EXHIBIT 10.1
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SALE AND SERVICING AGREEMENT
among
XXXXXX EQUIPMENT ASSET RECEIVABLES TRUST 1997-1,
as Issuer,
XXXXXX FUNDING CORPORATION,
as Trust Depositor,
XXXXXX FINANCIAL, INC.,
as Servicer
and
[__________________________]
as Indenture Trustee
Dated as of August [__], 1997
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TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS........................................................................................... 1
Section 1.01. Definitions............................................................................ 1
Section 1.02. Usage of Terms......................................................................... 22
Section 1.03. Section References..................................................................... 22
Section 1.04. Calculations........................................................................... 22
Section 1.05. Accounting Terms....................................................................... 22
ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS......................................................... 23
Section 2.01. Creation and Funding of Trust; Transfer of Trust Assets................................ 23
Section 2.02. Conditions to the Closing.............................................................. 23
Section 2.03. Acceptance by Owner Trustee............................................................ 24
Section 2.04. Conveyance of Subsequent Contracts..................................................... 24
Section 2.05. Release of Released Amounts............................................................ 25
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES........................................................................ 26
Section 3.01. Representations and Warranties Regarding the Trust Depositor........................... 26
Section 3.02. Representations and Warranties Regarding the Servicer.................................. 28
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS........................................... 29
Section 4.01. Custody of Contracts................................................................... 29
Section 4.02. Filing................................................................................. 30
Section 4.03. Name Change or Relocation.............................................................. 30
Section 4.04. Costs and Expenses..................................................................... 30
ARTICLE FIVE
SERVICING OF CONTRACTS................................................................................ 31
Section 5.01. Appointment and Acceptance; Responsibility for Contract Administration................. 31
Section 5.02. General Duties......................................................................... 31
Section 5.03. Consent to Assignment or Replacement................................................... 31
Section 5.04. Disposition Upon Termination of Contract............................................... 31
Section 5.05. Subservicers........................................................................... 32
Section 5.06. Further Assurance...................................................................... 32
Section 5.07. Notice to Obligors..................................................................... 32
Section 5.08. Collection Efforts; Modification of Contracts.......................................... 32
Section 5.09. Prepaid Contract....................................................................... 32
Section 5.10. Acceleration........................................................................... 32
Section 5.11. Taxes and Other Amounts................................................................ 33
Section 5.12. Lockboxes, Etc......................................................................... 33
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Section 5.13. Remittances.................................................................. 33
Section 5.14. Servicer Advances............................................................ 33
Section 5.15. Realization Upon Defaulted Contract.......................................... 33
Section 5.16. Maintenance of Insurance Policies............................................ 33
Section 5.17. Other Servicer Covenants..................................................... 34
Section 5.18. Servicing Compensation....................................................... 34
Section 5.19. Payment of Certain Expenses by Servicer...................................... 34
Section 5.20. Records...................................................................... 35
Section 5.21. Inspection................................................................... 35
Section 5.22. Trustees to Cooperate in Releases............................................ 35
ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR............................................................ 36
Section 6.01. Corporate Existence.......................................................... 36
Section 6.02. Contracts Not to be Evidenced by Promissory Notes............................ 36
Section 6.03. Security Interests........................................................... 36
Section 6.04. Delivery of Collections...................................................... 36
Section 6.05. Regulatory Filings........................................................... 36
Section 6.06. Compliance With Law.......................................................... 36
Section 6.07. Activities................................................................... 36
Section 6.08. Indebtedness................................................................. 36
Section 6.09. Guarantees................................................................... 36
Section 6.10. Investments.................................................................. 37
Section 6.11. Merger; Sales................................................................ 37
Section 6.12. Distributions................................................................ 37
Section 6.13. Other Agreements............................................................. 37
Section 6.14. Separate Corporate Existence................................................. 37
Section 6.15. Location; Records............................................................ 38
Section 6.16. Liability of Trust Depositor; Indemnities.................................... 38
Section 6.17. Bankruptcy Limitations....................................................... 39
Section 6.18. Limitation on Liability of Trust Depositor and Others........................ 39
Section 6.19. Chief Executive Office....................................................... 39
ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND...................................... 40
Section 7.01. Trust Accounts; Collections.................................................. 40
Section 7.02. Reserve Fund Deposit......................................................... 40
Section 7.03. Trust Account Procedures..................................................... 40
Section 7.04. Securityholder Distributions................................................. 40
Section 7.05. Allocations and Distributions................................................ 41
Section 7.06. Repurchases of, or Substitution For, Contracts for Breach of Representations
and Warranties............................................................... 44
Section 7.07. Reassignment of Repurchased or Substituted Contracts......................... 45
Section 7.08. Sellers' and Trust Depositor's Repurchase Option............................. 45
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ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER............................................................ 46
Section 8.01. Servicer Default............................................................... 46
Section 8.02. Service Transfer............................................................... 46
Section 8.03. Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act..... 47
Section 8.04. Notification to Securityholders................................................ 47
Section 8.05. Effect of Transfer............................................................. 47
Section 8.06. Database File.................................................................. 48
Section 8.07. Successor Servicer Indemnification............................................. 48
Section 8.08. Responsibilities of the Successor Servicer..................................... 48
ARTICLE NINE
REPORTS....................................................................................... 49
Section 9.01. Monthly Reports................................................................ 49
Section 9.02. Officer's Certificate.......................................................... 49
Section 9.03. Other Data..................................................................... 49
Section 9.04. Annual Report of Accountants................................................... 49
Section 9.05. Annual Statement of Compliance from Servicer................................... 49
Section 9.06. Annual Summary Statement....................................................... 50
ARTICLE TEN
TERMINATION................................................................................... 51
Section 10.01. Sale of Trust Assets.......................................................... 51
ARTICLE ELEVEN
MISCELLANEOUS................................................................................. 52
Section 11.01. Amendment..................................................................... 52
Section 11.02. Protection of Title to Trust.................................................. 52
Section 11.03. Governing Law................................................................. 53
Section 11.04. Notices....................................................................... 53
Section 11.05. Severability of Provisions.................................................... 54
Section 11.06. Third Party Beneficiaries..................................................... 55
Section 11.07. Counterparts.................................................................. 55
Section 11.08. Headings...................................................................... 55
Section 11.09. No Bankruptcy Petition........................................................ 55
EXHIBITS
Exhibit A Form of Assignment............................................................ A-1
Exhibit B Form of Closing Certificate of Trust Depositor................................ B-1
Exhibit C Form of Closing Certificate of Seller/Servicer................................ C-1
Exhibit D Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion)...................... D-1
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Exhibit E Form of Opinion of Counsel for Trust Depositor regarding
the "true sale" nature of the transaction................................... E-1
Exhibit F Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation........................................................... F-1
Exhibit G Form of Certificate Regarding Repurchased Contracts......................... G-1
Exhibit H List of Contracts........................................................... H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholders................ I-1
Exhibit J Sellers' Representations and Warranties..................................... J-1
Exhibit K Lockbox Banks and Lockbox Accounts.......................................... K-1
Exhibit L Form of Contract Stamp...................................................... L-1
Exhibit M Form of Subsequent Transfer Agreement....................................... M-1
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This SALE AND SERVICING AGREEMENT, dated as of August [__], 1997, is among
Xxxxxx Equipment Asset Receivables Trust 1997-1 (together with its successors
and assigns, the "Issuer" or the "Trust"), Xxxxxx Funding Corporation (together
with its successor and assigns, the "Trust Depositor"), [____________] (solely
in its capacity as Indenture Trustee, together with its successors and assigns,
the "Indenture Trustee") and Xxxxxx Financial, Inc. (together with its
successors and assigns, "HFI" and, solely in its capacity as Servicer, together
with its successor and assigns, the "Servicer").
WHEREAS the Trust Depositor desires to fund the Trust by selling, conveying
and assigning a designated pool of Contracts (as defined herein) together with
certain related security therefor and other related rights and property as
further described herein, which Contracts were originated by HFI or Xxxxxx
Leasing (as defined herein), or acquired by purchase and assignment by HFI or
Xxxxxx Leasing from the owner thereof, and subsequently sold by HFI or Xxxxxx
Leasing (as applicable) to the Trust Depositor pursuant to the Transfer and Sale
Agreement (as defined herein);
WHEREAS the Trust is willing to purchase and accept assignment of the
Contracts, together with such related rights and property, from the Trust
Depositor pursuant to the terms hereof; and
WHEREAS the Servicer is willing to service the Contracts for the benefit
and account of the Trust pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accountant's Report" has the meaning assigned such term in Section 9.04.
"Accrual Period" means the period from and including the most recent
Distribution Date to but excluding the following Distribution Date, provided,
that the initial Accrual Period following the Closing Date shall be the period
from and including the Closing Date to but excluding the first Distribution Date
following the Closing Date.
"ADCB" means, with respect to any date of determination thereof, the sum of
the Discounted Contract Balances of each Contract included in the group of
Contracts for which an ADCB determination is being made, as of the date of such
determination. For purposes of calculating such sum on any date other than the
last day of a Collection Period, the Discounted Contract Balance of a Contract
shall be as of the last day of the preceding Collection Period or, with respect
to any Subsequent Contract transferred to the Trust after such last day, the
Discounted Contract Balance on the applicable Subsequent Cutoff Date for such
Contract.
"Additional Contract" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Addition Event has occurred with
respect to a Contract or Contracts then held in the Contract Pool and identified
in the related Addition Notice.
"Addition Event" means, with respect to any transfer of an Additional
Contract to the Trust under Section 2.04, a prepayment of one or more related
Contracts, identified in the corresponding Addition Notice, in full by the
related Obligor.
"Addition Notice" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Contracts from the applicable Seller), a
notice, which shall be given at least [5] days prior to the related Subsequent
Transfer Date, identifying the Subsequent Contracts to be transferred, the ADCB
of such Subsequent Contracts and the related Addition Event or Substitution
Event (with
respect to an identified Contract or Contracts then in the Contract Pool) to
which such Subsequent Contract relates, with such notice to be signed both by
the Trust Depositor, and the Seller which owns such Subsequent Contract (which
is to be transferred by such Seller to the Trust Depositor and by the Trust
Depositor to the Trust on the related Subsequent Transfer Date).
"Affiliate" of any specified Person means any other Person controlling or
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Aggregate Principal Amount" means, with respect to any group of Notes or
Certificates, at any date of determination, the sum of the Principal Amounts of
such Notes or Certificates on such date of determination.
"Applicable Class Percentage" means
(a) prior to the occurrence of an Event of Default, or prior to the
occurrence and during the continuance of a Restricting Event, for any
outstanding Class of Notes for which a determination of Applicable Class
Percentage is required to be made hereunder,
(i) prior to the payment in full of the Class A-1 Notes, 0%; and
(ii) thereafter, the ratio (expressed as a percentage) that the
Initial Principal Amount of such Class of Notes bears to the sum of the Initial
Principal Amount of all Classes of Notes (other than the Class A-1 Notes); and
(b) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event,
(i) for the Class A-1 Notes and the Class A-2 Notes, (A) until
each such Class has been repaid in full, the ratio (expressed as a percentage)
that the aggregate Principal Amount of such Class of Notes on the date on which
such Event of Default or Restricting Event commences, bears to the sum of such
aggregate Principal Amounts for both such Classes of Notes, and (B) thereafter,
0%;
(ii) for the Class B Notes, 0% until all outstanding principal of
the Class A-1 Notes and Class A-2 Notes has been paid in full, then 100% until
all outstanding principal of the Class B Notes has been paid in full, and
thereafter 0%;
(iii) for the Class C Notes, 0% until all outstanding principal
of the Class A-1 Notes, Class A-2 Notes and Class B Notes has been paid in full,
then 100% until all outstanding principal of the Class C Notes has been paid in
full, and thereafter 0%; and
(iv) for the Class D Notes, 0% until all outstanding principal of
the Class A-1 Notes, Class A-2 Notes, Class B Notes and Class C Notes has been
paid in full, then 100% until all outstanding principal of the Class D Notes has
been paid in full, and thereafter 0%.
"Applicable Security" means, with respect to a Vendor Loan, any (i)
Secondary Contract securing such Vendor Loan and (ii) Equipment securing such
Vendor Loan or a related Secondary Contract.
"Assignment" means each Assignment, substantially in the form of Exhibit A
hereto (in the case of an Assignment executed by the Trust Depositor) and in the
form of Exhibit A to the Transfer and Sale Agreement (in the case of an
Assignment executed by a Seller), relating to an assignment, transfer and
conveyance of Contracts and related property to the applicable assignee.
"Available Amounts" means, as of any Distribution Date, the sum of (i) all
amounts on deposit in the Collection Account as of the immediately preceding
Determination Date on account of Scheduled Payments due on or before, and
Prepayments received on or before, the last day of the Collection Period
immediately preceding such Distribution Date (other than Excluded Amounts), (ii)
Recoveries on account of previously Defaulted Contracts, (iii) Investment
Earnings credited to the Collection Account, and (iv) Late Charges received on
or before the last day of such Collection Period.
"Average Cumulative Net Loss Ratio" means, for any date of determination
following the conclusion of the sixth full Collection Period occurring since the
Closing Date, the average of the sum of the Net Loss Ratios determined for each
of the six most recent full Collection Periods occurring prior to such date of
determination.
"Business Day" means any day which is neither a Saturday or a Sunday, nor
another day on which banking institutions in the city of Chicago, Illinois,
Wilmington, Delaware or New York, New York are authorized or obligated by law,
executive order, or governmental decree to be closed.
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"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware Code,
12 Del Code 3801 et seq., as the same may be amended from time to time.
["Calculation Date" means [________].]
"Casualty Loss" means, with respect to any item of Equipment, the loss,
theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
"Certificate Distribution Account" has the meaning specified in the Trust
Agreement.
"Certificate Register" has the meaning specified in the Trust Agreement.
"Certificateholders" has the meaning specified in the Trust Agreement.
"Certificates" means the Class D Certificates, or any of them.
"Class" means any of the group of Notes or Certificates identified herein
as, as applicable, the Class A-1 Notes, the Class A-2 Notes, the Class B Notes,
the Class C Notes, or the Class D Certificates.
"Class A-1 Interest Rate" means [___]% per annum.
"Class A-1 Maturity Date" means the [_________] Distribution Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"Class A-1 Notes" means the $[______] aggregate initial principal amount
Xxxxxx Equipment Asset Receivables Trust Notes, Class A-1, issued pursuant to
the Indenture.
"Class A-1 Principal Payment Amount" means, with respect to any
Distribution Date and the Class A-1 Notes, (a) prior to the occurrence of an
Event of Default, or prior to the occurrence and during the continuance of a
Restricting Event, the sum of (1) the lesser of (A) the outstanding Principal
Amount of the Class A-1 Notes, and (B) the excess of (x) the ADCB for all
Contracts held by the Trust as of the last day of the second Collection Period
preceding such Distribution Date (or, in the case of Contracts that were first
added to the Contract pool during the Collection Period immediately preceding
such Distribution Date, as of the applicable Cutoff Date for such Contracts)
over (y) the ADCB for all Contracts held by the Trust as of the last day of the
Collection Period immediately preceding such Distribution Date (such amount
described in this clause (i) being, the "Expected Class A-1 Payment"), plus (ii)
the aggregate amount of Expected Class A-1 Payments which were not paid on each
preceding Distribution Date; and (b) following the occurrence of an Event of
Default, or following the occurrence and during the continuance of a Restricting
Event, the sum of (i) the difference between (A) the outstanding Principal
Amount of the Class A-1 Notes, and (B) the product of (x) the Applicable Class
Percentage for such Class A-1 Notes, and (y) the ADCB for all Contracts held by
the Trust as of the last day of the Collection Period immediately preceding such
Distribution Date (such amount described in this clause (i) being, the
"Anticipated Class A-1 Payment"), plus (ii) the aggregate amount of Anticipated
Class A-1 Payments which were not paid on each preceding Distribution Date.
"Class A-2 Interest Rate" means [___]% per annum.
"Class A-2 Maturity Date" means the [_________] Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"Class A-2 Notes" means the $[______] aggregate initial principal amount
Xxxxxx Equipment Asset Receivables Trust Notes, Class A-2, issued pursuant to
the Indenture.
"Class A-2 Principal Payment Amount" means, with respect to any
Distribution Date and the Class A-2 Notes, the sum of (i) the difference between
(A) the Principal Amount of the Class A-2 Notes immediately prior to such
Distribution Date, and (B) the product of (x) the Applicable Class Percentage
for such Notes and (y) the ADCB for all Contracts held by the Trust as of the
last day of the Collection Period immediately preceding such Distribution Date
(the amount described in clause (i) being, the "Expected Class A-2 Payment"),
plus
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described in clause (i) being, the "Expected Class A-2 Payment") and
(ii) the aggregate amount of Expected Class A-2 Payments which were not paid on
each preceding Distribution Date.
"Class B Interest Rate" means [___]% per annum.
"Class B Maturity Date" means the [_________] Distribution Date.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Class B Notes" means the $[______] aggregate initial principal amount
Xxxxxx Equipment Asset Receivables Trust Notes, Class B, issued pursuant to the
Indenture.
(i) the difference between (A) the Principal Amount of the Class B
Notes immediately prior to such Distribution Date, and (B) the product of
(x) the Applicable Class Percentage for such Notes and (v) the ADCB for all
Contracts held by the Trust as of the last day of the Collection Period
immediately preceding such Distribution Date (the amount described in
clause (i) being, the "Expected Class B Payment"), plus
"Class C Interest Rate" means [___]% per annum.
"Class C Maturity Date" means the [_________] Distribution Date.
"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Notes" means the $[______] aggregate initial principal amount
Xxxxxx Equipment Asset Receivables Trust Notes, Class C, issued pursuant to the
Indenture.
(i) the difference between (A) the Principal Amount of the Class C
Notes immediately prior to such Distribution Date, and (B) the product of
(x) the Applicable Class Percentage for such Notes and (y) the ADCB for all
Contracts held by the Trust as of the last day of the Collection Period
immediately preceding such Distribution Date (the amount described in the
clause (i) being, the "Expected Class C Payment"), plus
(ii) the aggregate amount of Expected Class C Payments which were not
paid on each preceding Distribution Date.
"Class D Interest Rate" means [___]% per annum.
"Class D Maturity Date" means the [_________] Distribution Date.
"Class D Noteholder" means the Person in whose name a Class D Note is
registered in the Note Register.
"Class D Notes" means the $[ ] aggregate initial principal amount
Xxxxxx Equipment Asset Receivables Trust Notes, Class D, issued pursuant to the
Indenture.
"Class D Principal Payment Amount" means, with respect to any Distribution
Date and the Class D Notes, the sum of (i) the difference between (A) the
Principal Amount of the Class D Notes immediately prior to such Distribution
Date, and (B) the product of (x) the Applicable Class Percentage for such Notes
and (y) the ADCB for all Contracts held by the Trust as of the last day of the
Collection Period immediately preceding such Distribution Date (the amount
described in clause (i) being, the "Expected Class D Payment", plus
(ii) the aggregate amount of Expected Class D Payments which were not
paid on each preceding Distribution Date.
"Class E Certificateholder" means the Person in whose name a Class E
Certificate is registered in the Certificate Register.
"Class E Certificates" means the $[ ] aggregate initial principal
amount Xxxxxx Equipment Asset Receivables Trust Certificates, Class E,
representing beneficial equity interests in the Trust and issued pursuant to the
Trust Agreement.
"Class E Maturity Date" means the [ ] Distribution Date.
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of (1) the ADCB for all Contracts held by the Trust as of the last day of the
second Collection Period preceding such Distribution Date (or, in the case of
Contracts that were first added to the Contract pool during the Collection
Period immediately preceding such Distribution Date, as of the applicable Cutoff
Date for such Contracts) over (2) the ADCB for all Contracts held by the Trust
as of the last day of the Collection Period immediately preceding such
Distribution Date (the product described in clause (i) being, the "Expected
Class D Payment") and (ii) the aggregate amount of Expected Class D Payments
which were not paid on each preceding Distribution Date.
"Closing Date" means August [__], 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning given such term in the "granting clause" of
the Indenture.
"Collection Account" means the Trust Account so designated pursuant to
Section 7.01.
"Collection Period" means a period beginning on the first day of a calendar
month and ending on, but not including, the first day of the next calendar
month, provided that the first Collection Period shall be the period beginning
on the Initial Cutoff Date and ending on, but not including, the first day of
the calendar month immediately following the calendar month in which the Closing
Date occurs.
"Collections" means all payments received on or with respect to the
Contracts in the Contract Pool or the related Equipment, including, without
limitation, Scheduled Payments, Prepayments, Recoveries and Expired Lease
Proceeds, all as related to amounts attributable to the Contracts in the
Contract Pool or the related Equipment, but excluding any Excluded Amounts.
"Commission" means the United States Securities and Exchange Commission.
"Computer Disk" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Sellers
in selecting the Contracts conveyed to the Trust Depositor pursuant to the
Transfer and Sale Agreement (and any Subsequent Purchase Agreement), and
includes the master file and the history file as well as servicing information
with respect to the Contracts.
"Contract" means each End-User Contract and each Vendor Loan but, unless
otherwise specified herein, shall not refer to any Secondary Contract.
"Contract Assets" has the meaning assigned in Section 2.01 (and 2.04, as
applicable in the case of Subsequent Contracts) of the Transfer and Sale
Agreement.
"Contract File" means, with respect to each Contract, the fully executed
original counterpart (for UCC purposes) of the contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Servicer keeps on file in accordance with its customary procedures, evidencing
ownership of such Equipment (if applicable) and all other documents originally
delivered to the applicable Seller or held by the Servicer with respect to any
Contract.
"Contract Pool" as of any date means the Initial Contracts and the
Subsequent Contracts (if any), other than any such Contracts which (i) have been
reconveyed by the Trust to the Trust Depositor, and concurrently by the Trust
Depositor to the applicable Seller, pursuant to Section 7.07 hereof and Section
5.03 of the Transfer and Sale Agreement, or (ii) have been paid (or prepaid) in
full.
"Controlling Party" means the Holders of Class A-1 Notes and Class A-2
Notes aggregating more than 66-2/3% of the Aggregate Principal Amount of all
Class A-1 Notes and Class A-2 Notes outstanding (and if no Class A-1 Notes or
Class A-2 Notes remain outstanding, the Holders of Notes aggregating more than
50% of the Aggregate Principal Amount of all other Classes of Notes then
outstanding).
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"Corporate Trust Office" means, with respect to the Indenture Trustee or
Owner Trustee, as applicable, the office of the Indenture Trustee or Owner
Trustee at which at any particular time its corporate trust business shall be
principally administered, which offices at the date of the execution of this
Agreement are located at the addresses set forth in Section 11.04.
["Credit Guidelines" shall mean {HFI's _________ dated as of [_____],
19[__],} as amended or supplemented from time to time.]
"CSA" means each conditional sales agreement, including, as applicable,
schedules, subschedules, supplements and amendments to a master conditional
sales agreement, pursuant to which specified assets were conditionally sold to
an Obligor at specified monthly, quarterly, semi-annual or annual payments.
"Cumulative Net Loss Ratio" means, for any date of determination, the
fraction (expressed as a percentage) determined by dividing (i) the ADCB of all
Contracts in the Trust which have become Defaulted Contracts since the Initial
Cutoff Date, net of aggregatge Recoveries received by the Trust during such same
period, by (ii) the ADCB of all Contracts in the Contract Pool as of the Initial
Cutoff Date.
"Cutoff Date" means either or both (as the context may require) the Initial
Cutoff Date and any Subsequent Cutoff Date, as applicable to the Contract or
Contracts in question.
"Date of Processing" means, with respect to any transaction, the date on
which such transaction is first recorded on the related Seller's or Servicer's
computer master file of Contracts (without regard to the effective date of such
recordation).
"Defaulted Contract" means a Contract in the Contract Pool with respect to
which there has occurred one or more of the following: (i) all or some portion
of any Scheduled Payment under the Contract is more than 120 days delinquent
(or, with respect to a Contract for which there exists available payment
recourse to a Vendor to satisfy the amount in default, and which recourse was
not yet available (pursuant to the contractual terms thereof) or had not yet
been paid by the Vendor prior to the end of such 120 day period, then at such
time thereafter as the Vendor shall have failed to pay such defaulted amount in
accordance with the provisions of the Program Agreement, Vendor Assignment or
other agreement with the Vendor providing such recourse), or (ii) the Servicer
has determined in its sole discretion, in accordance with its usual and
customary practices (and taking into account any available Vendor recourse),
that such Contract is not collectible.
"Determination Date" means with respect to any Distribution Date, the third
Business Day prior to such Distribution Date.
"Discount Rate" means [___]% (which is equal to the sum of (1) the weighted
average of the Class A-1 Interest Rate, Class A-2 Interest Rate, Class B
Interest Rate, Class C Interest Rate, and Class D Interest Rate, and (2) the
Servicing Fee Percentage).
"Discounted Contract Balance" means with respect to any Contract, (i) as of
the related Cutoff Date, the present value of all of the remaining Scheduled
Payments becoming due under such Contract after the applicable Cutoff Date
discounted monthly at the applicable Discount Rate, and (ii) as of any other
date of determination, the sum of (x) the present value of all of the remaining
Scheduled Payments becoming due under such Contract after such date of
determination discounted monthly at the Discount Rate and (y) the aggregate
amount of all Scheduled Payments due and payable under such Contract after the
applicable Cutoff Date and prior to such date of determination (other than
Scheduled Payments related to Contracts that have become Defaulted Contracts or
Prepaid Contracts, and have not been replaced with a Subsequent Contract as
provided in Section 2.04) that have not then been received by the Servicer.
The "Discounted Contract Balance" for each Contract shall be calculated
assuming:
(i) all payments due in any Collection period are due on the last day
of the Collection Period;
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(ii) payments are discounted on a monthly basis using a 30 day month
and a 360 day year; and
(iii) all security deposits and drawings under letters of credit, if
any, issued in support of a Contract are applied to reduce Scheduled
Payments in inverse order of the due date thereof.
"Distribution Date" shall mean the [twentieth] day of each calendar month
or, if such [twentieth] day is not a Business Day, the next succeeding Business
Day, with the first such Distribution Date hereunder being September [22], 1997.
"Dollar" and "$" means lawful currency of the United States of America.
"Eligible Contract" means at any date of determination, each Contract with
respect to which each of the following is true:
(a) the information with respect to the Contract, any Secondary
Contract securing the obligations under such Contract, and the Equipment,
if any, subject to the Contract delivered under the Transfer and Sale
Agreement is true and correct in all material respects;
(b) immediately prior to the transfer of such Contract and any
related Equipment (or security interest therein) or Applicable Security (or
security interest therein) to the Trust Depositor, and immediately prior to
the Trust Depositor's concurrent transfer thereof to the Trust, such
Contract was owned by the applicable Seller (and by the Trust Depositor
following the transfer by the Seller) free and clear of any adverse claim,
other than with respect to any Residual Investment;
(c) the Contract did not have a Scheduled Payment that was a
delinquent payment for more than 60 days, and the Contract is not a
Defaulted Contract;
(d) no provision of the Contract has been waived, altered or modified
in any respect, except by instruments or documents contained in the
Contract File (other than payment delinquencies permitted under clause (c)
above);
(e) the Contract is a valid and binding payment obligation of the
Obligor and is enforceable in accordance with its terms (except as may be
limited by applicable Insolvency Laws and the availability of equitable
remedies);
(f) the Contract is not and will not be subject to the rights of
rescission, setoff, counterclaim or defense and, to the Seller's knowledge,
no such rights have been asserted or threatened with respect to the
Contract;
(g) the Contract, at the time it was made, did not violate the laws
of the United States or any state, except for any such violations which
would not materially and adversely affect the collectibility of the
Contracts in the Contract Pool taken as a whole;
(h) (i) the Contract and any related Equipment or interest therein
have not been sold, transferred, assigned or pledged by the applicable Seller to
any other Person (other than the financed sale of the Equipment to the End-User
effected through the End-User Contract) and any Equipment related to such
Contract is free and clear of any liens and encumbrances of any third parties
other than the applicable Seller (except for Permitted Liens), and (ii) either
(A) such Contract is secured by a fully perfected lien of the first priority in
favor of the applicable Seller on the related Equipment, or, in the case of any
Vendor Loan, related Applicable Security or (B) in the case of such a Contract
secured by Title Registry Equipment, either (1) within 30 calendar days of the
origination or acquisition of such Contract by the applicable Seller an
application was filed (in the case of motor vehicles) in the appropriate state
office to note such Seller's interest in such Equipment on the certificate of
title for such vehicle, or (in the case of other Title Registry Equipment) all
applicable federal registration or recording procedures were initiated, and in
any case
7
such Seller's interest will be so noted or recorded within 180 days of such
acquisition or origination, or (2) a certificate of title or similar
evidence of recordation on which the Seller's interest has been noted has
been obtained;
(i) if the Contract constitutes "chattel paper" for purposes of the
UCC, there is not more than one "secured party's original" counterpart of
the Contract;
(j) all filings necessary to evidence the conveyance or transfer of
the applicable Seller's ownership interest in the Contract, and such
Seller's corresponding interest in the related Equipment or Applicable
Security, as applicable, to the Trust Depositor (as well as the concurrent
conveyance of such property hereunder from the Trust Depositor to the
Trust), have been made in all appropriate jurisdictions; [provided, that
(i) UCC financing statement filings with respect to Equipment or Applicable
Security which name such Seller as secured party have not been amended to
indicate either the Trust Depositor or the Trust as an assignee; (although
separate UCC filings were made against the Seller's interest in Applicable
Security in each jurisdiction where a related Vendor is located) and (ii)
filings or registrations with respect to Title Registry Equipment which
name such Seller as either owner or a lienholder have not been amended to
indicate either the Trust Depositor or the Trust as an assignee;] [discuss
residual conveyance issue]
(k) the Obligor is not, to the Seller's knowledge, subject to
bankruptcy or other insolvency proceedings;
(l) the Obligor's billing address is in the United States and the
Contract is a U.S. dollar-denominated obligation;
(m) the Contract does not require the prior written consent of an
Obligor or contain any other restriction on the transfer or assignment of
the Contract (other than a consent or waiver of such restriction that has
been obtained prior to the Closing Date, with respect to an Initial
Contract, or the Subsequent Transfer Date, with respect to a Subsequent
Contract);
(n) either (x) the obligations of the related Obligor under such
Contract are irrevocable and unconditional and non-cancelable [(as
distinguished from prepayable)] or (y) with respect to certain Leases with
Lessees that are governmental entities or municipalities, if such Lease is
canceled in accordance with its terms, either (1) the Vendor that assigned
such Lease to the applicable Seller is unconditionally obligated to a
repurchase such lease from such Seller for a purchase price not less than
the Discounted Contract Balance of such Lease (as of the date of purchase)
plus interest thereon at the Discount Rate through the Distribution Date
following such date of repurchase, or (2) pursuant to the Transfer and Sale
Agreement, the Seller that sold such Lease to the Trust Depositor has
indemnified the Trust Depositor against such cancellation in an amount at
least equal to the Discounted Contract Balance of such Lease (as of the
date or purchase) plus interest thereon at the Discount Rate through the
Distribution Date following such cancellation, less any amounts paid by the
Vendor pursuant to clause (1);
(o) the Contract has an original maturity of not greater than the term
specified in this Agreement;
(p) no adverse selection procedure was used in selecting the Contract
for the Contract Pool;
(q) the Obligor under the Contract is required to maintain casualty
insurance or to self-insure with respect to the related Equipment in
accordance with the Servicer's normal requirements;
(r) the Contract constitutes chattel paper, an account, or a general
intangible (but not an instrument, except to the extent part of chattel
paper), in each case as defined under the UCC;
(s) the Contract is not a "consumer lease" as defined in Section 2A-
103(1)(e) of the UCC;
8
(t) if such Contract is a Lease, the Lessee thereunder has represented
to the related Vendor or applicable Seller that such Lessee has accepted
the related Equipment and has had a reasonable opportunity to inspect and
test such Equipment and the Vendor or Seller has not been notified of any
defects therein;
(u) the Contract is not subject to any guarantee by the applicable
Seller [or any Affiliate of same], nor has the Seller established any
specific credit reserve with respect to the related Obligor;
(v) if such Contract is a Lease, such Lease is a "triple net lease"
under which the Obligor is responsible for the maintenance of the related
Equipment in accordance with general industry standards applicable to such
item of Equipment;
(w) if such Contract is a Vendor Loan, such Vendor Loan is secured by
an Eligible Secondary Contract having an aggregate Discounted Contract
Balance for such Eligible Secondary Contract equal to the outstanding
principal amount of such Vendor Loan (assuming the interest rate specified
in such Vendor Loan is the "Discount Rate" for purposes of calculating such
Discounted Contract Balance);
(x) no provision of such Contract provides for a Prepayment Amount
less than the amount calculated in accordance with the definition of
Prepayment Amount (unless otherwise indemnified by the Vendor or the
applicable Seller in an amount equal to the excess of the "Prepayment
Amount" as calculated in accordance with the definition thereof over the
amount otherwise payable upon a prepayment under such Contract); and
(y) such Contract is not an obligation of the United States of
America or an agency, department, or instrumentality of the United States
of America;]
provided, that Contracts with respect to which any of the statements in clauses
(c), (o) or (x) above are not true shall also be "Eligible Contracts" if the
Trust Depositor shall have received confirmation from each Rating Agency that
such fact will not result in a Ratings Effect.
"Eligible Deposit Account" means either (a) a segregated account with a
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
Untied States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its short-term credit rating categories which signifies investment grade.
"Eligible Investments" with respect to any Distribution Date means
negotiable instruments or securities or other investments maturing on or before
such Distribution Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) which,
as of any date of determination, mature by their terms on or prior to the
Distribution Date immediately following such date of determination, and (c)
which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
full and trimly payment by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and
credit of the United States of America);
(ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of the Trust's
investment or contractual commitment to invest therein, the commercial
paper, if any, and short-term unsecured debt obligations (other than such
obligation whose rating is based on the credit of a Person other than such
institution or trust company) of such depository institution or trust
company shall have a credit rating from each Rating Agency in the Highest
Required Investment Category granted by such Rating Agency;
9
(iii) commercial paper, or other short term obligations, having, at
the time of the Trust's investment or contractual commitment to invest
therein, a rating in Highest Required Investment Category granted by each
Rating Agency;
(iv) demand deposits, time deposits or certificates of deposit that
are fully insured by the FDIC;
(v) notes that are payable on demand or bankers' acceptances
issued by any depository institution or trust company referred to in (ii)
above;
(vi) investments in money market funds having, at the time of the
Trust's investment or contractual commitment to invest therein, a rating of
the Highest Required Investment Category from each Rating Agency or whose
portfolio is limited to the investments described in clause (i) of this
definition;
(vii) time deposits (having maturities of not more than 90 days) by
an entity the commercial paper of which has, at the time of the Trust's
investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category granted by each Rating Agency;
(viii) Eligible Repurchase Obligations; and
(ix) any negotiable instruments or securities or other investments
in which the investment by the Trust therein has been approved in writing
by the Rating Agency.
"Eligible Secondary Contract" shall mean each Secondary Contract
(i) that satisfies all the criteria set forth in the definition of
"Eligible Contract" except clauses (b), (h) (with respect to ownership by
the applicable Seller of the Contract) and (w) thereof, and except that the
term "Obligor" shall mean "End-User" in all such criteria;
(ii) with respect to which Secondary Contract and the proceeds thereof
the applicable Seller has a duly perfected first priority lien; and
(iii) the transfer of the Seller's security interest with respect to
which has created a valid first priority Lien in such Secondary Contract
and the proceeds thereof in favor of the Seller which has been duly
perfected.
"Eligible Repurchase Obligations" means repurchase obligations with respect
to any security that is a direct obligation of, or fully guaranteed by, the
United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (c)(ii) of the
definition of Eligible Investments.
"End-User" shall mean any party that uses the Financed Item pursuant to an
End-User Contract.
"End-User Contract" shall mean any CSA, Secured Note, Lease, IPA, or other
Financing Agreement covering Financed Items originated or purchased by either or
the Financing Originators.
"Equipment" means the tangible assets (including printing equipment,
information technology equipment, communications equipment, commercial
equipment, industrial equipment, transportation equipment, construction
equipment, forestry equipment or other equipment) financed or leased by an
Obligor pursuant to a Contract and/or, unless the context otherwise requires, a
security interest in such assets.
"Event of Default" shall have the meaning specified in Section 5.01 of the
Indenture.
"Excess Contract", as of any date of determination, means each Contract
selected by the Servicer in accordance with Section 7.06 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.05 of the Transfer and Sale Agreement, the removal of
which pursuant to Section 7.06 hereof and the applicable Seller's repurchase
thereof or substitution of a Substitute Contract therefor pursuant to Section
5.01 of the Transfer and Sale Agreement, shall remedy such breach.
["Exchange Act" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.]
"Excluded Amounts" means (i) any collections on deposit in the Collection
Account or otherwise received by the Servicer on or with respect to the Contract
Pool or related Equipment, which collections are attributable to any taxes, fees
or other charges imposed by any Governmental Authority, (ii) any collections
representing reimbursements of insurance premiums or payments for services that
were not financed by the applicable Seller, and (iii) any proceeds from
10
the sale or other disposition of Equipment in excess of the difference between
(x) the Discounted Contract Balance of the related Contract as of the applicable
Cutoff Date, over (y) the present value as of the applicable Cutoff Date of all
amounts actually received by the Trust in respect of such Contract, discounted
monthly at the Discount Rate.
"Expired Lease" means any Lease that has terminated other than on its
scheduled expiration date.
"Expired Lease Proceeds" means any and all cash proceeds or rents realized
from the sale or re-lease of Equipment under an Expired Lease (net of
Liquidation Expenses).
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Final Trust Termination Date" means [December 31, 201].
"Financed Items" means Equipment, Software, Services and other property and
services that are permitted to be financed under Contracts in accordance with
the [Credit Guidelines].
"Financing Agreement" means each financing agreement covering Financed
Items other than a CSA, a Secured Note, a Lease or an IPA.
"Fitch" means Fitch Investors Service, L.P., or any successor thereto.
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government.
"Guaranteed Residual Investment" means each Residual Investment that is
made in the form of a full recourse loan to the related Obligor on an End-User
Contract constituting a Lease [, the repayment obligation with respect to which
is not included as part of the Scheduled Payments on the related Contract].
"Xxxxxx Leasing" means Xxxxxx Financial Leasing, Inc., a Delaware
corporation.
"HFI" has the meaning assigned such term in the preamble hereto.
"Highest Required Investment Category" means (i) with respect to ratings
assigned by Fitch, [___] for short-term instruments and [___] for long-term
instruments, and (ii) with respect to ratings assigned by Xxxxx'x, A-2 or P-1
for one month instruments, A-1 or P-1 for three month instruments, AA3 or P-1
for six month instruments and AAA or P-1 for instruments with a term in excess
of six months.
"Holder" means (i) with respect to a Certificate, the Person in whose name
such Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person at any date, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such person has not assumed or
otherwise become liable for the payment thereof.
"Indenture" means the Indenture, dated as of the date hereof, between the
Issuer and the Indenture Trustee.
11
"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means such a
Person who (i) is in fact independent of the Issuer, the Trust Depositor or the
Servicer, (ii) is not a director, officer or employee of any Affiliate of the
Issuer, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Issuer, the Trust Depositor or the Servicer or
any of their respective Affiliates, (iv) is not a holder (directly or
indirectly) of more than 10% of any voting securities of the Issuer, the Trust
Depositor or the Servicer or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Trust Depositor or the Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"Ineligible Contract" has the meaning specified in Section 7.06.
"Initial Class A-1 Principal Amount" means $[_________].
"Initial Class A-2 Principal Amount" means $[_________].
"Initial Class B Principal Amount" means $[_________].
"Initial Class C Principal Amount" means $[_________].
"Initial Class D Principal Amount" means $[_________].
"Initial Class E Principal Amount" means $[_________].
"Initial Principal Amount" means the sum of the Initial Class A-1 Principal
Amount, the Initial Class A-2 Principal Amount, the Initial Class B Principal
Amount, the Initial Class C Principal Amount, the Initial Class D Principal
Amount, and the Initial Class E Principal Amount i.e., $[_________].
"Initial Contracts" means those Contracts conveyed to the Trust on the
Closing Date.
"Initial Cutoff Date" means [July 31], 1997.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such person to the entry of an order for relief in an involuntary case under
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of this property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
"Insolvency Laws" means the Bankruptcy Code of the United States of America
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments,
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally.
"Insurance Policy" means, with respect to any Contract, an insurance policy
covering physical damage to or loss of the related Equipment.
"Insurance Proceeds" means. depending on the context, any amounts payable
or any payments made, to the Servicer under any Insurance Policy.
12
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Investment Earnings" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Collection Account and the
Reserve Fund, to be credited to the Collection Account on such Distribution Date
pursuant to Section 7.03.
"IPA" means each installment payment agreement, including as applicable,
schedules, subschedules, supplements and amendments to a software license
agreement, pursuant to which the Originator financed the purchase or acquisition
of specified assets by an Obligor for specified monthly, quarterly or semiannual
payments.
"Issuer" means the Xxxxxx Equipment Asset Receivables Trust 1997-1, a
Delaware business trust.
"Late Charges" means any late payment fees paid by Obligors on Contracts
after all sums received have been allocated first to regular installments due or
overdue and all such installments are then paid in full.
"Lease" means each agreement, including both operating and financing
agreements, and, as applicable, schedules, subschedules, supplements and
amendments to a master lease, pursuant to which the Originator, as lessor,
leased specified assets to a Lessee at a specified monthly, quarterly,
semiannual or annual rental.
"Lessee" means, with respect to any Lease, the Obligor with respect to such
Lease.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"Liquidation Expenses" means, with respect to any Contract, the aggregate
amount of all out-of-pocket expenses reasonably incurred by the Servicer
(including amounts paid to any subservicer) and any reasonably allocated costs
of internal counsel, in each case in accordance with the Servicer's customary
procedures in connection with the repossession, refurbishing and disposition of
any related Equipment upon or after the expiration or earlier termination of
such Contract and other out-of-pocket costs related to the liquidation of any
such Equipment, including the attempted collection of any amount owing pursuant
to such Contract if it is a Defaulted Contract.
"Liquidation Proceeds" means, with respect to a Defaulted Contract,
proceeds from the sale, lease or re-lease of the Equipment, proceeds of the
related Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment, net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
"List of Contracts" means the list identifying each Contract constituting
part of the Trust Assets, which list shall consist of the initial List of
Contracts reflecting the Initial Contracts transferred to the Trust on the
Closing Date, together with any Subsequent List of Contracts reflecting the
Subsequent Contracts transferred to the Trust on the related Subsequent Transfer
Date, and which list (a) identifies each Contract and (b) sets forth as to each
Contract (i) the Discounted Principal Balance as of the applicable Cutoff Date,
(ii) the amount of monthly payments due from the Obligor, (iii) the Contract
Rate and (iv) the maturity date, and which list (as in effect on the Closing
Date) is attached to this Agreement as Exhibit H.
"Lockbox" means the post office boxes listed on Exhibit K to which the
Obligors are instructed to remit payments on the Contracts included in the
Contract Pool and/or such other post office boxes for such purpose as may be
established or have been established from time to time.
13
"Lockbox Account" means the intervening account used by a Lockbox Processor
for deposit of funds received in a Lockbox prior to their transfer to the
Collection Account.
"Lockbox Processor" means the depositary institution or processing company
(which may be the Indenture Trustee) which processes payments on the Contracts
sent by the Obligors thereon forwarded to a Lockbox.
"Material Modification" means a termination or release (including pursuant
to prepayment), or an amendment, modification or waiver, or equivalent similar
undertaking or agreement, by the Servicer with respect to a Contract which would
not otherwise be permitted under the standards and criteria set forth in
Sections 5.08 and/or 5.09 hereof, as applicable.
"Maturity Date" means, as applicable, the Class A-1 Maturity Date, Class A-
2 Maturity Date, Class B Maturity Date, Class C Maturity Date, Class D Maturity
Date or Class E Maturity Date.
"Monthly Report" has the meaning specified in Section 9.01.
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor thereto.
"Note" means any one of the notes of the Trust of any Class executed and
authenticated in accordance with the Indenture.
"Note Distribution Account" means the account established and maintained as
such pursuant to Section 7.01.
["Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly or as an indirect participant, in accordance with the rules of
such Clearing Agency), and in any event the Person who is the beneficial owner
of a Note.]
"Note Register" has the meaning given such term in Section [__] of the
Indenture.
"Obligor" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any officer of
the Trust Depositor or the Servicer and delivered to the Owner Trustee or the
Indenture Trustee, as the case may be.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
(including internal counsel) for the Trust Depositor or the Servicer and who
shall be reasonably acceptable to the Owner Trustee or the Indenture Trustee, as
the case may be.
"Originator" means, with respect to each Contract, the party that is the
original lessor or financing party thereunder.
"Owner Trustee" means the Person acting, not in its individual capacity,
but solely as Owner Trustee, under the Trust Agreement, its successors in
interest and any successor owner trustee under the Trust Agreement.
"Paying Agent" means as described in Section 6.11 of the Indenture and
Section 3.10 of the Trust Agreement.
14
"Permitted Liens" means (a) with respect to Contracts in the Contract Pool:
(i) Liens for state, municipal or other local taxes if such taxes
shall not at the time be due and payable or if the Trust Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with
respect thereto, (ii) Liens in favor of the Trust Depositor created
pursuant to the Transfer and Sale Agreement and transferred to the Trust
pursuant hereto, (iii) Liens in favor of the Trust created pursuant to this
Agreement, and (iv) Liens in favor of the Indenture Trustee created
pursuant to the Indenture and/or this Agreement;
and (b) with respect to the related Equipment:
(i) materialmen's, warehousemen's, mechanics' and other liens arising
by operation of law in the ordinary course of business for sums not due,
(ii) Liens for state, municipal or other local taxes if such taxes shall
not at the time be due and payable or if the Trust Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with
respect thereto, (iii) Liens in favor of the Trust Depositor created
pursuant to the Transfer and Sale Agreement and transferred to the Owner
Trustee pursuant hereto, (iv) Liens in favor of the Trust created pursuant
to this Agreement; (v) Liens in favor of the Indenture Trustee created
pursuant to the Indenture and/or this Agreement, (vi) subordinated liens
which are subordinated to the prior payment of the Notes and Certificates
on terms described herein, and (vii) Liens granted by the End-Users which
are subordinated to the interest of the Trust in such Equipment.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Placement Agency Agreement" means [________].
"Prepaid Contract" means any Contract that has terminated or been prepaid
in full prior to its scheduled expiration date (including because of a Casualty
Loss), other than a Defaulted Contract.
"Prepayment Amount" has the meaning specified in Section 5.09.
"Prepayments" means any and all partial and full prepayments on a Contract
(including, with respect to any Contract and any Collection Period, any
Scheduled Payment (or portion thereof) which is due in a subsequent Collection
Period which the Servicer has received, and (if such Contract is not otherwise
prepayable by its terms) expressly permitted the related Obligor to make, in
advance of its scheduled due date and which will be applied to such Scheduled
Payment on such due date, and any and all cash proceeds or rents realized from
the sale, lease, re-lease or re-financing of Equipment under a Prepaid Contract,
net of Liquidation Expenses), Liquidation Proceeds, amounts received in respect
of Transfer Deposit Amounts and payments upon an optional termination of the
Trust pursuant to Section 7.08.
"Principal Amount" means, with respect to a Class of Notes or Certificates,
as applicable, the aggregate Initial Principal Amount thereof reduced by (i) the
aggregate amount of any distributions applied in reduction of such principal
amount and (ii) the aggregate amount of any distributions then on deposit in the
Note Distribution Account, if any, for such Class of Notes established in
accordance with the Indenture or, as applicable, the Certificate Distribution
Account, if any, for such Class of Certificates established in accordance with
the Trust Agreement, and to be applied in reduction of such principal amount in
accordance with such Indenture or Trust Agreement.
"Program Agreement" means each vendor finance program agreement pursuant to
which End-User Contracts originated by a Vendor are assigned to a Seller.
["Prospectus" means [________].]
15
"Qualified Eligible Investments" means Eligible Investments acquired by the
Indenture Trustee in its name and in its capacity as Indenture Trustee, which
are held by the Indenture Trustee in the Collection Account or the Reserve Fund
and with respect to which (a) the Indenture Trustee has noted its interest
therein on its books and records, and (b) the Indenture Trustee has purchased
such investments for value without notice of any adverse claim thereto (and, if
such investments are securities or other financial assets or interests therein,
within the meaning of Section 8-102 of the UCC as enacted in Illinois, without
acting in collusion with a securities intermediary in violating such securities
intermediary's obligations to entitlement holders in such assets, under Section
8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of
such entitlement holders), and (c) either (i) such investments are in the
possession of the Indenture Trustee, or (ii) such investments, (A) if
certificated securities and in bearer form, have been delivered to the Indenture
Trustee, or in registered form, have been delivered to the Indenture Trustee and
either registered by the issuer in the name of the Indenture Trustee or endorsed
by effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in Illinois) representing interests in securities or other
financial assets (or interests therein) held by a securities intermediary
(within the meaning of said Section 8-102), a securities intermediary indicates
by book entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its Affiliates.
"Qualified Institution" means (a) the corporate trust department of the
Indenture Trustee, or (b) a depository institution organized under the laws of
the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) (A) which has either
(1) a long-term unsecured debt rating acceptable to the Rating Agencies, or (2)
a short-term unsecured debt rating or certificate of deposit rating acceptable
to the Rating Agencies, (B) the parent corporation of which has either (1) a
long-term unsecured debt rating acceptable to the Rating Agencies, or (2) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies, or (C) is otherwise acceptable to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"Rating Agency" means each of Moody's and Fitch, so long as such Persons
maintain a rating on the Notes and Certificates; and if either Moody's or Fitch
no longer maintains a rating on the Notes and Certificates, such other
nationally recognized statistical rating organization selected by the Trust
Depositor.
"Rating Agency Condition" means, with respect to any action or series of
related actions or proposed transaction or series of related proposed
transactions, that each Rating Agency shall have notified the Trust Depositor
and the Owner Trustee in writing that such action or series of related actions
or the consummation of such proposed transaction or series of related
transactions will not result in a reduction or withdrawal of the rating of any
outstanding Class with respect to which it is a Rating Agency.
"Ratings Effect" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
"Record Date" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"Recoveries" means any and all recoveries on account of a Defaulted
Contract, including, without limitation, any and all cash proceeds or rents
realized from the sale, lease, re-lease or re-financing of repossessed Equipment
or other property, Insurance Proceeds, amounts representing late fees and
penalties and amounts received pursuant to a Program Agreement (including,
without limitation, amounts received from any "ultimate net loss pool" that may
have been created under such Program Agreement), but in each case net of
Liquidation Expenses.
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"Released Amounts" means, with respect to any payment or collection
received with respect to any Contract on any Business Day (whether such payment
or collection is received by the Servicer, the Owner Trustee or the Trust
Depositor), an amount equal to that portion of such payment or collection
constituting Excluded Amounts.
"Required Holders" means (i) prior to the payment in full of the Class A-1
Notes and Class A-2 Notes outstanding, Class A-1 Noteholders and/or Class A-2
Noteholders holding Class A-1 Notes and/or Class A-2 Notes evidencing more than
66 2/3% of the Aggregate Principal Amount of all Class A-1 Notes and Class A-2
Notes outstanding, (ii) from and after the payment in full of the Class A-1
Notes and Class A-2 Notes outstanding, Holders of Class B Notes holding Class B
Notes evidencing more than 66 2/3% of the Aggregate Principal Amount of all
Class B Notes outstanding, (iii) from and after the payment in full of the Class
B Notes outstanding, Holders of Class C Notes holding Class C Notes evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class C Notes
outstanding, and (iv) from and after the payment in full of the Class C Notes
outstanding, Holders of Class D Notes holding Class D Notes evidencing more than
66 2/3% of the Aggregate Principal Amount of all Class D Notes outstanding.
"Required Percentage of Holders" means (i) prior to the payment in full of
the principal amount of and accrued interest on the Class A-1 Notes and Class X-
0 Notes, Class A-1 Noteholders and/or Class A-2 Noteholders holding Class A-1
Notes and/or Class A-2 Notes evidencing more than 50% of the Aggregate Principal
Amount of all Class A-1 Notes and Class A-2 Notes then outstanding (or the
Indenture Trustee on behalf of such percentage of Noteholders), (ii) from and
after the payment in full of the principal amount of and accrued interest on the
Class A-1 Notes and Class A-2 Notes, Class B Noteholders holding Class B Notes
evidencing more than 50% of the Aggregate Principal Amount of all Class B Notes
outstanding (or the Indenture Trustee on behalf of such percentage of Class B
Noteholders), (iii) from and after the payment in full of the principal amount
of and accrued interest on the Class B Notes, Class C Noteholders holding Class
C Notes evidencing more than 50% of the Aggregate Principal Amount of all Class
C Notes outstanding (or the Indenture Trustee on behalf of such percentage of
Class C Noteholders), and (iv) from and after the payment in full of the
principal amount of and accrued interest on all Notes outstanding, Class D
Noteholders holding Class D Notes evidencing more than 50% of the Aggregate
Principal Amount of all Class D Notes outstanding.
"Requirements of Law" for any Person means the certificate of incorporation
or articles of association and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or order or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"Reserve Fund" means the Reserve Fund established and maintained pursuant
to Section 7.06 hereof.
"Reserve Fund Amount" means, initially as of the Closing Date, $[_____]
(representing the Reserve Fund Initial Deposit) and thereafter, at any date of
determination, means an amount equal to the lesser of (a) the Reserve Fund
Initial Deposit, and (b) the Aggregate Principal Amount of the Notes as of such
date of determination.
"Reserve Fund Initial Deposit" means $[_____], which is equal to 1.00% of
the ADCB of the Contracts Pool at the Initial Cutoff Date.
"Reserve Fund Deposits" means all moneys deposited in the Reserve Fund from
time to time including, but not limited to, the Reserve Fund Initial Deposit as
well as all investments and reinvestments thereof, earnings thereon, and
proceeds of the foregoing, whether now or hereafter existing.
"Residual Investment" means, with respect to certain Leases, any funds that
a Seller shall have advanced against all or any portion of the anticipated
residual value of the leased Equipment upon the expiration of such Lease in
accordance with its terms, and in excess of the discounted present value of the
rental payments due under such Lease.
"Responsible Officer" means, with respect to the Owner Trustee, any officer
in its Corporate Trust Administration Department (or any similar group of a
successor Owner Trustee) and with respect to the Indenture Trustee, the chairman
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Indenture Trustee
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customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"Restricting Event" means any of the following events:
(a) As of any Calculation Date occurring after the elapsing of six
full Collection Periods since the Closing Date, the Average
Cumulative Net Loss Ratio exceeds 1.00%; or
(b) A Servicer Default or an Event of Default has occurred and is
continuing.
"Scheduled Payment" means, with respect to any Contract, the monthly or
quarterly or semi-annual or annual rent or financing (whether principal or
principal and interest) payment scheduled to be made by the related Obligor
under the terms of such Contract after the related Cutoff Date; it being
understood that Scheduled Payments do not include any Excluded Amounts or
payments owing by such Obligor pursuant to the related End-User Contract in
respect of a Guaranteed Residual Investment.
"Secondary Contract" shall mean, with respect to a Vendor Loan, each
End-User Contract securing such Vendor Loan.
"Secured Note" means each promissory note with a related security interest
evidenced by written agreement, pursuant to which the purchase of specified
assets by a Obligor is financed for specified monthly, quarterly or semiannual
payments.
"Securities" means the Notes and the Certificates, or any of them.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securityholders" means the Holders of the Notes or the Certificates.
"Seller" means either of HFI or Xxxxxx Leasing, each in the capacity as a
Seller of a Contract under the Transfer and Sale Agreement (including in respect
of a Subsequent Contract pursuant to a Subsequent Purchase Agreement).
"Servicer" means initially HFI, or its successor, until any Service
Transfer hereunder and thereafter means the Successor Servicer appointed
pursuant to Article VIII below with respect to the duties and obligations
required of the Servicer under this Agreement.
"Servicer Advance" means, with respect to any Distribution Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Distribution Date in respect of Scheduled Payments pursuant to Section 5.14.
"Servicer Default" shall have the meaning specified in Section 8.01.
"Services" means, in connection with the financing of Software by an
Originator, the support and consulting services related to such Software, the
procurement of which was also financed by such Originator pursuant to a
Contract.
"Servicing Fee" has the meaning specified in Section 5.18.
"Servicing Fee Percentage" means [0.50]%.
"Service Transfer" has the meaning assigned in Section 8.02(a).
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"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.
"Software" means the computer software programs financed or leased by an
Obligor pursuant to a Contract.
"Solvent" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"Subsequent Contract" means any Contracts conveyed, assigned and
transferred by the Trust Depositor to the Trust pursuant to Section 2.04 (and
which has been acquired by the Trust Depositor from a Seller pursuant to Section
2.04 of the Transfer and Sale Agreement), whether an Additional Contract or a
Substitute Contract.
"Subsequent Contract Qualification Conditions" means, with respect to any
Subsequent Contract being transferred to the Trust pursuant to Section 2.04, the
accuracy of each of the following statements as of the related Cutoff Date for
such Contract:
(a) the Discounted Contract Balance of such Subsequent Contract is not
less than that of the related Contract or Contracts identified on the related
Addition Notice (whether a Contract or Contracts with respect to which there has
occurred an Addition Event, or a Substitution Event); and
(b) for each separate Collection Period which corresponds to a
Collection Period in which a payment would have been owing on the related
Contract or Contracts identified on the related Addition Notice, the amount in
respect of Scheduled Payments receivable (assuming Scheduled Payments are paid
and received when due) on the Subsequent Contract in such Collection Period is
not less than that of such related Contract or Contracts;
(c) if, instead of such Subsequent Contract being added to the
Contracts Pool on the related Subsequent Transfer Date, such Subsequent Contract
had instead been included in the Contracts Pool as of the Initial Cutoff Date,
and the related Contract or Contracts identified on the related Addition Notice
were no so included (and assuming such hypothetical inclusion satisfied the
criteria set forth in clause (a) and (b) above that would have been applicable
at such time), the representations of the Sellers set forth in Section 3.05
concerning concentrations would not, as a result of such inclusion, have become
inaccurate or incorrect in any material respect; and
(d) no adverse selection procedure shall have been employed in the
selection of such Subsequent Contract from the Sellers' portfolio.
"Subsequent Cutoff Date" means the date specified as such for Subsequent
Contracts in the related Subsequent Transfer Agreement.
"Subsequent List of Contracts" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Subsequent
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
"Subsequent Purchase Agreement" means, with respect to any Subsequent
Contracts, the agreement between the applicable Seller and the Trust Depositor
pursuant to which such Seller will transfer the Subsequent Contracts to the
Trust Depositor, the form of which is attached to the Transfer and Sale
Agreement as Exhibit C.
"Subsequent Transfer Agreement" means the agreement described in Section
2.04 hereof.
"Subsequent Transfer Date" means any date on which Subsequent Contracts are
transferred to the Trust.
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"Substitute Contract" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Substitution Event has occurred
with respect to a Contract or Contracts then held in the Contract Pool and
identified in the related Addition Notice.
"Substitute Contract Transfer Condition" means, with respect to any
Substitute Contract being transferred to the Trust pursuant to Section 2.04 in
respect of a related Contract or Contracts identified on the related Addition
Notice which is of a type described in clause (a) or (b) of the definition of
Substitution Event (a "Type"), the condition that after giving effect to such
transfer, the ADCB of all Substitute Contracts transferred to the Trust since
the Closing Date in respect of related Contracts of the same Type shall not
exceed 15% of the ADCB of the Initial Contracts as of the Initial Cutoff Date.
"Substitution Event" means, with respect to any transfer of a related
Substitute Contract to the Trust under Section 2.04, the occurrence of any of
the following: (a) one or more Contracts then held in the Trust and identified
in the related Addition Notice has become a Defaulted Contract, (b) one or more
Contracts then held in the Trust and identified in the related Addition Notice
has been subjected to a Material Modification, or (c) one or more Contracts then
held in the Trust and identified in the related Addition Notice is the subject
of a breach of a representation or warranty under the Transfer and Sale
Agreement which breach, in the absence of a substitution of a Substitute
Contract for such Contract or Contracts, would require the payment of a Transfer
Deposit Amount to the Trust in respect of such Contract.
"Successor Servicer" has the meaning given such term in Section 8.02(b).
"Tax Opinion" means, with respect to any action, an opinion of Counsel to
the effect that, for federal income tax purposes, (i) following such action the
Trust will not be deemed to be an association (or publicly traded partnership)
taxable as a corporation, and (ii) such action will not affect the tax
characterization as debt of Notes of any outstanding Class issued by the Trust
for which an Opinion of Counsel has been provided that such Notes are debt.
"Title Registry Equipment" means Equipment in the form of motor vehicles,
aircraft, barges or similar maritime assets , or railroad rolling stock, where
the transfer of interests in such Equipment is subject to state vehicle
registration laws (in the case of motor vehicles) or certain federal title
registration statutes, regulations and procedures (in the case of other Title
Registry Equipment).
"Transaction Documents" means this Agreement, the Transfer and Sale
Agreement, the Indenture, the Trust Agreement, the Administration Agreement, the
Note Depository Agreement, the Certificate Depository Agreement, any Subsequent
Transfer Agreement and any Subsequent Purchase Agreement.
"Transfer and Sale Agreement" means the Transfer and Sale Agreement dated
as of August [__], 1997 by and among each Seller and the Trust Depositor, as
amended, supplemented or otherwise modified from time to time.
"Transfer Date" means the Business Day immediately preceding each
Distribution Date.
"Transfer Deposit Amount" means, with respect to each Ineligible Contract
or Excess Contract, on any date of determination, the sum of the Discounted
Contract Balances of such Contracts, together with accrued interest thereon
through such date of determination at the Discount Rate, and any outstanding
Servicer Advances thereon.
"Transferred Assets" means all right, title and interest of the
transferring party in, to and under the following:
(i) the Initial Contracts and Subsequent Contracts, and all monies due
or to become due in payment of such Contracts on and after the related Cutoff
Dates, any Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but excluding any
Scheduled Payments due prior to the related Cutoff Date and any Excluded
Amounts;
20
(ii) the Equipment related to such Contracts and, in the case of
any Vendor Loan, related Applicable Security, including all proceeds from
any sale or other disposition of such Equipment (but subject to the
exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Program Agreements or
Vendor Agreements with the related Seller and under any guarantee or
similar credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi) rights of the Trust Depositor under the Transfer and Sale
Agreement, including, without limitation, in respect of the obligation of
each Seller party thereto to repurchase or substitute for Contracts under
certain circumstances as specified therein;
(vii) each Assignment; and
(viii) all income from and proceeds of the foregoing;
provided, that Transferred Assets shall not include any Residual
Investment.
"Trust" means the trust created by the Trust Agreement and funded pursuant
to this Agreement, consisting of the Trust Assets.
"Trust Accounts" means, collectively, the Collection Account, the Reserve
Fund and the Note Distribution Account, or any of them.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including without limitation the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.
"Trust Agreement" means the Trust Agreement, dated as of the date hereof,
between the Trust Depositor and the Owner Trustee.
"Trust Assets" has the meaning given to such term in Section 2.01(b) hereof
(and in Section 2.04(a) hereof in respect of Subsequent Contracts and related
assets transferred to the Trust pursuant to Subsequent Transfer Agreements).
"Trust Depositor" has the meaning assigned such term in the preamble
hereunder, or any successor entity thereto.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"Trustees" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as enacted in Illinois; provided,
however, in the event that, by reason of mandatory provisions of law, any and
all of the attachment, perfection or priority of the Lien of the Trust in and to
the Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Illinois, the term UCC shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
21
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"UCC Filing Locations" means the States of Illinois, Delaware, each
other State in which the Seller/Servicer maintains the Contract Files related to
Contracts in the Contract Pool and each State in which a Vendor [which is an
Obligor on a Vendor Loan] is located (as defined in the UCC in such State).
"Uncollectible Advance" means with respect to any Determination Date and
any Contract, the amount, if any, advanced by the Servicer pursuant to Section
7.03 which the Servicer has as of such Determination Date determined in good
faith will not be ultimately recoverable by the Servicer.
"Underwriter" means First Union Capital Markets Corp.
"United States" means the United States of America.
"Unreimbursed Servicer Advances" means, at any time, the amount of all
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Sections 7.01 or 7.05 and which
the Servicer has determined in its sole discretion are Uncollectible Advances,
and with respect to which the Servicer has given a written certification to such
effect to each Trustee.
"Vendor" means, with respect to a Contract, the equipment manufacturer,
dealer or distributor, or software licensor or distributor, or other Person that
provided financing under such Contract in connection with the acquisition or use
by an End-User of such party's Equipment, Software, Services or other products.
"Vendor Agreements" means the collective reference to Vendor Assignments
and Program Agreements.
"Vendor Assignment" means each assignment agreement pursuant to which an
individual End-User Contract originated by a Vendor is assigned to a Seller.
"Vendor Loan" means a limited recourse loan agreement (not in the form of
an "instrument" as defined in the UCC) payable by a Vendor and secured by the
Vendor's interest in Secondary Contracts and by the Equipment, if any, related
thereto.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
Section 1.02. Usage of Terms. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
Section 1.03. Section References. All section references, unless otherwise
indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
Section 2.01. Creation and Funding of Trust; Transfer of Trust Assets. (a)
The Trust shall be created pursuant to the terms and conditions of the Trust
Agreement, upon the execution and delivery of the Trust Agreement and the filing
by the Owner Trustee of an appropriately completed Certificate of Trust under
the Business Trust Statute. The Trust Depositor, as settlor of the Trust, shall
fund and convey assets to the Trust pursuant to the terms and provisions hereof.
The Trust shall be administered pursuant to the provisions of this Agreement and
the Trust Agreement for the benefit of the Noteholders and Certificateholders.
The Owner Trustee is hereby specifically recognized by the parties hereto as
empowered to conduct business dealings on behalf of the Trust in accordance with
the terms hereof and of the Trust Agreement.
(b) On the Closing Date, the Trust Depositor shall sell, transfer, assign,
set over and otherwise convey to the Trust by execution of an Assignment
substantially in the form of Exhibit A hereto, without recourse other than as
expressly provided herein, (i) all the right, title and interest of the Trust
Depositor in and to the Transferred Assets, (ii) the remittances, deposits and
payments made into the Trust Accounts from time to time and amounts in the Trust
Accounts from time to time (and any investments of such amounts), and (iii) all
proceeds and products of the foregoing (the property in clauses (i)-(iii) above,
the corpus of the Trust, being the "Trust Assets"). Although the Trust Depositor
and the Owner Trustee agree that such transfer is intended to be a sale,
conveyance and transfer of ownership of the Trust Assets, rather than the
granting of a security interest to secure a borrowing, and that the Trust Assets
shall not be property of the Trust Depositor, in the event such transfer is
deemed to be of a mere security interest to secure a borrowing, the Trust
Depositor shall be deemed to have granted the Owner Trustee for the benefit of
the Trust a perfected first priority security interest in such Trust Assets and
this Agreement shall constitute a security agreement under applicable law,
securing the obligations and/or interests represented by the Securities, in the
order and priorities, and subject to the other terms and conditions of, this
Agreement, the Indenture and the Trust Agreement, together with such other
obligations or interests as may arise hereunder and thereunder in favor of the
parties thereto.
Section 2.02. Conditions to the Closing. On or before the Closing Date,
the Trust Depositor shall deliver or cause to be delivered the following
documents to the Owner Trustee and Indenture Trustee:
(a) The initial List of Contracts, certified by the Chairman of the
Board, President or any Vice President of the Trust Depositor, together
with an Assignment substantially in the form of Exhibit A hereto.
(b) A certificate of an officer of the Seller substantially in the
form of Exhibit B to the Transfer and Sale Agreement and of an officer of
the Trust Depositor substantially in the form of Exhibit B hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of Exhibits D, E and F hereto (and including as
an addressee thereof each Rating Agency).
(d) A letter from Xxxxxx Xxxxxxxx LLP, or another nationally
recognized accounting firm, addressed to the Sellers and stating that such
firm has reviewed a sample of the Initial Contracts and performed specific
procedures for such sample with respect to certain contract terms and which
identifies those Initial Contracts which do not conform.
(e) Copies of resolutions of the Board of Directors of each of the
Sellers, the Servicer and the Trust Depositor or of the Executive Committee
of the Board of Directors of each of the Sellers, the Servicer and the
Trust Depositor approving the execution, delivery and performance of this
Agreement and the other Transaction Documents to which any of them is a
party, as applicable, and the transactions contemplated hereunder and
thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Sellers, the Servicer and the Trust Depositor.
23
(f) Officially certified, recent evidence of due incorporation and
good standing of each of the Sellers and the Trust Depositor under the laws
of Delaware.
(g) Evidence of proper filing with appropriate officers in the UCC
Filing Locations of UCC financing statements executed by each Seller, as
debtor, naming the Trust Depositor as secured party (and the Owner Trustee
as assignee) and identifying the Contract Assets as collateral; and
evidence of proper filing with appropriate officer in the UCC Filing
Locations of UCC financing statements executed by the Trust Depositor, as
debtor, naming the Owner Trustee as secured party (and the Indenture
Trustee as assignee) and identifying the Trust Assets as collateral; and
evidence of proper filing with appropriate officers in the UCC Filing
Locations of UCC financing statements executed by the Trust and naming the
Indenture Trustee as secured party and identifying the Collateral, as
collateral.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
(i) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts on or after the Initial
Cutoff Date to the Closing Date, together with an Officer's Certificate
from the Servicer to the effect that such amount is correct.
(j) The Officer's Certificate of each Seller specified in Section
2.02(h) of the Transfer and Sale Agreement.
(k) Evidence of deposit in the Reserve Fund of the Reserve Fund
Initial Deposit by the Trust Depositor.
(l) A fully executed Transfer and Sale Agreement.
(m) A fully executed Trust Agreement.
(n) A fully executed Administration Agreement.
(o) A fully executed Indenture.
Section 2.03. Acceptance by Owner Trustee. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, the Owner Trustee
shall issue on behalf of the Trust to, or upon the order of, the Trust Depositor
the Certificates representing ownership of a beneficial interest in 100% of the
Trust and the Owner Trustee shall issue, and the Indenture Trustee shall
authenticate, to, or upon the order of, the Trust Depositor the Notes secured by
the Collateral. The Owner Trustee hereby acknowledges its acceptance, on behalf
of the Trust, of the Trust Assets, and declares that it shall maintain such
right, title and interest in accordance with the terms of this Agreement and the
Trust Agreement upon the trust herein and therein set forth.
Section 2.04. Conveyance of Subsequent Contracts. (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor shall sell,
transfer, assign, set over and otherwise convey to the Trust, without recourse
other than as expressly provided herein and therein, (i) all the right, title
and interest of the Trust Depositor in and to the Subsequent Contracts listed on
the Subsequent List of Contracts (including, without limitation, all rights to
receive payments which are collected pursuant thereto on or after the related
Subsequent Cutoff Date, including any liquidation proceeds therefrom, but
excluding any rights to receive payments which were collected pursuant thereto
prior to such Subsequent Cutoff Date), and (ii) all other rights and property
interests consisting of Transferred Assets related to such Subsequent Contracts
(the property in clauses (i)-(ii) above, upon such transfer, becoming part of
the "Trust Assets"). Although the Trust Depositor and the Owner Trustee agree
that such transfer is intended to be a sale of ownership, rather than the
granting of a security interest to secure a borrowing, and that the Trust Assets
following such transfer shall not be property of the Trust Depositor, in the
event such transfer is deemed to be of a mere security interest to secure a
borrowing, the Trust Depositor shall be deemed to have granted the Owner Trustee
for the benefit of the Trust a perfected
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first priority security interest in such Trust Assets and this Agreement shall
constitute a security agreement under applicable law, securing the obligations
and/or interests represented by the Securities, in the order and priorities, and
subject to the other terms and conditions of, this Agreement, the Indenture and
the Trust Agreement, together with such other obligations or interests as may
arise hereunder and thereunder in favor of the parties hereto and thereto.
(b) The Trust Depositor shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date (and the delivery
of a related Addition Notice by the Trust Depositor shall be deemed a
representation and warranty by the Trust Depositor, and of the Sellers jointly
and severally, that such conditions have been or will be, as of the related
Subsequent Transfer Date, satisfied):
(i) The Trust Depositor shall have provided the Owner Trustee and
the Indenture Trustee with a timely Addition Notice complying with the
definition thereof contained herein;
(ii) there shall have occurred, with respect to each such Subsequent
Contract, a corresponding Addition Event or Substitution Event with respect
one or more Contracts then in the Contract Pool;
(iii) the Subsequent Contract(s) being conveyed to the Trust, satisfy
the Subsequent Contract Qualification Conditions;
(iv) if such Subsequent Contracts include Substitute Contracts,
after giving effect to the conveyance, the Substitute Contract Transfer
Conditions shall remain satisfied;
(v) the Trust Depositor shall have delivered to the Owner Trustee a
duly executed written assignment (including an acceptance by the Owner
Trustee) in substantially the form of Exhibit M hereto (the "Subsequent
Transfer Agreement"), which shall include a Subsequent List of Contracts
listing the Subsequent Contracts;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all Collections received with respect
to the Subsequent Contracts on or after the related Subsequent Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither the Sellers nor
the Trust Depositor were insolvent nor will any of them have been made
insolvent by such transfer nor are any of them aware of any pending
insolvency;
(viii) no selection procedures believed by the Sellers or the Trust
Depositor to be adverse to the interests of the Noteholders or
Certificateholders shall have been utilized in selecting the Subsequent
Contracts;
(ix) each of the representations and warranties made by the Seller
pursuant to Article III of the Transfer and Sale Agreement applicable to
the Subsequent Contracts shall be true and correct as of the related
Subsequent Transfer Date, and the Sellers shall have performed all
obligations to be performed by them hereunder or thereunder on or prior to
such Subsequent Transfer Date; and
(x) the Seller shall, at its own expense, on or prior to the
Subsequent Transfer Date indicate in its Computer Disk that the Subsequent
Contracts identified on the Subsequent List of Contracts in the Subsequent
Transfer Agreement have been sold to the Issuer through the Trust Depositor
pursuant to this Agreement and the Transfer and Sale Agreement.
Section 2.05. Release of Released Amounts. The Indenture Trustee hereby
agrees to release to the Trust from the Transferred Assets, and the Trust hereby
agrees to release to the Trust Depositor, an amount equal to the Released
Amounts immediately upon identification thereof, which release shall be
automatic and shall require no further act by the Indenture Trustee or the
Trust, provided that the Indenture Trustee or Owner Trustee shall execute and
deliver
25
such instruments of release and assignment, or otherwise confirm the foregoing
release, as may reasonably be requested by the Trust Depositor. Upon such
release, such Released Amounts shall not constitute and shall not be included in
the Transferred Assets.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Each Seller under the Transfer and Sale Agreement has jointly and severally
made, and upon execution of each Subsequent Purchase Agreement is jointly and
severally deemed to remake, each of the representations and warranties set forth
in Exhibit J hereto and has consented to the assignment by the Trust Depositor
to the Issuer of the Trust Depositor's rights with respect thereto. Such
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
Pursuant to Section 2.01 of this Agreement, the Trust Depositor has sold,
assigned, transferred and conveyed to the Issuer as part of the Trust Assets its
rights under the Transfer and Sale Agreement, including without limitation, the
representations and warranties of the Sellers therein as set forth in Exhibit J
attached hereto, together with all rights of the Trust Depositor with respect to
any breach thereof including any right to require the Sellers to repurchase or
substitute for any Contract in accordance with the Transfer and Sale Agreement.
It is understood and agreed that the representations and warranties set forth or
referred to in this Section shall survive delivery of the Contract Files to the
Owner Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Owner Trustee
that it has entered into the Transfer and Sale Agreement with the Sellers, that
the Sellers have made the representations and warranties in the Transfer and
Sale Agreement as set forth in Exhibit J hereto, that such representations and
warranties run to and are for the benefit of the Trust Depositor, and that
pursuant to Section 2.01 of this Agreement the Trust Depositor has transferred
and assigned to the Issuer all rights of the Trust Depositor to cause the
Sellers under the Transfer and Sale Agreement to repurchase or substitute for
Contracts in the event of a breach of such representations and warranties.
Section 3.01. Representations and Warranties Regarding the Trust
Depositor. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Issuer, the
Indenture Trustee, the Noteholders and the Certificateholders that:
(a) Sellers' Representations and Warranties. The representations
and warranties set forth in Exhibit J are true and correct.
(b) Organization and Good Standing. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Trust Depositor
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or other) of the Trust Depositor or the Trust.
(c) Authorization; Valid Sale; Binding Obligations. The Trust
Depositor has the power and authority to make, execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party
and all of the transactions contemplated under this Agreement and the other
Transaction Documents to which it is a party, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party and
has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the other Transaction
Documents to which it is a party and to cause the Trust to be created. This
Agreement and the
26
related Subsequent Transfer Agreement, if any, shall effect a valid sale,
transfer and assignment of the Trust Assets, enforceable against the Trust
Depositor and creditors of and purchasers from the Trust Depositor. This
Agreement and the other Transaction Documents to which the Trust Depositor
is a party constitute the legal, valid and binding obligation of the Trust
Depositor enforceable in accordance with their terms, except as enforcement
of such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(d) No Consent Required. The Trust Depositor is not required to
obtain the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or the other Transaction Documents to
which it is a party.
(e) No Violations. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a party
by the Trust Depositor, and the consummation of the transactions
contemplated hereby and thereby, will not violate any Requirement of Law
applicable to the Trust Depositor, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Trust
Depositor is a party or by which the Trust Depositor or any of the Trust
Depositor's properties may be bound, or result in the creation or
imposition of any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind upon any of its properties pursuant to
the terms of any such mortgage, indenture, contract or other agreement,
other than as contemplated by the Transaction Documents.
(f) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Trust Depositor threatened, against the Trust
Depositor or any of its properties or with respect to this Agreement, the
other Transaction Documents to which it is a party or the Securities (1)
which, if adversely determined, would in the reasonable judgment of the
Trust Depositor have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of the Trust Depositor or the
Trust or the transactions contemplated by this Agreement or the other
Transaction Documents to which the Trust Depositor is a party or (2)
seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificates or Notes.
(g) Bulk Sales. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" laws by the Trust
Depositor.
(h) Solvency. The transactions under this Agreement do not and
will not render the Trust Depositor insolvent.
(i) Taxes. The Trust Depositor has filed or caused to be filed
all tax returns which, to its knowledge, are required to be filed and has
put all taxes shown to be due and payable on such returns or on any
assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any amount of tax due, the validity of
which is currently being contested in good faith by appropriate proceedings
and with respect to which reserves in accordance with generally accepted
accounting principles have been provided on the books of the Trust
Depositor); no tax lien has been filed and, to the Trust Depositor's
knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.
(j) Place of Business; No Changes. The Trust Depositor's sole
place of business (within the meaning of Article 9 of the UCC) is as set
forth in Section 11.04 below. The Trust Depositor has not changed its name,
whether by amendment of its Certificate of Incorporation, by reorganization
or otherwise, and has not changed the location of its place of business,
within the four months preceding the Closing Date.
27
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
Section 3.02. Representations and Warranties Regarding the Servicer. The
Servicer represents and warrants to the Owner Trustee, the Indenture Trustee,
the Noteholders and the Certificateholders that:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate power to
own its assets and to transact the business in which it is currently
engaged. The Servicer is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by
it requires such qualification and in which the failure so to qualify would
have a material adverse effect on the business, properties, assets, or
condition (financial or otherwise) of the Servicer or the Trust. The
Servicer is properly licensed in each jurisdiction to the extent required
by the laws of such jurisdiction to service the Contracts in accordance
with the terms hereof.
(b) Authorization; Binding Obligations. The Servicer has the
power and authority to make, execute, deliver and perform this Agreement
and the other Transaction Documents to which the Servicer is a party and
all of the transactions contemplated under this Agreement and the other
Transaction Documents to which the Servicer is a party, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents to which
the Servicer is a party. This Agreement and the other Transaction Documents
to which the Servicer is a party constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with their terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) No Consent Required. The Servicer is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity
or enforceability of this Agreement and the other Transaction Documents to
which the Servicer is a party.
(d) No Violations. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Servicer is
a party by the Servicer will not violate any Requirements of Law applicable
to the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or
by which the Servicer or any of the Servicer's properties may be bound, or
result in the creation of or imposition of any security interest, lien,
pledge, preference, equity or encumbrance of any kind upon any of its
properties pursuant to the terms of any such mortgage, indenture, contract
or other agreement, other than as contemplated by the Transaction
Documents.
(e) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Servicer threatened, against the Servicer or any of
its properties or with respect to this Agreement, or any other Transaction
Document to which the Servicer is a party which, if adversely determined,
would in the reasonable judgment of the Servicer have a material adverse
effect on the business, properties, assets or condition (financial or
otherwise) of the Servicer or the Trust or the transactions contemplated by
this Agreement or any other Transaction Document to which the Servicer is a
party.
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ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
Section 4.01. Custody of Contracts. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Noteholders, the Certificateholders, the Indenture Trustee, and the Owner
Trustee as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the UCC Filing Locations as shall from time to time be identified to
the Trustees by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; provided, however, that the Servicer will take all
action necessary to maintain the perfection of the Trust's interest in the
Contracts and the proceeds thereof. It is intended that by the Servicer's
agreement pursuant to Section 4.01(a) above and this Section 4.01(b) the
Trustees shall be deemed to have possession of the Contract Files for purposes
of Section 9-305 of the Uniform Commercial Code of the State in which the
Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Noteholders and the
Certificateholders and the Owner Trustee and the Indenture Trustee,
maintain accurate records pertaining to each Contract to enable it to
comply with the terms and conditions of this Agreement, maintain a current
inventory thereof, conduct annual physical inspections of Contract Files
held by it under this Agreement and certify to the Owner Trustee and the
Indenture Trustee annually that it continues to maintain possession of such
Contract Files;
(ii) implement policies and procedures in writing and signed by a
Servicing Officer with respect to persons authorized to have access to the
Contract Files on the Servicer's premises and the receipting for Contract
Files taken from their storage area by an employee of the Servicer for
purposes of servicing or any other purposes;
(iii) attend to all details in connection with maintaining custody of
the Contract Files on behalf of the Noteholders and the Certificateholders,
the Owner Trustee and the Indenture Trustee;
(iv) at all times maintain the original of each fully executed
Contract and store such original Contract in a fireproof vault;
(v) stamp each Contract on both the first and the signature page
(if different) as of the Closing Date (or Subsequent Transfer Date, as the
case may be) with a legend in the form attached hereto as Exhibit L; and
(vi) within 30 days of the Closing Date (or Subsequent Transfer
Date, as the case may be) deliver an Officer's Certificate to the Owner
Trustee and the Indenture Trustee certifying that as of a date no earlier
than the Closing Date (or Subsequent Transfer Date, as the case may be) it
has conducted an inventory of the Contract Files (which in the case of
Subsequent Contracts, need be only of the Contract Files related to such
Subsequent Contracts) and that there exists a Contract File for each
Contract and stating all exceptions to such statement, if any.
(d) In performing its duties under this Section 4.01, the Servicer agrees
to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the financing of Financed Items
owned and/or serviced by it, and in any event with no less degree of skill and
care than would be exercised by a prudent servicer
29
of such Financed Items. The Servicer shall promptly report to the Owner Trustee
and the Indenture Trustee any failure by it to hold the Contract Files as herein
provided and shall promptly take appropriate action to remedy any such failure.
In acting as custodian of the Contract Files, the Servicer further agrees not to
assert any legal or beneficial ownership interest in the Contracts or the
Contract Files, except as provided in Section 5.06. The Servicer agrees to
indemnify the Noteholders, the Certificateholders, the Owner Trustee and the
Indenture Trustee for any and all liabilities, obligations, losses, damages,
payments, costs, or expenses of any kind whatsoever which may be imposed on,
incurred by or asserted against the Noteholders, the Certificateholders, the
Owner Trustee and the Indenture Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Contract Files;
provided, however, that the Servicer will not be liable for any portion of any
such amount resulting from the gross negligence or willful misconduct of any
Noteholder, Certificateholder, the Owner Trustee or the Indenture Trustee. The
Trustees shall have no duty to monitor or otherwise oversee the Servicer's
performance as custodian hereunder.
Section 4.02. Filing. On or prior to the Closing Date, the Servicer shall
cause the UCC financing statement(s) referred to in Section 2.02(g) hereof to be
filed and from time to time the Servicer shall take and cause to be taken such
actions and execute such documents as are necessary or desirable or as the Owner
Trustee or Indenture Trustee may reasonably request to perfect and protect the
Trust's first priority perfected interest in the Trust Corpus against all other
persons, including, without limitation, the filing of financing statements,
amendments thereto and continuation statements, the execution of transfer
instruments and the making of notations on or taking possession of all records
or documents of title.
Section 4.03. Name Change or Relocation. (a) During the term of this
Agreement, neither the Servicer nor the Trust Depositor shall change, nor shall
the Trust Depositor permit any Seller to change, its name, identity or structure
or relocate its chief executive office without first giving at least 30 days'
prior written notice to the Owner Trustee and the Indenture Trustee.
(b) If any change in either the Servicer's, a Seller's or the Trust
Depositor's name, identity or structure or other action would make any financing
or continuation statement or notice of lien seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the Servicer,
no later than five days after the effective date of such change, shall file such
amendments as may be required to preserve and protect the Trust's interests in
the Trust Assets and the proceeds thereof. In addition, neither any Seller, the
Servicer nor the Trust Depositor shall change its place of business (within the
meaning of Article 9 of the UCC), or the locations in which Contract Files are
maintained, from the locations specified in Section 11.04 below or the UCC
Filing Locations unless it has first taken such action as is advisable or
necessary to preserve and protect the Trust's interest in the Trust Assets.
Promptly after taking any of the foregoing actions, the Servicer shall deliver
to the Owner Trustee and the Indenture Trustee an opinion of counsel reasonably
acceptable to the Owner Trustee stating that, in the opinion of such counsel,
all financing statements or amendments necessary to preserve and protect the
interests of the Owner Trustee in the Trust Corpus have been filed, and reciting
the details of such filing.
Section 4.04. Costs and Expenses. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Equipment related thereto).
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ARTICLE FIVE
SERVICING OF CONTRACTS
Section 5.01. Appointment and Acceptance; Responsibility for Contract
Administration. HFI is hereby appointed as Servicer and custodian (as
contemplated in Article IV hereof) pursuant to this Agreement. HFI accepts the
appointment and agrees to act as the Servicer and custodian pursuant to this
Agreement.
The Servicer will have the sole obligation to manage, administer, service and
make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer,
shall furnish the Servicer with any powers of attorney or other documents
necessary or appropriate in the opinion of the Owner Trustee to enable the
Servicer to carry out its servicing and administrative duties hereunder. The
Servicer is hereby appointed the servicer hereunder until such time as any
Service Transfer may be effected under Article VIII.
Section 5.02. General Duties. The Servicer will service, administer and
enforce the Contracts in the Contract Pool on behalf of the Trust and will have
full power and authority to do any and all things in connection with such
servicing and administration which it deems necessary or desirable and as shall
not contravene the provisions of this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in the Contract Pool
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable contracts that it services for itself
or others. The Servicer's duties will include collection and posting of all
payments, responding to inquiries of Obligors regarding the Contracts in the
Contract Pool, investigating delinquencies, accounting for collections,
furnishing monthly and annual statements with respect to collections and
payments in accordance with Article Nine hereof, making Servicer Advances in its
discretion, and using its best efforts to maintain the perfected first priority
security interest of the Indenture Trustee in the Trust Assets. The Servicer
will follow its customary standards, policies, and procedures and will have full
power and authority, acting alone, to do any and all things in connection with
such managing, servicing, administration, and collection that it deems necessary
or desirable. If the Servicer commences a legal proceeding to enforce a
Defaulted Contract pursuant to Section 5.15 or commences or participates in a
legal proceeding (including a bankruptcy proceeding) relating to or involving a
Contract in the Contract Pool, the Trust will be deemed to have automatically
assigned such Contract to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Trust, pursuant to this Section 5.02, to execute
and deliver, on behalf of itself and the Trust, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceedings. If in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, then the Owner Trustee will, at the
Servicer's expense and direction, take steps on behalf of the Trust to enforce
the Contract, including bringing suit in the Trust's name.
Section 5.03. Consent to Assignment or Replacement. At the request of an
Obligor, the Servicer may in its sole discretion consent to the assignment of
the related Contract or the sublease of a unit of the Equipment relating to a
Contract, so long as such Obligor remains liable for all of its obligations
under such Contract. Upon the request of any Obligor, the Servicer may, in its
sole discretion, provide for the substitution or replacement of any unit of
Equipment for a substantially similar unit of Equipment, so long as such Obligor
remains liable for all of its obligations under such Contract.
Section 5.04. Disposition Upon Termination of Contract. Upon the
termination of a Contract included in the Contract Pool as a result of a default
by the obligor thereunder, and upon any such Contract becoming a Defaulted
Contract, the Servicer will use commercially reasonable efforts to dispose of
any related Equipment. Without limiting the generality of the foregoing, the
Servicer may dispose of any such Equipment by purchasing such Equipment or by
selling
31
such Equipment to any of its Affiliates for a purchase price equal to the fair
market value thereof. The Servicer will deposit any Prepayments and any Expired
Lease Proceeds of any such disposition in accordance with Section 7.01.
Section 5.05. Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers (including any Affiliate of the
Servicer) to perform all or a portion of the servicing functions on behalf of
the Servicer; provided that the Servicer shall remain obligated and be liable to
the Trust for servicing and administering the Contracts in the Contract Pool in
accordance with the provisions of this Agreement without diminution of such
obligation and liability by virtue of the appointment of such subservicer, to
the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering such Contracts. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and its subservicer
and neither the Owner Trustee, the Trust, the Indenture Trustee nor the Holders
will have any responsibility therefor. All actions of a subservicer taken
pursuant to such a subservicer agreement will be taken as an agent of the
Servicer with the same force and effect as though performed by the Servicer.
Section 5.06. Further Assurance. The Owner Trustee and the Indenture
Trustee will furnish the Servicer, and the Servicer will furnish any
subservicer, with any powers of attorney and other documents necessary or
appropriate to enable the Servicer or a subservicer, as applicable, to carry out
its servicing and administrative duties under this Agreement.
Section 5.07. Notice to Obligors. The Servicer will not be required to
notify any Obligor that such Obligor's Contract or related Equipment, or any
security interest in such Contract or such Equipment, has been sold,
transferred, assigned, or conveyed pursuant to the Transfer and Sale Agreement
or pursuant to this Agreement; provided that, in the event that the Servicer
resigns or is replaced, then if the place for payment pursuant to any Contract
is changed, the Successor Servicer must give each related Obligor prompt written
notice of the appointment of the Successor Servicer and the place to which such
Obligor should make payments pursuant to each such Contract.
Section 5.08. Collection Efforts; Modification of Contracts. The Servicer
will make reasonable efforts to collect all payments called for under the terms
and provisions of the Contracts in the Contract Pool as and when the same become
due, and will follow those collection procedures which it follows with respect
to all comparable contracts that it services for itself or others. The Servicer
may, subject to Sections 5.09 and 5.10, at the request of an Obligor and at the
Servicer's option, waive, modify or otherwise vary any other provision of a
Contract in accordance with its customary and usual practices, provided, that no
such waiver, modification or variance shall, without the consent of each Rating
Agency, have the effect of accelerating (except as provided in Sections 5.09 and
5.10), delaying, reducing or extending the date for payment of Scheduled
Payments with respect to such Contract. The Servicer may in its discretion waive
any late payment charge or any other fees that may be collected in the ordinary
course of servicing any Contract in the Contract Pool.
Section 5.09. Prepaid Contract. The Servicer may, at its option and in
accordance with its customary and usual practices, agree to permit a Contract in
the Contract Pool that is not otherwise contractually prepayable by its terms to
become a Prepaid Contract (which shall not include a Contract that becomes an
Prepaid Contract due to a Casualty Loss); provided, that the Servicer will not
permit the early termination or full prepayment of such a Contract unless (i)
such early termination or full prepayment would not result in the Trust
receiving an amount (the "Prepayment Amount") less than the sum of (A) the
Discounted Contract Balance on the date of such prepayment plus any accrued and
unpaid interest payments thereon (at the Discount Rate) and (B) any outstanding
Servicer Advances thereon, or (ii) if such early termination or full prepayment
would result in the Trust receiving a Prepayment Amount less than the amount set
forth in clause (i), either the Vendor or the Sellers shall have agreed to pay
the Trust the difference between the Prepayment Amount actually paid and the
amount set forth in clause (i) (such payment by the Vendor or Seller also to be
considered a "Prepayment Amount").
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Section 5.10. Acceleration. The Servicer, in its sole discretion, may
accelerate (or elect not to accelerate) the maturity of all or any Scheduled
Payments under any Contract in the Contract Pool under which a default under the
terms thereof has occurred and is continuing (after the lapse of any applicable
grace period); provided that the Servicer is required to accelerate the
Scheduled Payments due under any Contract in the Contract Pool (and take other
action in accordance with the applicable Seller's past practice, including
repossessing or otherwise converting the related Equipment, to realize upon the
value of such Contract and the related Equipment) to the fullest extent
permitted by the terms of such Contract, promptly after such Contract becomes a
Defaulted Contract.
Section 5.11. Taxes and Other Amounts. To the extent provided for in any
Contract in the Contract Pool, the Servicer will make reasonable efforts to
collect all payments with respect to amounts due for taxes, assessments and
insurance premiums relating to such Contracts or the Equipment and remit such
amounts to the appropriate Governmental Authority or insurer on or prior to the
date such payments are due.
Section 5.12. Lockboxes, Etc. On or before the Closing Date with respect
to the Initial Contracts and on or before the relevant Subsequent Transfer Date,
with respect to Subsequent Contracts, the Servicer shall have instructed all
Obligors to make all payments in respect of the Contracts in the Contract Pool
to a Lockbox or directly to a Lockbox Account. All Collections received in a
Lockbox shall, within one Business Day of receipt thereof, be deposited in the
Lockbox Account. In the event that any payments in respect of the Contracts are
made directly to the Servicer, the Servicer shall, within two Business Days of
receipt thereof, deposit such amounts in a Lockbox Account or in the Collection
Account. The Servicer shall cause all Collections deposited in the Lockbox
Account to be deposited in the Collection Account within two Business Days of
the date such Collections are possessed by or on behalf of the Servicer.
Section 5.13. Remittances. The Servicer will service all Collections in
accordance with Section 7.01 hereof. As soon as practicable but in any event not
later than the Business Day following the date of establishment by the Servicer
that any of the collected funds received in any of the Lockboxes do not
constitute Collections on account of the Contracts in the Contract Pool, such
monies which do not constitute such Collections shall be remitted to the
applicable Seller.
Section 5.14. Servicer Advances. For each Collection Period, if the
Servicer determines that any Scheduled Payment (or portion thereof) which was
due and payable pursuant to a Contract in the Contract Pool during such
Collection Period was not received prior to the end of such Collection Period,
the Servicer may make a Servicer Advance in an amount up to the amount of such
delinquent Scheduled Payment (or portion thereof) , to the extent that in its
sole discretion it determines that it can recoup such amount from subsequent
Collections under the related Contract. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 11:00 a.m. (Chicago time) on
the related Transfer Date, in immediately available funds. The Servicer will be
entitled to be reimbursed for Servicer Advances pursuant to Sections 7.05(a) and
7.05(b).
Section 5.15. Realization Upon Defaulted Contract. The Servicer will use
its best efforts consistent with its customary and usual practices and
procedures in its servicing of contracts to repossess or otherwise comparably
convert the ownership of any Equipment relating to a Defaulted Contract and will
act as sales and processing agent for Equipment or Applicable Security which it
repossesses. The Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in its servicing of
contracts and other actions by the Servicer in order to realize upon such
Equipment or Applicable Security, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Equipment or Applicable Security at public or private sale in
circumstances other than those described in the preceding sentence. Without
limiting the generality of the foregoing, the Servicer may sell any such
Equipment or Applicable Security to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof. In any case in which
any such Equipment or Applicable Security has suffered damage, the Servicer will
not expend funds in connection with any repair or toward the repossession of
such Equipment or Applicable Security unless it determines in its discretion
that such repair and/or repossession will increase the Liquidation Proceeds by
an amount greater than the amount of such expenses. The Servicer will remit to
the Collection Account the Liquidation Proceeds received in connection with the
sale or disposition
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of Equipment or Applicable Security relating to a Defaulted Contract in
accordance with Section 7.01 net of any amounts payable to a Vendor.
Section 5.16. Maintenance of Insurance Policies. The Servicer will use its
best efforts to ensure that each Obligor maintains an Insurance Policy with
respect to the related Equipment in an amount at least equal to the sum of the
Discounted Contract Balance of the related Contract in the Contract Pool;
provided that the Servicer, in accordance with its customary servicing
procedures, may allow Obligors to self-insure. Additionally, the Servicer will
require that each Obligor maintain property damage liability insurance during
the term of each Contract in the Contract Pool in amounts and against risks
customarily insured against by the Obligor on equipment owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor. In
connection with its activities as Servicer of the Contracts, the Servicer agrees
to present, on behalf of itself, the Trust, the Indenture Trustee and the
Holders, claims to the insurer under each Insurance Policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract. The Servicer's Insurance
Policies with respect to the related Equipment will insure against liability for
personal injury and property damage relating to such Equipment, will name the
Indenture Trustee as an insured thereunder and will contain a breach of warranty
clause.
Section 5.17. Other Servicer Covenants. The Servicer hereby covenants
that:
(a) Contract Files. The Servicer will, at its own cost and
expense, maintain all Contract Files in accordance with its customary
procedures. Without limiting the generality of the preceding sentence, the
Servicer will not dispose of any documents constituting the Contract Files
in any manner which is inconsistent with the performance of its obligations
as the Servicer pursuant to this Agreement and will not dispose of any
Contract except as contemplated by this Agreement.
(b) Compliance with Law. The Servicer will comply, in all
material respects, with all laws and regulations of any Governmental
Authority applicable to the Servicer or the Contracts in the Contract Pool
and related Equipment and Contract Files or any part thereof; provided that
the Servicer may contest any such law or regulation in any reasonable
manner which will not materially and adversely affect the value of (or the
rights of the Trust on behalf of the Holders or the Indenture Trustee on
behalf of the Noteholders, with respect to) the Trust Assets.
(c) Obligations with Respect to Contracts; Modifications. The
Servicer will duly fulfill and comply with, in all material respects, all
obligations on the part of the Trust Depositor to be fulfilled or complied
with under or in connection with each Contract in the Contract Pool and
will do nothing to impair the rights of the Indenture Trustee and the
Holders in, to and under the Trust Assets. The Servicer will perform such
obligations under the Contracts in the Contract Pool and will not change or
modify the Contracts, except as otherwise provided herein and except
insofar as any such failure to perform, change or modify would not
materially and adversely affect the value of (or the rights of the Trust,
on behalf of the Holders, or the Indenture Trustee, on behalf of the
Noteholders, with respect to) the Contracts or the related Equipment.
(d) No Bankruptcy Petition. Prior to the date that is one year
and one day after the payment in full of all amounts owing in respect of
all outstanding Securities, the Servicer will not institute against the
Trust Depositor, or the Trust, or join any other Person in instituting
against the Trust Depositor or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceedings under the laws of the United States or any state of the United
States. This Section 5.17(d) will survive the termination of this
Agreement.
(f) Location of Contract Files. The Contract Files shall remain
at all times in the possession of the Servicer.
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Section 5.18. Servicing Compensation. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in Section
5.19, the Servicer shall be entitled to receive a monthly servicing fee in
respect of any Collection Period (or portion thereof) prior to the termination
of the Trust (with respect to each Collection Period, the "Servicing Fee") equal
to one-twelfth of the product of (A) the Servicing Fee Percentage and (B) the
ADCB of the Contract Pool as of the first day of such Collection Period.
Section 5.19. Payment of Certain Expenses by Servicer. The Servicer will
be required to pay all expenses incurred by it in connection with its activities
under this Agreement, including fees and disbursements of independent
accountants, the Owner Trustee, the Indenture Trustee, taxes imposed on the
Servicer, expenses incurred in connection with payments and reports pursuant to
this Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Trust or the Trust Depositor, but excluding
Liquidation Expenses incurred as a result of activities contemplated by Section
5.15. The Servicer will be required to pay all reasonable fees and expenses
owing to the Owner Trustee or the Indenture Trustee in connection with the
maintenance of the Trust Accounts. The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment or
reimbursement therefor other than the Servicing Fee.
Section 5.20. Records. The Servicer shall, during the period it is
Servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
Section 5.21. Inspection. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel to
assist in any examination of such records by the Owner Trustee or the Indenture
Trustee, or such authorized agents, and allow copies of the same to be made. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Owner Trustee or the Indenture Trustee may, using generally accepted audit
procedures, verify the status of each Contract and review the Computer Disk and
records relating thereto for conformity to Monthly Reports prepared pursuant to
Article IX and compliance with the standards represented to exist as to each
Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Securityholders.
Section 5.22. Trustees to Cooperate in Releases. At the same time as (i)
any Lease in the Contract Pool becomes an Expired Lease and the Equipment
related to such Lease is sold, (ii) any Contract becomes a Prepaid Contract and
in connection therewith the Equipment related to such Prepaid Contract is sold,
or (iii) the Servicer substitutes or replaces any unit of Equipment as
contemplated in Section 5.03, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee, on behalf of the Noteholders, will to the extent requested by
the Servicer release the Trust's interest in the Equipment relating to such
Expired Lease or Prepaid Contract or such substituted or replaced Equipment, as
the case may be; provided that such release will not constitute a release of the
Trust's interest in the proceeds of such sale (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
sale of such Equipment, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee will execute and deliver to the Servicer any assignments,
bills of sale, termination statements and any other releases and instruments as
the Servicer may request in order to effect such release and transfer; provided
that neither the Owner Trustee nor the Indenture Trustee will make any
representation or warranty, express or implied, with respect to any such
Equipment in connection with such sale or transfer and assignment. Nothing in
this Section 5.22 shall diminish the Servicer's obligations pursuant to Section
7.01 with respect to the proceeds of any such sale.
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ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR
Section 6.01. Corporate Existence. During the term of this Agreement, the
Trust Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Transaction
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Trust Depositor
and its Affiliates will be conducted on an arm's-length basis.
Section 6.02. Contracts Not to be Evidenced by Promissory Notes. The
Trust Depositor will take no action to cause any Contract to be evidenced by an
instrument (as defined in the UCC), except in connection with the enforcement or
collection of such Contract.
Section 6.03. Security Interests. Except for the transfers hereunder and
any Residual Investment that is not a Guaranteed Residual Investment, the Trust
Depositor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on any Contract in the
Contract Pool or related Equipment, whether now existing or hereafter
transferred to the Trust, or any interest therein. The Trust Depositor will
immediately notify the Owner Trustee and the Indenture Trustee of the existence
of any Lien on any Contract in the Contract Pool or related Equipment; and the
Trust Depositor shall defend the right, title and interest of the Trust in, to
and under the Contracts in the Contract Pool and the related Equipment, against
all claims of third parties; provided, however, that nothing in this Section
6.03 shall prevent or be deemed to prohibit the Trust Depositor from suffering
to exist Permitted Liens upon any of the Contracts in the Contract Pool or any
related Equipment.
Section 6.04. Delivery of Collections. The Trust Depositor agrees to pay
to the Servicer promptly (but in no event later than two Business Days after
receipt) all Collections received by the Trust Depositor in respect of the
Contracts in the Contract Pool, for application in accordance with Section 7.01.
Section 6.05. Regulatory Filings. The Trust Depositor shall make any
filings, reports, notices, applications and registrations with, and seek any
consents or authorizations from, the Commission and any state securities
authority on behalf of the Trust as may be necessary or that Trust Depositor
deems advisable to comply with any federal or state securities or reporting
requirements laws.
Section 6.06. Compliance With Law. Trust Depositor hereby agrees to
comply in all material respects with all Requirements of Law applicable to Trust
Depositor.
Section 6.07. Activities. The Trust Depositor shall not engage in any
business or activity of any kind, or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other undertaking, which is
not directly related to the transactions contemplated and authorized by this
Agreement or the other Transaction Documents.
Section 6.08. Indebtedness. The Trust Depositor shall not create, incur,
assume or suffer to exist any Indebtedness or other liability whatsoever, except
(i) obligations incurred under this Agreement, or (ii) liabilities incident to
the maintenance of its corporate existence in good standing.
Section 6.09. Guarantees. The Trust Depositor shall not become or remain
liable, directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other than
endorsements of negotiable instruments for deposit or collection in the ordinary
course of business), agreement to purchase or repurchase, agreement to supply or
advance funds, or otherwise.
36
Section 6.10. Investments. The Trust Depositor shall not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Person except (i) for purchases of Contracts
pursuant to the Transfer and Sale Agreement, or (ii) for investments in Eligible
Investments in accordance with the terms of this Agreement.
Section 6.11. Merger; Sales. The Trust Depositor shall not enter into any
transaction of merger or consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution) or acquire or be acquired by any Person,
or convey, sell, lease or otherwise dispose of all or substantially all of its
property or business, except as provided for in this Agreement.
Section 6.12. Distributions. The Trust Depositor shall not declare or
pay, directly or indirectly, any dividend or make any other distribution
(whether in cash or other property) with respect to the profits, assets or
capital of the Trust Depositor or any Person's interest therein, or purchase,
redeem or otherwise acquire for value any of its capital stock now or hereafter
outstanding, except that so long as no Event of Default has occurred and is
continuing and no Event of Default would occur as a result thereof or after
giving effect thereto and the Trust Depositor would continue to be Solvent as a
result thereof and after giving effect thereto, the Trust Depositor may declare
and pay dividends on its capital stock.
Section 6.13. Other Agreements. The Trust Depositor shall not become a
party to, or permit any of its properties to be bound by, any indenture,
mortgage, instrument, contract, agreement, lease or other undertaking, except
this Agreement and the other Transaction Documents to which it is a party; nor
shall it amend or modify the provisions of its Certificate of Incorporation or
issue any power of attorney except to the Owner Trustee, the Indenture Trustee
or the Servicer.
Section 6.14. Separate Corporate Existence. The Trust Depositor shall:
(i) maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions. The
funds of the Trust Depositor will not be diverted to any other Person
or for other than corporate uses of the Trust Depositor.
(ii) Ensure that, to the extent that it shares the same officers
or other employees as any of its stockholders or Affiliates, the
salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(iii) Ensure that, to the extent that it jointly contracts with
any of its stockholders or Affiliates to do business with vendors or
service providers or to share overhead expenses, the costs incurred in
so doing shall be allocated fairly among such entities, and each such
entity shall bear its fair share of such costs. To the extent that the
Trust Depositor contracts or does business with vendors or service
providers when the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between Trust Depositor
and any of its Affiliates shall be only on an arm's length basis.
(iv) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its
Affiliates. To the extent that the Trust Depositor and any of its
stockholders or Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs among
them, and each such entity shall bear its fair share of such expenses.
37
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate
and customary corporate formalities, including, but not limited to,
holding all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of its meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "nonsubstantive consolidation" opinion of
Winston & Xxxxxx, delivered on the Closing Date, upon which the
conclusions expressed therein are based.
Section 6.15. Location; Records. The Trust Depositor (x) shall not move
outside the State of Illinois, the location of its chief executive office,
without 45 days' prior written notice to the Owner Trustee and the Indenture
Trustee and (y) shall not move or permit the Servicer to move the location of
the Contract Files from the location(s) thereof on the Closing Date, without 45
days' prior written notice to the Owner Trustee and the Indenture Trustee and
(z) will promptly take all actions required (including, but not limited to, all
filings and other acts necessary or advisable under the UCC of each relevant
jurisdiction in order to continue the first priority perfected security interest
of the Indenture Trustee in all Contracts in the Contract Pool. The Trust
Depositor will give the Owner Trustee and the Indenture Trustee prompt notice of
a change within the State of Illinois of the location of its chief executive
office.
Section 6.16. Liability of Trust Depositor; Indemnities. The Trust
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Trust Depositor under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee and the Servicer from and against any
taxes that may at any time be asserted against any such Person with respect to
the transactions contemplated herein and in the other Transaction Documents,
including any sales, gross receipts, general corporation, tangible personal
property, Illinois personal property replacement privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the sale of the Contracts to the Issuer or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Contracts, or federal or other income taxes arising out of
distributions on the Certificates or the Notes) and costs and expenses in
defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, and the Indenture Trustee from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
and, in the case of the Owner Trustee, in the Trust Agreement and, in the case
of the Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee, or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; provided, however, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Trust Certificates or a Noteholder in the capacity of an investor in the
Notes. In addition, any third party creditors of the Trust (other than in
connection with the obligations described
38
in the immediately preceding sentence for which the Trust Depositor shall not be
liable) shall be deemed third party beneficiaries of this paragraph. The
obligations of the Trust Depositor under this paragraph shall be evidenced by
the Trust Certificates described in the Trust Agreement, which for purposes of
the Business Trust Statute shall be deemed to be a separate class of Trust
Certificates from all other Trust Certificates issued by the Trust; provided
that the rights and obligations evidenced by all Trust Certificates, regardless
of class, shall, except as provided in this Section, be identical.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the Trust
Depositor shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Trust Depositor, without interest.
Section 6.17. Bankruptcy Limitations. The Trust Depositor shall not,
without the affirmative vote of a majority of the members of the Board of
Directors of the Trust Depositor (which must include the affirmative vote of at
least two duly appointed Independent directors) (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a substantial
part of its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally as they
become due, or (G) take any corporate action in furtherance of the actions set
forth in clauses (A) through (F) above; provided, however, that no director may
be required by any shareholder of the Trust Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the Trust Depositor
so long as it is Solvent.
Section 6.18 Limitation on Liability of Trust Depositor and Others. The
Trust Depositor and any director or officer or employee or agent of the Trust
Depositor may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of the Owner Trustee's or the Indenture Trustee's willful
misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder. The Trust
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
Section 6.19. Chief Executive Office. During the term of this Agreement,
the Trust Depositor will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas, New
Mexico, Oklahoma, Utah or Wyoming.
39
ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND
Section 7.01. Trust Accounts; Collections. (a) On or before the Closing
Date, the Trust Depositor shall establish the Collection Account, Note
Distribution Account, Certificate Distribution Account and Reserve Fund, each in
the name of the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, respectively. The Servicer and Indenture Trustee are hereby
required to ensure that each of the Trust Accounts is established and maintained
as an Eligible Account with a Qualified Institution. If any institution with
which any of the accounts established pursuant to this Section 7.01(a) are
established ceases to be a Qualified Institution, the Servicer or the Indenture
Trustee (as the case may be) shall within 10 Business Days establish a
replacement account at a Qualified Institution after notice of such event.
(b) The Servicer shall deposit or cause to be deposited, without deposit
into any intervening account, into the Collection Account as promptly as
practical after the Date of Processing (but in any case not later than the
second Business Day following the Date of Processing thereof), all Collections
on deposit in the form of available funds in a Lockbox Account, and all
Collections otherwise received by the Servicer.
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or cause to
be deposited, on the Closing Date and on each Subsequent Transfer Date
thereafter, in immediately available funds into the Collection Account, all
collections received after the applicable Cutoff Date and through and including
the Closing Date or Subsequent Transfer Date, as the case may be, in respect of
Contracts being transferred to the Trust on such date.
(d) Notwithstanding Sections 7.01(a) and (b), the Servicer shall not be
required to deposit or cause to be deposited Collections on any Contracts in the
Contract Pool on which (and to the extent that) the Servicer has previously mad
a Servicer Advance which has not been reimbursed, which amounts the Servicer may
retain (as reimbursement of such Servicer Advance).
Section 7.02. Reserve Fund Deposit. On the Closing Date, the Owner
Trustee, on behalf of the Trust Depositor, shall deposit the Reserve Fund
Initial Deposit into the Reserve Fund from the net proceeds of the Securities.
Section 7.03. Trust Account Procedures. If the Servicer so directs, in
writing, the Indenture Trustee shall invest the amounts in the Trust Accounts in
Qualified Eligible Investments that mature not later than one Business Day prior
to the next succeeding Distribution Date. Once such funds are invested, the
Indenture Trustee shall not change the investment of such funds. Any loss on
such investments shall be deposited in the applicable Trust Account by the
Servicer out of its own funds immediately as realized. Funds in the Trust
Accounts not so invested must be insured to the extent permitted by law by the
Bank Insurance Fund or the Savings Association Insurance Fund of the Federal
Deposit Insurance Corporation. Subject to the restrictions herein, the Indenture
Trustee may purchase a Qualified Eligible Investment from itself or an
Affiliate. Subject to the other provisions hereof, the Indenture Trustee shall
have sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Indenture Trustee or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment to
the Indenture Trustee in a manner which complies with this Section 7.03. All
Investment Earnings on investments of funds in the Trust Accounts shall be
deposited in the Collection Account pursuant to Section 7.01 and distributed on
the next Distribution Date pursuant to Section 7.05. The Trust Depositor and the
Trust agree and acknowledge that the Indenture Trustee is to have "control"
(within the meaning of Section 8-102 of the UCC as enacted in Illinois) of
collateral comprised of "Investment Property" (within the meaning of Section 9-
115 of the UCC as enacted in Illinois) for all purposes of this Agreement.
Section 7.04. Securityholder Distributions. (a) Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
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Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee or Owner Trustee, respectively, at least ten days prior to
such Distribution Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and Certificateholders required
hereunder. The Indenture Trustee hereby agrees that all amounts held by it for
payment hereunder will be held in trust for the benefit of the Noteholders and
Certificateholders.
Section 7.05. Allocations and Distributions.
(a) Allocations and Distributions Prior to an Event of Default or a
Restricting Event. On each Determination Date prior to an Event of Default or a
Restricting Event, the Servicer, pursuant to monthly payment instructions and
notification, shall instruct the Indenture Trustee to withdraw, and on the
succeeding Distribution Date the Indenture Trustee acting in accordance with
such instructions shall withdraw, the amounts required to be withdrawn from the
Collection Account pursuant to this Section in order to make the following
payments or allocations from the Available Amounts for the related Distribution
Date (in each case, such payment or transfer to be made only to the extent funds
remain available therefor after all prior payments and transfers for such
Distribution Date have been made), in the following order of priority:
(i) pay to the Servicer, the amount of any Unreimbursed Servicer
Advance;
(ii) pay to the Servicer the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing Fee
that were due in respect of prior monthly periods that remain unpaid;
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders an amount equal to interest accrued in respect of the related
Class A-1 Notes for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
provided that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so allocated,
such remaining Available Amounts shall be allocated to the Holder of each
Class A-1 Note pro rata based upon the outstanding Principal Amount
thereof;
(iv) pay to the Indenture Trustee on behalf of the Class A-2
Noteholders an amount equal to interest accrued in respect of the related
Class A-2 Notes for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
provided that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so allocated,
such remaining Available Amounts shall be allocated to the Holder of each
Class A-2 Note pro rata based upon the outstanding Principal Amount
thereof;
(v) pay to the Indenture Trustee on behalf of the Class B Noteholders
an amount equal to the interest accrued thereon for the Accrual Period
immediately preceding such Distribution Date, together with any amounts
that accrued in respect of prior Accrual Periods for which no allocation
was previously made; provided, that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount required
to be so paid, such remaining Available Amount shall be paid to the Holder
of each Class B Note pro rata based on the outstanding Principal Amount
thereof;
(vi) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon for the
Accrual Period immediately preceding such Distribution Date, together with
any such amounts that accrued in respect of prior Accrual Periods for which
no allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
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amount required to be so paid, such remaining Available Amounts shall be
paid to the Holder of each Class C Note pro rata based on the outstanding
Principal Amount thereof;
(vii) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to interest accrued thereon for the Accrual
Period immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so paid, such remaining Available Amounts shall be
paid to the Holder of each Class D Note pro rata based on the outstanding
principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the lesser of (i) the Class A-1 Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class A-1 Notes; provided that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount required
to be so paid, such remaining Available Amounts shall be allocated to each
Class A-1 Note pro rata based on the outstanding principal amount thereof;
(ix) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the lesser of (i) the Class A-2 Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class A-2 Notes; provided (i) that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so paid, such remaining Available Amounts shall be
allocated to each Class A-2 Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated pursuant
to this clause exceeds the amount needed to repay outstanding Class A-2
Note principal in full, then such excess shall be applied in repayment of
principal on the Class B Notes;
(x) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the lesser of (i) the Class B Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class B Notes; provided (i) that if the Available Amounts remaining
to be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be allocated
to each Class B Note pro rata based on the outstanding principal amount
thereof, and (ii) if the amount to be allocated pursuant to this clause
exceeds the amount needed to repay outstanding Class B Note principal in
full, then such excess shall be applied in repayment of principal on the
Class C Notes;
(xi) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the lesser of (i) the Class C Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class C Notes; provided (i) that if the Available Amounts remaining
to be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be allocated
to each Class C Note pro rata based on the outstanding principal amount
thereof, and (ii) if the amount to be allocated pursuant to this clause
exceeds the amount needed to repay outstanding Class C Note principal in
full, then such excess shall be applied in repayment of principal on the
Class D Notes; and
(xii) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the lesser of (i) the Class D Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class D Notes; provided (i) that if the Available Amounts remaining
to be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class D Note pro rata based on the outstanding principal
amount thereof, and (ii) if the amount to be allocated pursuant to this
clause exceeds the amount needed to repay outstanding Class D Note
principal in full, then such excess shall be applied in accordance with the
priorities in clauses (xiii) and (xiv) below;
(xiii) pay to the Indenture Trustee, for deposit into the Reserve
Fund, such remaining Available Amounts up to such amount as may be required
to cause the amounts on deposit in the Reserve Fund to equal the Reserve
Fund Amount; and
(xiv) pay any remaining Available Amounts to the Holder of the
Class E Certificates.
Prior to the occurrence of an Event of Default or Restricting Event, if the
Available Amounts are less than the amount required to make in full the payments
and allocations set forth in Sections 7.05(a)(i)-(xii) above, amounts held in
the Reserve Fund shall be withdrawn in order for any of such payments or
allocations to be made and such amounts will be considered as Available Amounts
for such purpose only.
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(b) Allocations and Payments after an Event of Default or a Restricting
Event. On each Determination Date after the occurrence of an Event of Default or
on each Determination Date after the occurrence, but only during the
continuance, of a Restricting Event, the Servicer, pursuant to monthly payment
instructions and notification, shall instruct the Indenture Trustee to withdraw,
and on the succeeding Distribution Date the Indenture Trustee acting in
accordance with such instructions shall withdraw, the amounts required to be
withdrawn from the Collection Account pursuant to this Section in order to make
the following payments or allocations from the Available Amounts for the related
Distribution Date (in each case, such payment or transfer to be made only to the
extent funds remain available therefor after all prior payments and transfers
for such Distribution Date have been made), in the following order of priority:
(i) pay to the Indenture Trustee the amount of any unpaid fees and
expenses to which the Indenture Trustee is entitled under Section
5.06(a)(i) of the Indenture;
(ii) pay to the Servicer, the amount of any Unreimbursed Servicer
Advances;
(iii) pay to the Servicer the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing Fee
that were due in respect of prior monthly periods that remain unpaid;
(iv) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders an amount equal to interest accrued in respect of the related
Class A-1 Notes for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
provided that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so allocated,
such remaining Available Amounts shall be allocated to the Holder of each
Class A-1 Note pro rata based upon the outstanding Principal Amount
thereof;
(v) pay to the Indenture Trustee on behalf of the Class A-2
Noteholders an amount equal to interest accrued in respect of the related
Class A-2 Notes for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
provided that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so allocated,
such remaining Available Amounts shall be allocated to the Holder of each
Class A-2 Note pro rata based upon the outstanding Principal Amount
thereof;
(vi) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon for the Accrual
Period immediately preceding such Distribution Date, together with any
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so paid, such remaining Available Amount shall be
paid to the Holder of each Class B Note pro rata based on the outstanding
Principal Amount thereof;
(vii) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon for the
Accrual Period immediately preceding such Distribution Date, together with
any such amounts that accrued in respect of prior Accrual Periods for which
no allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so paid, such remaining Available Amounts shall be
paid to the Holder of each Class C Note pro rata based on the outstanding
Principal Amount thereof;
(viii) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to the interest accrued thereon for the Accrual
Period immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
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amount required to be so paid, such remaining Available Amounts shall be
paid to the Holder of each Class D Note pro ata based on the outstanding
principal amount thereof;
(ix) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the lesser of (i) the Class A-1 Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class A-1 Notes; provided that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount required
to be so paid, such remaining Available Amounts shall be allocated to each
Class A-1 Note pro rata based on the outstanding principal amount
thereof;
(x) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the lesser of (i) the Class A-2 Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class A-2 Notes; provided (i) that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so paid, such remaining Available Amounts shall be
allocated to each Class A-2 Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated pursuant
to this clause exceeds the amount needed to repay outstanding Class A-2
Note principal in full, then such excess shall be applied in repayment of
principal on the Class B Notes;
(xi) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the lesser of (i) the Class B Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class B Notes; provided (i) that if the Available Amounts remaining
to be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be allocated
to each Class B Note pro rata based on the outstanding principal amount
thereof, and (ii) if the amount to be allocated pursuant to this clause
exceeds the amount needed to repay outstanding Class B Note principal in
full, then such excess shall be applied in repayment of principal on the
Class C Notes;
(xii) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the lesser of (i) the Class C Principal Payment Amount for
such Distribution Date, and (ii) the remaining outstanding Principal Amount
of the Class C Notes; provided (i) that if the Available Amounts remaining
to be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be allocated
to each Class C Note pro rata based on the outstanding principal amount
thereof, and (ii) if the amount to be allocated pursuant to this clause
exceeds the amount needed to repay outstanding Class C Note principal in
full, then such excess shall be applied in repayment of principal on the
Class D Notes; and
(xiii) pay all other remaining Available Amounts to the Holder of the
Class E Certificates.
Following the occurrence and during the continuance of an Event of Default
or Restricting Event, if the Available Amounts are less than the amount required
to make in full the payments and allocations set forth in Sections 7.05(b)(i)-
(xiii) above, amounts held in the Reserve Fund (in the same order of priority)
shall be withdrawn in order for any of such payments or allocations to be made
(in the same order of priority) and such amounts will be considered as Available
Amounts for such purpose only.
Section 7.06. Repurchases of, or Substitution For, Contracts for Breach of
Representations and Warranties. Upon a discovery by the Servicer, the Trust
Depositor or the Trustees of a breach of a representation or warranty of the
Sellers as set forth in Exhibit J hereto or as made or deemed made in any
Addition Notice in any Subsequent Purchase Agreement relating to Subsequent
Contracts that materially adversely affects the Trust's interest in such
Contract (without regard to the benefits of the Reserve Fund) (an "Ineligible
Contract"), or of an inaccuracy with respect to the representations as to
concentrations of the Initial Contracts made under Section 3.05 of the Transfer
and Sale Agreement, the party discovering the breach shall give prompt written
notice to the other parties (and the Servicer shall, with respect to an
inaccuracy concerning concentrations, select one or more Contracts, without
employing adverse selection, as the related Excess Contract for
44
purposes of this Section), provided, that the Trustees shall have no duty or
obligation to inquire or to investigate the breach by the Sellers of any of such
representations or warranties. The Sellers, as provided in the Transfer and Sale
Agreement and in accordance with this Section 7.06, shall repurchase each such
Ineligible Contract or Excess Contract, at a repurchase price equal to the
Transfer Deposit Amount, not later than ninety (90) days following the date the
Seller becomes aware of, or receives written notice from any Trustee, the
Servicer or the Trust Depositor of, any such breach or inaccuracy and which
breach or inaccuracy has not otherwise been cured; provided, however, that if
the Seller is able to effect a substitution for any such Ineligible Contract or
Excess Contract in compliance with Section 2.04, the Seller may, in lieu of
repurchasing such Contract, effect a substitution for such affected Contract
with a Substitute Contract not later than the date a repurchase of such affected
Contract would be required hereunder, and provided further that with respect to
a breach of representation or warranty relating to the Contracts in the
aggregate and not to any particular Contract the Seller may select Contracts
(without adverse selection) to repurchase (or substitute for) such that had such
Contracts not been included as part of the Trust Assets (and, in the case of a
substitution, had such Substitute Contract been included as part of the Trust
Assets instead of the selected Contract) there would have been no breach of such
representation or warranty. Notwithstanding any other provision of this
Agreement, the obligation of the Sellers under the Transfer and Sale Agreement
and described in this Section 7.06 shall not terminate or be deemed released by
any party hereto upon a Service Transfer pursuant to Article VIII. The
repurchase obligation described in this Section 7.06 is in no way to be
satisfied with monies in the Reserve Fund.
Section 7.07. Reassignment of Repurchased or Substituted Contracts. Upon
receipt by the Indenture Trustee for deposit in the Collection Account of the
Repurchase Price as described in Section 7.06 or Section 7.08 (or upon the
Subsequent Transfer Date related to a Substitute Contract described in Section
7.06), and upon receipt of a certificate of a Servicing Officer in the form
attached hereto as Exhibit G, the Indenture Trustee shall assign to the original
applicable Seller all of the Trust's right, title and interest in the
repurchased or substituted Contract and related Trust Assets without recourse,
representation or warranty and such reassigned Contract shall no longer
thereafter be included in any calculations of Discounted Contract Balances
required to be made hereunder or otherwise deemed a part of the Trust.
Section 7.08. Seller's and Trust Depositor's Repurchase Option. As
provided in the Transfer and Sale Agreement, on written notice to the Indenture
Trustee at least 20 days prior to a Distribution Date, and provided that the
ADCB of all Contracts in the Contract Pool is then less than 10% of the ADCB of
such Contracts as of the Initial Cutoff Date, the Sellers, through the Trust
Depositor, may (but are not required to) repurchase from the Trust on that
Distribution Date all outstanding Contracts at a price equal to the aggregate
outstanding Principal Amount of the Securities (other than the Class E
Certificates) as of the current Distribution Date thereon, the amount of
unreimbursed Servicer Advances (if any) as well as accrued and unpaid monthly
Servicing Fees to the date of such repurchase. Such price is to be deposited in
the Collection Account one Business Day before such Distribution Date, against
the Owner Trustee's and Indenture Trustee's and Trust Depositor's release of the
Contracts and the Contract Files to the Sellers.
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ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER
Section 8.01. Servicer Default. "Servicer Default" means the occurrence
of any of the following:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Owner Trustee or the
Indenture Trustee pursuant to this Agreement on or before the date
occurring three Business Days after the date such payment, transfer,
deposit, or such instruction or notice or report is required to be made or
given, as the case may be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in this Agreement which has a material adverse effect on the
Noteholders or Certificateholders, which continues unremedied for a period
of 30 days after the first to occur of (i) the date on which written notice
of such failure requiring the same to be remedied shall have been given to
the Servicer by the Indenture Trustee or to the Servicer and the Indenture
Trustee by the Noteholders or Certificateholders or the Indenture Trustee
on behalf of such Noteholders of Notes aggregating not less than 25% of the
Principal Amount of any Class adversely affected thereby and (ii) the date
on which the Servicer becomes aware thereof and such failure continues to
materially adversely affect such Noteholders or Certificateholders for such
period; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to the
this Agreement shall prove to have been incorrect when made, which has a
material adverse effect on the Noteholders or Certificateholders and which
continues to be incorrect in any material respect for a period of 30 days
after the first to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to
the Servicer and the Owner Trustee by the Indenture Trustee, or to the
Servicer, the Owner Trustee and the Indenture Trustee by Noteholders or
Certificateholders or by the Indenture Trustee on behalf of Noteholders of
Notes aggregating not less than 25% of the Principal Amount of any Class
adversely affected thereby and (ii) the date on which the Servicer becomes
aware thereof, and such incorrectness continues to materially adversely
affect such Holders for such period; or
(d) an Insolvency Event shall occur with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five Business Days or
referred to under clause (b) or (c) for a period of 60 days (in addition to any
period provided in (a), (b) or (c)) shall not constitute a Servicer Default
until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Owner Trustee, the Indenture Trustee and the
Trust Depositor prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee in writing of any Servicer Default.
Section 8.02. Service Transfer. (a) If a Servicer Default has occurred
and is continuing, (x) the Required Holders, or (y) the Indenture Trustee may,
by written notice (a "Termination Notice") delivered to the parties hereto,
terminate all (but not less than all) of the Servicer's management,
administrative, servicing, custodial and collection functions.
(b) Upon delivery of the notice required by Section 8.02(a) (or, if later,
on a date designated therein), and on the date that a successor Servicer shall
have been appointed pursuant to Section 8.03 (such appointment being herein
called a "Servicer Transfer") all rights, benefits, fees, indemnities, authority
and power of the Servicer under this Agreement, whether with respect to the
46
Contracts, the Contract Files or otherwise, shall pass to and be vested in
such successor (the "Successor Servicer") pursuant to and under this Section
8.02; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts. The Servicer
shall transfer to the Successor Servicer all records held by the Servicer
relating to the Contracts in such electronic form as the Successor Servicer may
reasonably request and (ii) any Contract Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Service Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer.
Section 8.03. Appointment of Successor Servicer; Reconveyance; Successor
Servicer to Act. Upon delivery of the notice required by Section 8.02(a) (or, if
later, on a date designated therein), the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Termination Notice or, if no such date is specified, until a date mutually
agreed by the Servicer and the Indenture Trustee. The Indenture Trustee shall as
promptly as possible after the giving of or receipt of a Termination Notice,
appoint a Successor Servicer, and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee and Owner Trustee. If within 60 days of delivery of a Termination Notice
the Indenture Trustee is unable to obtain any bids from eligible servicers and
the Servicer shall have yet to cure the Servicer Default, then the Indenture
Trustee shall offer the Trust Depositor, and the Trust Depositor shall offer the
Sellers, the right to accept retransfer of all the Trust Assets, and such
parties may accept retransfer of such Trust Assets in consideration of the Trust
Depositor's delivery to the Collection Account on or prior to the next upcoming
Distribution Date of a sum equal to the Aggregate Principal Amount of all
Securities (other than the Certificates) then outstanding, together with
accrued and unpaid interest thereon through such date of deposit (provided, that
the Indenture Trustee, if so directed by the Required Holders, need not accept
and effect such reconveyanced in the absence of evidence (which may include
valuations of an investment bank or similar entity) reasonably acceptable to
such Trustee or Required Holders that such retransfer would not constitute a
fraudulent conveyance of the Trust Depositor or the Sellers).
In the event that a Successor Servicer has not been appointed and has not
accepted its appointment at the time when the then Servicer has ceased to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer. Notwithstanding the foregoing, if the
Indenture Trustee is legally unable or prohibited from so acting, it shall
petition a court of competent jurisdiction to appoint any established financial
institution having a net worth of at least $50,000,000 and whose regular
business includes the servicing of contracts similar to the Contracts as the
Successor Servicer hereunder. On or after a Service Transfer, the Successor
Servicer shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof, and
the terminated Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Service Transfer; provided, however, that (i) the
Successor Servicer will not assume any obligations of the Servicer described in
Section 8.03 and (ii) the Successor Servicer shall not be liable for any acts or
omissions of the Servicer occurring prior to such Service Transfer or for any
breach by the Servicer of any of its representations and warranties contained
herein or in any related document or agreement. As compensation therefor, the
Successor Servicer shall be entitled to receive reasonable compensation equal to
the monthly Servicing Fee. The Owner Trustee, Securityholders and the Indenture
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. To the
extent the terminated Servicer has made Servicer Advances, it shall be entitled
to reimbursement of the same notwithstanding its termination hereunder, to the
same extent as if it had continued to service the Contracts hereunder.
Section 8.04. Notification to Securityholders. (a) Promptly following
the occurrence of any Servicer Default, the Servicer shall give written notice
thereof to the Trustees, the Trust Depositor and each Rating Agency at the
addresses described in Section 11.04 hereof and to the Noteholders and
Certificateholders at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a Successor
Servicer pursuant to this Article VIII, the Indenture Trustee shall give written
notice thereof to each Rating Agency and the Trust Depositor at the addresses
described in Section 11.04 hereof, and to the Noteholders and Certificateholders
at their respective addresses appearing on the Note Register and the Certificate
Register, respectively.
Section 8.05. Effect of Transfer. (a) After a Service Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section 8.03 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Contracts.
47
Section 8.06. Database File. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii) thereafter, as of
the last day of the preceding Collection Period on each Determination Date prior
to a Servicer Default and (iv) on and as of the Business Day before the actual
commencement of servicing functions by the Successor Servicer following the
occurrence of a Servicer Default.
Section 8.07. Successor Servicer Indemnification. The original Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.02 hereof. The indemnification
provided by this Section 8.07 shall survive the termination of this Agreement.
Section 8.08. Responsibilities of the Successor Servicer. The Successor
Servicer will not be responsible for delays attributable to the Servicer's
failure to deliver information, defects in the information supplied by the
Servicer or other circumstances beyond the control of the Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Contract information.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Contract with applicable law or the breach
or the inaccuracy of any representation or warrant made with respect to any
Contract.
48
ARTICLE NINE
REPORTS
Section 9.01. Monthly Reports. With respect to each Distribution Date and
the related Collection Period, the Servicer will provided to each Trustee, and
each Rating Agency, on the related Determination Date, a monthly statement (a
"Monthly Report") substantially in the form of Exhibit I hereto.
Section 9.02. Officer's Certificate. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer substantially in the form of Exhibit C, certifying the accuracy of the
Monthly Report and that no Servicer Default or event that with notice or lapse
of time or both would become a Servicer Default has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
Section 9.03. Other Data. In addition, the Servicer shall, upon the
request of any Trustees, or any Rating Agency, furnish such Trustee or Rating
Agency, as the case may be, such underlying data used to generate a Monthly
Report as may be reasonably requested.
Section 9.04. Annual Report of Accountants.
(a) The Servicer shall cause a firm of nationally recognized independent
certified public accountants (the "Independent Accountants"), who may also
render other services to the Servicer or its Affiliates, to deliver to the
Trustees and each Rating Agency, on or before March 31 (or 90 days after the end
of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 1998 (i) with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date), a report addressed
to the Board of Directors of the Servicer and to the Trustees, to the effect
that such firm (A) has reviewed certain documents and records relating to the
servicing of the Contracts in the Contract Pool, and (B) based on such review,
such firm is of the opinion that the Monthly Reports for such year were prepared
in compliance with this Agreement, except for such exceptions as it believes to
be immaterial and such other exceptions as will be set forth in such firm's
report, and (ii) a report with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) to the effect that
such accountants have applied certain agreed-upon procedures to certain
documents and records relating to the servicing of Contracts under this
Agreement, compared the information contained in the Servicer's certificates
delivered during the period covered by such report with such documents and
records and that no matters came to the attention of such accountants that
caused them to believe that such servicing was not conducted in compliance with
this Agreement, except for such exceptions as such accountants shall believe to
be immaterial and such other exceptions as shall be set forth in such statement.
A copy of such report (the "Accountant's Report") may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, in the case of
a Noteholder, or to the Owner Trustee, in the case of a Certificateholder,
addressed to its respective Corporate Trust Office.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
Section 9.05. Annual Statement of Compliance from Servicer. The Servicer
will deliver to the Trustees, and each of the Rating Agencies, on or before
January 31 of each year commencing January 31, 1998, an Officer's Certificate
stating that (a) a review of the activities of the Servicer during the prior
calendar year and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to such officer's
knowledge, based on such review, the Servicer has fully performed or cause to be
performed in all material respects all its obligations under this Agreement and
no Servicer Default has occurred or is continuing, or, if there has been a
Servicer Default, specifying each such default known to such officer and the
nature and status thereof and the steps being taken or necessary to be taken to
remedy such event. A copy of such certificate may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, with respect to
any Noteholder, or the Owner Trustee, with respect to any Certificateholder.
49
Section 9.06. Annual Summary Statement. On or prior to January 31 of each
year, commencing January 31, 1998, the Servicer shall prepare and provide to
each Trustee, and each Rating Agency, a cumulative summary of the information
required to be included in the Monthly Reports for the Collection Periods ending
during the immediately preceding calendar year.
50
ARTICLE TEN
TERMINATION
Section 10.01. Sale of Trust Assets.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02 of
the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to allocate and apply (after the
application on such Distribution Date of Available Amounts and funds on deposit
in the Reserve Fund pursuant to Section 7.04) the Insolvency Proceeds as if (and
in the same order of priority as) the Insolvency Proceeds were Available Amounts
being allocated and distributed on such date pursuant to Section 7.04(b).
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
51
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Amendment.
(a) This Agreement may be amended by the Trust Depositor, the Servicer, the
Indenture Trustee and the Owner Trustee on behalf of the Issuer, collectively,
without the consent of any Securityholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement which are inconsistent with the
provisions herein, or to add any other provisions with respect to matters or
questions arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement; provided, however that any such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Issuer, with the consent of the Required Holders, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or
delay the timing of (A) Collections of payments on the Contracts or
distributions that shall be required to be made on any Note or Certificate
(including by way of amendment of related definition), or (B) the manner in
which the Reserve Fund is applied, or (ii) change in any manner (including
through amendment of related definitions), the Holders which are required to
consent to any such amendment, or (iii) make any Note or Certificate payable in
money other than Dollars without the consent of the Holders of all Notes and
Certificates of the relevant Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the Indenture
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholders pursuant to Section 11.01(b)
to approve the particular form of any proposed amendment or consent, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization by
Noteholders and Certificateholders of the execution thereof shall be subject to
such reasonable requirements as the Owner Trustee or the Indenture Trustee may
prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02. Protection of Title to Trust.
(a) The Servicer shall execute and file such financing statements and cause
to be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain and protect
the interest of the Issuer, the Securityholders, the Indenture Trustee and the
Owner Trustee in the Contracts and in the proceeds thereof. The Servicer shall
deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Seller, the Trust Depositor nor the Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in
52
accordance with Section 4.02(a) seriously misleading within the meaning of
(S) 9-402(7) of the UCC, unless it shall have given the Issuer, the Owner
Trustee and the Indenture Trustee at least 60 days' prior written notice thereof
and shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) The Seller, the Trust Depositor and the Servicer shall give the Issuer,
the Owner Trustee and the Indenture Trustee at least 60 days' prior written
notice of any relocation of the principal executive office of any Seller, or the
Trust Depositor or the Servicer if, as a result of such relocation, the
applicable provisions of the UCC would require filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement, and the Servicer shall promptly file or cause to be filed any such
amendment or new financing statement. The Servicer shall at all times maintain
each office from which it shall service Contracts, and its principal executive
office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in or credited to the
Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee. Indication
of the Issuer's ownership of and the Indenture Trustee's interest in a Contract
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the related Contract shall have been paid in full or repurchased or
substituted for.
(f) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and each Rating Agency promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee and reciting
the details of each filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
Section 11.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee shall be
governed by the laws of the State of Delaware.
Section 11.04. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Servicer or Seller:
Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: [________]
Fax No.: (312) [_________]
53
(ii) If to the Trust Depositor:
Xxxxxx Funding Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: [________]
Fax No.: (312) [_________]
(iii) If to the Indenture Trustee:
[____________]
Attention: Indenture Trust Administration
Fax No.: (___) [_______]
(iv) If to the Owner Trustee:
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
Attention: Corporate Trust Administration
Fax No.: (000) 000-0000]
(v) If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telecopier No.: (000) 000-0000
(vi) If to Fitch:
[_________________]
Fax No.: (___) [_________]
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 11.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
54
Section 11.06. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this Agreement,
and specifically that the Obligors are not third party beneficiaries of this
Agreement.
Section 11.07. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 11.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.09. No Bankruptcy Petition. Each of the Indenture Trustee, the
Servicer, the Owner Trustee and each Holder (by acceptance of the applicable
Securities) covenants and agrees that, prior to the date that is one year and
one day after the payment in full of all amounts owing in respect of all
outstanding Securities, it will not institute against the Trust Depositor, or
the Trust, or join any other Person in instituting against the Trust Depositor
or the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 11.09 will
survive the termination of this Agreement.
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
XXXXXX EQUIPMENT ASSET RECEIVABLES TRUST 1997-1
By: [________________________], not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By: _________________________________________
Printed Name:_________________________
Title:________________________________
XXXXXX FUNDING CORPORATION, as Trust Depositor
By: _________________________________________
Printed Name:_________________________
Title:________________________________
XXXXXX FINANCIAL, INC., as Servicer
By: _________________________________________
Printed Name:_________________________
Title:________________________________
[________________________], not in its
individual capacity but solely as Indenture
Trustee
By: _________________________________________
Printed Name:_________________________
Title:________________________________
56
Exhibit A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "Sale and
Servicing Agreement") dated as of August [__], 1997 made by and between the
undersigned, as Trust Depositor ("Trust Depositor"), Xxxxxx Financial, Inc., as
Servicer, [____________], as Indenture Trustee and the Xxxxxx Equipment Asset
Receivables Trust 1997-1 (the "Trust"), as assignee thereunder, the undersigned
does hereby sell, transfer, convey and assign, set over and otherwise convey to
the Trust (i) all the right, title and interest of the Trust Depositor in and to
the Initial Contracts listed on the initial List of Contracts delivered on the
Closing Date (including, without limitation, all rights to receive Collections
with respect thereto on or after the Initial Cutoff Date, but excluding any
rights to receive payments which were collected pursuant thereto prior to the
Initial Cutoff Date), and (ii) all other Transferred Assets relating to the
foregoing.
Capitalized terms used herein have the meaning given such terms in the Sale
and Servicing Agreement.
This Assignment is made pursuant to and in reliance upon the representation
and warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this _____ day of August, 1997.
XXXXXX FUNDING CORPORATION
By:________________________________________________
Printed Name: ______________________________
Title: _____________________________________
A-1
Exhibit B
[Form of Closing Certificate of Trust Depositor]
Xxxxxx Funding Corporation
Officer's Certificate
The undersigned certifies that he/she is [________] of Xxxxxx Funding
Corporation, a Delaware corporation (the "Trust Depositor"), and that as such is
duly authorized to execute and deliver this certificate on behalf of the Trust
Depositor in connection with the Sale and Servicing Agreement (the "Agreement")
dated as of August [__], 1997 (the "Effective Date") by and among the Trust
Depositor, [____________] (the "Indenture Trustee"), as Indenture Trustee,
Xxxxxx Financial, Inc. ("HFI"), as Servicer, and the Xxxxxx Equipment Asset
Receivables Trust 1997-1 ("Issuer") (all capitalized terms used herein without
definition having the respective meanings set forth in the Agreement), and
further certifies as follows:
(1) Attached hereto as Exhibit I is a true and correct copy of the
Certificate of Incorporation of the Trust Depositor, together with all
amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of the Trust Depositor since
_____, and no such amendment has been authorized by the Board of Directors
or shareholders of the Trust Depositor.
(3) Attached hereto as Exhibit II is a Certificate of the Secretary of
State of the State of Delaware dated August ___, 1997 stating that the
Trust Depositor is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy of the
Bylaws of the Trust Depositor, as amended, which were in full force and
effect on August __, 1997, and at all times subsequent thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy of
resolutions adopted pursuant to the unanimous written consent of the Board
of Directors of the Trust Depositor relating to the execution, delivery and
performance of (among other things) the Agreement; the Transfer and Sale
Agreement dated as of the Effective Date among the Trust Depositor, HFI and
Xxxxxx Financial Leasing, Inc.; the Trust Agreement dated as of the
Effective Date between the Trust Depositor and [ Wilmington Trust Company]
(the "Owner Trustee"), as Owner Trustee; the Administration Agreement dated
as of the Effective Date among the Trust Depositor, the Issuer, the
Indenture Trustee, and HFI, as Administrator; and the Underwriting
Agreement dated August ___, 1997 among the Trust Depositor, HFI and First
Union Capital Markets Corp. (collectively, the "Program Agreements"). Said
resolutions have not been amended, modified, annulled or revoked, and are
on the date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to the Trust Depositor has occurred and is
continuing which would constitute an Event of Default or an event that,
with notice or the passage of time or both, would become an Event of
Default as defined in the Agreement. To the best of my knowledge after
reasonable investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Trust Depositor, whether or not arising in the
ordinary course of business since the respective dates as of which
information is given in the Prospectus and except as set forth therein.
(7) All federal, state and local taxes of the Trust Depositor due and
owing as of the date hereof have been paid.
B-1
(8) All representations and warranties of the Trust Depositor contained in
the Program Agreements or any other related documents, or in any document,
certificate or financial or other statement delivered in connection therewith
are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending or, to our
knowledge, threatened against the Trust Depositor before any court,
administrative agency or other tribunal (a) asserting the invalidity of the
Program Agreements; (b) seeking to prevent the consummation of any of the
transactions contemplated by the Program Agreements; or (c) which is likely
materially and adversely to affect the Trust Depositor's performance of its
obligations under, or the validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no notice to or
filing with, any governmental agency or body or state or federal court is
required to be obtained by the Trust Depositor for the Trust Depositor's
consummation of the transactions contemplated by the Program Agreements, except
such as have been obtained or made and such as may be required under the blue
sky laws of any jurisdiction in connection with the issuance and sale of the
Securities.
(11) The Trust Depositor is not a party to any agreements or instruments
evidencing or governing indebtedness for money borrowed or by which the Trust
Depositor or its property is bound (other than the Program Agreements). Neither
the Sellers' transfer and assignment of the Contract Assets to the Trust
Depositor, the Trust Depositor's concurrent transfer and assignment of the Trust
Assets to the Trust, nor the concurrent transfer and assignment of the
Collateral by the Trust to the Indenture Trustee nor the issuance and sale of
the Certificates and the Notes, nor the execution and delivery of the Program
Agreements, nor the consummation of any other of the transactions contemplated
therein, will violate or conflict with any agreement or instrument to which the
Trust Depositor is a party or by which it is otherwise bound.
(12) In connection with the transfer of Contracts and related collateral
contemplated in the Agreement, (a) the Trust Depositor has not made such
transfer with actual intent to hinder, delay or defraud any creditor of the
Trust Depositor, and (b) the Trust Depositor has not received less than a
reasonably equivalent value in exchange for such transfer, is not on the date
thereof insolvent (nor will become insolvent as a result thereof), is not
engaged (or about to engage) in a business or transaction for which it has
unreasonably small capital, and does not intend to incur or believe it will
incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of the Trust Depositor to be
performed on or before the Closing Date pursuant to the Program Agreements have
been performed in all material respects.
* * * *
In Witness Whereof, I have affixed my signature hereto this ___ day of
August, 1997.
By: ____________________________________
Printed Name: ______________________
Title: _____________________________
Exhibit C
[Form of Closing Certificate of Servicer/Seller]
Xxxxxx Financial, Inc.
Officer's Certificate
The undersigned certifies that he/she is ___________ of Xxxxxx Financial,
Inc. ("HFI"), and that as such he/she is duly authorized to execute and deliver
this certificate on behalf of HFI, as Servicer, in connection with the Sale and
Servicing Agreement (the "Sale and Servicing Agreement") dated as of August
[__], 1997 (the "Effective Date") by and among HFI, as Servicer, Xxxxxx Funding
Corporation ("HFC"), [__________], as Indenture Trustee and Xxxxxx Equipment
Asset Receivables Trust 1997-1 ("Issuer"), and as a Seller in connection with
the Transfer and Sale Agreement dated as of the Effective Date (the "Transfer
and Sale Agreement") by and among HFI and Xxxxxx Leasing, as Sellers, and HFC
(all capitalized terms used herein without definition having the respective
meanings set forth in the Sale and Servicing Agreement), and further certifies
as follows:
(1) Attached hereto as Exhibit I is a true and correct copy of the
Certificate of Incorporation of HFI, together with all amendments thereto
as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFI since [_______], 19__,
and no such amendment has been authorized by the Board of Directors or
shareholders of HFI.
(3) Attached hereto as Exhibit II is a Certificate of the Secretary of
State of the State of Delaware dated August __, 1997 stating that HFI is
duly incorporated under the laws of the State of Delaware and is in good
standing.
(4) Attached hereto as Exhibit III is a true and correct copy of the
Bylaws of HFI which were in full force and effect on [________], 19__ and
at all times subsequent thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy of
resolutions adopted pursuant to a unanimous written consent of the Board of
Directors of HFI and relating to the authorization, execution, delivery and
performance of (among other things) the Transfer and Sale Agreement; the
Sale and Servicing Agreement; the Underwriting Agreement dated August ___,
1997 among HFI, HFC and First Union Capital Markets Corp. (the
"Underwriting Agreement"); and the Administration Agreement dated August
[__], 1997 among HFI, HFC, the Issuer and [__________], as Indenture
Trustee (the "Indenture Trustee") (the "Administration Agreement"). Said
resolutions have not been amended, modified, annulled or revoked, and are
on the date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to HFI has occurred and is continuing which
would constitute an Event of Default or Servicer Default or an event that,
with notice or the passage of time, would constitute an Event of Default or
Servicer Default as defined in the Sale and Servicing Agreement. To the
best of my knowledge after reasonable investigation, there has been no
material adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of HFI, whether or not
arising in the ordinary course of business, since the respective dates as
of which information is given in the Prospectus and except as set forth
therein.
(7) All federal, state and local taxes of HFI due and owing as of the
date hereof have been paid.
C-1
(8) All representations and warranties of HFI contained in the
Transfer and Sale Agreement, the Sale and Servicing Agreement, the
Underwriting Agreement and the Administration Agreement (collectively, the
"Program Agreements") or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of the
date hereof.
(9) There is no action, investigation or proceeding pending or, to my
knowledge, threatened against HFI before any court, administrative agency
or other tribunal (a) asserting the invalidity of any Program Agreement to
which HFI is a party; or (b) which is likely materially and adversely to
affect HFI's performance of its obligations under, or the validity or
enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or state or federal court
is required to be obtained by HFI for HFI's consummation of the
transactions contemplated by the Program Agreements, except such as have
been obtained or made and such as may be required under the blue sky laws
of any jurisdiction in connection with the issuance and sale of the Notes
or Certificates.
(11) Schedule A hereto contains a complete list of all material
agreements (other than the Transfer and Sale Agreement) or instruments
evidencing or governing indebtedness for money borrowed to which HFI is a
party or by which HFI or its property is bound. Neither HFI's transfer and
assignment of the Contract Assets to HFC, HFC's concurrent transfer and
assignment of the Trust Assets to the Trust, nor the concurrent transfer
and assignment by the Trust of the Collateral to the Indenture Trustee, nor
the issuance and sale of the Notes or Certificates or the entering into of
the Program Agreements, nor the consummation of any other of the
transactions contemplated therein, will violate or conflict with any
agreement or instrument to which HFI is a party or by which it is otherwise
bound.
(12) In connection with the transfers of Contracts and related assets
contemplated in the Transfer and Sale Agreement, (a) HFI has not made such
transfer with actual intent to hinder, delay or defraud any creditor of
HFI, and (b) HFI has not received less than a reasonably equivalent value
in exchange for such transfer, is not on the date hereof insolvent (nor
will HFI become insolvent as a result thereof), is not engaged (or about to
engage) in a business or transaction for which it has unreasonably small
capital, and does not intend to incur or believe it will incur debts beyond
its ability to pay when matured.
(13) Each of the agreements and conditions of HFI to be performed or
satisfied on or before the Closing Date under the Program Agreements has
been performed or satisfied in all material respects.
(14) Each Contract being transferred pursuant to the Transfer and Sale
Agreement is evidenced by a written agreement providing for a repayment
obligation as well as a security interest in the related Equipment securing
such obligation.
(16) HFI has not executed for filing any UCC financing statements
listing the Contract Assets as collateral other than financing statements
relating to the transactions contemplated in the Transfer and Sale
Agreement.
* * * * * *
C-2
In Witness Whereof, I have affixed my signature hereto this ___ day of
August, 1997.
By: _________________________________________
Printed Name: _____________________
Title: _____________________________
Exhibit D
[Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)
D-1
Exhibit E
[Form of Opinion of Counsel for Trust
Depositor Regarding the "True Sale" Nature
of the Transaction
E-1
Exhibit F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
F-1
Exhibit G
[Form of Certificate Regarding Repurchased Contracts]
Xxxxxx Financial, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he/she is a ____________________________ of
Xxxxxx Financial, Inc., a Delaware corporation (the "Servicer"), and that as
such he/she is duly authorized to execute and deliver this certificate on behalf
of the Servicer pursuant to Section 7.07 of the Sale and Servicing Agreement
(the "Agreement") dated as of August [__], 1997 by and among Xxxxxx Funding
Corporation, as Trust Depositor, the Servicer, [__________], as Indenture
Trustee and Xxxxxx Equipment Asset Receivables Trust 1997-1 (all capitalized
terms used herein without definition having the respective meanings specified in
the Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased by the
Seller on the date hereof, or substituted for by the Seller pursuant
to and in accordance with section 7.06 of the Agreement and Section
5.01 of the Transfer and Sale Agreement.
2. Upon deposit of the Transfer Deposit Amount for such Contracts (or the
effective conveyance of one or more Substitute Contracts therefor),
such Contracts may, pursuant to Section 7.07 of the Agreement, be
assigned by the Owner Trustee to the Seller.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
August, 1997.
Xxxxxx Financial, Inc.
By: ______________________________________
Printed Name: _______________________
Title: _______________________________
G-1
Exhibit H
[List of Contracts]
H-1
Exhibit I
[Form of Monthly Report to Noteholders And Certificateholders]
I-1
Exhibit J
[Seller's Representations and Warranties]
J-1
Exhibit K
[Lockbox Banks and Lockbox Accounts]
K-1
Exhibit L
[Form of Contract Stamp]
This Contract/Note is subject to a security interest granted to [______________]
as Owner Trustee for the Xxxxxx Equipment Asset Receivables Trust 1997-1. UCC-1
Financing Statements covering this Contract/Note have been filed with the
Secretary of State of the State of Illinois. Such lien will be released only in
connection with appropriate filings in such offices. Consequently, potential
purchasers of this Contract/Note must refer to such filings to determine whether
such lien has been released.
L-1
Exhibit M
[Form of Subsequent Transfer Agreement]
[see Exhibit C of the Transfer and Sale Agreement]
M-1
