUST AND DOES NOT REPRESENT AN
OBLIGATION OF, OR AN INTEREST IN, AFG, THE TRUSTEE OR THE COLLATERAL TRUSTEE.
NONE OF THIS NOTE, THE LEASES, THE RELATED EQUIPMENT OR THE OTHER TRUST ASSETS
IS INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. THIS NOTE
IS LIMITED IN RIGHT OF PAYMENT SOLELY TO CERTAIN COLLECTIONS RESPECTING THE
LEASES AND TO THE OTHER TRUST ASSETS, ALL AS MORE SPECIFICALLY SET FORTH IN THE
INDENTURE WITHOUT RECOURSE TO ANY OTHER ASSETS OR TO ANY OTHER PARTY, INCLUDING,
WITHOUT LIMITATION, AFG CREDIT CORPORATION.
AFG Credit Corporation has structured the Indenture and the Series
1997-1 Notes with the intention that the Series 1997-1 Notes will qualify under
applicable tax law as indebtedness, and each Series 1997-1 Noteholder by
acceptance of its Series 1997-1 Note agrees to treat and to take no action
inconsistent with the treatment of the Series 1997-1 Notes for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness.
To the extent not defined herein, capitalized terms used herein have
the meanings assigned in the Indenture, which more specifically sets forth the
rights of the Noteholders. This Note is issued under and is subject to the
terms, provisions and conditions of the Indenture, and the terms set forth
herein are qualified thereby. The Noteholder by virtue of its acceptance hereof
assents to and is bound by the Indenture, as amended from time to time.
This Note is one of a series of Notes entitled "AFG Master Trust Series
1997-1 Notes" (the "Series 1997-1 Notes") which represents the right to receive
interest payments and a return of principal as described herein and in the
Indenture, including the right to receive the Collections and other amounts at
the times and in the amounts specified in the Indenture to be deposited in the
Series Accounts maintained for the benefit of such Notes or paid to the Series
1997-1 Noteholders.
Series 1997-1 Note Interest will be distributed monthly on the
fifteenth Business Day of each calendar month, or if such fifteenth day is not a
Business Day, the next succeeding Business Day (a "Distribution Date"). In the
case of the first interest payment, interest will accrue from the date of
issuance and in the case of subsequent interest payments, interest will accrue
from the preceding Distribution Date in each case to but excluding the date of
payment thereof (an "Accrual Period"). On each Distribution Date, the Paying
Agent shall pay to the Noteholder of record its pro rata share of the amount
deposited into the Distribution Account pursuant to the Indenture on the related
Transfer Date. On each Distribution Date occurring during the Amortization
Period, the Paying Agent shall pay to the Noteholder its pro rata share of the
Percentage of the Target Repayment Amount for Series 1997-1 for such
Distribution Date.
The Deal Agent is authorized to endorse on Schedule I attached to this
Note all increases and decreases in the principal amount of this Note, and all
payments made on account of the principal amount thereof, which endorsements
shall, in the absence of manifest error, be conclusive as to the outstanding
balance hereunder; provided, however, that the failure to make any such notation
shall not limit or otherwise affect the obligations of the undersigned under the
Indenture or this Note.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Transferor, the Trustee or the Collateral Trustee in
connection herewith, against: (i) the Trustee or the Collateral Trustee in its
individual capacity; (ii) any owner of a beneficial interest in the Transferor;
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Trustee or the Collateral Trustee in their individual capacities,
any holder of a beneficial interest in the Transferor, the Trustee or the
Collateral Trustee or of any successor or assign of the Trustee or the
Collateral Trustee in their individual capacities (or any of their successors or
assigns), except as any such Person may have expressly agreed (it being
understood that the Trustee and the Collateral Trustee have no such obligations
in their individual capacities) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Subject to the limitations set forth herein, the transfer of this Note
shall be registered in the Register upon surrender of this Note for registration
of transfer at any office or agency maintained by the Transfer Agent and
Registrar accompanied by a written instrument of transfer in a form satisfactory
to the Trustee and the Transfer Agent and Registrar duly executed by the
Noteholder or such Noteholder's attorney duly authorized in writing, and
thereupon one or more new Notes of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees.
The Trustee, the Paying Agent and the Transfer Agent and Registrar, and
any agent of any of them, may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, and neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by notice to the contrary except in certain circumstances
described in the Indenture.
The rights evidenced by this Note created by the Indenture and the
Trust shall terminate on the earlier of (i) the day, if any, designated by AFG
Credit Corporation after the Distribution Date following the date on which funds
shall have been deposited in the Distribution Account sufficient to pay the
aggregate Principal Amount plus Series 1997-1 Note Interest accrued through such
Distribution Date in full and (ii) the day on which final payment is made under
the Notes, but in no event later than the Scheduled Series 1997-1 Termination
Date.
Upon the occurrence of any one or more of the Pay Out Events specified
in the Indenture all amounts then remaining unpaid on this Note shall become, or
may be declared to be, immediately due and payable all as provided therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS, PROVIDED, HOWEVER, THAT THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE TRUSTEE SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Unless the note of authentication hereon has been executed by or on
behalf of the Trustee, by manual or facsimile signature of a duly authorized
signatory, this Note shall not be entitled to any benefit under the Indenture,
or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Note to be duly executed.
AFG MASTER TRUST
By: BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Trustee on behalf of the Trust
By:
Title:
Trustee's Certificate of Authentication
This is one of the Series 1997-1 Notes referred to in the within
mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
Date of Increase Principal Amount Principal Amount
Decrease, or of Increase of Decrease
Prepayment
Principal Amount Outstanding Principal
of Repayment Amount
