DB Draft 8/5/99
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CHARTER FUNDING CORPORATION V,
TRANSFEROR
AND
CHARTER EQUIPMENT LEASE 1999-1 LLC,
ISSUER
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TRANSFEROR CONTRIBUTION AND SALE AGREEMENT
Dated as of August 1, 1999
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TABLE OF CONTENTS
Page
RECITALS .........................................................................................................1
ARTICLE I DEFINITIONS ............................................................................................2
ARTICLE II SALE AND CAPITAL CONTRIBUTION .........................................................................2
Section 2.01 Sale and Capital Contribution of Leases and Equipment, Lease Receivables.......................2
Section 2.02 Treatment as a Sale and Contribution; Grant of Security Interest...............................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR.............................................4
Section 3.01 Corporate Organization and Authority...........................................................4
Section 3.02 Business and Property..........................................................................4
Section 3.03 Financial Statements...........................................................................4
Section 3.04 Equipment and Leases...........................................................................4
Section 3.05 Payments.......................................................................................8
Section 3.06 Full Disclosure................................................................................8
Section 3.07 Pending Litigation.............................................................................8
Section 3.08 Title to Properties............................................................................8
Section 3.09 Transactions Legal and Authorized..............................................................8
Section 3.10 Governmental Consent...........................................................................9
Section 3.11 Taxes..........................................................................................9
Section 3.12 Compliance with Law............................................................................9
Section 3.13 Ability to Perform............................................................................10
Section 3.14 Ordinary Course; No Insolvency................................................................10
Section 3.15 Assets and Liabilities........................................................................10
Section 3.16 Fair Consideration............................................................................10
Section 3.17 Ability to Pay Debts..........................................................................11
Section 3.18 Bulk Transfer Provisions......................................................................11
Section 3.19 Transfer Taxes................................................................................11
Section 3.20 Principal Executive Office....................................................................11
Section 3.21 Sale and Contribution Treatment...............................................................11
Section 3.22 Nonconsolidation..............................................................................11
Section 3.23 Lease Repurchase..............................................................................12
ARTICLE IV THE TRANSFEROR .......................................................................................12
Section 4.01 Merger or Consolidation of the Transferor.....................................................12
Section 4.02 Control of Issuer.............................................................................13
Section 4.03 Books and Records.............................................................................13
Section 4.04 Communications................................................................................13
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ARTICLE V SUBSTITUTION AND ADDITION OF LEASES...................................................................13
Section 5.01 Substitution and Addition.....................................................................13
Section 5.02 Procedure.....................................................................................14
Section 5.03 Transferor's Subsequent Obligations...........................................................15
ARTICLE VI ASSIGNMENT ...........................................................................................15
Section 6.01 Assignment to Trustee.........................................................................15
Section 6.02 Assignment by Transferor......................................................................16
ARTICLE VII NATURE OF OBLIGATIONS AND SECURITY THEREFOR .........................................................16
Section 7.01 Obligations Absolute..........................................................................16
Section 7.02 Further Assurances; Financing Statements......................................................16
ARTICLE VIII MISCELLANEOUS ......................................................................................17
Section 8.01 Continuing Obligations........................................................................17
Section 8.02 GOVERNING LAW.................................................................................17
Section 8.03 Successors and Assigns........................................................................17
Section 8.04 Modification..................................................................................17
Section 8.05 No Petition or Proceedings....................................................................17
Section 8.06 Notices.......................................................................................18
Section 8.07 Counterparts..................................................................................18
Schedule 1 - Schedule of Leases
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TRANSFEROR CONTRIBUTION AND SALE AGREEMENT
This TRANSFEROR CONTRIBUTION AND SALE AGREEMENT is made and dated as of
August 1, 1999, by and between CHARTER EQUIPMENT LEASE 1999-1 LLC, a Delaware
limited liability company, as issuer hereunder (the "Issuer") and CHARTER
FUNDING CORPORATION V, a New York corporation, as transferor of the Leases (the
"Transferor").
R E C I T A L S
WHEREAS, pursuant to the Seller Contribution and Sale Agreement, Charter
Financial, Inc. (the "Seller") is selling and making certain capital
contributions to Charter Funding Corporation V (the "Transferor") with respect
to the Leases, the related Equipment and other assets described therein (the
"Transferred Assets").
WHEREAS, pursuant to this Transferor Contribution and Sale Agreement, the
Transferor is selling and making certain capital contribution to Charter
Equipment Lease 1999-1 LLC (the "Issuer"), with respect to the Transferred
Assets.
WHEREAS, pursuant to the Indenture, the Issuer is pledging the Transferred
Assets thereunder for the benefit of the Holders of the Notes (as detailed
below) and is issuing one class of [ ]% Class A-1 Lease-Backed Notes, [ ] in the
aggregate principal amount of $[ ] (the "Class A-1 Notes"), one class of [ ]%
Class A-2 Lease-Backed Notes, [ ] in the aggregate principal amount of $[ ] (the
"Class A-2 Notes"), one class of [ ]% Class A-3 Lease-Backed Notes, [ ] in the
aggregate principal amount of $[ ] (the "Class A-3 Notes"), one class of [ ]%
Class A-4 Lease-Backed Notes, [ ] in the aggregate principal amount of $[ ] (the
"Class A-4 Notes"; together with the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes, the "Class A Notes"), one class of [ ]% Class B
Leased-Backed Notes, [ ] (the "Class B Notes"), in the aggregate principal
amount of $[ ], one class of [ ]% Class C Lease-Backed Notes, [ ], in the
aggregate principal amount of $[ ] (the "Class C Notes"), one class of [ ]%
Class D Leased-Backed Notes, [ ] in the aggregate principal amount of $[ ] (the
"Class D Notes"); together with the Class A Notes, the Class B Notes, the Class
C Notes, and the Class D Notes, are referred to collectively as the "Notes").
WHEREAS, pursuant to the Indenture, the Issuer is granting, inter alia, to
the Trustee, for the benefit of the Holders from time to time of the Notes, a
security interest in all right, title and interest of the Issuer in, to and
under the Leases, the interests in the Equipment and the other Transferred
Assets and the Servicing Agreement.
NOW, THEREFORE, the parties hereto agree, in consideration of the mutual
agreements set forth herein and other valuable consideration provided, as
follows:
ARTICLE I DEFINITIONS
As used in this Transferor Contribution and Sale Agreement, the following
terms have the respective meanings set forth below or set forth in the Section
hereof or in any other agreement indicated:
Lease - at any time, each separate lease agreement and each lease schedule
or supplement (and each master lease agreement insofar as the same relates to
any such schedule or supplement) described in Schedule 1 hereto, as the same may
be amended or modified from time to time in accordance with the provisions
hereof and thereof and of the Servicing Agreement.
Predecessor Lease - as defined in Section 5.01 hereof.
Schedule of Leases - the schedule of Leases, annexed hereto as Schedule 1
as may be amended from time to time.
Servicing Agreement - the Servicing Agreement dated as of August 1, 1999
among the Issuer, LaSalle Bank National Association, as Trustee, and Charter
Financial, Inc. as the same may be amended or modified from time to time in
accordance with the provisions hereof and thereof.
Substitute Lease - as defined in Section 5.01 hereof.
Transfer Taxes - as defined in Section 3.19 hereof.
To the extent capitalized terms are used herein which are not otherwise
defined, such terms shall have meanings defined in the Servicing Agreement.
ARTICLE II SALE AND CAPITAL CONTRIBUTION
Section 2.01 Sale and Capital Contribution of Leases and Equipment, Lease
Receivables.
By their execution and delivery of this Transferor Contribution and Sale
Agreement, the Transferor hereby sells, contributes and assigns to the Issuer,
and the Issuer hereby acquires from the Transferor without recourse (except to
the extent of the Transferor's purchase obligations as set forth herein), all of
the Transferor's right, title and interest in and to each of the Leases and the
Lease Receivables (including the right to receive all payments due or to become
due thereunder since the Cut-Off Date, or the related Transfer Date with respect
to Additional Leases or Substitute Leases), as shown on the Schedule of Leases
from time to time. The Transferor and the Issuer each acknowledge and confirm
that contemporaneously with the sale and the contribution of the Leases as
hereinabove provided, the Transferor, as a holder of beneficial interests in the
Issuer, is selling, contributing and transferring to the Issuer, and in
connection with each transfer and assignment of Additional Leases and Substitute
Leases the Transferor will sell, contribute and transfer to the Issuer, without
recourse, all right, title and interest of the Transferor in and to each item of
Equipment subject to each Lease, Additional Lease and Substitute Lease. After
such sale, contribution and transfer by the Transferor to the Issuer, all right,
title and interest of the Transferor in and to each item of Equipment subject to
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each Lease shall be vested in the Issuer. In each instance, the transfer of the
Leases, the Lease Receivables and the Equipment shall be regarded as a sale,
however to the extent that the sale price for the Lease, the Lease Receivables
and the Equipment is less than the fair market value thereof, the difference
shall be deemed to be a capital contribution by the Transferor to the Issuer.
Section 2.02 Treatment as a Sale and Contribution; Grant of Security
Interest.
It is the intention of the parties hereto that each transfer of Leases,
Additional Leases, Substitute Leases, Lease Payments and all other amounts due
or becoming due with respect thereto and Equipment (or interests therein) being
made hereunder shall constitute a sale and a capital contribution, as described
in Section 2.01 hereof, and not a loan. The Transferor shall not take any action
inconsistent with the treatment of such transfers as sales and capital
contributions, as described in Section 2.01 hereof, or with the Issuer's
ownership of the Leases, the Lease Receivables and all other amounts due or
becoming due with respect thereto and the interests in the Equipment. The
Transferor shall indicate in its records that ownership of each of the Leases,
the Lease Receivables and the interests in the Equipment is held by the Issuer,
and each shall respond to any inquiries from third parties by indicating that
its ownership in the Leases, Additional Leases, Substitute Leases, the Lease
Receivables and all other amounts due or becoming due with respect thereto and
the interests in the Equipment is held by the Issuer. In the event, however,
that a court of competent jurisdiction were to hold that any transaction
evidenced hereby constitutes a loan and not a capital contribution, it is the
intention of the parties hereto that this Agreement shall constitute a security
agreement under applicable law and that the Issuer shall be deemed to have been
granted a first priority security interest in (a) the Leases and all Lease
Payments, Casualty Payments, Termination Payments, and other amounts now due or
becoming due with respect thereto since the Cut-Off Date (other than any
prepayments of rent required pursuant to the terms of any Lease at or before the
commencement of the Lease and any payments due before the Cut-Off Date) and all
Additional Leases and Substitute Leases and all Lease Payments, Casualty
Payments, Termination Payments and other amounts due or becoming due with
respect thereto since the effective date of their respective addition or
substitution (other than any prepayments of rent required by the terms of any
Lease at or before the commencement of the Lease and any payments due before the
effective date of such addition or substitution), (b) all rights of the Issuer
to or under any guarantees of or collateral (including all rights of the Issuer
in any security deposits) for the Lessee's obligations under any Lease, (c) all
interests of the Issuer in the Equipment at any time subject to any Lease
including any security interest of the Transferor in the Equipment and (d) all
proceeds of the conversion, whether voluntary or involuntary, of any of the
foregoing into cash or other property.
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR
The Transferor hereby represents and warrants to the accuracy and
correctness of the statements set forth in Section 3.01 through Section 3.22.
Section 3.01 Corporate Organization and Authority.
The Transferor:
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation,
(b) has all requisite power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its business as now
conducted (except where the failure to have such licenses and permits would not
have a material adverse effect on the business or condition (financial or
otherwise) of the Transferor or impair the enforceability of any Lease) and to
enter into and perform its obligations under this Transferor Contribution and
Sale Agreement, and the transactions contemplated hereby, including the
Transferor's support obligations hereunder, and
(c) has duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each jurisdiction where the character of
its properties or the nature of its activities makes such qualification
necessary (except where the failure to be so qualified or in good standing would
not have a material adverse effect on the Transferred Assets or the business or
condition (financial or otherwise) of the Transferor or impair the
enforceability of any Lease).
Section 3.02 Business and Property.
The Prospectus and the Private Placement Memoranda, accurately describe in
all material respects the general nature of the business of the Transferor.
Section 3.03 Financial Statements.
Except as disclosed in the Prospectus and the Private Placement Memoranda,
there has been no change in the business, condition or prospects (financial or
otherwise) of the Transferor except changes in the ordinary course of business,
none of which individually or in the aggregate has been materially adverse.
Neither the Transferor nor any of its subsidiaries has any material liabilities
or obligations not incurred in the ordinary course of business other than those
for which adequate reserves are reflected in such financial statements and
certain contingent obligations of the Transferor relating to other asset
securitization transactions involving the Transferor.
Section 3.04 Equipment and Leases.
(a) Prior to the date of each transfer of any Leases and Equipment in
accordance with Sections 2.01 and 2.02, respectively, the Transferor purchased
each item of Equipment from Charter Financial, Inc. pursuant to the Seller
Contribution and Sale Agreement.
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The Transferor has paid in full, to Charter Financial, Inc., as the case may be,
the purchase price and any related charges in connection with the acquisition of
the Equipment. The transfer to the Issuer of the Leases and all of the
Transferor's right, title and interest in each item of Equipment does not
violate the terms or provisions of any Lease or any other agreement to which the
Transferor is a party or by which it is bound.
(b) Upon completion of the transfer described in Article II hereof, the
Issuer will (i) be the legal owner of the Leases (including the right to receive
all payments due or to become due thereunder), (ii) have a valid security
interest in each item of Equipment subject to any Lease other than a Rent Stream
Obligation. At such time, the Leases (including the right to receive all
payments due or to become due thereunder) and the Transferor's interest in the
Equipment will be free and clear of all Liens other than Permitted Encumbrances.
(c) With respect to any Lease, other than an Additional Lease or a
Substitute Lease, as of the Cut-Off Date, or with respect to any Additional
Lease or any Substitute Lease, as of the related Transfer Date, the Transferor
represents and warrants that each Lease shall comply with the following:
(i) the Lease is a valid and binding obligation of the Lessee
enforceable against such Lessee in accordance with its terms (except as may
be limited by bankruptcy laws, other laws affecting creditor's rights in
similar transactions generally, and judicial powers of equity);
(ii) the Lease constitutes a non-cancellable, "hell or high water"
obligation of the Lessee and requires the Lessee to make all Lease Payments
thereon regardless of the condition of the Equipment to which the Lease
relates;
(iii) the Lease is non-cancellable by the Lessee and does not contain
early termination options (except for a Lease which contains early
termination or prepayment clauses, which requires the Lessee to pay the
Prepayment Amount for such Lease upon such cancellation or prepayment);
(iv) all payments payable under the Lease are absolute, unconditional
obligations of the Lessee without right to offset for any reason;
(v) the Lease requires the Lessee or a third party to maintain the
Equipment in good working order, to bear all the costs of operating the
Equipment, including taxes and insurance relating thereto;
(vi) the Lease does not materially violate any U.S. or state laws;
(vii) the Lease provides for periodic payments;
(viii) in the event of a Casualty Loss, with respect to the Lease, the
Lessee, at the Lessee's expense, is required to replace the Equipment with
like equipment in good repair, acceptable to the Servicer or pay at a
minimum the outstanding principal or net book value of the Leases and any
applicable make whole premium, if any;
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(ix) the Lease was originated by the Seller, or was acquired by the
Seller in a "true sale" in the ordinary course of its business and in a
manner which satisfies the underwriting practices set forth in the Credit
and Collection Policy as in effect from time to time;
(x) the Lease has been sold to the Transferor free and clear of any
Liens other than Permitted Encumbrances;
(xi) the Lease is assignable without prior written consent of the
Lessee;
(xii) the Lease is denominated and payable only in U.S. dollars, the
Lessor is located in the United States and one or more Obligors who are
fully liable under the Lease are located in the United States;
(xiii) the Lease is not a "consumer lease" within the meaning of
Article 2A of the UCC in any jurisdiction where such Article 2A has been
adopted and governs the construction thereof;
(xiv) the Lease, to the extent such Xxxxx was reacquired by the Seller
from an affiliate prior to its conveyance in this transaction, was acquired
by the Seller in a "true sale";
(xv) no adverse selection was used in selecting the Lease for transfer
to the Transferor or the Issuer;
(xvi) the Lessee has represented to the Seller or Vendor that it has
accepted the Equipment;
(xvii) the Lessee is not a subject of an insolvency or bankruptcy
proceeding at the time of the transfer;
(xviii) the Lease is not a Defaulted Lease;
(xix) the maximum remaining term of the Lease does not exceed 84
months; and
(xx) the Lease is not more than 60 days past due at time of transfer
to the Transferor or the Issuer;
(xxi) (A) with respect to any Lease other than a Rent Stream
Obligation, such Lease is a Finance Lease, and (B) with respect to any
Lease other than a Rent Stream Obligation or a Synthetic Lease, such Lease
provides that by the end of the lease term, the Lessee may elect to
purchase the related Equipment upon the exercise of a nominal purchase
option;
(xxii) at least one Lease Payment has been paid by the Obligor on such
Lease;
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(xxiii) at the time that the Seller conveyed its right, title and
interest in the Lease and the related Equipment, the Seller had no
knowledge that any item of such Equipment had suffered any loss or damage
which has not been repaired;
(xxiv) at the time that the Seller conveyed its right, title and
interest in the Lease and the related Equipment, such Lease shall not have
been amended, altered or modified in any respect, except in writing and all
such writings shall be contained in the Lease File in which the Lease
itself is contained;
(xxv) if a Synthetic Lease, such Lease was originated by the Seller
and not acquired by the Seller from a third party;
(xxvi) at the time that the Seller conveyed its right title and
interest in the Lease and the related Equipment, (A) except to the extent
that payments have been previously received on such Lease, the Obligor will
not have been released, in whole or in part, from any of its obligations in
respect of such Lease, (B) except as shown in the Lease File, no Equipment
related to such Lease will have been released, in whole or in part, from
such Lease, and (C) except as shown in the Lease File, neither the
operation of the Lease nor the exercise of any rights thereunder, nor the
execution of any instrument, nor the occurrence of any facts or
circumstances, has rendered or will render such Lease unenforceable, in
whole or in part, or subject such Lease or any related Equipment to any
right of rescission, setoff, counterclaim or defense (including, without
limitation, the defense of usury);
(xxvii) with respect to a Lease which had been acquired by Charter
Financial, Inc. from a third party originator, other than an affiliate of
Charter Financial, Inc., UCC filings have been filed to reflect the
assignment of the security interest from the third party originator to
Charter Financial, Inc.; and
(xxviii) with respect to a Lease which is a Financial Lease, Charter
Financial, Inc. has made all necessary UCC filings in all states where the
related Equipment is located, naming the Lessee as debtor and Charter
Financial, Inc. as secured party, to perfect the security interest of
Charter Financial, Inc. in such Equipment.
(d) the Transferor represents and warrants that as of the Cut-Off-Date:
(i) no more than 2.5% of the Leases by Discounted Lease Balance have
Equipment which is subject to certificate of title regulations in any
jurisdiction;
(ii) the information set forth in the Schedule of Leases is true and
correct.
(iii) no less than 98% of the Leases by Discounted Lease Balance have
Lease Payments which are scheduled to be paid in monthly intervals; and
(iv) the Leases which are Rent Stream Obligations which were issued by
any individual third party issuer (including, without limitation, an
affiliate of Charter
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Financial, Inc.) do not represent more than 1.5% of the Aggregate
Discounted Lease Balance.
Section 3.05 Payments.
The portfolio detail delivered or to be delivered to the Trustee on or
prior to the Closing Date (i) accurately sets forth, as of the Cut-Off Date, the
amount of each Lease Payment due under each of the Leases and the month in which
such Lease Payment is to be paid in accordance with the terms of the Lease under
which the same is to be paid, (ii) accurately sets forth, as of the Cut-Off
Date, the information with respect to certain other characteristics of the
Leases and the Equipment described in such portfolio detail and (iii) is
otherwise true and correct in all respects.
Section 3.06 Full Disclosure.
The Prospectus and the Private Placement Memoranda (including, without
limitation, the statistical and descriptive information with respect to the
initial Leases, Lessees and Equipment), as of their respective dates, do not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to the Transferor or any Affiliate of the Transferor or, to the
knowledge of the Transferor, any Lease, Lessee or item of Equipment, which the
Transferor has not or will not disclose in the Prospectus or the Private
Placement Memoranda which materially affects adversely nor, so far as the
Transferor can now reasonably foresee, will materially affect adversely the
ability of the Transferor to perform the transactions contemplated by this
Transferor Contribution and Sale Agreement.
Section 3.07 Pending Litigation.
There are no proceedings or investigations pending, or to the knowledge
(after due inquiry) of the Transferor threatened, against or affecting the
Transferor or any subsidiary 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 Transferor and its subsidiaries, or the ability of the
Transferor to perform its obligations under this Transferor Contribution and
Sale Agreement. The Transferor is not in default with respect to any order of
any court, governmental authority or agency or arbitration board or tribunal.
Section 3.08 Title to Properties.
Immediately following the transfer by the Transferor to the Issuer of the
Leases and the Transferor's interest in the Equipment, the Leases (including the
right to receive all payments due or to become due thereunder) and the interest
in the Equipment will be free and clear of all Liens, other than Permitted
Encumbrances.
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Section 3.09 Transactions Legal and Authorized.
The transfer by the Transferor of all of its right, title and interest in
and to each item of Equipment and each Lease (including the right to receive all
payments due or to become due thereunder) and compliance by the Transferor with
all of the provisions of this Transferor Contribution and Sale Agreement:
(a) have been duly authorized by all necessary corporate action on the part
of the Transferor, and do not require any stockholder approval, or approval or
consent of any trustee or holders of any indebtedness or obligations of the
Transferor except such as have been duly obtained;
(b) are within the corporate powers of the Transferor; and
(c) are legal and will not conflict with, result in any breach in any of
the provisions of, constitute a default under, or result in the creation of any
Lien upon any property of the Transferor under the provisions of, any agreement,
charter, instrument, by-law or other instrument to which the Transferor is a
party or by which it or its property may be bound or result in the violation of
any law, regulation, rule, order or judgment applicable to the Transferor or its
properties, or any order to which the Transferor or its properties is subject,
of or by any government or governmental agency or authority.
Section 3.10 Governmental Consent.
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority is necessary or required on the
part of the Transferor in connection with the execution and delivery of this
Transferor Contribution and Sale Agreement or the contribution of the Leases and
Equipment.
Section 3.11 Taxes.
(a) All tax returns required to be filed by the Transferor or any
subsidiary in any jurisdiction have in fact been filed, or a valid extension
obtained, and all taxes, assessments, fees and other governmental charges upon
the Transferor or any subsidiary, or upon any of their respective properties,
income or franchises, shown to be due and payable on such returns have been
paid. To the best of the Transferor's knowledge all such tax returns were true
and correct and neither the Transferor nor any subsidiary knows of any proposed
additional tax assessment against it in any material amount nor of any basis
therefor.
(b) The provisions for taxes on the books of the Transferor and each of its
subsidiaries are in accordance with generally accepted accounting principles.
Section 3.12 Compliance with Law.
The Transferor:
(a) is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject;
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(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, by-law or other 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 Transferor and its subsidiaries.
Section 3.13 Ability to Perform.
At the date hereof, the Transferor does not believe, nor does it have any
reasonable cause to believe, that it cannot perform each and every covenant
contained in this Transferor Contribution and Sale Agreement.
Section 3.14 Ordinary Course; No Insolvency.
The transactions contemplated by the Notes, the Indenture and this
Transferor Contribution and Sale Agreement are being consummated by the
Transferor in furtherance of the Transferor's ordinary business purposes and
constitute a practical and reasonable course of action by the Transferor
designed to improve the financial position of the Transferor, with no
contemplation of insolvency and with no intent to hinder, delay or defraud any
of its present or future creditors. The Transferor will not, either as a result
of the transaction contemplated by this Transferor Contribution and Sale
Agreement, or immediately before or after such transaction, be insolvent or have
an unreasonably small capital for the conduct of its business and the payment of
anticipated obligations.
Section 3.15 Assets and Liabilities.
(a) Both immediately before and after any transfer of Leases (including the
right to receive all payments due or to become due thereunder) and the transfer
of the interests in the Equipment contemplated by this Transferor Contribution
and Sale Agreement, the present fair salable value of the Transferor's assets
was or will be in excess of the amount that will be required to pay the
Transferor's probable liabilities as they then exist and as they become absolute
and matured; and
(b) Both immediately before and after any transfer of Leases (including the
right to receive all payments due or to become due thereunder) and the transfer
of the interests in the Equipment contemplated by this Transferor Contribution
and Sale Agreement, the sum of the Transferor's assets was or will be greater
than the sum of the Transferor's debts, valuing the Transferor's assets at a
fair salable value.
Section 3.16 Fair Consideration.
The consideration received by the Transferor, in exchange for the Leases
(including the right to receive all payments due or to become due thereunder)
and the transfer of its interests in the Equipment, is fair consideration having
value equivalent to or in excess of the value of the assets being transferred by
the Transferor.
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Section 3.17 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this Transferor
Contribution and Sale Agreement nor otherwise does the Transferor believe that
it will incur debts beyond its ability to pay or which would be prohibited by
its charter documents or by-laws. The Transferor's assets and cash flow enable
it to meet its present obligations in the ordinary course of business as they
become due.
Section 3.18 Bulk Transfer Provisions.
The transfer, assignment and conveyance of the Leases and its interests in
the Equipment by the Transferor pursuant to this Transferor Contribution and
Sale Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
Section 3.19 Transfer Taxes.
The transfer, assignment and conveyance of the Leases (including all
payments due or to become due thereunder) and its interests in the Equipment by
the Transferor pursuant to this Transferor Contribution and Sale Agreement is
not subject to and will not result in any tax, fee or governmental charge
payable by the Transferor to any federal, state or local government ("Transfer
Taxes"). In the event that the Issuer receives actual notice of any Transfer
Taxes arising out of the transfer, assignment and conveyance of the Leases
and/or its interests in the Equipment, on written demand by the Issuer, or upon
the Transferor otherwise being given notice thereof, the Transferor shall pay,
and otherwise indemnify and hold the Issuer, the Trustee and the holders of the
Notes harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the holders of the Notes and the
Trustee shall have no obligation to pay such Transfer Taxes).
Section 3.20 Principal Executive Office.
The principal executive office of the Transferor is located at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 3.21 Sale and Contribution Treatment.
The Transferor will treat the transfer to the Issuer of the Leases and the
Lease Receivables as a sale and capital contribution as described in Section
2.01 hereof and absolute assignment for tax reporting and accounting purposes.
Section 3.22 Nonconsolidation.
The Transferor is and at all times since its incorporation has been
operated in such a manner that it would not be substantively consolidated with
the Issuer, such that the separate existence of the Transferor and the Issuer
would be disregarded in the event of a bankruptcy or insolvency of the
Transferor or the Issuer, and in such regard:
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(a) the Transferor maintains separate corporate records and books of
account from the Issuer and otherwise observes corporate formalities and has
separate business office space from the Issuer;
(b) the financial statements and books and records of the Transferor
prepared after the Issuance Date will reflect the separate existence of the
Issuer;
(c) the Transferor maintains its assets separately from the assets of the
Issuer (including through the maintenance of a separate bank account), the
Transferor's funds and assets, and records relating thereto, have not been and
are not commingled with those of the Issuer;
(d) all business correspondence of the Transferor and other communications
are conducted in the Transferor's own name and on its own stationery; and
(e) the Issuer does not act as an agent of the Transferor in any capacity
and the Transferor does not act as agent for the Issuer, but instead presents
itself to the public as a corporation separate from the Issuer.
Section 3.23 Lease Repurchase
In the event that any of the representations or warranties made by the
Transferor in Section 3.04 or Section 3.05 with respect to any of the Leases
proves at any time to have been inaccurate in any material respect as of the
Closing Date or the related Transfer Date, as applicable, and the event or
condition causing such inaccuracy shall not have been cured or corrected within
30 days of the earlier of the date on which (a) the Transferor is given notice
thereof by the Issuer or the Trustee, or (b) on the date on which the Transferor
otherwise first has notice thereof, the Transferor shall, unless it has
otherwise substituted a Substitute Lease for such Lease, purchase such Lease not
later than the third Business Day after the Calculation Date next following the
expiration of such 30 day period described herein in an amount equal to the
Lease Repayment Amount for such Lease, and in addition, the Transferor shall, at
the same time, reimburse to the Servicer any Servicer Advances made with respect
to such Xxxxx.
ARTICLE IV THE TRANSFEROR
Section 4.01 Merger or Consolidation of the Transferor.
The Transferor will keep in full force and effect its existence, rights and
franchise as a corporation under the laws of its jurisdiction of incorporation
and will preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is necessary to protect the
validity and enforceability of any of the Leases or to permit performance of the
Transferor's duties under this Transferor Contribution and Sale Agreement.
The Transferor shall not merge or consolidate with any other Person unless
(i) the entity surviving such merger or consolidation is a corporation organized
under the laws of the
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United States or any jurisdiction thereof and (ii) the surviving entity, if not
the Transferor, shall execute and deliver to the Issuer or the Servicer and the
Trustee, in form and substance satisfactory to each of them, (a) an instrument
expressly assuming all of the obligations of the Transferor hereunder and (b) an
opinion of counsel to the effect that such Person is a corporation of the type
described in the preceding clause (i) and has effectively assumed the
obligations of the Transferor hereunder.
Section 4.02 Control of Issuer.
So long as any of the Notes or the other obligations secured by the
Indenture remain outstanding, the Transferor will not (i) sell, pledge or
otherwise transfer any of its membership interest in the Issuer held by the
Transferor or (ii) vote such beneficial interests in favor of any amendment to
or alteration of the certificate of formation of the Issuer.
Section 4.03 Books and Records.
The Transferor will clearly mark its books and records to reflect the sales
and contributions of Leases and Equipment pursuant to this Agreement.
Section 4.04 Communications.
The Transferor will reply to all inquiries by third parties with respect to
the transactions contemplated by this Agreement by indicating that it has
contributed the Leases and its right, title and interest in the related
Equipment and that the Issuer now holds title to the Leases and such interest in
the related Equipment.
ARTICLE V SUBSTITUTION AND ADDITION OF LEASES
Section 5.01 Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth in Section
5.01(c) hereof, the Transferor will have the right (but not the obligation) at
any time to substitute one or more Eligible Leases and the Equipment subject
thereto (each, a "Substitute Lease") for a Lease (for purposes of this Article V
referred to as a "Predecessor Lease") and the Equipment subject thereto if:
(i) the Predecessor Lease became (A) a Defaulted Lease, (B) a Lease
subject to a Warranty Event or (C) a Lease which is the subject of a
Casualty Loss, during the immediately preceding Collection Period; and
(ii) if Section 5.01(a)(i)(A) or (C) is applicable, the aggregate
Discounted Lease Balance of the Leases that are, or have been, Predecessor
Leases shall not in the aggregate exceed 10% of the Discounted Lease
Balance of the Leases on the Cut-Off Date.
(b) Subject to the satisfaction of the requirements set forth in Section
5.01(c) hereof, in the event of an Early Lease Termination which has been
prepaid in full, the Issuer will have the option to reinvest the proceeds of
such Early Termination Lease in one or more
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Additional Leases. The purchase price of such Additional Lease or Leases will be
an amount paid to the Transferor in equal to the proceeds of such Early
Termination Lease.
(c) Each transfer of Substitute Leases and addition of Additional Leases
will be subject to the satisfaction of the following conditions precedent:
(i) the final payment on such Substitute Lease or Additional Lease
must be on or prior to the date of the final payment of the Predecessor
Lease or Early Termination Lease.
(ii) after giving effect to such additions and substitutions, the
aggregate amount of Lease Payments through the term of the Leases
(including the Substitute Leases and the Additional Leases) and the
Discounted Lease Balance of the Leases will not be materially less than the
aggregate scheduled Lease Payments of the Leases and the Discounted Lease
Balance of the Leases, respectively prior to such substitution or addition
or adjustment; and
(iii) after giving effect to such adjustments, additions, and
substitutions pursuant to Article IV, the weighted average remaining term
of the Leases must not be greater than the weighted average remaining term
of the Leases prior to such adjustment, addition, and substitution.
(d) Each addition and substitution pursuant to this Section 5.01 shall
include the right to receive all amounts due or to become due under each
Substitute Lease being substituted or Additional Leases being purchased and any
security deposits paid by the related Lessee to the Transferor in connection
therewith (other than any prepayments of rent required pursuant to the terms
thereof at or before the commencement of such Lease and any payments due before
the Transfer Date as to which such substitution or addition is made). At the
time of each such substitution and addition, the Transferor shall transfer to
the Trustee all Lease Payments actually received by the Transferor which became
due on or after the related Transfer Date.
Section 5.02 Procedure.
(a) By 11:00 A.M. on the third Business Day following each Transfer Date,
the Transferor shall give written notice to the Servicer of any substitution
pursuant to Section 5.01 of Substitute Leases for Predecessor Leases or addition
of Additional Leases for Early Termination Leases which have been prepaid in
full during the preceding Collection Period. By 11:00 A.M. on the fourth
Business Day following each Payment Date, the Transferor shall deliver to the
Servicer and the Trustee and, to the extent not included in the Monthly Servicer
Report, the Trustee shall promptly deliver to each Rating Agency (i) a
supplement to Schedule 1 hereto setting forth the information shown thereon for
each such Substitute Lease and Additional Lease, (ii) an Officer's Certificate
(A) certifying that each such Substitute Lease and Additional Lease is an
"Eligible Lease", (B) specifying each Predecessor Lease for which a substitution
has been made and each Early Termination Lease which is being replaced by an
Additional Lease and the amount of each periodic Lease Payment under each such
Predecessor Lease and the amount of each periodic Lease Payment under each
Additional Lease and Substitute Lease being transferred thereby and (C) that all
conditions precedent to such addition or substitution have
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been satisfied and (iii) such additional information concerning such Additional
Leases, Substitute Leases, Early Termination Leases or Predecessor Leases as may
be needed for the Servicer to prepare its monthly reports pursuant to the
Servicing Agreement and to otherwise carry out its duties as servicer under the
Servicing Agreement.
(b) Subject to the provisions of Section 5.03, the delivery of any
Officer's Certificate and supplement to Schedule 1 pursuant to Section 5.02(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Collection Period (i) the Transferor assigned to the
Issuer, as a sale and a capital contribution in accordance with Section 2.01
hereof to the extent the assignment is made under Section 5.01(a)(i)(A) or (C)
hereof all of the Transferor's right, title and interest in and to the
Substitute Leases and Additional Leases identified in such supplement and the
related rights described in Section 5.01 hereof, (ii) the Transferor assigned to
the Issuer, as a sale and a capital contribution in accordance with Section 2.01
hereof to the extent the assignment is made under Section 5.01(a)(i)(A) or (C),
all of the Transferor's right, title and interest in and to the Equipment
subject to such Substitute Leases and Additional Leases (to the extent of the
Transferor's interest in such Equipment, including the Transferor's security
interest in any Equipment which is not owned by the Transferor), and (iii) the
Issuer assigned and transferred to the Transferor, without representation or
warranty, all of the Issuer's right, title and interest in and to the
Predecessor Leases and Early Termination Leases identified in such Officer's
Certificate and the Equipment subject thereto (to the extent of the Issuer's
interest in such Equipment, including the Issuer's security interest in any
Equipment which is not owned by the Issuer). The Transferor shall promptly cause
to be delivered to the Trustee (or a custodian on its behalf) the original
executed counterpart of each Substitute Lease and Additional Lease assigned to
the Issuer pursuant to Section 5.01 hereof and the Issuer shall promptly request
the Trustee to deliver to the Transferor the original executed counterpart of
each Predecessor Lease and each Early Termination Lease for which substitution
or an addition has been made pursuant to Section 7.01 hereof.
Section 5.03 Transferor's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of this
Article V, the Transferor's obligations hereunder with respect to the
Predecessor Lease shall cease but the Transferor shall thereafter have the same
obligations with respect to the Substitute Lease substituted as it has with
respect to all other Leases subject to the terms hereof.
ARTICLE VI ASSIGNMENT
Section 6.01 Assignment to Trustee.
It is understood that this Transferor Contribution and Sale Agreement and
all rights of the Issuer hereunder will be assigned by the Issuer to the Trustee
pursuant to the Indenture, for the benefit of the Trustee, the holders from time
to time of the Notes as provided in the Indenture, and may be subsequently
assigned by the Trustee to any successor Trustee or as otherwise provided in the
Indenture. The Transferor hereby expressly agrees to each such assignment and
agrees that all of its duties, obligations, representations and warranties
hereunder shall be for the benefit of, and may be enforced by, the Trustee, the
holders from time to time of the Notes, and any successor to or assignee of any
thereof.
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Section 6.02 Assignment by Transferor.
None of the respective rights or obligations of the Transferor hereunder
may be assigned without the prior written consent of the Issuer and the Trustee
(acting upon the instructions of the Holders of 66-2/3% of the then aggregate
unpaid Outstanding Principal Amount of the Notes).
ARTICLE VII NATURE OF OBLIGATIONS AND SECURITY THEREFOR
Section 7.01 Obligations Absolute.
The obligations of the Transferor hereunder, and the rights of the Trustee,
as assignee of the Issuer, in and to all amounts payable by the Transferor
hereunder, shall be absolute and unconditional and shall not be subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment whatsoever,
including, without limitation, abatements, reductions, setoffs, defenses,
counterclaims or recoupments due or alleged to be due to, or by reason of, any
past, present or future claims which the Transferor may have against, the
Issuer, the Trustee, and any holder of the Notes or any other Person for any
reason whatsoever; nor, except as otherwise expressly provided herein, shall
this Transferor Contribution and Sale Agreement terminate, or the respective
obligations of the Issuer or the Transferor be otherwise affected, by reason of
any defect in any Lease or in any unit of Equipment or in the respective rights
and interests of the Issuer, the Transferor and the Trustee therein, or by
reason of any Liens, encumbrances, security interests or rights of others with
respect to any Lease or any unit of Equipment, or any failure by the Issuer to
perform any of its obligations herein contained, or by reason of any other
indebtedness or liability, howsoever and whenever arising, of the Issuer, the
Trustee, or any holder of the Notes to the Transferor or any other Person or by
reason of any insolvency, bankruptcy, or similar proceedings by or against the
Transferor, the Issuer, the Trustee or any other Person or for any other cause
whether similar or dissimilar to the foregoing, any present or future law to the
contrary notwithstanding, it being the intention of the parties hereto that all
obligations of the Transferor hereunder and all amounts payable by the
Transferor hereunder shall continue to be due and payable in all events and in
the manner and at the times herein provided unless and until the obligation to
perform or pay the same shall be terminated or limited pursuant to the express
provisions of this Transferor Contribution and Sale Agreement. The Seller shall
provide the Rating Agencies with notice of any assignment of any of its
obligations hereunder.
Section 7.02 Further Assurances; Financing Statements.
The Transferor agrees that at any time and from time to time, at its
expense, it shall promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable or
that the Issuer or the Trustee may request to perfect and protect the
assignments and security interests granted or purported to be granted herein
with respect to the Leases and the Lease Payments or to enable the Issuer or the
Trusteeto exercise and enforce its rights and remedies under this Agreement with
respect to any Leases and the Lease Payments. Without limiting the generality of
the foregoing, the Transferor shall execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices as may be necessary or desirable or that the Issuer or the Trustee
16
may request to protect and preserve the assignments and security interests
granted by this Agreement with respect to the Leases.
ARTICLE VIII MISCELLANEOUS
Section 8.01 Continuing Obligations.
This Transferor Contribution and Sale Agreement shall continue in full
force and effect until each of the Notes and any other amounts due to any holder
of the Notes have been paid in full and all other obligations, if any, secured
by the Lien of the Indenture have been fully satisfied.
Section 8.02 GOVERNING LAW.
THIS TRANSFEROR CONTRIBUTION AND SALE AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY,
THE LAWS OF THE STATE OF NEW YORK. IF ANY PROVISION OF THIS TRANSFEROR
CONTRIBUTION AND SALE AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE
BALANCE OF THIS TRANSFEROR CONTRIBUTION AND SALE AGREEMENT.
Section 8.03 Successors and Assigns.
This Transferor Contribution and Sale Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Issuer, the Transferor
and the Trustee and shall inure to the benefit of the successors and assigns of
the Holders, from time to time, of the Notes.
Section 8.04 Modification.
The terms of this Transferor Contribution and Sale Agreement shall not be
waived, modified or amended without (a) the written consent of the party against
whom such waiver, modification or amendment is claimed and, in any case, the
Trustee (acting upon the instructions of the Holders of 66-2/3% of the then
aggregate unpaid Outstanding Principal Amount of the Notes), and (b)
confirmation from the Rating Agencies that such waiver, modification or
amendment will not cause the then existing rating of the Notes to be decreased.
Section 8.05 No Petition or Proceedings.
So long as there shall not have elapsed one year plus one day since the
latest maturing Notes have been paid in full in cash, the Transferor hereby
agrees that it will not, directly or indirectly, institute, or cause to be
instituted, against the Issuer any petition or otherwise invoke the process of
any Governmental Authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
its respective property, or ordering the winding up or liquidation of the
affairs of the Issuer.
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Section 8.06 Notices.
All notices and other communications given in connection with this
Transferor Contribution and Sale Agreement shall be sufficient for every Person
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt requested, or sent
by private courier or confirmed telecopy, in case of the Seller, the Servicer,
the Issuer and the Transferor, to 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer, with a copy to the General Counsel (telecopy:
212-805-1181), and in the case of the Trustee and the Holders of the Notes, to
such addresses as are provided pursuant to Sections 1.05 and 1.06 of the
Indenture or to such other address as either party may specify to the other from
time to time in accordance with this Section 8.06.
Section 8.07 Counterparts.
This Transferor Contribution and Sale Agreement may be executed in any
number of counterparts, each counterpart constituting an original, but all
together constituting only one Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Transferor
Contribution and Sale Agreement as of the date and year first written above.
CHARTER FUNDING CORPORATION V, as
Transferor
By:
------------------------------
Name:
Title:
CHARTER EQUIPMENT LEASE 1999-1 LLC
By: CHARTER FUNDING CORPORATION V
By:
------------------------------
Name:
Title:
The undersigned hereby acknowledges receipt of a copy of the foregoing
Transferor Contribution and Sale Agreement and agrees to, and to be bound by,
each of the provisions thereof applicable to the undersigned.
LASALLE BANK NATIONAL ASSOCIATION,
as Trustee
By:
------------------------------
Name:
Title:
[Signature Page to the Transferor Contribution and Sale Agreement]
SCHEDULE 1
SCHEDULE OF LEASES
