Exhibit 10.51
POOLING AND SERVICING AGREEMENT
AMONG
ALLIANCE LAUNDRY SYSTEMS LLC
SERVICER AND ORIGINATOR
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES LLC
SELLER
AND
ALLIANCE LAUNDRY EQUIPMENT RECEIVABLES TRUST 2000-A
ISSUER
DATED AS OF NOVEMBER 28, 2000
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS 1
SECTION 1.01. Definitions 1
ARTICLE II
CONVEYANCE OF LOANS; ORIGINAL ISSUANCE OF CERTIFICATES 1
SECTION 2.01. Conveyance of Initial Loans. 1
SECTION 2.02. Conveyance of Replacement Loans. 3
SECTION 2.03. Custody of Loan Files 4
SECTION 2.04. Acceptance and Acknowledgment by Issuer 7
SECTION 2.05. Representations and Warranties as to the Loans 8
SECTION 2.06. Repurchase of Loans Upon Breach of Warranty 8
SECTION 2.07. Substitution of Loans 8
ARTICLE III
ADMINISTRATION AND SERVICING OF LOANS 10
SECTION 3.01. Duties of the Servicer 10
SECTION 3.02. Collection of Loan Payments 11
SECTION 3.03. Prepayments 12
SECTION 3.04. Realization Upon Defaulted Loans 12
SECTION 3.05. Maintenance of Insurance Policies 13
SECTION 3.06. Maintenance of Security Interests in Collateral 13
SECTION 3.07. Covenants of the Servicer 14
SECTION 3.08. Purchase of Loans Upon Breach of Covenant 17
SECTION 3.09. Total and Supplemental Servicing Fees;
Payment of Certain Expenses by Servicer 18
SECTION 3.10. Servicer's Certificate 18
SECTION 3.11. Application of Collections 18
SECTION 3.12. Lockbox Account 19
SECTION 3.13. Power of Attorney 19
SECTION 3.14. Back-up Servicer 20
ARTICLE IV
SERVICER'S COVENANTS; DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO BENEFICIARIES AND THE CERTIFICATEHOLDERS 20
SECTION 4.01. Annual Statement as to Compliance: Notice of
Servicer Default 20
SECTION 4.02. Annual Independent Accountants' Report 21
SECTION 4.03. Access to Certain Documentation and Information
Regarding Loans 22
SECTION 4.04. Amendments to Loans and to Schedule of Loans 22
SECTION 4.05. Assignment of Administrative Loans and
Warranty Loans 23
SECTION 4.06. Distributions 23
SECTION 4.07. Reserve Account 23
SECTION 4.08. Net Deposits 24
SECTION 4.09. Statements to Beneficiaries and the
Certificateholders 24
SECTION 4.10. Information Provided to Rating Agencies 26
ARTICLE V
ACCOUNTS; COLLECTIONS, DEPOSITS AND INVESTMENTS; ADVANCES 27
SECTION 5.01. Establishment of Accounts 27
SECTION 5.02. [Reserved.] 30
SECTION 5.03. [Reserved.] 30
SECTION 5.04. Collections 30
SECTION 5.05. Investment Earnings and Supplemental
Servicing Fees 31
SECTION 5.06. Monthly Advances 31
SECTION 5.07. Additional Deposits 31
SECTION 5.08. Ambac Policy Proceeds 32
ARTICLE VI
THE SELLER; REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE SERVICER 32
SECTION 6.01. Representations and Warranties of the
Seller and the Servicer 32
SECTION 6.02. Liability of Seller 35
SECTION 6.03. Merger or Consolidation of, or Assumption of
the Obligations of, Seller; Amendment of
Limited Liability Company Agreement 35
SECTION 6.04. Limitation on Liability of Seller and Others 35
SECTION 6.05. Seller May Own Securities 35
SECTION 6.06. Rule 144A 35
ARTICLE VII
LIABILITIES OF SERVICER AND OTHERS 36
SECTION 7.01. Liability of Servicer; Indemnities 36
SECTION 7.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer 37
SECTION 7.03. Limitation on Liability of Servicer and Others 38
SECTION 7.04. Delegation of Duties 39
SECTION 7.05. Servicer Not to Resign 39
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ARTICLE VIII
DEFAULT 39
SECTION 8.01. Servicer Defaults 39
SECTION 8.02. Consequences of a Servicer Default 41
SECTION 8.03. Indenture Trustee to Act; Appointment of
Successor 42
SECTION 8.04. Notification to the Beneficiaries and the
Certificateholders 43
SECTION 8.05. Waiver of Past Defaults 43
SECTION 8.06. Effects of Termination or Resignation of
Servicer 43
ARTICLE IX
TERMINATION; REDEMPTION 44
SECTION 9.01. Optional Purchase of All Loans 44
SECTION 9.02. Termination of the Agreement 44
ARTICLE X
MISCELLANEOUS PROVISIONS 44
SECTION 10.01. Amendment 44
SECTION 10.02. Protection of Title to Owner Trust Estate 46
SECTION 10.03. Notices 47
SECTION 10.04. Governing Law 47
SECTION 10.05. Severability of Provisions 47
SECTION 10.06. Assignment 47
SECTION 10.07. Third-Party Beneficiaries 48
SECTION 10.08. Separate Counterparts 48
SECTION 10.09. Headings and Cross-References 48
SECTION 10.10. Assignment to Indenture Trustee 48
SECTION 10.11. No Petition Covenants 48
SECTION 10.12. Limitation of Liability of the Trustees 48
SECTION 10.13. Survival of Agreement 49
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EXHIBITS
EXHIBIT A-1 Form of Initial PSA Assignment
EXHIBIT A-2 Form of Replacement Assignment
EXHIBIT A-3 Form of Substitution Assignment
EXHIBIT B Locations of Schedule of Receivables
EXHIBIT C Back-Up Servicer Requirements
EXHIBIT D Forms of Loan
APPENDIX A Defined Terms and Rules of Construction
APPENDIX B Notice Addresses and Procedures
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THIS POOLING AND SERVICING AGREEMENT is made as of November 28, 2000
by and among Alliance Laundry Systems LLC, a Delaware limited liability company
("ALS" and, in its capacity as Originator and Servicer hereunder, the
"Originator" and the "Servicer," respectively), Alliance Laundry Equipment
Receivables LLC, a Delaware limited liability company ("ALER" and, in its
capacity as the Seller hereunder, the "Seller"), and Alliance Laundry Equipment
Receivables Trust 2000-A, a Delaware business trust (the "Issuer").
WHEREAS, ALS has sold certain Loans to the Seller on the date hereof
pursuant to the Purchase Agreement.
WHEREAS, the Seller desires to sell those Loans to the Issuer in
exchange for the Securities and the Servicer desires to perform the servicing
obligations set forth herein for and in consideration of the fees and other
benefits set forth in this Agreement.
WHEREAS, the Seller and the Issuer wish to set forth the terms
pursuant to which those Loans are to be sold by the Seller to the Issuer and the
Loans will be serviced by the Servicer.
NOW, THEREFORE, in consideration of the foregoing, the other good
and valuable consideration and the mutual terms and covenants contained herein,
the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions. Certain capitalized terms used in the above
recitals and in this Agreement are defined in and shall have the respective
meanings assigned them in Part I of Appendix A to this Agreement. All references
herein to "the Agreement" or "this Agreement" are to this Pooling and Servicing
Agreement as it may be amended, supplemented or modified from time to time, the
exhibits hereto and the capitalized terms used herein which are defined in such
Appendix A, and all references herein to Articles, Sections and subsections are
to Articles, Sections or subsections of this Agreement unless otherwise
specified. The rules of construction set forth in Part II of such Appendix A
shall be applicable to this Agreement.
ARTICLE II
CONVEYANCE OF LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01 Conveyance of Initial Loans. In consideration of the Issuer's
delivery of the Securities to, or upon the order of, the Seller, the Seller does
hereby enter into this Agreement and agree to fulfill all of its obligations
hereunder and to sell, transfer, assign and otherwise convey to the Issuer,
without recourse (except as otherwise set forth in this Agreement), pursuant to
an assignment in the form attached hereto as Exhibit A-1 (the "Initial PSA
Assignment"), all right, title and interest of the Seller in, to and under:
(a) the Loans, including without limitation all documents and instruments
evidencing or governing the Loans and all Loan Files relating thereto,
identified in the schedule to the Initial
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PSA Assignment (the "Initial Loans") and all monies paid or payable
thereon (including Liquidation Proceeds) on or after or due and payable,
but in each case not paid, as of the Initial Cutoff Date;
(b) the Equipment, including, without limitation, all security interests
therein, granted by Obligors pursuant to the Initial Loans and any other
collateral securing the Initial Loans;
(c) any Insurance Policies and proceeds thereof, and rights and benefits
thereunder, with respect to such Equipment and any other collateral
securing the Initial Loans;
(d) with respect to the Initial Loans, any Guaranties and proceeds thereof,
and all rights and benefits thereunder;
(e) the Lockbox and Lockbox Account, all funds on deposit from time to time in
the Lockbox or in the Lockbox Account with respect to the Initial Loans
and all proceeds thereof;
(f) the Purchase Agreement, the Initial PA Assignment pursuant to Section
2.01(a) of the Purchase Agreement with respect to the Initial Loans, and
the other Basic Documents (other than the Trust Agreement, the Trust
Certificate, the Certificates and the documents and certificates executed
in connection with the foregoing), including the right of the Seller to
cause ALS to perform its obligations thereunder (including the obligation
to repurchase such Loans under certain circumstances); and
(g) any proceeds of the property described in clauses (a) through (f) above.
It is the intention of the Seller that the transfer and assignment
contemplated by this Section 2.01 shall constitute a sale of the Initial Loans
from the Seller to the Issuer and the beneficial interest in and title to the
assets conveyed pursuant to this Section 2.01 shall not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. The foregoing sale does not constitute and is
not intended to result in any assumption by the Issuer of any obligation of ALS
or the Seller to the Obligors, insurers or any other Person in connection with
the Initial Loans, any Insurance Policies or any agreement or instrument
relating to any of them. On the Closing Date, the Seller shall cause to be
deposited into the Collection Account all Collections (from whatever source) on
or with respect to the assets conveyed pursuant to this Section 2.01 received by
the Seller pursuant to Section 5.07 of the Purchase Agreement. The Seller, the
initial Servicer and the Issuer intend to treat such transfer and assignment as
a sale for accounting and tax purposes. Notwithstanding the foregoing, in the
event a court of competent jurisdiction determines that such transfer and
assignment did not constitute such a sale or that such beneficial interest is a
part of the Seller's estate, then (i) the Seller shall be deemed to have granted
to the Issuer a first priority perfected security interest in all of the
Seller's right title and interest in, to and under the Initial Loans and other
assets referred to in clauses (a) through (g) above, and the Seller hereby
grants such security interest to the Issuer and (ii) the Initial Loans and other
assets referred to in clauses (a) through (g) above shall be deemed to include
all rights, powers and options (but none of the obligations, if any) of the
Seller under any agreement or instrument included in the assets referred to in
clauses (a) through (g) above, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of such
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Loans and all other monies payable under such Loans, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Seller or otherwise
and generally to do and receive anything that the Seller is or may be entitled
to do or receive under or with respect to the assets conveyed pursuant to this
Section 2.01. For purposes of such grant, this Agreement shall constitute a
security agreement under the UCC.
SECTION 2.02 Conveyance of Replacement Loans. Provided no Early Payout
Event or an Event of Default has occurred and is continuing, on or prior to the
tenth day of the month (each a "Replacement Date"), the Seller shall, if and to
the extent it has Eligible Loans, sell, transfer, assign and otherwise convey to
the Issuer, without recourse (except as otherwise set forth in this Agreement),
and the Issuer shall in such event acquire from the Seller, Replacement Loans in
an amount up to but not in excess of the aggregate amount of Full Prepayments
with respect to Loans during the prior Monthly Period pursuant to an assignment
in the form attached hereto as Exhibit A-2 (each, a "Replacement Assignment"),
all right, title and interest of the Seller in, to and under:
(a) the Loans, including all documents and instruments evidencing or governing
the Loans and all Loan Files relating thereto, identified in the schedule
to the Replacement Assignment (the "Replacement Loans") and all monies
paid or payable thereon (including Liquidation Proceeds) on or after or
due and payable, but in each case not paid, as of the Replacement Cutoff
Date;
(b) the Equipment, including, without limitation, all security interests
therein, granted by Obligors pursuant to such Replacement Loans and any
other collateral securing such Replacement Loans;
(c) any Insurance Policies, and proceeds thereof, and rights and benefits
thereunder, with respect to such Equipment and any other collateral
securing such Replacement Loans;
(d) with respect to such Replacement Loans, any Guaranties, and proceeds
thereof, and all rights and benefits thereunder;
(e) all funds on deposit from time to time in the Lockbox or in the Lockbox
Account with respect to such Replacement Loans and all proceeds thereof;
(f) the Subsequent PA Assignment pursuant to Section 2.01(b) of the Purchase
Agreement with respect to such Loans, and the other Basic Documents (other
than the Trust Agreement, the Trust Certificate, the Certificates and the
documents and certificates executed in connection with the foregoing),
including the right of the Seller to cause ALS to perform its obligations
thereunder (including the obligation to repurchase such Loans under
certain circumstances); and
(g) any proceeds of the property described in clauses (a) through (f) above.
Each Replacement Loan shall be an Eligible Loan as of the close of
business on the last day of the month preceding the Replacement Date (the
"Replacement Cutoff Date") and
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no Replacement Loan shall have previously been a Replacement Loan or a
Substitute Loan. Loans may not be sold by the Seller or purchased by the Issuer
pursuant to this Section 2.02 if and to the extent (i) on a cumulative basis for
both Pools since the Closing Date, the sum of (A) the aggregate Loan Balance (as
of the related Replacement Cutoff Date) of all Replacement Loans (including
Loans to be purchased on such date) and (B) the aggregate Loan Balance of all
Substitute Loans substituted into the Trust on or prior to such date (including
Loans to be substituted on such date) exceeds 25% of the Aggregate Initial Loan
Balance or (ii) after giving effect to the addition of both the Replacement
Loans and Substitute Loans to be added on such date, the Pool Criteria would not
be satisfied. Only Loans with a fixed interest rate may be added to Pool 1, and
only Loans with a floating interest rate may be added to Pool 2.
It is the intention of the Seller that the transfer and assignment
contemplated by this Section 2.02 shall constitute a sale of the Replacement
Loans from the Seller to the Issuer and the beneficial interest in and title to
the assets conveyed pursuant to this Section 2.02 shall not be part of the
Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. The foregoing sale does not
constitute and is not intended to result in any assumption by the Issuer of any
obligation of ALS or the Seller to the Obligors, insurers or any other Person in
connection with the Replacement Loans, any Insurance Policies or any agreement
or instrument relating to any of them. On the Replacement Date, the Seller shall
cause to be deposited into the Collection Account all Collections (from whatever
source) on or with respect to the assets conveyed pursuant to this Section 2.02
received by the Seller pursuant to Section 5.07 of the Purchase Agreement. The
Seller, the initial Servicer and the Issuer intend to treat such transfer and
assignment as a sale for accounting and tax purposes. Notwithstanding the
foregoing, in the event a court of competent jurisdiction determines that such
transfer and assignment did not constitute such a sale or that such beneficial
interest is a part of the Seller's estate, then (i) the Seller shall be deemed
to have granted to the Issuer a first priority perfected security interest in
all of the Seller's right title and interest in, to and under the Replacement
Loans and other assets referred to in clauses (a) through (g) above, and the
Seller hereby grants such security interest to the Issuer and (ii) the
Replacement Loans and other assets referred to in clauses (a) through (g) above
shall be deemed to include all rights, powers and options (but none of the
obligations, if any) of the Seller under any agreement or instrument included in
the assets referred to in clauses (a) through (g) above, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of such Loans and all other monies
payable under such Loans, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Seller or otherwise and generally to do and
receive anything that the Seller is or may be entitled to do or receive under or
with respect to the assets conveyed pursuant to this Section 2.02. For purposes
of such grant, this Agreement shall constitute a security agreement under the
UCC.
In consideration for the purchase of any Replacement Loans, the Issuer
shall, on the related Replacement Date, pay to the Seller in immediately
available funds an amount equal to the aggregate of the Loan Balance for such
Replacement Loans as of the applicable Cutoff Date (the "Purchase Price").
SECTION 2.03. Custody of Loan Files. In connection with the sale,
transfer and assignment of Loans to the Seller from ALS pursuant to the Purchase
Agreement, the sale, transfer and
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assignment to the Issuer pursuant to this Agreement and the execution and
delivery of the Indenture, the Servicer, the Issuer and the Indenture Trustee
simultaneously with the execution and delivery of this Agreement, shall enter
into the Custodial Agreement with the Custodian, pursuant to which the Indenture
Trustee shall revocably appoint the Custodian, at the expense of the Servicer,
and the Custodian shall accept such appointment, to act as the agent of the
Indenture Trustee as Custodian of the following documents or instruments
(collectively, the "Collateral Documents"):
(a) the fully executed original of the Equipment Note for any such Loan (which
shall not bear any transfer or encumbrance legend or, if it shall bear
such a legend, shall be accompanied by an unconditional release from the
party or parties named in such legend);
(b) the original, fully executed Guaranty executed in respect of such Loan
(unless the Loan Schedule certifies that such document does not exist with
respect to the applicable Loan);
(c) the original, fully executed security agreement executed for such Loan;
(d) the original file-stamped UCC-1 financing statement with recording
information indicated thereon for such Loan filed by the Originator
against the Obligor with respect to the related Equipment (unless, solely
with respect to the Initial Loans, the Loan Schedule certifies that such
document does not exist with respect to the applicable Loan and is not
required to be delivered to the Custodian pursuant to this Agreement) or a
copy thereof and related certificates (as provided in the second paragraph
below);
(e) the Delivery and Acceptance Receipt for such Loan (unless the Loan
Schedule certifies that such document does not exist with respect to the
applicable Loan) or a copy thereof and related certification (as provided
in the second paragraph below); and
(f) the assignment of lease, landlord waiver, mortgagee waiver or deed, in
each case, with respect to the real property on which the related
Equipment is located (unless the Loan Schedule certifies that such
document does not exist with respect to the applicable Loan and is not
required to be delivered to the Custodian pursuant to this Agreement).
The Seller shall or shall cause the Servicer to deliver to the Custodian
all of the Collateral Documents (but shall retain copies thereof) relating to at
least half of the Aggregate Initial Loan Balance of the Initial Loans no later
than 30 days after the Closing Date and will deliver to the Custodian all of the
Collateral Documents (but shall retain copies thereof) with respect to all of
the Initial Loans no later than 60 days after the Closing Date. With respect to
any Replacement or Substitute Loan, the Seller shall or shall cause the Servicer
to deliver all of the Collateral Documents (but shall retain copies thereof)
relating to such Loans to the Custodian no later than the applicable Replacement
Date or Substitution Date. The Custodian shall in accordance with the Custodial
Agreement review and certify as complete pursuant to a Custodian Receipt
Certification all Collateral Documents required to be delivered to the Custodian
with respect to each Loan. Any Loans as to which such Collateral Documents have
not been certified as complete or without Exception (as defined in the Custodial
Agreement) by the Custodian (a copy of such notice will be provided to the
Insurer and the Indenture Trustee) within three days after the required deposit
date or, with respect to the Initial Loans, within 60
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days after the Closing Date, shall be deemed Warranty Loans as of such date and
will be repurchased by the Originator pursuant to Section 2.06. The Servicer
shall maintain in its possession all other documents comprising the Loan Files
other than the Collateral Documents. The Servicer (i) except as otherwise
provided herein with respect to the transfer of servicing duties hereunder,
shall maintain the portion of the Loan Files in its possession in a manner
consistent with the Servicing Standards and will not dispose of any documents
constituting the Loan Files, (ii) except as otherwise provided herein with
respect to the transfer of servicing duties hereunder, will not permit any
person other than the Indenture Trustee to maintain any adverse claim upon any
Loan File, and (iii) except as otherwise provided herein with respect to the
transfer of servicing duties, will not permit any person other than the
Indenture Trustee or the Custodian (or any sub-servicer or other agent permitted
hereunder) to maintain possession of any Loan File so long as the related Loan
shall remain part of the Trust Estate.
With respect to any documents described in parts (d) or (f) above which
have been delivered or are being delivered to recording offices for recording
and have not been returned to the Seller or Servicer in time to permit their
delivery hereunder at the time required, in lieu of delivering such original
documents, the Seller or Servicer shall deliver to the Custodian a true copy
thereof with a certification (a copy of which certification shall be delivered
to the Insurer) executed by an authorized representative of the Seller or
Servicer certifying that such copy is a true, correct and complete copy of the
original, which has been transmitted for recordation. The Seller or Servicer
shall deliver such original documents to the Custodian promptly when they are
received.
Upon termination of the Servicer as Servicer, the terminated Servicer
shall promptly deliver to the Indenture Trustee any Loan Files, or portion
thereof, as applicable, and any copies of the Collateral Documents that may be
in the possession of such Servicer and that may have been delivered to such
Servicer pursuant to this Section 2.03. From time to time, solely to the extent
the same is required to implement the foreclosure, purchase, payoff,
substitution or servicing of the Loans by the Servicer or any related
collateral, the Servicer may request release by the Custodian of any portion of
a Loan File in accordance with the terms of the Custodial Agreement. A copy of
any such request shall be sent concurrently to the Insurer. In the event that an
Event of Default, Default, Early Payment Event or Servicer Default has occurred
and is continuing, the consent of the Insurer if the Insurer is the Controlling
Party shall be required in order for the Servicer to make any such request. The
Servicer shall promptly return to the Custodian each and every document
previously requested from the Loan File when the Servicer's need therefor no
longer exists, unless the Loan has been liquidated, paid off, is a Warranty
Loan, an Administrative Loan or is a Loan with respect to which a Substitute
Loan has been substituted in its place, in which case, the Servicer shall
provide a certification to this effect to the Custodian, which may be included
in the request for release, a copy of which shall be sent concurrently to the
Insurer.
If the Insurer is the Controlling Party, notwithstanding anything to the
contrary set forth herein, in no event shall the Servicer be entitled to request
any Collateral Documents held by the Custodian if the Collateral Documents other
than for Loans which have been repurchased, paid off, substituted or liquidated
in accordance with the Servicing Standards then held by the Servicer (including
the Collateral Documents to be requested), exceeds 10% of the then Aggregate
Loan Balance of the Loans for the first 48 months from the Closing Date, or 15%
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of the then Aggregate Loan Balance of the Loans thereafter unless the Servicer
has obtained the prior written consent of the Insurer. The Servicer may hold and
hereby acknowledges that it shall hold any Loan Files and all other Trust Estate
property that it may from time to time receive hereunder as custodian for the
Indenture Trustee solely at the will of the Custodian and the Indenture Trustee
for the sole purpose of facilitating the servicing of the Loans and such
retention and possession shall be in a custodial capacity only. To the extent
the Servicer, as agent of the Indenture Trustee and the Issuer, holds any Loan
File or other Trust Estate property, the Servicer shall do so in accordance with
the Servicing Standards as such standard applies to servicers acting as
custodial agent. The Servicer shall promptly report to the Custodian and the
Indenture Trustee the loss by it of all or part of any Loan File previously
provided to it by the Custodian and shall promptly take appropriate action to
remedy any such loss. In such custodial capacity, the Servicer shall have and
perform the following powers and duties:
(a) hold the Loans and Loan Files that it may from time to time receive
hereunder from the Indenture Trustee for the benefit of the Indenture
Trustee, maintain accurate records pertaining to each Loan to enable it to
comply with the terms and conditions of the Indenture and this Agreement,
and maintain a current inventory thereof;
(a) implement policies and procedures consistent with the Servicing Standards
and requirements of the Custodial Agreement so that the integrity and
physical possession of such Loan Files will be maintained; and
(c) take all other actions, in accordance with the Servicing Standards, in
connection with maintaining custody of such Loan Files on behalf of the
Indenture Trustee.
Acting as custodian of such Loan Files pursuant to this Section, the Servicer
agrees that it does not and will not have or assert any beneficial ownership
interest in the Loans or the Loan Files.
The Servicer agrees to maintain the Loan Files in its possession,
including any Collateral Documents that it may from time to time receive from
the Custodian, at its office located in Ripon, Wisconsin or at such other
offices of the Servicer as shall from time to time be identified by prior
written notice to the Indenture Trustee and the Insurer. Notwithstanding the
foregoing, the Servicer may temporarily move individual Loan Files or any
portion of an individual Loan File without notice as necessary to conduct the
collection and other servicing activities originally set forth in the request
for release in accordance with the Servicing Standards; provided, that the
Servicer shall not move any such Loan Files for more than 30 days without
obtaining the written consent of the Indenture Trustee and, so long as the
Insurer is the Controlling Party, the Insurer.
SECTION 2.04. Acceptance and Acknowledgment by Issuer. The Issuer does
hereby accept all consideration conveyed by the Seller pursuant to Section 2.01,
and declares that the Issuer shall hold such consideration upon the trust set
forth in the Trust Agreement for the benefit of Certificateholders, subject to
the terms and conditions of the Trust Agreement, Indenture and this Agreement.
The Issuer hereby agrees and accepts the appointment and authorization of ALS as
Servicer under Section 3.01 of this Agreement.
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Transfer of Conveyed Assets. Each of the Seller, ALS as the Originator and
the Servicer understands that the Issuer intends to pledge the Trust Estate to
the Indenture Trustee for the benefit of the Beneficiaries and the
Certificateholders pursuant to the Indenture. Each of the Seller, ALS as the
Originator and the Servicer agrees that, upon an Event of Default, the Indenture
Trustee may exercise the rights of the Issuer hereunder and shall be entitled to
all of the benefits to which the Issuer is entitled to hereunder to the extent
provided for in the Indenture.
SECTION 2.05. Representations and Warranties as to the Loans. Pursuant to
Section 2.01(f) and 2.02(f), the Seller assigns to the Issuer all of its right,
title and interest in, to and under the Purchase Agreement. Such assigned right,
title and interest includes the representations and warranties of ALS made to
the Seller pursuant to Section 3.01 of the Purchase Agreement. Each of the
Originator and the Seller hereby represents, warrants and covenants to the
Issuer that it has taken no action and will take no action which would cause
such representations, warranties and covenants to be false in any material
respect as of the Closing Date, Substitution Date or Replacement Date, as
applicable. Each of the Originator and the Seller further acknowledges that the
Issuer, the Indenture Trustee and the Controlling Party rely on, and for their
benefit, the Seller hereby reaffirms the representations, warranties and
covenants of the Seller under this Agreement and the Originator hereby reaffirms
the representations, warranties and covenants of ALS under the Purchase
Agreement in accepting the Loans in trust and executing and delivering the
Securities. The foregoing representations and warranties speak as of the Closing
Date, Substitution Date or Replacement Date but shall survive the sale, transfer
and assignment of the Loans to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
SECTION 2.05. Repurchase of Loans Upon Breach of Warranty. Upon discovery
by the Seller, the Insurer, the Servicer or either Trustee of a breach of any of
the representations and warranties in (x) Section 3.01 of the Purchase Agreement
(irrespective of any limitation set forth in the Purchase Agreement regarding
knowledge of the Originator) or in Sections 2.05, 6.01(b)(i), (ii) or
6.01(b)(iii) of this Agreement; or (y) Section 6.01(a), (b) or (c) (other than
Section 6.01(b)(i), (ii) or (iii)) of this Agreement that materially and
adversely affects the interests of the Beneficiaries in or collectability of any
Loan; the party discovering such breach shall give prompt written notice thereof
to the others. As of the second Accounting Date following its discovery or its
receipt of notice of breach (or, at the Seller's or Originator's election, as
the case may be, the first Accounting Date following such discovery), unless
such breach shall have been cured in all material respects or the Seller shall
have replaced the affected Loan with a Substitute Loan in accordance with
Section 2.07, the Seller in the event of a breach of the representations and
warranties made by the Seller and not by the Originator or the Originator, in
the event of a breach of representation and warranty of the Originator and not
the Seller, shall repurchase such Loan from the Issuer on the related
Distribution Date. The Owner Trustee shall have no affirmative duty to conduct
any investigation as to the occurrence of any event requiring the repurchase of
any Loan pursuant to this Section 2.06.
The repurchase price to be paid by any Warranty Purchaser shall be an
amount equal to the Warranty Payment. It is understood and agreed that the
obligation of the Warranty Purchaser to repurchase any Loan as to which a breach
has occurred and is continuing shall, if such repurchase obligations are
fulfilled, constitute the sole remedy against the Seller, the Servicer or ALS
for such breach available to any Interested Party. The Servicer acknowledges its
obligations to repurchase Administrative Loans from the Issuer pursuant to
Section 3.08
8
hereof and ALS, in its capacity as the seller under the Purchase Agreement,
acknowledges its obligations to repurchase Warranty Loans pursuant to Section
5.04 of the Purchase Agreement and Section 2.06 hereof.
SECTION 2.06. Substitution of Loans.
Provided no Early Payout Event or Event of Default has occurred and is
continuing, on or prior to the tenth day of the month (each a " Substitution
Date"), the Seller shall, if and to the extent it has Eligible Loans, pursuant
to an assignment in the form attached hereto as Exhibit A-3 each, a
"Substitution Assignment") substitute such loans (each a " Substitute Loan") for
any Loan that became subject to a Warranty Event during the prior Monthly
Period, together with all right, title and interest of the Seller in, to and
under:
(a) all documents and instruments evidencing or governing the Substitute Loans
and all Loan Files relating thereto, identified in the schedule to the
Substitution Assignment and all monies paid or payable thereon (including
Liquidation Proceeds) on or after or due and payable, but in each case not
paid, as of the Substitution Cutoff Date;
(b) the Equipment, including, without limitation, all security interests
therein, granted by Obligors pursuant to such Substitute Loans and any
other collateral securing such Substitute Loans;
(c) any Insurance Policies, and proceeds thereof, and rights and benefits
thereunder, with respect to such Equipment and any other collateral
securing such Substitute Loans;
(d) with respect to such Substitute Loans, any Guaranties, and proceeds
thereof, and all rights and benefits thereunder;
(e) all funds on deposit from time to time in the Lockbox or in the Lockbox
Account with respect to such Substitute Loans and all proceeds thereof;
(f) the Subsequent PA Assignment pursuant to Section 2.01(b) of the Purchase
Agreement with respect to such Loans, and the other Basic Documents (other
than the Trust Agreement, the Trust Certificate, the Certificates and the
documents and certificates executed in connection with the foregoing),
including the right of the Seller to cause ALS to perform its obligations
thereunder (including the obligation to repurchase such Loans under
certain circumstances); and
(g) any proceeds of the property described in clauses (i) through (vi) above.
The aggregate Loan Balance as of the Substitution Cutoff Date of the loans
substituted into a Pool on any Substitution Date shall not be less than the
aggregate Loan Balance or more than 110% of the aggregate Loan Balance of the
Loans removed from that Pool as of the Substitution Cutoff Date, and no
Substitute Loan shall previously have been substituted or put as a Replacement
Loan into either Pool.
9
Each Substitute Loan shall be an Eligible Loan as of the close of business
on the last day of the month preceding the Substitution Date (the " Substitution
Cutoff Date") and no Substitute Loan shall have previously been a Substitute
Loan or a Replacement Loan. Only loans with a fixed interest rate may be
substituted into Pool 1 and only loans with a floating interest rate may be
substituted into Pool 2. Loans may not be substituted for Warranty Loans if and
to the extent (i) on a cumulative basis for both Pools from the Closing Date,
the sum of the aggregate Loan Balance (as of the related Substitution Cutoff
Date) of all Substitute Loans (including Loans to be substituted on such date)
exceeds 10% of the Aggregate Initial Loan Balance, (ii) on a cumulative basis
for both Pools since the Closing Date, the sum of (A) the aggregate Loan Balance
(as of the related Substitution Cutoff Date) of all Substitute Loans (including
Loans to be substituted on such date) and (B) the aggregate Loan Balance of all
Replacement Loans added to the Trust on or prior to such date exceeds 25% of the
Aggregate Initial Loan Balance or (iii) after giving effect to the addition of
both the Substitute Loans and the Replacement Loans to be added on such date,
the Pool Criteria would not be satisfied.
Upon the replacement of a Loan and collateral as described above, the
interest of the Trustees and the Securityholders in such replaced Loan and
collateral shall be terminated and such replaced Loan and collateral shall be
released to the Seller.
Any substitution or replacement of a Loan pursuant to this Agreement shall
be effected by (i) delivery to the Custodian on behalf of the Indenture Trustee
of the Collateral Documents for each such Substitute Loan or Replacement Loan on
or prior to such conveyance in accordance with Section 2.03, (ii) filing of any
UCC financing statements necessary to perfect the interest of the Indenture
Trustee in the Substitute Loans or Replacement Loans, (iii) delivery to the
Indenture Trustee of a list of Replacement Loans and Substitute Loans reflecting
such replacement or substitution, and (iv) execution of and delivery of the
related Assignments.
10
ARTICLE III
ADMINISTRATION AND SERVICING OF LOANS
SECTION 3.01. Duties of the Servicer. ALS is hereby appointed as the
initial Servicer. The Servicer is hereby appointed and authorized to act as
agent for the Owner of the Loans and in such capacity shall manage, service,
administer and make Collections on the Loans with reasonable care, using no less
than that degree of skill and attention that the Servicer exercises with respect
to comparable stand-alone commercial laundry equipment loans that it services
for itself or others and consistent with the Credit and Collection Policy
(collectively, the "Servicing Standards"). ALS hereby accepts such appointment
and authorization and agrees to perform the duties of Servicer with respect to
the Loans set forth herein. The Servicer's duties shall include, but not be
limited to, collection and posting of all payments, responding to inquiries of
Obligors on the Loans, investigating delinquencies, sending payment statements
to Obligors, reporting tax information to Obligors (which currently consists of
IRS Form 1098), monitoring the collateral in accordance with the Servicing
Standards, accounting for Collections and furnishing monthly and annual
statements to the Owner of any Loans with respect to distributions, maintaining
the first priority perfected security interest of the Indenture Trustee in the
Trust Estate (other than Exempt Collateral) for the benefit of the Beneficiaries
and filing any financing and continuation statements required to be filed
pursuant to the UCC, which continuation statements shall be filed on or before
the 60th day prior to the expiration date of such financing statement; and
promptly delivering evidence of all such filings to the Indenture Trustee and
the Insurer which evidence shall be satisfactory in form and substance to the
Insurer with evidence of the filing of continuation statements being delivered
on or before the 30th day before the expiration of such financing statements,
and performing the other duties specified herein. Subject to the provisions of
Section 3.02, the Servicer shall follow the Servicing Standards and shall have
full power and authority, acting alone, to do any and all things in connection
with such managing, servicing, administration and collection that it may deem
necessary or desirable.
Without limiting the generality of the foregoing, the Servicer is hereby
authorized and empowered by the Owner of the Loans, pursuant to this Section
3.01 to execute and deliver, on behalf of all Interested Parties, or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments, with respect to
the Loans and the related collateral but solely to the extent such release or
discharge is expressly permitted pursuant to the terms of the Basic Documents.
The Servicer is hereby authorized to commence in the name of the Owner of such
Loan or, to the extent necessary, in its own name, a legal proceeding to enforce
a Defaulted Loan as contemplated by Section 3.04, to enforce all obligations of
ALS and ALER, in its capacity as the Seller or otherwise, under each of the
Purchase Agreement and the Transfer and Servicing Agreements or to commence or
participate in a legal proceeding (including a bankruptcy proceeding) relating
to or involving a Loan or a Defaulted Loan. If the Servicer commences or
participates in such a legal proceeding in its own name (which any successor
Servicer shall not be permitted to do, it being understood that in no event will
any successor Servicer take any action hereunder in its own name, including,
without limitation, setting up accounts or directing Obligors to make payments
to it or in its name), the Owner of such Loan shall thereupon be deemed to have
automatically assigned such Loan to the Servicer solely for purposes of
commencing or participating in any such proceeding as a party or claimant, the
Servicer is hereby authorized and empowered by the Owner of a Loan to execute
and deliver in the Servicer's name any
11
notices, demands, claims, complaints, responses, affidavits, all instruments of
satisfaction or cancellation, or of partial or full release or discharge or
other documents or instruments in connection with any such proceeding. Any Owner
of Loans, upon the written request of the initial Servicer, shall furnish the
Servicer with any powers of attorney and other documents and take any other
steps which the Servicer may deem necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties under this
Agreement and the other Transfer and Servicing Agreements. Except to the extent
required by the preceding two sentences, the authority and rights granted to the
Servicer in this Section 3.01 shall be nonexclusive and shall not be construed
to be in derogation of the retention by the Owner of a Loan of equivalent
authority and rights. If in any proceeding it is held that the Servicer may not
enforce a Loan on the grounds that it is not a real party in interest or a
holder entitled to enforce the Loan, the applicable Trustee shall, at the
Servicer's specific written direction and expense, take such steps as shall be
reasonably required to enforce the Loan, including bringing suit in the name of
such Person or the names of the Securityholders.
SECTION 3.02. Collection of Loan Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Loans as and when the same shall become due, and shall follow
the Servicing Standards. Notwithstanding anything in this Agreement to the
contrary, neither the Indenture Trustee nor the Servicer shall release the
Equipment or other collateral securing a Loan from the lien of the Indenture
unless the outstanding Loan Balance, if any, of such Loan has been deposited
into the Collection Account, except upon substitution of Substitute Loans,
substitution of equivalent Equipment or other collateral (which substitution
shall not reduce the Obligor's payment obligations under such Loan), or the
foreclosure and sale of collateral or final settlement or compromise of a
Defaulted Loan in which case the proceeds of such foreclosure, sale, or final
settlement or compromise shall be deposited into the Collection Account as
required under the Basic Documents. Subject to the limitations in subsection
3.07(c), the Servicer is hereby authorized to grant extensions, rebates or
adjustments on a Loan without the prior consent of the Owner of such Loan or the
Controlling Party and to consent to the assignment or assumption, including the
release of the existing Obligor in connection therewith, without the prior
consent of the Owner of such Loan provided that (x) after giving effect to such
extension, rebate or adjustment the Pool Criteria would be satisfied if the
affected Loan were treated as a Substitute Loan or Replacement Loan and (y) with
respect to any such assignment or assumption other than of a Defaulted Loan,
after giving effect to such assignment or assumption, the new Obligor would
satisfy all Eligibility Criteria and Pool Criteria applicable to Obligors;
provided, further, that subject to preceding clauses (x) and (y) and Section
3.07(c), any successor Servicer (other than an affiliate of ALS) shall be
authorized to grant extensions, rebates or adjustments without the consent of
the Controlling Party only to the extent it determines that such action is
reasonably likely to prevent a payment event of default by the Obligor. The
Servicer is authorized in its discretion to waive any prepayment charge, late
payment charge or any other fees that may be collected in the ordinary course of
servicing such Loan; provided, however, that once the Servicer waives such fees,
they cannot be collected from the Designated Accounts, the Lockbox Account or
any other source. To the extent provided for in any Loan, the Servicer shall
make reasonable efforts to collect all payments with respect to amounts due for
maintenance, taxes or assessments on the Equipment or the Loans and shall remit
such amounts to the appropriate maintenance provider or Governmental Authority
on or prior to the date such payments are due.
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SECTION 3.03. Prepayments. The Servicer may accept Prepayment in part or
in full; provided, that in the event of Full Prepayment, the Servicer may
consent to such Full Prepayment only if the amount thereof deposited into the
Collection Account is not less than the balance of and all accrued and unpaid
interest and fees on such Loan and all other amounts due and payable in
connection therewith, and provided further, that in the event of a Prepayment in
part, the outstanding Loan Balance of such Loan is not reduced by more than the
amount of such Prepayment allocable to principal pursuant to Section 3.11.
SECTION 3.04. Realization Upon Defaulted Loans. The Servicer shall use
reasonable efforts, consistent with the Servicing Standards, to repossess,
remarket or otherwise comparably convert the ownership of each item of Equipment
and other collateral that it has reasonably determined should be repossessed or
otherwise converted following a default under the Loan secured by each such item
of Equipment and other collateral. The Servicer is authorized to follow such
practices, policies and procedures as it shall deem necessary or advisable and
as shall be in accordance with the Servicing Standards to realize upon or obtain
benefits of any proceeds from any Insurance Policies and proceeds from any
Guaranties, in each case with respect to the Loans, selling the related
Equipment and other collateral at public or private sale or sales and other
actions by the Servicer in order to realize upon such a Loan. The foregoing is
subject to the provision that, in any case in which the Equipment shall have
suffered damage, the Servicer shall not expend funds in connection with any
repair or towards the repossession of such Equipment unless it shall determine
in its discretion consistent with the Servicing Standards that such repair
and/or repossession shall likely increase the proceeds of liquidation of the
related Loan by an amount greater than the amount of such expenses. The Servicer
shall be entitled to receive Liquidation Expenses with respect to each Defaulted
Loan out of amounts that would otherwise comprise Liquidation Proceeds with
respect to the related Loan. The Servicer shall enforce any of the foregoing
rights and remedies described in this Section 3.04 with respect to any Defaulted
Loans that are cross collateralized by other loan obligations, in the manner and
priority specified in Section 5.10 of the Purchase Agreement. To the extent that
an escrow account has been established by or on behalf of an Obligor to cover
defaults on contracts between such Obligor and the Originator, amounts in such
escrow account shall be applied against defaults under each such contract in the
order that such defaults occur with respect to any such contract unless
otherwise required by law, regulation or judicial order. The Servicer shall not
accelerate any Scheduled Payment unless permitted to do so by the terms of the
Loan or under applicable law; and provided, that the Servicer shall not declare
an Obligor to be in default under a Loan nor exercise any other remedies under
such Loan based solely on a default by such Obligor under any other obligation
of such Obligor to ALS or its Affiliates, if such Obligor is not also in default
under such Loan unless the Servicer concludes that declaring such default is in
the best interest of the Noteholders and the Insurer or will maximize potential
recoveries from such Obligor for the Issuer for the benefit of the Noteholders
and the Insurer provided further that a successor Servicer (other than an
affiliate of ALS or successor thereto pursuant to Section 7.02) shall not
declare an Obligor to be in default under a Loan nor exercise any other remedies
under such Loan based solely on such a cross default unless the successor
Servicer shall be directed to do so by the Controlling Party (any such successor
Servicer agrees to give prompt notice to the Controlling Party of any
circumstances of which it is aware which would permit such a cross default).
13
SECTION 3.05. Maintenance of Insurance Policies. The Servicer shall, in
accordance with the Servicing Standards, require that each Obligor shall have
obtained physical damage insurance covering each item of Equipment as of the
execution of the related Loan, unless the Servicer has in accordance with the
Servicing Standards permitted an Obligor to self-insure the item of Equipment
securing such Loan or to maintain no insurance with respect to such item of
Equipment. The Servicer shall, in accordance with the Servicing Standards,
monitor such physical damage insurance with respect to each item of Equipment
that secures each Loan. The Servicer shall remit to the Collection Account
within two Business Days of receipt of all Insurance Proceeds received directly
by the Servicer with respect to any Loan or Equipment subject thereto,
notwithstanding any notice given pursuant to Section 3.12 hereof. Additionally,
the Servicer shall maintain a general liability policy in the amount of at least
$1,000,000 per occurrence, at least $2,000,000 in the aggregate and an excess
liability insurance policy in umbrella form in the aggregate amount of at least
$5,000,000. All premiums due and payable for the term of the period in respect
of such policies have been paid and shall continue to be paid promptly as such
premiums become due. The Indenture Trustee and the Insurer shall at all times
while the Notes are outstanding be named as an additional insured on such
casualty and liability policies maintained by the Servicer.
SECTION 3.06. Maintenance of Security Interests in Collateral. The
Servicer shall, in accordance with the Servicing Standards and at its own
expense, take such steps as are necessary to maintain in favor of the Indenture
Trustee perfection of the first priority security interest in the Trust Estate
(other than Exempt Collateral) including, without limitation, filings required
because of revisions to the UCC; provided that the Servicer agrees that (x) the
aggregate Loan Balance of the Loans which are covered by part (c) of the
definition of Exempt Collateral shall not at any time exceed 0.25% of the
Aggregate Loan Balance and (y) with respect to the Initial Loans only, as of the
Initial Cutoff Date, the aggregate value of the collateral related to such Loans
other than the collateral covered by clause (e) of the definition of Exempt
Collateral was not less than 80% of the Aggregate Initial Loan Balance. The
Owner of each Loan hereby authorizes the Servicer to re-perfect such first
priority security interest as necessary because of the relocation of an item of
Equipment or for any other reason. The Servicer shall execute and file such
continuation statements and any other documents reasonably requested by the
Indenture Trustee or which may be required by law to fully preserve and protect
the first priority perfected security interest of the Indenture Trustee on
behalf of the Noteholders and the Insurer in and to the Trust Estate other than
Exempt Collateral. The Servicer shall use commercially reasonable efforts to
enforce the obligations of the Obligors under the applicable loan documents to
remove any Lien on the Trust Estate of which the Servicer has actual knowledge
or reason to have knowledge pursuant to the performance of its obligations as
Servicer hereunder other than the Lien created pursuant to the Indenture.
SECTION 3.07. Covenants of the Servicer. The Servicer hereby makes the
following covenants on which the Issuer, the Insurer, the Indenture Trustee and
the Noteholders are relying in connection with the Issuer acquiring the Loans
hereunder and issuing the Securities under the Basic Documents. The Servicer
covenants that from and after the Closing Date:
(a) Liens in Force. Except as expressly provided in this Agreement, the
Servicer shall not release in whole or in part any Lien on any collateral
securing any Loan or any Equipment or other collateral from the security
interest securing such related Loan and shall use reasonable
14
efforts not to permit any Liens to attach to the Trust Estate except those
created under the Indenture.
(b) No Impairment. The Servicer shall not impair the rights of the Issuer, the
Insurer or any Interested Party in and to any Loan and shall take no
action with respect to a Loan which at the time the Servicer reasonably
believes would be contrary to the maximization of the ultimate repayment
on such Loan.
No Modifications. The Servicer shall not (i) amend or otherwise modify or
grant rebates or adjustments on any Loan such that (A) the Loan Balance or the
Annual Percentage Rate (other than for those Loans eligible for ALS's Rewards
Program) is decreased, (B) after such amendment, modification, rebate or
adjustment, the Pool Criteria would not be satisfied or (ii) grant any extension
with respect to, or amend, any Scheduled Payment to extend or delay any payments
of principal on any Loan, provided, however, that subject to the restrictions in
clause (i) above, but notwithstanding the restrictions in clause (ii) above, the
Servicer may extend or amend up to two Loans in any Monthly Period, and extend
or amend not more than 35 Loans after the Closing Date; provided that, in each
case, the final Scheduled Payment date as amended would not be later than April
30, 2008. The Servicer shall not amend or otherwise modify any Loan more than
once after its initial applicable Cutoff Date.
Contract Management System. The Servicer will, at its own cost and
expense, (A) retain the Contract Management System, or an alternative system of
equal capability, used by the Servicer as a master record of the Loans and (B)
xxxx the Contract Management System to the effect that the Loans listed thereon
have been conveyed to the Issuer pursuant to this Agreement and pledged by the
Issuer to the Indenture Trustee for the benefit of the Beneficiaries and (to the
limited extent as provided therein) the Certificateholders pursuant to the
Indenture.
The Servicer will maintain accounts and records as to each respective Loan
serviced by the Servicer that are accurate and sufficiently detailed to permit
(i) the reader thereof to know as of the most recent Determination Date the
status of such Loan, 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 Loan and the amounts from time to time deposited in
the Collection Account in respect of such Loan.
Compliance with Law. The Servicer will comply, in all material respects,
with all acts, rules, regulations, orders, decrees and directions of any
Governmental Authority applicable to the Loans and the Equipment or any part
thereof; provided, however, that the Servicer may contest any act, regulation,
order, decree or direction in any reasonable manner that shall not materially
and adversely affect the rights of the Noteholders or the Insurer in the Trust
Estate; and provided, further, that such contests shall be in good faith by
appropriate proceedings and shall not subject the Insurer or the Indenture
Trustee to any civil or criminal liability or risk of loss of any collateral.
Obligations with Respect to Loans. The Loans shall impose no material
obligation on the Originator or any successor or assignee. Without limiting the
foregoing, as more specifically set forth in this Agreement, in performing its
servicing duties hereunder, the Servicer shall, in accordance with the Servicing
Standards, collect all payments required to be made by the
15
Obligors under the Loans and enforce all material rights of the Issuer under the
Loans. The Servicer shall not assign, sell, pledge, or exchange, or in any way
encumber or otherwise dispose of the Equipment or other collateral securing the
Loans, except as expressly permitted under this Agreement and the Indenture.
No Ownership Interest. The Servicer does not have any ownership interest
in the Trust Estate and will not assert any ownership interest in the Trust
Estate.
Collection Policies and Procedures. So long as the Insurer is the
Controlling Party, the Servicer shall not without the prior written consent of
the Insurer amend, modify or otherwise change its Credit and Collection Policy
in any manner unless such amendment, modification or change (i) applies
generally to all contracts or loans serviced by the Servicer (and not just to
Loans in the Pools) and (ii) would not be likely to materially and adversely
affect the Loans or the ability of the Servicer to collect the Loans or the
minimum required credit quality of the Loans consistent with the underwriting
criteria of ALS in the ordinary course of business. So long as the Insurer is
the Controlling Party, the Servicer shall provide at least five (5) Business
Days' prior written notice to the Insurer of any proposed material change to the
Credit and Collection Policy.
Financial Condition Covenants. For so long as any payments of principal or
interest remain outstanding on the Notes or any other amounts are owed to any
Beneficiary, the Issuer or the Indenture Trustee under the Basic Documents, the
Servicer shall, so long as ALS, any Affiliate thereof or any successor thereto
pursuant to Section 7.02 is the Servicer, maintain the following financial
ratios (the "Financial Condition Covenants") as specified in this Section
3.07(i)(i) and (ii) below:
(a) the Servicer shall not permit the Consolidated Leverage Ratio as at the
last day of any period of four consecutive fiscal quarters of the Servicer
ending with any fiscal quarter set forth below to exceed the ratio set
forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Ending On or About Leverage Ratio
--------------------------------- --------------
September 30, 2000 7.00 to 1.00
December 31, 2000 7.00 to 1.00
March 31, 2001 7.00 to 1.00
June 30, 2001 7.00 to 1.00
September 30, 2001 6.75 to 1.00
December 31, 2001 6.30 to 1.00
March 31, 2002 6.30 to 1.00
June 30, 2002 6.30 to 1.00
September 30, 2002 6.30 to 1.00
December 31, 2002 5.60 to 1.00
March 31, 2003 5.60 to 1.00
June 30, 2003 5.60 to 1.00
September 30, 2003 5.60 to 1.00
December 31, 2003 4.75 to 1.00
and each Fiscal
Quarter thereafter 4.50 to 1.00
16
and;
(b) the Servicer shall not permit the Consolidated Interest Coverage Ratio for
any period of four consecutive fiscal quarters of the Servicer ending with
any fiscal quarter set forth below to be less than the ratio set forth
below opposite such fiscal quarter.
Consolidated Interest
Fiscal Quarter Ending On or About Coverage Ratio
--------------------------------- --------------
September 30, 2000 1.45 to 1.00
December 31, 2000 1.50 to 1.00
March 31, 2001 1.50 to 1.00
June 30, 2001 1.50 to 1.00
September 30, 2001 1.50 to 1.00
December 31, 2001 1.60 to 1.00
March 31, 2002 1.60 to 1.00
June 30, 2002 1.60 to 1.00
September 30, 2002 1.60 to 1.00
December 31, 2002 1.75 to 1.00
March 31, 2003 1.75 to 1.00
June 30, 2003 1.75 to 1.00
September 30, 2003 1.75 to 1.00
December 31, 2003 2.00 to 1.00
March 31, 2004 2.00 to 1.00
June 30, 2004 2.00 to 1.00
September 30, 2004 2.10 to 1.00
December 31, 2004 2.50 to 1.00
and each Fiscal
Quarter thereafter 2.50 to 1.00
17
SECTION 3.08. Purchase of Loans Upon Breach of Covenant. Upon discovery
by any of the Insurer, the Issuer, the Seller, the Servicer or any party under
the Transfer and Servicing Agreements of a breach of any of the covenants set
forth in Sections 3.06 and 3.07(a), (b) or (c), the party discovering such
breach shall give prompt written notice thereof to the others. As of the second
Accounting Date following its discovery or receipt of notice of such breach (or,
at the Servicer's election, the first Accounting Date so following), the
Servicer shall, unless it shall have cured such breach in all material respects,
purchase from the Owner thereof any Loan affected by such breach and, prior to
the related Determination Date, the Servicer shall deposit the Administrative
Purchase Payment in the Collection Account. It is understood and agreed that the
obligation of the Servicer to purchase any Loan with respect to which such a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Servicer for such breach available to the
Seller or any Interested Party for all repurchases of Loans comprising not more
than 3% of the Aggregate Initial Loan Balance on a cumulative basis. Should the
Servicer's repurchases exceed the 3% threshold described in the foregoing
sentence with respect to the breach of any Loan which has occurred and is
continuing, then the Seller, the Controlling Party or any Interested Party shall
be entitled to exercise any rights to which they are entitled pursuant to
Section 8.02. Each of the Owner Trustee and the Indenture Trustee shall have no
affirmative duty to conduct any investigation as to the occurrence of any event
requiring the repurchase of any Loan pursuant to this Section 3.08.
SECTION 3.09. Total and Supplemental Servicing Fees; Payment of Certain
Expenses by Servicer. The Servicer is entitled to receive the Total Servicing
Fee and Supplemental Servicing Fees out of Collections (to the extent not waived
by the Servicer) in respect of the Loans as provided in Section 8.2 of the
Indenture. Subject to any limitations on the Servicer's liability hereunder or
as otherwise specifically provided herein, the Servicer shall be required to pay
from its own funds all expenses incurred by it in connection with its activities
under this Agreement (including fees and disbursements of the Issuer, any
trustees and independent accountants, taxes imposed on the Servicer, expenses
incurred in connection with distributions and reports to the Beneficiaries and
the Certificateholders the fees of the Back-up Servicer, the Custodian and the
Lockbox Bank, and all other fees and expenses not expressly stated under this
Agreement to be for the account of the Beneficiaries and the Certificateholders,
but excluding federal, state and local income and franchise taxes, if any, of
the Issuer, the Beneficiaries and the Certificateholders).
SECTION 3.10. Servicer's Certificate. Not later than 11:00 a.m. (New
York City time) on each Determination Date, the Servicer shall deliver to each
Trustee, the Insurer and the Rating Agencies a Servicer's Certificate with
respect to the immediately preceding Monthly Period executed by the President or
any of the Vice President/Controller, the Vice President/Chief Financial Officer
or the Treasurer of the initial Servicer or by an appropriate officer of any
successor Servicer (or, if such Servicer's Certificate is delivered
electronically, such Servicer's Certificate shall be deemed for all purposes to
have be certified by the Chief Financial Officer or similar officer), containing
all information necessary to each such party for making the calculations,
withdrawals, deposits, transfers and distributions required by Section 4.06 of
this Agreement and Section 8.2 of the Indenture, and all information required to
be provided to Certificateholders, the Insurer and Noteholders under subsection
4.09(a). Loans to be purchased by the Servicer under Section 3.08 hereof or
repurchased by the Seller or Originator under Section 2.06 hereunder or by ALS
under Section 5.04 of the Purchase Agreement as of the
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last day of any Monthly Period shall be identified by Loan number (as set forth
in the Schedule of Loans). With respect to any Loans for which the Seller, the
Originator or ALS becomes the Owner, the Servicer shall deliver to the Seller,
the Originator or ALS such accountings relating to such Loans and the actions of
the Servicer with respect thereto as the Seller, the Originator or ALS may
reasonably request and at the expense of the requesting party.
SECTION 3.11. Application of Collections. For the purposes of this
Agreement, as of each Accounting Date, all payments by or on behalf of the
Obligor received during a Monthly Period with respect to a Loan shall be applied
by the Servicer (i) first to any unpaid Scheduled Payment for any prior Monthly
Period with respect to such Loan, (ii) second, to the Scheduled Payment for such
Monthly Period with respect to such Loan, (iii) third, to the payment of any
late fees, rewrite charges, and other Supplemental Servicing Fees with respect
to such Loan and (iv) fourth, the remainder shall constitute, with respect to
such Loan, a Prepayment of principal of the Loan.
SECTION 3.12. Lockbox Account.
Prior to the date on which any Loan is transferred to the Trust, the
Servicer shall require each of the Obligors under such Loan to make all payments
under such Loan or otherwise in connection with the Trust Estate, including any
and all payments of late fees, directly to the Lockbox in the name of the
Indenture Trustee. In the event that any Servicer resigns or is replaced, then
if the place for payment pursuant to any Loan is changed, the successor Servicer
shall give each related Obligor prompt written notice of its appointment and the
address, if not the Lockbox, to which such Obligor should make payments to each
such Loan.
The Servicer shall no later than 15 days after the Closing Date direct
each obligor which is not an Obligor, to make all payments to an address other
than the Lockbox. The Servicer is hereby expressly authorized and empowered by
the Owner of the Loans, without the need of prior consent or authorization, to
withdraw immediately from the Collection Account any payment received and
deposited into the Collection Account which is not a payment with respect to the
Loans or the Trust Estate. The Servicer shall certify in writing to the
Indenture Trustee that such withdrawal is pursuant to this Section 3.12(b). The
Servicer and the Indenture Trustee shall direct the Lockbox Bank to transfer all
available amounts in the Lockbox Account by wire transfer into the Collection
Account no later than the second Business Day following the date of receipt
thereof. The Servicer Certificate shall specify the amounts transferred into the
Collection Account with respect to the immediately preceding Monthly Period. The
Servicer shall deposit into the Lockbox Account all Collections received by it
relating to the period after the applicable Cutoff Date within two Business Days
of such receipt.
The parties hereto agree that, in the event (i) ALS, an affiliate of ALS
or a successor to ALS pursuant to Section 7.02 is no longer the Servicer or (ii)
any Rating Agency has indicated that maintenance of the Lockbox or the Lockbox
Account with the then current Lockbox Bank could result in a downgrading of the
Notes, at the request of the Controlling Party, the Servicer shall designate a
new Lockbox Bank acceptable to the Controlling Party and shall promptly
thereafter (A) establish a new Lockbox and Lockbox Account in the name and under
the sole dominion and control of the Indenture Trustee with such new Lockbox
Bank, (B) instruct all Obligors to make payments under the Loans or otherwise in
connection with the Trust Estate
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directly to such new Lockbox, and (iii) enter into a Lockbox Agreement with such
new Lockbox Bank satisfactory to the Controlling Party. In such event, the
Indenture Trustee shall promptly send a termination notice to the existing
Lockbox Bank to terminate the Lockbox Agreement with the existing Lockbox Bank
following receipt of an instruction to such effect from the Controlling Party.
SECTION 3.13. Power of Attorney. The Servicer (other than a successor
Servicer) and the Originator each irrevocably constitute and appoint the
Indenture Trustee, with full power of substitution, as their true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Servicer or the Originator, as applicable, and in the name of the
Servicer or the Originator, as applicable, or in its own name, for purposes of
taking any and all appropriate action and executing any and all documents and
instruments which may be necessary to accomplish either of the following:
(a) after an Event of Default, Early Payout Event or Servicer Default has
occurred and is continuing, at any time, for the purpose of carrying out
the terms of this Agreement in the name of the Servicer or its own name,
or otherwise, to take possession of and indorse and collect any checks,
drafts, notes, acceptances or other instrument, general intangible or
contract or with respect to any other collateral and to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Indenture Trustee or the Insurer for
the purpose of collecting any and all such monies due under any account,
instrument, general intangible or contract with respect to the Trust
Estate; and
(b) whether or not an Event of Default, Early Payout Event or Servicer Default
has occurred, execute and deliver any and all agreements, instruments,
documents and papers (including, without limitation, UCC Financing
Statements) as the Indenture Trustee or the Insurer may reasonably request
to perfect the Indenture Trustee's security interest in the Trust Estate
(other than Exempt Collateral).
SECTION 3.14. Back-up Servicer. The Servicer shall retain a back-up
servicer (the "Back-up Servicer") designated by the Controlling Party, which is
reasonably acceptable to the Servicer (or if the Insurer is not the Controlling
Party, designated by the Servicer), who will agree to perform the services set
forth in Exhibit C pursuant to terms and conditions acceptable to the
Controlling Party. The initial Back-up Servicer shall be BNY Asset Solutions LLC
and the Insurer hereby agrees that the terms and conditions of the Back-up
Servicing Agreement entered into on the date hereof with BNY Asset Solutions LLC
is acceptable. The Servicer shall on or prior to each Distribution Date send
such Back-up Servicer the information required to be provided pursuant to the
Back-up Servicing Agreement. The fees and expenses of the Back-up Servicer shall
be paid by the Servicer from the Total Servicing Fee and Supplemental Servicing
Fees. To the extent the obligations of the Backup Servicer as Servicer under
this Agreement shall be expressly modified pursuant to the provisions of its
Backup Servicing Agreement, such provisions shall modify the obligations of the
Backup Servicer as Servicer under this Agreement.
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ARTICLE IV
SERVICER'S COVENANTS; DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO BENEFICIARIES AND THE CERTIFICATEHOLDERS
SECTION 4.01. Annual Statement as to Compliance: Notice of Servicer
Default.
The Servicer shall deliver to each Trustee and the Insurer (with a copy to
the Initial Purchaser), on or before April 15 of each year, beginning April 15,
2001, an officer's certificate signed by an Executive Officer of the initial
Servicer (or by an appropriate officer of any successor Servicer), dated as of
the immediately preceding December 31, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or, with
respect to the first such certificate, such period as shall have elapsed from
the Closing Date to December 31, 2000) and of its performance under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled its
obligations under this Agreement in all material respects throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. A copy of such certificate may be obtained by any Noteholder
or any Certificateholder by a request in writing to the Issuer addressed to the
Corporate Trust Office of the Indenture Trustee or the Owner Trustee,
respectively.
The Servicer shall deliver to each Trustee, the Insurer and to the Rating
Agencies (with a copy to the Initial Purchaser), promptly after having obtained
knowledge thereof, but in no event later than (2) two Business Days thereafter,
written notice in an officer's certificate signed by an Executive Officer of the
Servicer of any Servicer Default or event which with the giving of notice or
lapse of time, or both, would become a Servicer Default under Section 8.01. Such
notice shall describe the nature and period of existence of such event and the
action, if any, the Servicer is taking or proposes to take with respect thereto.
SECTION 4.02. Annual Independent Accountants' Report.
The Servicer shall, at its own expense, cause a firm of independent
accountants, who may also render other services to the Servicer or the Seller,
to deliver to each Trustee, the Insurer and the Rating Agencies (with a copy to
the Initial Purchaser), on or before April 15 of each year, beginning April 15,
2001 with respect to the twelve months ended on the immediately preceding
December 31 (or, with respect to the first such report, such period as shall
have elapsed from the Closing Date to December 31, 2000), a report (the
"Accountants' Report") addressed to the board of directors of the Servicer and
to each Trustee and the Insurer, to the effect that such firm has audited the
financial statements of the initial Servicer and issued its report thereon and
that such audit (A) was made in accordance with generally accepted auditing
standards and the requirements of the Ambac Insurance Agreement, (B) included
tests relating to Equipment Notes serviced for others in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers (the
"Program"), to the extent the procedures in the Program are applicable to the
servicing obligations set forth in this Agreement and (C) except as described in
the report, disclosed no exceptions or errors in the records relating to
equipment notes serviced for others that, in the firm's opinion, paragraph four
of the Program requires such firm to report.
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The Accountants' Report shall also indicate that the firm is independent
of the Seller and the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
A copy of the Accountants' Report may be obtained by any Noteholder or any
Certificateholder by a request in writing to the Issuer addressed to the
Corporate Trust Office of the Indenture Trustee or the Owner Trustee,
respectively.
For so long as ALS is the Servicer, the Servicer shall also deliver to the
Insurer (i) within 95 days of the Servicer's fiscal year end the Servicer's
annual Form 10-K report for such year and (ii) within 50 days after the end of
each of the Servicer fiscal quarters (other than its fiscal year end) the
Servicer's Form 10-Q report for such quarter or if the Servicer is no longer a
reporting company under the Securities Exchange Act of 1934, a report containing
all the information required to be contained in a Form 10-K or 10-Q report, as
applicable, if it were such a reporting company. In the event that ALS is not
the Servicer, if such Servicer shall not be, or not be a wholly-owned subsidiary
of, a reporting company under the Securities Exchange Act of 1934, the Servicer
shall within 95 days after the end of each of its fiscal years, and within 50
days after the end of each of its fiscal quarters (other than a fiscal year
end), deliver to the Insurer a report containing all the information required to
be contained in a Form 10-K or Form 10-Q, respectively, if it were such a
reporting company.
SECTION 4.03. Access to Certain Documentation and Information Regarding
Loans.
The Servicer shall provide to the Insurer and each Trustee and each of
their respective representatives, attorneys and accountants access (as described
below) to the documentation regarding the Loans as described below. The Servicer
shall provide such access to any Securityholder only in such cases where a
Securityholder is required by applicable statutes or regulations to review such
documentation, and then, if permitted by law, only upon receipt by it of a
confidentiality agreement reasonably acceptable to it and such Securityholder
restricting the Securityholders use of any proprietary information of the
Servicer made available to the Securityholder in connection with such review. In
each case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours at offices of the Servicer designated
by the Servicer. The failure of the Servicer to provide access as provided in
this Section 4.03, because the Servicer reasonably believes access would violate
applicable law with respect to disclosure shall not constitute a breach of this
Section 4.03.
At all times during the term hereof, the Servicer shall either (i) keep
available in physical form at its principal executive office for inspection by
the Indenture Trustee, the Insurer or their respective duly authorized
representatives, attorneys or accountants a list of all Loans then subject to
the lien of the Indenture, together with a reconciliation of such list to the
list of Initial Loans, all lists of Substitute Loans and Replacement Loans and
each of the Servicer's Certificates, indicating the cumulative removals and
additions of Loans subject to the lien of the Indenture or (ii) maintain
electronic facilities which allow such list and reconciliation to be generated
in a readable form which can be accessed by the Issuer, the Indenture Trustee
and each of their respective representatives, attorneys or accountants (it being
agreed that information in ASCII or Excel are acceptable forms).
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SECTION 4.04. Amendments to Loans and to Schedule of Loans. If the
Servicer, during a Monthly Period, assigns to a Loan an account number that
differs from the account number previously identifying such Loan on the Schedule
of Loans, the Servicer shall deliver to the Seller, the Back-up Servicer, the
Insurer and each Trustee on or before the Distribution Date related to such
Monthly Period an amendment to the Schedule of Loans to report the newly
assigned account number. Each such amendment shall list all new account numbers
assigned to Loans during such Monthly Period and shall show by cross reference
the prior account numbers identifying such Loans on the Schedule of Loans. The
Servicer shall amend the Schedule of Loans, as appropriate, to reflect removal
of repaid Loans, substituted Loans, Administrative Loans, Warranty Loans,
Defaulted Loans and Loans which have been liquidated in accordance with the
Servicing Standards and the addition of Replacement Loans and Substitute Loans
and shall deliver an updated Schedule of Loans to the Insurer, the Back-up
Servicer, the Seller and each Trustee on each Distribution Date.
SECTION 4.05. Assignment of Administrative Loans and Warranty Loans. Upon
deposit into the Collection Account of the Administrative Purchase Payment or
the Warranty Payment with respect to an Administrative Loan or a Warranty Loan,
respectively, or the substitution of a Substitute Loan for a Warranty Loan and
provided that such purchase or substitution of a Loan shall otherwise have been
made in full compliance with the provisions of the Basic Documents, each Trustee
shall assign, without recourse, representation or warranty, to the Servicer or
the Warranty Purchaser, as applicable, all of such Person's right, title and
interest in, to and under (a) such Administrative Loan or Warranty Loan and all
monies due thereon, (b) the security interests in the related collateral, (c)
amounts held on deposit in the Designated Accounts or the Lockbox Account with
respect to such Loan and not applied to the Loan Balance as of the applicable
Accounting Date, if any (d) proceeds from any Insurance Policies with respect to
the collateral securing such Loan or any Guaranties of such Loan received after
the applicable Accounting Date, if any and (e) the rights of such Person under
the Purchase Agreement with respect to such Loan, such assignment being an
assignment outright and not for security. Upon the assignment of such Loan
described in the preceding sentence, the Servicer, the Warranty Purchaser or the
Seller, as applicable, shall own such Loan, and all such security and documents,
free of any further obligations to either Trustee or Beneficiaries and the
Certificateholders with respect thereto.
SECTION 4.06. Distributions.
On or before each Determination Date, with respect to the preceding
Monthly Period and the related Distribution Date, the Servicer shall calculate
for each Series of Notes and the related Pool of Loans, the Available Amount,
Outstanding Monthly Advances, the Total Servicing Fee, the Supplemental
Servicing Fee, the Monthly Advance Reimbursement Amount, the Class A
Noteholders' Interest Distributable Amount, the Class B Noteholders' Interest
Distributable Amount, the Class A Noteholders' Principal Distributable Amount,
the Class B Noteholders' Principal Distributable Amount, the Class A-2 Carryover
Amount, the Class B-2 Carryover Amount, the Certificateholders' Distributable
Amount and all other amounts required to determine the amounts to be deposited
in or paid from each of the Collection Account, the Note Distribution Account,
the Certificate Distribution Account and the Reserve Account, as applicable, on
the next succeeding Distribution Date.
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SECTION 4.07. Reserve Account.
The Servicer, for the benefit of the Beneficiaries and the
Certificateholders, shall establish and maintain in the name of the Indenture
Trustee and subject to the sole dominion and control of the Indenture Trustee an
Eligible Deposit Account known as the Alliance Laundry Equipment Receivables
Trust 2000-A Reserve Account (the "Reserve Account") to include the money and
other property deposited and held therein pursuant to this Section 4.07 and
Section 8.2 of the Indenture. On the Closing Date, the Seller shall deposit the
Initial Reserve Account Deposit into the Reserve Account.
If the amount on deposit in the Reserve Account on any Distribution Date
(after giving effect to all deposits therein or withdrawals therefrom on such
Distribution Date) exceeds the Specified Reserve Account Balance for such
Distribution Date, the Servicer shall instruct the Indenture Trustee to deposit
into the Collection Account an amount equal to any such excess which shall be
deemed Certificateholders' Distributable Amounts for distribution to the
Certificateholders in accordance with the Indenture provided, however, if the
Notes have been accelerated as a result of an Event of Default under the
Indenture or an Early Payout Event shall have occurred and be continuing, such
amounts shall be deposited into the Collection Account and shall be deemed to be
Available Amounts.
If the amount on deposit in the Reserve Account is less than the Specified
Reserve Account Balance or if the Notes have been accelerated as a result of an
Event of Default under the Indenture or an Early Payout Event shall have
occurred and be continuing, Investment Earnings on funds in the Reserve Account,
net of losses and investment expenses, up to the Specified Reserve Account
Balance, will be retained in the Reserve Account and applied in accordance with
Section 8.2(d) of the Indenture.
SECTION 4.08. Net Deposits. At any time that (i) ALS shall be the
Servicer and (ii) the Servicer shall be permitted by Section 5.04 to remit
Collections on a basis other than a daily basis, the Servicer, the Seller and
each Trustee may make any remittances pursuant to this Article IV net of amounts
to be distributed by the applicable recipient to such remitting party.
Nonetheless, each such party shall account for all of the above described
remittances and distributions as if the amounts were deposited and/or
transferred separately.
SECTION 4.09. Statements to Beneficiaries and the Certificateholders.
On each Distribution Date, the Owner Trustee shall include with each
distribution to each Certificateholder, and the Indenture Trustee shall include
with each distribution to each Noteholder, a statement (the "Monthly Report")
(which statement shall also be provided to the Insurer, the Rating Agencies and
the Initial Purchaser) based on information in the Servicer's Certificate
furnished pursuant to Section 3.10. Each such statement shall set forth the
following information as to the Notes with respect to such Distribution Date or
the preceding Monthly Period, as applicable:
(a) the amount of the distribution allocable to interest on each class of
Notes;
(b) the amount of the distribution allocable to principal of each class of
Notes;
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(c) the aggregate outstanding principal balance for each class of Notes and
the Note Pool Factor for each class of Notes, each after giving effect to
all payments reported above on such date;
(d) with respect to the Series 2 Notes only, the amount of the distribution
allocable to the Carryover Amount of each class of Notes;
(e) with respect to the Series 2 Notes only, the aggregate outstanding
Carryover Amount, if any, for each class of Notes, each after giving
effect to all payments reported above on such date;
(f) the Aggregate Loan Balance for each Pool as of the close of business on
the last day of such Monthly Period;
(g) the amount of the Total Servicing Fee for each Pool paid to the Servicer,
with respect to the related Monthly Period;
(h) the amount of the Supplemental Servicing Fee for each Pool paid to the
Servicer, with respect to the related Monthly Period;
(i) the amount of Aggregate Losses for each Pool for the related Monthly
Period and since the Closing Date;
(j) the Delinquency Ratio and the Default Ratio for the related Monthly
Period;
(k) the sum of all Administrative Purchase Payments and all Warranty Payments
made for each Pool for the related Monthly Period and since the Closing
Date;
(l) the amount, if any, paid by the Insurer,
(m) the amount of Monthly Advances for the related Monthly Period, the Monthly
Advance Reimbursement Amount for such Distribution Date and the
outstanding balance of Monthly Advances as of the last day of the related
Monthly Period after giving effect to the Monthly Advance Reimbursement
Amount for such Distribution Date;
(n) the balance of the Reserve Account on such date after giving effect to
distributions or deposits made on such date, the amount, if any, withdrawn
from the Reserve Account for the related Monthly Period, and the Specified
Reserve Account Balance for such Distribution Date;
(o) the aggregate Loan Balance of Loans that were replaced with Substitute
Loans with respect to the related Monthly Period;
(p) with respect to the Series 2 Notes only, the Interest Rate (subject to
reduction as a result of the Asset Rate) for the next Monthly Period;
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(q) with respect to each Series, the Class A Noteholders' Monthly Interest
Distributable Amount and the Class A Noteholders' Interest Distributable
Amount for such Distribution Date and the Class A Noteholders' Interest
Shortfall for the preceding Distribution Date;
(r) with respect to each Series, the Class B Noteholders' Monthly Interest
Distributable Amount and the Class B Noteholders' Interest Distributable
Amount for such Distribution Date and the Class B Noteholders' Interest
Shortfall for the preceding Distribution Date;
(s) the Asset Rate for the related Monthly Period;
(t) Liquidation Proceeds and Liquidation Expenses for the related Monthly
Period;
(u) the total number of Loans as of the last day of the related Monthly
Period;
(v) the total number and aggregate Loan Balance of Defaulted Loans and
Substitute Loans and Replacement Loans for the related Monthly Period and
since the Closing Date; and
(w) the total amount of Collections deposited into the Collection Account for
the related Monthly Period, broken down by type of Collections (i.e.,
prepayments, recoveries, etc.).
Each amount set forth pursuant to clauses (i),(ii),(iii),(iv) and (v) above
shall be expressed as a dollar amount per $1,000 of the initial Note Principal
Balance. In lieu of preparing and delivering a separate statement pursuant to
this Section, a Trustee may deliver a copy of the Servicer's Certificate
furnished pursuant to Section 3.10 provided that it shall include all of the
information noted above.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of this Agreement, the Servicer shall
prepare and execute and the Indenture Trustee and the Owner Trustee shall mail
to each Person who at any time during such calendar year shall have been a
holder of Notes or Certificates, respectively, and received any payments
thereon, a statement prepared and supplied by the Servicer containing the sum of
the amounts set forth in each of clauses (i), (ii), (iv) and (v) for such
calendar year or, if such Person shall have been a Securityholder during a
portion of such calendar year and received any payments thereon, for the
applicable portion of such year, for the purposes of such Securityholder's
preparation of federal income tax returns.
SECTION 4.10. Information Provided to Rating Agencies. In addition to
receiving any information or documents required to be delivered to any Rating
Agency pursuant to any Basic Document, each Rating Agency and the Insurer may
request in writing to the Servicer, and the Servicer shall deliver, reasonable
additional information necessary to the Rating Agencies and the Insurer to
monitor the Notes. Promptly, but in no event later than two (2) Business Days,
after obtaining knowledge of an Insolvency Event with respect to the Servicer,
the Seller or the
26
Trust, the Servicer shall deliver to each of the Ratings Agencies and the
Insurer (with a copy to the Initial Purchaser) notice of such Insolvency Event.
ARTICLE V
ACCOUNTS; COLLECTIONS, DEPOSITS AND INVESTMENTS; ADVANCES
SECTION 5.01. Establishment of Accounts.
The Servicer, for the benefit of the Beneficiaries and the
Certificateholders, shall establish and maintain in the name of the Indenture
Trustee and under the Indenture Trustee's sole dominion and control an Eligible
Deposit Account known as the Alliance Laundry Equipment Receivables Trust 2000-A
Collection Account (the "Collection Account"), bearing an additional designation
clearly indicating that the funds deposited therein are held for the benefit of
the Beneficiaries and the Certificateholders.
The Servicer, for the benefit of the Noteholders, shall establish and
maintain in the name of the Indenture Trustee and under the Indenture Trustee's
sole dominion and control an Eligible Deposit Account known as the Alliance
Laundry Equipment Receivables Trust 2000-A Note Distribution Account (the "Note
Distribution Account"), bearing an additional designation clearly indicating
that the funds deposited therein are held for the benefit of the Noteholders and
the Insurer.
Pursuant to the Trust Agreement, the Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Owner
Trustee an Eligible Deposit Account known as the Alliance Laundry Equipment
Receivables Trust 2000-A Certificate Distribution Account (the "Certificate
Distribution Account"), bearing an additional designation clearly indicating
that the funds deposited therein are held for the benefit of the
Certificateholders.
The Servicer, for the benefit of the Beneficiaries and the
Certificateholders, shall establish and maintain in the name of the Indenture
Trustee under the Indenture Trustee's sole dominion and control an Eligible
Deposit Account known as the Alliance Laundry Equipment Receivables Trust 2000-A
Lockbox Account (the "Lockbox Account") bearing an additional designation
clearly indicating that the funds deposited therein are held for the benefit of
the Beneficiaries and the Certificateholders.
The Servicer shall establish and maintain the Reserve Account pursuant to
the terms of Section 4.07.
Each of the Designated Accounts shall be initially established with the
Indenture Trustee and shall be maintained with the Indenture Trustee and shall
be under its sole dominion and control so long as (A) the short-term unsecured
debt obligations of the Indenture Trustee have the Required Deposit Rating or
(B) each of the Designated Accounts are maintained in the corporate trust
department of the Indenture Trustee. All amounts held in such accounts
(including amounts which the Servicer is required to remit daily to the
Collection Account pursuant to Section 5.04) shall, to the extent permitted by
applicable laws, rules and regulations, be invested, at the written direction of
the Servicer, by such bank or trust company in Eligible
27
Investments. Such written direction shall constitute certification by the
Servicer that any such investment is authorized by this Section 5.01. Funds
deposited in the Collection Account and Reserve Account shall be invested in
Eligible Investments that mature prior to the next Distribution Date except, and
then only to the extent, as shall be otherwise permitted by the Rating Agencies
and the Insurer. Investments in Eligible Investments shall be made in the name
of the Indenture Trustee or its nominee, and such investments shall not be sold
or disposed of prior to their maturity. Should the short-term unsecured debt
obligations of the Indenture Trustee (or any other bank or trust company with
which the Designated Accounts are maintained) no longer have the Required
Deposit Rating, then the Servicer shall within 10 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency and the
Insurer shall consent), with the Indenture Trustee's assistance as necessary,
cause the Designated Accounts (A) to be moved to a bank or trust company, the
short-term unsecured debt obligations of which shall have the Required Deposit
Rating and which is otherwise acceptable to the Insurer, or (B) to be moved to
the corporate trust department of the Indenture Trustee. Subject to Section
4.07(c), Investment Earnings on funds deposited in the Designated Accounts and
the Certificateholder Distribution Account shall be deposited into the
Collection Account and shall be deemed Certificateholders' Distributable Amounts
for distribution to the Certificateholders in accordance with the Indenture;
provided, however, if the Notes have been accelerated as a result of an Event of
Default under the Indenture or an Early Payout Event shall have occurred and be
continuing, Investment Earnings on the Designated Accounts and any available
Investment Earnings on the Lockbox Account shall be deposited in the Collection
Account and shall be deemed to be Available Amounts. The Indenture Trustee or
the other Person holding the Designated Accounts as provided in this Section
5.01(b)(i) shall be the "Securities Intermediary." If the Securities
Intermediary shall be a Person other than the Indenture Trustee, the Servicer
shall obtain the express agreement of (i) the Indenture Trustee as to the
designation of such person as Securities Intermediary and (ii) such Person to
the obligations of the Securities Intermediary set forth in Section 5.01.
With respect to the Designated Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(a) The Designated Accounts are accounts to which Financial Assets will be
credited.
(b) All securities or other property underlying any Financial Assets credited
to the Designated Accounts shall be registered in the name of the
Securities Intermediary, indorsed to the Securities Intermediary or in
blank or credited to another securities account maintained in the name of
the Securities Intermediary and in no case will any Financial Asset
credited to any of the Designated Accounts be registered in the name of
the Issuer, Owner Trustee, the Servicer or the Seller, payable to the
order of the Issuer, the Servicer or the Seller or specially indorsed to
the Issuer, the Servicer or the Seller except to the extent the foregoing
have been specially indorsed to the Securities Intermediary or in blank.
(c) All property delivered to the Securities Intermediary pursuant to the
Pooling and Servicing Agreement will be promptly credited to the
appropriate Designated Account.
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Each item of property (whether investment property, Financial Asset,
security, instrument or cash) credited to a Designated Account shall be treated
as a "financial asset" within the meaning of Section 8-102(a)(9) of the New York
UCC.
If at any time the Securities Intermediary shall receive any order from
the Indenture Trustee directing transfer or redemption of any Financial Asset
relating to the Securities Accounts, the Securities Intermediary shall comply
with such entitlement order without further consent by the Issuer, the Owner
Trustee, the Servicer, the Seller or any other person.
The Designated Accounts shall be governed by the laws of the State of New
York, regardless of any provision in any other agreement. For purposes of the
UCC, New York shall be deemed to be the Securities Intermediary's jurisdiction
and the Designated Accounts (as well as the Securities Entitlements related
thereto) shall be governed by the laws of the State of New York.
The Securities Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with any other
person relating to the Designated Accounts and/or any Financial Assets credited
thereto pursuant to which it has agreed to comply with entitlement orders (as
defined in Section 8-102(a)(8) of the New York UCC) of such other person and the
Securities Intermediary has not entered into, and until the termination of this
Agreement will not enter into, any agreement with the Issuer, the Seller, the
Servicer or the Indenture Trustee purporting to limit or condition the
obligation of the Securities Intermediary to comply with entitlement orders as
set forth in Section 5.01(b)(ii)(E) hereof.
Except for the claims and interest of the Indenture Trustee and of the
Issuer in the Designated Accounts, to the best of its knowledge without
independent investigation the Securities Intermediary knows of no claim to, or
interest in, the Designated Accounts or in any Financial Asset credited thereto.
If any other person asserts any lien, encumbrance or adverse claim (including
any writ, garnishment, judgment, warrant of attachment, execution or similar
process) against the Designated Accounts or in any Financial Asset carried
therein, the Securities Intermediary will promptly notify the Indenture Trustee,
the Servicer and the Issuer thereof.
The Securities Intermediary will promptly send copies of all statements,
confirmations and other correspondence concerning the Designated Accounts and/or
any Designated Account Property simultaneously to each of the Servicer, the
Indenture Trustee and the Insurer at the addresses set forth in Appendix B to
this Agreement.
The Servicer shall have the power, revocable by the Indenture Trustee, by
the Owner Trustee with the consent of the Indenture Trustee, or by the Insurer,
if the Insurer is the Controlling Party, to instruct the Indenture Trustee in
writing to make withdrawals and payments from the Designated Accounts and to
apply such amounts in accordance with the
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provisions of the Basic Documents. Notice of any revocation shall be provided to
the Insurer by the Servicer or the Indenture Trustee.
The Indenture Trustee shall possess all right, title and interest in and
to all funds on deposit from time to time in the Designated Accounts and the
Lockbox Account and in all proceeds thereof. The Designated Accounts and the
Lockbox Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Beneficiaries and the Certificateholders.
The Servicer shall not direct the Indenture Trustee to make any investment
of any funds or to sell any investment held in any of the Designated Accounts or
the Lockbox Account unless the security interest granted and perfected in such
account shall continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any written direction to the Indenture Trustee to make any such
investment or sale, the Servicer (so long as the Servicer is ALS or an Affiliate
thereof or successor thereto under Section 7.02) shall deliver to the Indenture
Trustee and the Insurer, at the request of the Indenture Trustee or the Insurer,
an Opinion of Counsel to such effect acceptable to the Insurer. The Servicer
shall reimburse any Designated Account pursuant to Section 5.07 hereof for any
investment losses in excess of investment earnings on investments held in such
Designated Accounts.
Pursuant to the Trust Agreement, the Owner Trustee shall possess all
right, title and interest in and to all funds on deposit from time to time in
the Certificate Distribution Account and in all proceeds thereof. Except as
otherwise provided herein or in the Trust Agreement, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Deposit Account, the
Servicer shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new
Certificate Distribution Account as an Eligible Deposit Account and shall cause
the Owner Trustee to transfer any cash and/or any investments in the old
Certificate Distribution Account to such new Certificate Distribution Account.
The Indenture Trustee, the Owner Trustee, the Securities Intermediary and
each other Eligible Institution with whom a Designated Account, the Lockbox
Account or the Certificate Distribution Account is maintained waives any right
of set-off, counterclaim, security interest or bankers' lien to which it might
otherwise be entitled.
SECTION 5.02. [Reserved.]
SECTION 5.03. [Reserved.]
SECTION 5.04. Collections. The Servicer shall remit to the Lockbox
Account or the Collection Account all payments by or on behalf of the Obligors
on the Loans, all Insurance Proceeds, all Liquidation Proceeds and proceeds from
any Guaranties and received directly by the Servicer, notwithstanding the
Servicer's notice to each Obligor pursuant to Section 3.12, within two Business
Days after receipt thereof. Any available funds in the Lockbox Account shall be
deposited into the Collection Account no later than the second Business Day
following
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the date of receipt thereof. Notwithstanding the foregoing, the Servicer shall
not be required to remit such Collections within such two Business Days but may
remit Collections received during a Monthly Period to the Collection Account in
immediately available funds on the second Business Day preceding the related
Distribution Date but only for so long as (i) ALS is the Servicer, (ii) (x) the
Servicer satisfies the requirements for monthly remittances established by the
Rating Agencies, and upon the satisfaction of such requirements, the Rating
Agencies reaffirm the rating of the Securities at the level at which they would
be rated if Collections were remitted within two Business Days or (y) the
short-term unsecured debt obligations of ALS are rated at least A-1+ by Standard
& Poor's Ratings Services and P-1 by Xxxxx'x Investors Service, (iii) a Servicer
Default, an Event of Default or Early Payout Event shall not have occurred and
be continuing and (iv) the Insurer shall have given its consent thereto. The
Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clause (iii) of the immediately preceding sentence that would
require remittance within two Business Days by the Servicer to the Collection
Account unless the Indenture Trustee has received notice of such event or
circumstance from the Insurer, the Seller or the Servicer in an Officer's
Certificate or from Noteholders whose Notes evidence not less than 25% of the
Outstanding Amount of the Voting Notes as of the close of the preceding
Distribution Date or unless a Responsible Officer in the Corporate Trust Office
with knowledge hereof and familiarity herewith has actual knowledge of such
event or circumstance. For purposes of this Article V the phrase "payments by or
on behalf of Obligors" shall mean payments made by Persons other than the
Servicer.
Based upon the amounts set forth in the Servicer's Certificate, the
Servicer shall direct the Indenture Trustee to distribute the Available Amount
in the Collection Account according to the priority set forth in Section 8.2 of
the Indenture.
SECTION 5.05. Investment Earnings and Supplemental Servicing Fees. The
Servicer shall be entitled to receive all Supplemental Servicing Fees, and,
except as otherwise provided in Section 4.07(b) and (c) and Section 5.01(b)(i)
hereof, the Certificateholders shall be entitled to receive all Investment
Earnings on the Designated Accounts and the Certificate Distribution Account
when and as distributed pursuant to the Indenture without any obligation to (a)
either Trustee, (b) with respect to the Supplemental Servicing Fees, the
Certificateholders or (c) with respect to the Investment Earnings, the Servicer,
in respect thereof.
SECTION 5.06. Monthly Advances. As of each Accounting Date, if the
payments during the related Monthly Period by or on behalf of the Obligor on a
Loan (other than an Administrative Loan, a Warranty Loan or a Defaulted Loan)
after application under subsection 3.11(a) shall be less than the Scheduled
Payment, then the Servicer may, if in its sole discretion it deems the shortfall
recoverable, but in either event shall not be obligated to, advance from its own
funds any such shortfall (such amounts, a "Monthly Advance"). In addition, the
Servicer shall be required to advance amounts as required by the Lockbox
Agreement. The Servicer shall receive Monthly Advance Reimbursement Amounts
pursuant to Section 8.2 of the Indenture.
SECTION 5.07. Additional Deposits. The Servicer shall deposit in any
Designated Account the reimbursement amounts for investment losses in excess of
investment earnings for the prior Monthly Period, if any, on the Designated
Accounts for purposes of restoring such principal balances as were previously
held in such Designated Account. Monthly Advances pursuant to
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Section 5.06 and the proceeds of Administrative Purchase Payments and the
Warranty Payments with respect to Administrative Loans and Warranty Loans,
respectively, shall be deposited into the Collection Account. All such deposits
with respect to a Monthly Period shall be made in immediately available funds
two Business Days prior to the Distribution Date related to such Monthly Period.
SECTION 5.08. Ambac Policy Proceeds. All proceeds with respect to the
Ambac Policy shall be deposited in the Note Distribution Account for
distribution to Class A Noteholders as set forth in Section 6.17 of the
Indenture.
ARTICLE VI
THE SELLER; REPRESENTATIONS AND WARRANTIESOF THE
SELLER AND THE SERVICER
SECTION 6.01. Representations and Warranties of the Seller and the
Servicer. The Seller, the Originator and the Servicer, in its capacity as such,
each makes the following representations and warranties as to itself on which
the Issuer is relying in acquiring the Loans hereunder and issuing the
Securities under the other Transfer and Servicing Agreements and for the benefit
of the Indenture Trustee, the Insurer and the Noteholders. The following
representations and warranties are made severally by each of the Seller, the
Originator, and the Servicer (for purposes of this Section 6.01, each, a
"Party") and speak as of the Closing Date but shall survive the sale, transfer
and assignment of the Loans to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Representations and Warranties as to each Party.
(i) Organization and Good Standing. Such Party has been duly organized
and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its business as such
properties are presently owned and such business is presently
conducted, and had at all relevant times, and now has, power,
authority and legal right (A) in the case of the Seller, to acquire,
own and sell the Loans and (B) in the case of the Servicer, to
service the Loans as provided in this Agreement;
(ii) Due Qualification. Such Party is duly qualified to do business as a
foreign limited liability company in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business
(including, in the case of the Servicer, the servicing of the Loans
as required by this Agreement) requires or shall require such
qualification;
(iii) Power and Authority. Such Party (A) has the power and authority to
execute and deliver the Basic Documents to which it is a party (as
used in this Section 6.01(a), the "applicable Basic Documents") and
to carry out the respective terms of such agreements, (B) in the
case of the Seller, has the power and authority to sell and assign
the property to be sold and assigned to and deposited with the
Issuer as part of the Owner Trust Estate and has duly authorized
such sale and assignment to the Issuer by all necessary limited
liability company action, and (C) in the case of the Originator, has
the power
32
and authority to sell and assign the property to be sold and
assigned to the Seller and has duly authorized such sale and
assignment to the Seller by all necessary limited liability company
action; and the execution, delivery and performance by such Party of
the applicable Basic Documents have been duly authorized by such
Party by all necessary limited liability company action;
(iv) Binding Obligations. The applicable Basic Documents, when duly
executed and delivered, shall constitute a legal, valid and binding
obligation of such Party enforceable against such Party in
accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at
law;
(v) No Violation. The consummation by such Party of the transactions
contemplated by the applicable Basic Documents and the fulfillment
of the terms of such agreements by such Party shall not conflict
with, result in any breach of any of the terms and provisions of or
constitute (with or without notice or lapse of time) a default
under, the limited liability company agreement of such Party, or any
indenture, agreement or other instrument to which such Party is a
party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument, other
than the applicable Basic Documents, or violate any law or, to such
Party's knowledge, any order, rule or regulation applicable to such
Party of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over such Party or any of its properties;
(vi) No Proceedings. There are no proceedings or, investigations pending
or, to such Party's knowledge, threatened before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over such Party or
its properties (i) asserting the invalidity of the applicable Basic
Documents, any Securities issued pursuant thereto and, in the case
of the Seller, the Custodial Agreement or the Administration
Agreement, (ii) seeking to prevent the issuance of such Securities
or the consummation of any of the transactions contemplated by the
applicable Basic Documents, or (iii) seeking any determination or
ruling that might materially and adversely affect the performance by
such Party of its obligations under, or the validity or
enforceability of, such Securities, under the applicable Basic
Documents; and
(vii) Consents and Approvals. No consent or authorization of, filing with,
notice to or other act by or in respect of any Governmental
Authority or any other Person is required in connection with the
transactions contemplated hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of
the other Basic Documents except as to such consents which have
already been obtained prior to the Closing Date and filings
necessary to perfect the security interests of the Indenture Trustee
in the Trust Estate.
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(b) Representations and Warranties of the Seller Only.
(i) Good Title. No Loan has been sold, transferred, assigned or pledged
by the Seller to any Person other than the Issuer; immediately prior
to the conveyance of the Loans pursuant to this Agreement the Seller
had good and marketable title thereto, free of any Lien; and, upon
execution and delivery of this Agreement by the Seller, the Issuer
shall have all of the right, title and interest of the Seller in, to
and under the Purchased Property transferred thereby free of any
Lien;
(ii) All Filings Made. All filings (including UCC filings) necessary in
any jurisdiction to give the Issuer a first priority perfected
security or ownership interest in the Owner Trust Estate (other than
Exempt Collateral) shall have been made, and the Loans and the
Equipment constitute Code Collateral; and
(iii) Valid Sale. This Agreement constitutes a valid sale, transfer and
assignment of the Purchased Property transferred thereby,
enforceable against creditors of and purchasers from the Seller.
(iv) Financial Condition. The Seller is solvent and able to pay its debts
when due, and is not the subject of any case or proceeding, domestic
or foreign, relating to bankruptcy, insolvency, reorganization,
arrangement, adjustment of debts, winding-up, liquidation,
dissolution, composition, receivership, trusteeship, custodianship,
or any other proceeding regarding relief of debtors or enforcement
of creditors' rights. The Seller shall not take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing cases or proceedings. The
Seller is not a defendant in any case, proceeding or other action
seeking issuance of a writ or warrant of attachment, execution,
distraint or similar process against all or any part of its assets.
(v) Place of Business. The principal places of business and chief
executive office of the Seller and the offices where it keeps all of
its Loan Files (other than those held by the Custodian) is located
at Xxxxxxx Xxxxxx, Xxxxx, XX 00000-0000.
(iv) Absence of Event. No event has occurred which materially and
adversely affects the Seller's operations or its ability to perform
its obligations under the Basic Documents to which it is a party.
(c) Representations and Warranties of the Originator Only.
(i) Purchase Agreement Representations and Warranties. The
representations and warranties of the Originator in Sections 3.01
and 3.02 of the Purchase Agreement are true and correct as of the
Closing Date.
(ii) Absence of Event. No event has occurred which materially and
adversely affects the Originator's operations or its ability to
perform its obligations as Originator under the Basic Documents.
34
Representations and Warranties of the Servicer Only. No Servicer Default
has occurred and no condition exists which, upon the issuance of the Notes would
constitute a Servicer Default.
SECTION 6.02. Liability of Seller. The Seller shall be liable in
accordance with this Agreement only to the extent of the obligations in this
Agreement specifically undertaken by the Seller.
SECTION 6.03. Merger or Consolidation of, or Assumption of the Obligations
of, Seller; Amendment of Limited Liability Company Agreement.
Any entity (i) into which the Seller may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Seller shall be a party,
(iii) succeeding to the business of the Seller, or (iv) more than 50% of the
voting interests of which is owned directly or indirectly by ALS, which entity
in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Seller under this Agreement, shall be the successor to
the Seller under this Agreement without the execution or filing of any document
or any further act on the part of any of the parties to this Agreement; provided
that the Seller shall provide 10 days' prior notice of any merger, consolidation
or succession pursuant to this Section 6.03 to the Rating Agencies and obtain
the prior written consent of the Insurer.
The Seller hereby agrees that during the term of this Agreement it shall
not amend the definition of "Independent Manager" or Sections 1.3, 1.4, 1.5,
1.7, 4.1, 4.2, 4.4, 5.1, 5.3, 5.4, 5.5, 6.1, 6.2, 6.3, 9.1 or 9.7 or Schedule 1
of its limited liability agreement without obtaining the prior written consent
of the Rating Agencies and the Insurer, so long as the Insurer is the
Controlling Party, and the prior written consent of the Holders of Certificates
evidencing not less than a majority of the ownership interest in the Trust as of
the close of the preceding Distribution Date.
SECTION 6.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
as Seller of the Loans under this Agreement and that in its opinion may involve
it in any expense or liability.
SECTION 6.05. Seller May Own Securities. Each of the Seller and any Person
controlling, controlled by or under common control with the Seller may in its
individual or any other capacity become the owner or pledgee of Securities with
the same rights as it would have if it were not the Seller or an Affiliate
thereof except as otherwise specifically provided herein. Except as otherwise
provided herein, Securities so owned by or pledged to the Seller or such
controlling or commonly controlled Person shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority or
distinction as among all of such Securities.
35
SECTION 6.06. Rule 144A. The Seller, the Issuer and the Servicer shall
furnish, upon the request of any Noteholder, the Insurer or the Owner Trustee,
to the Trust the information required to be delivered under Rule 144A(d)(4)
under the 1933 Act if at the time of such request the Issuer or the Seller is
not a reporting company under Section 13 or Section 15(d) of the Exchange Act,
and any of the Notes are "restricted securities" within the meaning of Rule
144(a)(3) under the 1933 Act at such time.
ARTICLE VII
LIABILITIES OF SERVICER AND OTHERS
SECTION 7.01. Liability of Servicer; Indemnities.
(a) The Servicer shall be liable in accordance with this Agreement only to the
extent of the obligations in this Agreement specifically undertaken by the
Servicer. Such obligations shall include (but are not limited to) the
following:
(i) The Servicer shall defend, indemnify and hold harmless each Trustee,
the Issuer, and the Beneficiaries and the Certificateholders from
and against any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from claims by third parties
(other than parties to the Basic Documents) arising from the
servicing of Loans or the use, ownership, repossession (other than
losses related to a decline in value of the Equipment repossessed)
or operation by the Servicer or any Affiliate thereof of any item of
Equipment or other collateral therefor;
(ii) The Servicer shall indemnify, defend and hold harmless each Trustee,
the Insurer and the Issuer from and against any taxes that may at
any time be asserted against any such Person with respect to the
transactions contemplated in this Agreement, including any sales,
gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any taxes asserted
with respect to, and as of the date of, the sale of the Loans to the
Issuer or the issuance and original sale of the Securities, or
asserted with respect to ownership of the Loans, or federal or other
income taxes arising out of distributions on the Securities, or any
fees or other compensation payable to any such Person) and costs and
expenses in defending against the same;
(iii) The Servicer shall indemnify, defend and hold harmless each Trustee,
the Issuer, and the Beneficiaries and the Certificateholders from
and against any and all costs, expenses, losses, claims, damages,
and liabilities (including, without limitation, reasonable fees and
expenses of counsel and expenses of litigation reasonably incurred)
to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon such Trustee, the
Issuer, or the Beneficiaries and the Certificateholders through the
negligence, willful misfeasance or bad faith of the Servicer or any
breach or failure by the Servicer in the performance of its duties
under this Agreement and any other Basic Documents or by reason of
negligent disregard of its obligations and duties or if any of the
representations and warranties by the Servicer shall be inaccurate
as of the date made under any of the Basic Documents; and
36
(iv) The Servicer (other than the Indenture Trustee in its capacity as
successor Servicer pursuant to Section 8.02 hereof) shall indemnify,
defend and hold harmless each Trustee and their respective agents,
officers, directors and servants, from and against all costs,
expenses, losses, claims, damages and liabilities (including,
without limitation, reasonable fees and expenses of counsel and
expenses of litigation reasonably incurred) arising out of or
incurred in connection with (x) in the case of the Owner Trustee,
the Indenture Trustee's performance of its duties under the Basic
Documents, (y) in the case of the Indenture Trustee, the Owner
Trustee's performance of its duties under the Basic Documents or (z)
the acceptance, administration or performance by, or action or
inaction of, the applicable Trustee of the trusts and duties
contained in this Agreement, the Basic Documents, the Indenture (in
the case of the Indenture Trustee), including the administration of
the Trust Estate, and the Trust Agreement (in the case of the Owner
Trustee), including the administration of the Owner Trust Estate,
except in each case to the extent that such cost, expense, loss,
claim, damage or liability: (A) is due to the willful misfeasance,
bad faith or gross negligence of the Person seeking to be
indemnified, (B) to the extent otherwise payable to the Indenture
Trustee, arises from the Indenture Trustee's breach of any of its
representations or warranties in Section 6.13 of the Indenture or
(C) to the extent otherwise payable to the Owner Trustee, arises
from the Owner Trustee's breach of any of its representations or
warranties set forth in Section 6.6 of the Trust Agreement.
(b) Indemnification under this Section 7.01 shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination
of this Agreement. If the Servicer has made any indemnity payments
pursuant to this Section 7.01 and the recipient thereafter collects any of
such amounts from others, the recipient shall promptly repay such amounts
collected to the Servicer, without interest.
(c) The Servicer shall pay any amounts owing pursuant to Section 7.01 hereof
directly to the indemnified Person and such amounts will not be deposited
in the Collection Account.
(d) Indemnification pursuant to this Section 7.01 will include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation reasonably incurred.
(e) Notwithstanding the foregoing indemnification obligations, nothing in this
Section 7.01 shall be intended by the parties to constitute a guaranty by
the Servicer of repayment of the Loans.
SECTION 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. Notwithstanding anything in this Agreement to the contrary,
without the consent of the Insurer or any other person, (a) the Servicer may
consolidate, merge or sell all or substantially all of its assets and (b) any
entity (i) into which the Servicer may be merged or consolidated, (ii) resulting
from any merger, conversion or consolidation to which the Servicer shall be a
party, (iii) succeeding to the business of the Servicer, or (iv) more than 50%
of the voting interests of which is owned directly or indirectly by ALS and
which is otherwise servicing the Seller's loans, which corporation or other
entity in any of the foregoing cases executes an agreement of assumption
reasonably satisfactory to the Insurer and Indenture Trustee to perform every
obligation of the Servicer under this Agreement shall be the successor to the
Servicer under this Agreement
37
without the further execution or filing of any paper or any further act on the
part of any of the parties to this Agreement provided that immediately after
giving effect thereto, there shall be no Servicer Default and the successor
entity's ratings on its senior subordinate unsecured obligations are not less
than "B-" by Standard & Poor's and "B3" by Xxxxx'x Investors Service and the
successor entity satisfies the financial covenants specified in Section 3.07(i)
on a pro forma basis (except to the extent such covenants do not apply to the
Servicer pursuant to this Agreement). In the event that the requirements in the
proviso of the preceding sentence are not satisfied, if the Insurer is the
Controlling Party, such transaction shall require the Insurer's written consent,
not to be unreasonably withheld. Pursuant to this Section 7.02, the Servicer
shall provide the Insurer and the Rating Agencies at least thirty days' prior
written notice of any merger, consolidation or succession and a copy of the
agreement of assumption in respect of such merger, consolidation or succession,
the pro forma financial calculations supporting the successor entity's
compliance with the financial covenants specified in Section 3.07(i), if
applicable, and such other additional information as the Insurer shall
reasonably request. It is understood that nothing in this Section 7.02 shall be
construed to limit or otherwise impair the ability of the Seller or any
Interested Party to enforce such remedies as are available to them under the
Basic Documents.
SECTION 7.03. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Issuer or the
Securityholders, except as specifically provided in this Agreement, for any
action taken or for refraining from the taking of any action pursuant to the
Basic Documents or for errors in judgment; provided, however, that this
provision shall not protect the Servicer or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence (negligence, in the case of the initial Servicer) in
the performance of duties or by reason of reckless (negligent, in the case of
the initial Servicer) disregard of obligations and duties under the Basic
Documents. The Servicer and any director, officer or employee or agent of the
Servicer may rely in good faith on the advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
[Reserved.]
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to service the Loans in accordance with this Agreement
and that in its opinion may involve it in any expense or liability; provided,
however, that the Servicer may undertake any reasonable action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties to this Agreement and the interests of the Beneficiaries and the
Certificateholders under this Agreement and the Beneficiaries and (to the extent
expressly provided therein) the Certificateholders under the Indenture and the
interests of the Certificateholders under the Trust Agreement. In such event,
the reasonable legal expenses and costs for such action and any liability
resulting therefrom that is not incidental to its duties to service the Loans in
accordance with this Agreement shall be expenses, costs and liabilities of the
Issuer and the Servicer shall be entitled to be reimbursed therefor.
38
The Indenture Trustee shall distribute out of the Collection Account on a
Distribution Date any amounts permitted for reimbursement pursuant to subsection
7.03(c) which have not been previously reimbursed in accordance with Section 8.2
of the Indenture; provided, however, that the Indenture Trustee shall not
distribute such amounts if the amount on deposit in the Reserve Account (after
giving effect to all deposits and withdrawals pursuant to Section 8.2 of the
Indenture) is greater than zero but less than the Specified Reserve Account
Balance for such Distribution Date.
SECTION 7.04. Delegation of Duties. So long as ALS acts as Servicer, the
Servicer may, at any time without notice or consent, delegate any duties under
this Agreement to any other entity more than 50% of the voting stock of which is
owned, directly or indirectly, by ALS. The Servicer may at any time perform
specific duties as Servicer through sub-contractors who are in the business of
servicing stand alone commercial laundry equipment loans; provided, however,
that (i) Servicer shall not delegate to any such sub-contractor any material
portion of such servicing duties without Insurer consent if the Insurer is the
Controlling Party, and (ii) no such delegation shall relieve the Servicer of its
responsibility with respect to such duties.
SECTION 7.05. Servicer Not to Resign. Subject to the provisions of
Section 8.02, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer without the consent of the
Controlling Party, except upon determination that the performance of its duties
under this Agreement is no longer permissible under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to each Trustee and the Insurer
and the Rating Agencies (with a copy to the Initial Purchaser). No such
resignation shall become effective until the Indenture Trustee or a successor
Servicer acceptable to the Insurer shall have assumed the responsibilities and
obligations of the Servicer in accordance with Section 8.02.
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Defaults. Each of the following shall constitute a
"Servicer Default":
(a) any failure by the Servicer to deliver to the Indenture Trustee for
deposit in any of the Designated Accounts or the Lockbox Account or to the
Owner Trustee for deposit in the Certificate Distribution Account any
required payment or to direct the Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for a period
of three Business Days after the date when due.
(b) failure on the part of the Seller or the Servicer to duly observe or
perform any other covenants or agreements of the Seller or the Servicer
set forth in the Purchase Agreement, this Agreement or any of the other
Basic Documents which failure (i) materially and adversely affects the
rights of the Beneficiaries or the Certificateholders, and (ii) continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Seller or the Servicer, as applicable, by the Indenture
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Trustee, if the Insurer is the Controlling Party, at the direction of the
Insurer, or to the Seller or the Servicer, as applicable, and to either
Trustee by the Controlling Party;
(c) the entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar official for the Seller or
the Servicer, in any bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of their respective affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 60
consecutive days;
(d) the consent by the Seller or the Servicer to the appointment of a
conservator or receiver, liquidator or similar official in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities, or
similar proceedings of or relating to the Seller or the Servicer or of or
relating to substantially all of their respective property; or the Seller
or the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment
of its obligations;
(e) the failure to distribute a Monthly Report (or a Servicer's Certificate in
lieu of such Monthly Report) pursuant to the terms of Section 4.09 within
one Business Day after the related Determination Date;
(f) any assignment of rights or delegation of duties by the Servicer in
violation of this Agreement;
(g) any material adverse change in the properties, business or condition
(financial or otherwise) of the Servicer or the existence of any other
condition which, in each case, constitutes, or if the Insurer is the
Controlling Party, in the sole discretion of the Insurer constitutes, a
material impairment of the Servicer's ability to perform its obligations
under this Agreement; provided that a change in the value of any Loan
shall not result in an Event of Default under this subsection (g);
(h) the first to occur of (i) an event of default by the Servicer or its
Affiliate, as applicable, in the performance of any term, provision or
condition of any indebtedness for borrowed money in excess of $5,000,000,
which event of default other than a payment default is neither waived
pursuant to an unconditional waiver nor cured within 60 days (inclusive of
any cure period or other period of grace) as of the date upon which such
event of default occurs or (ii) the acceleration of any such indebtedness
as a result of an event of default, such that any indebtedness due
thereunder is due prior to its stated maturity; or any such indebtedness
shall be declared to be due and payable prior to the date of maturity
thereof or shall be unpaid on its maturity date;
(i) a final judgment or judgments for the payment of money in excess of
$5,000,000.00 in the aggregate against the Servicer and the same shall not
be discharged (or provisions made for such discharge) or bonded, or a stay
of execution thereof shall not be procured, within sixty days from the
date of entry thereof and the Servicer shall not, within said period of
sixty days, or
40
within such longer period during which execution of the same shall have
been stayed or bonded, appeal therefrom and cause the execution thereof to
be stayed during such appeal;
(j) if ALS is the Servicer, the breach by the Servicer of one or both of the
covenants set forth in Section 3.07(i);
(k) the breach in any material respect by the Servicer of any representation
or warranty made by the Servicer under this Agreement or any of the Basic
Documents;
(l) if ALS is the Servicer, the Servicer's senior secured obligations are
downgraded by Xxxxx'x Investors Service to ratings below B1 or by Standard
& Poor's Ratings Services to ratings below B+, or (ii) the Servicer's
senior subordinate unsecured obligations are downgraded by Xxxxx'x
Investors Service to ratings below B3 or by Standard & Poor's Ratings
Services to ratings below B-;
(m) the occurrence of a Servicer Default Trigger; or
(n) the occurrence of a Cumulative Trigger.
SECTION 8.02. Consequences of a Servicer Default.
If a Servicer Default shall occur and be continuing (and has not been
waived in writing by the Controlling Party), the Controlling Party by notice
then given in writing to the Servicer and the Owner Trustee (and to the
Indenture Trustee if given by the Securityholders) may, in addition to other
rights and remedies available in a court of law or equity to damages, injunctive
relief and specific performance, elect to waive such Servicer Default or direct
the Indenture Trustee to terminate all of the rights and obligations of the
Servicer as Servicer under this Agreement (provided that a termination shall
occur without notice upon a Servicer Default under Section 8.01(c) or (d)). On
or after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Securities or the Loans or otherwise, shall pass to and be vested in the
Indenture Trustee and any successor Servicer pursuant to and under Section 8.03.
The Indenture Trustee and any successor Servicer is hereby 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 or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Loans and related documents, or otherwise. The predecessor
Servicer agrees to cooperate with the Indenture Trustee and any successor
Servicer in effecting the termination of the responsibilities and rights of the
Servicer under this Agreement, including the transfer to either Trustee for
administration by it of all cash amounts that shall at the time be held by the
Servicer for deposit, or that shall have been deposited by the Servicer in the
Lockbox Account, the Collection Account, the Reserve Account, the Note
Distribution Account or the Certificate Distribution Account or thereafter
received with respect to the Loans that shall at that time be held by the
Servicer, and will provide the Indenture Trustee and any successor Servicer
reasonable access to the servicing systems and records with respect to the
Loans. In addition to any other amounts that are then payable to the predecessor
Servicer under this Agreement, the predecessor Servicer shall be entitled to
receive from the successor Servicer the portions of any Monthly Advance
Reimbursement Amount which relates to any Monthly Advance made by the terminated
Servicer. To assist the successor
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Servicer in enforcing all rights under the Loans, the predecessor Servicer, at
its own expense, shall transfer its electronic records relating to such Loans to
the successor Servicer in such electronic form as is then-maintained by the
predecessor Servicer in the ordinary course of its business and shall transfer
the related Loan Files and all other records, correspondence and documents
relating to the Loans that it may possess to the successor Servicer in the
manner and at such times as the successor Servicer shall reasonably request.
Following the occurrence of a Servicer Default, but without limiting the
rights of the Indenture Trustee or the Controlling Party under any other
provisions of the Basic Documents, the Controlling Party may direct the
Indenture Trustee to conduct a review of the Servicer's cash application
procedures with respect to Collections on the Loans, including, without
limitation, transfers from the Lockbox Account to the Collection Account, and
the Indenture Trustee hereby agrees to conduct such review, or cause a third
party to conduct such review, at the expense of the Servicer, on such basis as
the Controlling Party shall reasonably determine.
SECTION 8.03. Indenture Trustee to Act; Appointment of Successor. On and
--------------------------------------------------
after the time the Servicer receives a notice of termination pursuant to Section
8.02 unless and until the Controlling Party has designated a successor Servicer,
which has accepted such appointment, the Indenture Trustee shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for in this Agreement, and
shall be subject to all the responsibilities, restrictions, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
of this Agreement; provided, however, that the predecessor Servicer shall remain
liable for, and the successor Servicer shall have no liability for, any
indemnification obligations of the Servicer arising as a result of acts,
omissions or occurrences during the period in which the predecessor Servicer was
the Servicer; and provided, further, that ALS shall remain liable for all such
indemnification obligations of the Servicer without regard to whether it is
still Servicer hereunder. As compensation therefor, the Indenture Trustee or a
successor Servicer designated by the Controlling Party shall be entitled to
reimbursement of costs and expenses incurred in the transfer and conversion of
the electronic records relating to the Loans received from the predecessor
Servicer, together with such compensation (whether payable out of the Collection
Account or otherwise) as the Servicer would have been entitled to under this
Agreement if no such notice of termination had been given including, but not
limited to, the Total Servicing Fee and Supplemental Servicing Fees. In the
event the Indenture Trustee becomes the successor Servicer, it hereby reserves
the right to terminate any then-existing sub-servicing agreements as may be
entered into pursuant to Section 7.04 hereof. Notwithstanding the above, the
Indenture Trustee may, if it shall be unwilling so to act, or shall, if it is
legally unable so to act, appoint, or petition a court of competent jurisdiction
to appoint, a successor (i) having a net worth of not less than $10,000,000,
(ii) acceptable to the Insurer and (iii) whose regular business includes the
servicing of equipment loans, as the successor to the Servicer under this
Agreement in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer under this Agreement. In connection with such
appointment and assumption, the Indenture Trustee may make such arrangements for
the compensation of such successor out of payments on Loans as it and such
successor shall agree, subject to the consent of the Insurer if the Insurer is
the Controlling Party; provided, that if a successor Servicer is appointed and
assumes the duties of successor Servicer hereunder, the Basic Servicing Fee Rate
used to calculate the Basic Servicing Fee payable to the successor Servicer
shall be a rate agreed upon by such successor Servicer and the person or group
appointing it hereunder but not in excess of 1.0% unless the Rating Agency
Condition has been satisfied. The Indenture Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. So long as the Insurer is the Controlling Party,
unless the Controlling Party shall otherwise consent, no removal or resignation
of the Servicer shall (other than under Section 8.02(a) with respect to a
Servicer Default under Section 8.01(c) or (d)) become effective until the
Indenture Trustee, the Back-up Servicer under Section 3.14 or another successor
Servicer acceptable to the Insurer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section 8.03.
SECTION 8.04. Notification to the Beneficiaries and the Certificateholders.
------------------------------------------------------------
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to this Article VIII, the Indenture Trustee shall give prompt written
notice thereof to the Noteholders, the Insurer and the Rating Agencies (with a
copy to the Initial Purchaser), and the Owner Trustee shall give prompt written
notice thereof to the Certificateholders.
SECTION 8.05. Waiver of Past Defaults. The Controlling Party may, on
-----------------------
behalf of all Beneficiaries and the Certificateholders, waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
including a default in making any required deposits to or payments from any of
the accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Default arising
42
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 8.06. Effects of Termination or Resignation of Servicer.
-------------------------------------------------
Upon the appointment of the successor Servicer, the predecessor Servicer
shall immediately remit any Scheduled Payments, Liquidation Proceeds or other
payments that it may receive pursuant to any Loan or otherwise to the successor
Servicer for the benefit of the Issuer after such date of appointment.
After the termination of the Servicer pursuant to Section 8.02 or
resignation pursuant to Section 7.05 (except as otherwise provided in Section
7.05 or 8.03), the predecessor Servicer shall have no further rights or
obligations with respect to the management or servicing of the Trust Estate or
the enforcement, custody or collection of the Loans, and the successor Servicer
shall have all of such obligations, except that the predecessor Servicer will
transmit or cause to be transmitted directly to the successor Servicer for the
benefit of the Noteholders and the Insurer, promptly upon receipt and in the
same form in which received, any amounts held by the predecessor Servicer
(properly endorsed where required for the successor Servicer to collect them)
received as payments upon or otherwise in connection with the Loans. The
predecessor Servicer's indemnification obligations pursuant to Section 7.01
hereof will survive the termination or resignation of the predecessor Servicer
but will not extend to any acts or omissions of a successor Servicer.
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ARTICLE IX
TERMINATION; REDEMPTION
SECTION 9.01. Optional Purchase of All Loans. On the last day of any
Monthly Period as of which the Aggregate Loan Balance of the Loans held by the
Trust is 10% or less of the Aggregate Initial Loan Balance, the Servicer shall
have the option, but not the obligation, to purchase the Trust Estate at a price
equal to the aggregate Administrative Purchase Payments for all Loans (including
Defaulted Loans) plus the appraised value of any other property held by the
Trust (less the Liquidation Expenses to be incurred in connection with the
recovery thereof), such value to be determined by an appraiser mutually agreed
upon by the Servicer, each Trustee and, if the Insurer is the Controlling Party,
the Insurer (the "Optional Purchase Price"); provided, however, that the
Servicer may not exercise its option if the Optional Purchase Price would be
less than the sum of (i) the Redemption Price of the Notes, (ii) all
administrative expenses, operating costs and amounts to third parties due as of
such Distribution Date and (iii) all Reimbursement Amounts due to the Insurer,
if any. In the event the Servicer elects to exercise its option, the Issuer
shall redeem the Notes in accordance with this Section 9.01 effective as of such
date of purchase. The Issuer shall be required to notify the Indenture Trustee
and the Insurer in writing by no later than five (5) Business Days prior to a
notice required to be sent by the Indenture Trustee pursuant to Section 10.1(a)
of the Indenture. To exercise such option, the Servicer shall deposit in the
Collection Account an amount equal to the Optional Purchase Price. Thereupon
subject to the provisions in the Indenture regarding discharge of Trust Estate,
including return of the Ambac Policy, the Servicer shall succeed to all
interests in and to the property of the Trust (other than the Designated
Accounts and the Certificate Distribution Account).
SECTION 9.02. Termination of the Agreement. Unless otherwise agreed by
the Seller, the Servicer, the Issuer and the Beneficiaries and the
Certificateholders, this Agreement shall terminate upon termination of the
Indenture and the Servicer shall give the Owner Trustee prompt notice of such
termination; provided that the Notes and all other amounts due to third parties
referred to in Section 9.01 have been paid in full, and all amounts due to the
Insurer have been paid and the Ambac Policy has been returned.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended by the Seller, the Servicer and the Issuer
with the consent of the Indenture Trustee and, so long as the Insurer is the
Controlling Party, the consent of the Insurer, but without the consent of any of
the Securityholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provision in this Agreement that may be defective or inconsistent with any
other provision in this Agreement or any other Basic Document, (iii) add to the
covenants, restrictions or obligations of the Seller, the Servicer, the Insurer
or either Trustee or (iv) add, change or eliminate any other provision of this
Agreement in any manner that shall not, as evidenced by an Officer's
Certificate, adversely affect in any material respect the interests of the
Securityholders.
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Notwithstanding paragraph (a), this Agreement may also be amended from
time to time by the Seller, the Servicer and the Issuer with the consent of the
Controlling Party 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 Securityholders, and any provisions hereof may
be waived with the consent of the Controlling Party except that no amendment may
be made to this Agreement which would be prohibited under the proviso of Section
9.2 of the Indenture if such amendment were to be made to the Indenture unless
the consent that would have been required as described therein, if such
amendment were to be made to the Indenture, shall have been obtained.
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 to the Rating Agencies and the Insurer.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Insurer and the Indenture Trustee shall
furnish written notification to each Noteholder.
It shall not be necessary for the consent of the Securityholders pursuant
to subsection 10.01(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 but it shall be necessary to obtain the consent of the
Insurer. The manner of obtaining such consents of the Securityholders (and any
other consents of the Securityholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by the Securityholders
shall be subject to such reasonable requirements as either Trustee may
prescribe, including the establishment of record dates pursuant to paragraph
number 2 of the Note Depository 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. The Indenture Trustee may, but shall not be
obligated to, execute and deliver any such amendment which affects the Indenture
Trustee's rights, duties or immunities under this Agreement or otherwise.
Each of ALS and the Seller agrees that such Person shall not amend or
agree to any amendment of the Purchase Agreement unless such amendment would be
permissible under the terms of this Section 10.01 as if this Section 10.01 were
contained in the Purchase Agreement and, if the Insurer is the Controlling
Party, with the consent of the Insurer.
45
SECTION 10.02. Protection of Title to Owner Trust Estate.
The Seller or the Servicer or both shall execute and file such financing
statements and cause to be executed and filed such continuation and other
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 Beneficiaries, the
Certificateholders and the Trustees under this Agreement in the Loans. The
Seller or the Servicer or both shall deliver (or cause to be delivered) to each
Trustee and the Insurer file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
Neither the Seller 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 accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-402(7) of the UCC, unless
it shall have given each Trustee and the Insurer at least 60 days prior written
notice thereof and shall have taken all such actions as may be reasonably
requested by the Trustees or the Insurer or necessary to maintain the perfection
and priority of such Liens of the Trustees.
Each of the Seller and the Servicer shall give each Trustee and the
Insurer at least 60 days prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement. The
Servicer shall at all times maintain each office from which it services Loans
and its principal executive office within the United States of America.
The Servicer shall maintain accounts and records as to each Loan
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Loan, including payments and recoveries made and
payments owing (and the nature of each) and extensions of any scheduled payments
made not less than 45 days prior thereto, and (ii) reconciliation between
payments or recoveries on (or with respect to) each Loan and the amounts from
time to time deposited in the Lockbox Account, the Collection Account, the Note
Distribution Account and the Certificate Distribution Account.
The Servicer shall maintain its computer systems so that, from and after
the time of sale under this Agreement of the Loans to the Issuer, the Servicer's
master computer records (including any back-up archives) that refer to any Loan
indicate clearly that the Loan is owned by the Issuer. Indication of the
Issuer's ownership of a Loan shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Loan has been paid in full, liquidated
or repurchased by the Seller or purchased by the Servicer.
If at any time the Seller or the Servicer proposes to sell, grant a
security interest in, or otherwise transfer any interest in stand-alone
commercial laundry equipment loans to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or print-outs (including any restored
from back-up archives) that, if they refer in any manner whatsoever to any Loan,
indicate clearly that such Loan has been sold and is owned by the Issuer unless
such Loan has been paid in full, liquidated or repurchased by the Seller or
purchased by the Servicer.
46
The Servicer shall permit each Trustee and the Insurer and their
respective agents (at such Person's cost and expense except to the extent such
costs and expenses shall be required to be paid by ALS or its Affiliates
pursuant to the Basic Documents) at any time during normal business hours and
upon reasonable advance notice to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Loans then or previously
included in the Owner Trust Estate.
The Servicer shall furnish to each Trustee and the Insurer at any time
upon request a list of all Loans then held as part of the Trust including any
then-existing amendments, substitutions or replacements thereto, together with a
reconciliation of such list to the Schedule of Loans and to each of the
Servicer's Certificates furnished before such request indicating removal of
Loans from the Trust. Upon request, the Servicer shall furnish a copy of any
such list to the Seller. Each Trustee and the Seller shall hold any such list
and the Schedule of Loans for examination by interested parties during normal
business hours at their respective offices located at the addresses set forth in
Section 10.03.
SECTION 10.03. Notices. All demands, notices and communications upon or
to the Seller, the Servicer, either Trustee, the Insurer, the Rating Agencies or
the Initial Purchaser under this Agreement shall be delivered as specified in
Appendix B hereto.
SECTION 10.04. Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without giving effect to any choice of law or conflict provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York; provided, however that the duties and immunities of the Owner Trustee
hereunder shall be governed by the laws of the State of Delaware.
SECTION 10.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Securities or
the rights of the holders thereof.
SECTION 10.06. Assignment.
Notwithstanding anything to the contrary contained in this Agreement, this
Agreement may not be assigned by the Seller without the prior written consent of
the Controlling Party. The Seller shall provide notice of any such assignment to
the Rating Agencies and the Insurer (with a copy to the Initial Purchaser).
Notwithstanding anything to the contrary contained in this Agreement, this
Agreement may not be assigned by the Servicer without the prior written consent
of the Controlling Party other than as permitted by Section 7.02. The Servicer
shall provide notice of
47
any such assignment to the Rating Agencies and the Insurer (with a copy to the
Initial Purchaser).
SECTION 10.07. Third-Party Beneficiaries. The Insurer and its successors
and assigns shall be third-party beneficiaries to the provisions of this Pooling
and Servicing Agreement, as it may be supplemented or amended, and shall be
entitled to rely upon and directly to enforce the provisions of this Pooling and
Servicing Agreement. This Agreement shall inure to the benefit of and be binding
upon the parties hereto, the Beneficiaries and the Certificateholders and the
Trustees and their respective successors and permitted assigns. Except as
otherwise provided in Section 7.01 or in this Article X, no other Person shall
have any right or obligation hereunder.
SECTION 10.08. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.09. Headings and Cross-References. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement.
SECTION 10.10. Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders, the Insurer and (only to the
extent expressly provided therein) the Certificateholders of all right, title
and interest of the Issuer in, to and under the Purchased Property and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
SECTION 10.11. No Petition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior to
the date which is one year and one day after the final distribution with respect
to the Notes, acquiesce, petition or otherwise invoke or cause the Seller or the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller or the Issuer
under any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Seller or the Issuer or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Seller
or the Issuer.
SECTION 10.12. Limitation of Liability of the Trustees.
Notwithstanding anything contained herein to the contrary, this Agreement
has been acknowledged and accepted by The Bank of New York not in its individual
capacity but solely as Indenture Trustee and in no event shall The Bank of New
York have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all purposes
of this Agreement in performance of its rights and duties hereunder, the
Indenture Trustee shall be entitled to the benefits of Article VI of the
Indenture.
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Notwithstanding anything contained herein to the contrary, this Agreement
has been executed by Wilmington Trust Company not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall
Wilmington Trust Company in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee of the Issuer have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of Article
VI of the Trust Agreement.
SECTION 10.13. Survival of Agreement. All covenants, agreements,
representations and warranties made herein, the Basic Documents and in the other
agreements delivered pursuant hereto shall survive the pledge of the Trust
Estate and the issuance of the Notes and shall continue in full force and effect
until payments in full of the Notes and all amounts owing to the Indenture
Trustee and the Insurer hereunder and under the Basic Documents, as applicable
and return of the Ambac Policy.
* * * * *
49
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.
ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES TRUST 2000-A
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Owner Trustee on
behalf of the Trust
By:__________________________________
Name:
Title:
ALLIANCE LAUNDRY EQUIPMENT
RECEIVABLES LLC, as Seller
By:__________________________________
Name:
Title:
ALLIANCE LAUNDRY SYSTEMS LLC,
as Servicer and Originator
By:__________________________________
Name:
Title:
Acknowledged and Agreed:
THE BANK OF NEW YORK, not in
its individual capacity but solely as
Indenture Trustee
By: _________________________________
Name:
Title:
50
APPENDIX A
PART I - DEFINITIONS
All terms defined in this Appendix shall have the defined meanings
when used in the Basic Documents, unless otherwise defined therein.
Accountants' Report: As defined in Section 4.02 of the Pooling and
Servicing Agreement.
Accounting Date: With respect to a Distribution Date, the last day of the
related Monthly Period, or, with respect to the Distribution Date, if any, that
occurs in the same calendar month as the Closing Date, the close of business on
the Closing Date.
Act: An Act as specified in Section 11.3(a) of the Indenture.
Administration Agreement: That certain Administration Agreement, dated as
of November 28, 2000 among ALS, as Administrator, the Trust and the Indenture
Trustee, as amended and supplemented from time to time.
Administrative Loan: A Loan which the Servicer is required to purchase as
of an Accounting Date pursuant to Section 3.08 of the Pooling and Servicing
Agreement or which the Servicer has elected to repurchase as of an Accounting
Date pursuant to Section 9.01 of the Pooling and Servicing Agreement.
Administrative Purchase Payment: With respect to a Distribution Date and
to an Administrative Loan purchased as of the related Accounting Date, the sum
of (i) the Loan Balance of such Loan, (ii) the interest portion of all due and
past due and unpaid Scheduled Payments and (iii) any other amounts due and owing
on such Loan.
Administrator: ALS or any successor Administrator under the Administration
Agreement.
Affiliate: With respect to any specified Person, any other Person
controlling, 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" and
"controlled" have meanings correlative to the foregoing.
Agency Office: Xxxxxx Trust Company, 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxxx
Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx.
Aggregate Initial Loan Balance: The sum of the Initial Loan Balances of
the Loans as of the Initial Cutoff Date, which is $137,846,035.17.
1
Aggregate Loan Balance: The sum of the Loan Balances of all outstanding
Loans (other than Defaulted Loans) held by the Trust, Pool 1 or Pool 2, as
applicable, as of any date.
Aggregate Losses: With respect to a Pool, a Monthly Period and the related
Distribution Date, the aggregate of the Loan Balances of all Loans in that Pool
newly designated during such Monthly Period as Defaulted Loans minus Liquidation
Proceeds collected during such Monthly Period with respect to all Defaulted
Loans of that Pool.
Aggregate Note Principal Balance: With respect to the close of a
Distribution Date, the sum of the Note Principal Balances for all classes of
Notes.
ALER: Alliance Laundry Equipment Receivables LLC, a Delaware limited
liability company.
ALS: Alliance Laundry Systems LLC, a Delaware limited liability company.
ALS's Rewards Program: An interest rate reduction or deferral program
sponsored by ALS for the benefit of certain Obligors, as described in the
Finance Bulletin published by ALS, a true and complete copy of which has been
provided to the Insurer.
Ambac Insurance Agreement: An insurance and indemnity agreement dated as
of November 28, 2000 among the Indenture Trustee, ALS, the Seller, the Issuer
and the Insurer.
Ambac Policy: A financial guarantee insurance policy (including any
endorsements thereto) issued by Insurer with respect to each Series of the Class
A Notes in favor of the Indenture Trustee for the benefit of the holders of the
Class A Notes, which guarantees the payment of the Insured Payments on the Class
A Notes.
Annual Percentage Rate: With respect to a Loan, the annual rate of finance
charges stated in such Loan.
Applicable Trustee: So long as the Aggregate Note Principal Balance or the
Reimbursement Amount is greater than zero and the Indenture has not been
discharged in accordance with its terms, the Indenture Trustee, and thereafter,
the Owner Trustee.
Asset Rate: With respect to any Distribution Date, the Weighted Average
Annual Percentage Rate of the Loans in Pool 2 as of the first Business Day of
the prior Monthly Period minus the sum of (a) the Basic Servicing Fee Rate and
(b) the Effective Insurance Premium Rate.
Assignment: Any Initial Assignment or Subsequent Assignment.
Authorized Officer: With respect to the Issuer, any officer of the Owner
Trustee who is authorized to act for the Owner Trustee in matters relating to
the Issuer and who is identified on the list of Authorized Officers delivered by
the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter) and, so long as the
Administration Agreement is in effect, any Vice President or more senior officer
of the Administrator who is
2
authorized to act for the Administrator in matters relating to the Issuer and to
be acted upon by the Administrator pursuant to the Administration Agreement and
who is identified on the list of Authorized Officers delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
Available Amount: With respect to each Pool and for any Distribution Date,
with respect to the related Monthly Period, or with respect to the first
Distribution Date, the period from and including the Initial Cutoff Date to the
last day of the related Monthly Period, the sum of without duplication (1) that
portion of all Collections on the Loans in the related Pool held by the Trust,
(2) all Liquidation Proceeds, Insurance Proceeds, proceeds from casualty loss,
Guarantees and early termination charges to the extent received by the Trust for
the related Pool, (3) all Monthly Advances made by the Servicer on the Loans of
the related Pool other than to the Lockbox Bank, (4) the Warranty Payment, the
Administrative Purchase Payment or the Optional Purchase Price of each Loan of
the related Pool that the Seller or Originator repurchased or the Servicer
purchased during such related Monthly Period, (5) any Prepayments with respect
to Loans of the related Pool (to the extent not used to purchase Replacement
Loans) and (6) if the Notes have been accelerated as a result of an Event of
Default or an Early Payout Event shall have occurred and is continuing, any
amounts available from the Reserve Account pursuant to Section 4.07(b) of the
Pooling and Servicing Agreement and any Investment Earnings other than those
retained in the Reserve Account pursuant to Section 4.07 of the Pooling and
Servicing Agreement.
Back-up Servicer: The entity designated as such pursuant to Section 3.14
of the Pooling and Servicing Agreement.
Back-up Servicing Agreement: The Back-up Servicing Agreement, dated as of
November 28, 2000, among the Servicer, the Issuer, the Indenture Trustee and BNY
Asset Solutions LLC.
Balloon Loan: Any Loan for which the principal portion of the final
Scheduled Payment for such Loan exceeds the principal amount of the Scheduled
Payment for the prior month.
Balloon Loan Ratio: For a Pool, the result of the aggregate Loan Balance
of all Balloon Loans or Combined Loans in such Pool divided by the aggregate
Loan Balance of all Loans or Combined Loans (in each case, including Balloon
Loans) in such Pool.
Basic Documents: The Certificate of Trust, the Trust Agreement, the
Purchase Agreement, the Pooling and Servicing Agreement, any Assignment, the
Custodial Agreement, the Administration Agreement, the Indenture, the Note
Depository Agreement, the Ambac Policy, the Ambac Insurance Agreement, the LLC
Agreement, the Certificate of Formation of the Seller, the Lockbox Agreement and
the other documents and certificates delivered in connection therewith.
Basic Servicing Fee: With respect to a Monthly Period, the fee payable to
the Servicer for services rendered during such Monthly Period, which shall be
equal to one-twelfth of the Basic Servicing Fee Rate multiplied by the Aggregate
Loan Balance as of the first day of such Monthly Period or for the first Monthly
Period, as of the Closing Date (pro rated in the case of the first Monthly
Period for the number of days in such Monthly Period and multiplied by the
Aggregate Loan Balance of all Loans held by the Trust in such Pool as of the
Closing Date).
3
Basic Servicing Fee Rate: 1.0% per annum or such other amount established
pursuant to Section 8.03 of the Pooling and Servicing Agreement with respect to
fees payable to the Servicer or any subsequent servicer.
Beneficiaries: The Noteholders and the Insurer.
Benefit Plan Investor: As defined in Section 2.15 of the Indenture.
Book-Entry Notes: A beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10 of the Indenture.
Business Day: Any day other than a Saturday, a Sunday or any other day on
which banking institutions in New York, New York or Chicago, Illinois or, if a
successor Servicer shall have been appointed, the location of the successor
Servicer's principal place of business may, or are required to, remain closed.
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss. 3801 et seq., as the same may be amended from time to time.
Carryover Amount: Collectively, the Class A-2 Carryover Amount and the
Class B-2 Carryover Amount.
Certificate: Any one of the certificates executed by the Owner Trustee and
authenticated by or on behalf of the Owner Trustee in substantially the form set
forth in Exhibit A to the Trust Agreement.
Certificate Distribution Account: The account designated as such,
established and maintained pursuant to Section 5.1(a) of the Trust Agreement.
Certificate of Formation: The certificate of formation of the Seller to be
filed for the Seller pursuant to and in accordance with the Delaware Limited
Liability Company Act.
Certificate of Trust: The certificate of trust of the Issuer substantially
in the form of Exhibit B to the Trust Agreement to be filed for the Trust
pursuant to Section 3810(a) of the Business Trust Statute.
Certificate Register: The register of Certificates specified in Section
3.4 of the Trust Agreement.
Certificate Registrar: The registrar at any time of the Certificate
Register, appointed pursuant to Section 3.4(a) of the Trust Agreement.
Certificateholder: A Holder of a Certificate.
Certificateholders' Distributable Amount: Amounts withdrawn from the
Reserve Account that are deposited into the Collection Account pursuant to
Section 4.07(b) of the Pooling and
4
Servicing Agreement for distribution to the Certificateholders and, subject to
the limitations in Section 5.05 of the Pooling and Servicing Agreement, all
Investment Earnings on the Designated Accounts.
Class A Noteholders' Interest Distributable Amount: With respect to the
Class A Notes of each Series and for any Distribution Date, the sum of (1) the
Class A Noteholders' Monthly Interest Distributable Amount for the Class A Notes
of that Series for such Distribution Date and (2) the Class A Noteholders'
Interest Shortfall for the Class A Notes of that Series as of the preceding
Distribution Date.
Class A Noteholders' Interest Shortfall: With respect to the Class A Notes
of each Series, as of the close of business on any Distribution Date, the
excess, if any, of the Class A Noteholders' Interest Distributable Amount for
the Class A Notes of that Series for such Distribution Date over the amount that
was actually deposited in the Note Distribution Account for such Distribution
Date in respect of interest on the Class A Notes of that Series.
Class A Noteholders' Monthly Interest Distributable Amount: (a) With
respect to the Class A-1 Notes and any Distribution Date, the product of (1) the
outstanding principal balance of the Class A-1 Notes on the preceding
Distribution Date after giving effect to all payments of principal in respect of
the Class A-1 Notes on such preceding Distribution Date (or, in the case of the
first Distribution Date, the outstanding principal balance on the Closing Date)
and (2) the product of the Interest Rate for the Class A-1 Notes and a fraction,
the numerator of which is 30 (or in the case of the first Distribution Date, the
number of days from and including the Closing Date to but excluding such
Distribution Date based on a 30 day month), and the denominator of which is 360,
and (b) with respect to the Class A-2 Notes and any Distribution Date, the
product of (1) the outstanding principal balance of the Class A-2 Notes on the
preceding Distribution Date after giving effect to all payments of principal in
respect of the Class A-2 Notes on such preceding Distribution Date (or, in the
case of the first Distribution Date, the outstanding principal balance on the
Closing Date) and (2) the product of the Interest Rate for the Class A-2 Notes
and a fraction, the numerator of which is the actual number of days from and
including the most recent Distribution Date (or, in the case of the first
Distribution Date, the actual number of days from and including the Closing
Date) to but excluding such Distribution Date, and the denominator of which is
360 (it being understood that in no event shall Class A Noteholders' Monthly
Interest Distributable Amount include any Class A-2 Carryover Amount).
Class A Noteholders' Monthly Principal Distributable Amount: With respect
to the Class A Notes for each Series and (a) for any Distribution Date on or
prior to the Final Scheduled Distribution Date for the Class A Notes of that
Series, the sum of (1) 90% (100% if an Early Payout Event has occurred and is
continuing or the Notes have been accelerated and 0% after the principal balance
of the Class A Notes of that Series has been reduced to zero) of the Principal
Distributable Amount for the related Pool for such Distribution Date and (2) on
the Final Scheduled Distribution Date for the Class A Notes of that Series, the
amount necessary to reduce the outstanding principal balance of the Class A
Notes of that Series to zero, and (b) after the Final Scheduled Distribution
Date for the Class A Notes of that Series, zero.
Class A Noteholders' Principal Distributable Amount: With respect to the
Class A Notes of each Series for any Distribution Date, the sum of (1) the Class
A Noteholders' Monthly Principal Distributable Amount for the Class A Notes of
that Series for such Distribution Date
5
and (2) the Class A Noteholders' Principal Shortfall for the Class A Notes of
that Series for the immediately preceding Distribution Date; provided, however,
on and after the Final Scheduled Distribution Date for the Class A Notes and on
any date on or after the Notes have been declared due and payable following the
occurrence of an Event of Default, the outstanding principal balance of such
Series of Class A Notes, but in any event no more than the amount necessary to
reduce the outstanding principal balance of such Series of Class A Notes to
zero.
Class A Noteholders' Principal Shortfall: With respect to the Class A
Notes for each Series and for any Distribution Date, the excess, if any, of the
Class A Noteholders' Principal Distributable Amount for such Distribution Date
over the amount actually deposited in the Note Distribution Account for such
Distribution Date in respect of principal for the Class A Notes of that Series.
Class A Notes: Collectively, the Class A-1 Notes and the Class A-2 Notes.
Class A-1 Notes: The Class A-1 7.09% Equipment Loan Backed Notes.
Class A-2 Carryover Amount: The excess, including the unpaid portion of
any excess from prior Distribution Dates plus interest thereon calculated on the
basis of the Interest Rate (without giving effect to the Asset Rate), if the
Interest Rate for the Class A-2 Notes for any Distribution Date is calculated
based on the Asset Rate, of (a) the amount of interest that would have accrued
on the Class A-2 Notes, in respect of the related Interest Period, had interest
on that class of Notes been calculated based on LIBOR over (b) the amount of
interest actually accrued on the Class A-2 Notes, in respect of such Interest
Period based on the Asset Rate.
Class A-2 Notes: The Class A-2 Floating Rate Equipment Loan Backed Notes.
Class B Noteholders' Interest Shortfall: With respect to the Class B Notes
of each Series, as of the close of business on any Distribution Date, the excess
of the Class B Noteholders' Interest Distributable Amount for the Class B Notes
of that Series for such Distribution Date over the amount that was actually
deposited in the Note Distribution Account for such Distribution Date in respect
of interest on the Class B Notes of that Series.
Class B Noteholders' Interest Distributable Amount: With respect to the
Class B Notes of each Series and for any Distribution Date, the sum of (1) the
Class B Noteholders' Monthly Interest Distributable Amount for the Class B Notes
of that Series for such Distribution Date and (2) the Class B Noteholders'
Interest Shortfall for the Class B Notes of that Series as of the preceding
Distribution Date.
Class B Noteholders' Monthly Interest Distributable Amount: (a) With
respect to the Class B-1 Notes and any Distribution Date, the product of (1) the
outstanding principal balance of the Class B-1 Notes on the preceding
Distribution Date after giving effect to all payments of principal in respect of
the Class B-1 Notes on such preceding Distribution Date (or, in the case of the
first Distribution Date, the outstanding principal balance on the Closing Date)
and (2) the product of the Interest Rate for the Class B-1 Notes and a fraction,
the numerator of which is 30 (or in the case of the first Distribution Date, the
number of days from and including the Closing Date to but excluding such
Distribution Date based on a 30 day month), and the denominator of
6
which is 360, and (b) with respect to the Class B-2 Notes and any Distribution
Date, the product of (1) the outstanding principal balance of the Class B-2
Notes on the preceding Distribution Date after giving effect to all payments of
principal in respect of the Class B-2 Notes on such preceding Distribution Date
(or, in the case of the first Distribution Date, the outstanding principal
balance on the Closing Date) and (2) the product of the Interest Rate for the
Class B-2 Notes and a fraction, the numerator of which is the actual number of
days from and including the most recent Distribution Date (or, in the case of
the first Distribution Date, the actual number of days from and including the
Closing Date) to but excluding such Distribution Date, and the denominator of
which is 360 (it being understood that in no event shall Class B Noteholders'
Monthly Interest Distributable Amount include any Class B-2 Carryover Amount).
Class B Noteholders' Monthly Principal Distributable Amount: With respect
to the Class B Notes for each Series and (a) for any Distribution Date on or
prior to the Final Scheduled Distribution Date for the Class B Notes of that
Series, the sum of (1) 3% (0% if an Early Payout Event has occurred and is
continuing or the Notes have been accelerated and 100% after the principal
balance of the Class A Notes of that Series has been reduced to zero) of the
Principal Distributable Amount for the related Pool for such Distribution Date
and (2) on the Final Scheduled Distribution Date for the Class B Notes of that
Series, the amount necessary to reduce the outstanding principal balance of the
Class B Notes of that Series to zero, and (b) after the Final Scheduled
Distribution Date for the Class B Notes of that Series, zero.
Class B Noteholders' Principal Distributable Amount: With respect to the
Class B Notes of each Series for any Distribution Date, the sum of (1) the Class
B Noteholders' Monthly Principal Distributable Amount for the Class B Notes of
that Series for such Distribution Date and (2) the Class B Noteholders'
Principal Shortfall for the Class B Notes of that Series for the immediately
preceding Distribution Date; provided, however, on or after the Final Scheduled
Distribution Date for the Class B Notes and on any date on or after the Notes
have been declared due and payable following the occurrence of an Event of
Default, the outstanding principal balance of such Series of Class B Notes, but
in any event no more than the amount necessary to reduce the outstanding
principal balance of such Series of Class B Notes to zero.
Class B Noteholders' Principal Shortfall: With respect to the Class B
Notes for each Series and for any Distribution Date, the excess, if any, of the
Class B Noteholders' Principal Distributable Amount for such Distribution Date
over the amount actually deposited in the Note Distribution Account for such
Distribution Date in respect of principal for the Class B Notes of that Series.
Class B Notes: Collectively, the Class B-1 Notes and the Class B-2 Notes.
Class B-1 Notes: The Class B-1 9.00% Equipment Loan Backed Notes.
Class B-2 Carryover Amount: The excess, including the unpaid portion of
any excess from prior Distribution Dates plus interest thereon calculated on the
basis of the Interest Rate (without giving effect to the Asset Rate), if the
Interest Rate for the Class B-2 Notes for any Distribution Date is calculated
based on the Asset Rate, of (a) the amount of interest that would have accrued
on the Class B-2 Notes, in respect of the related Interest Period, had interest
on
7
that class of Notes been calculated based on LIBOR over (b) the amount of
interest actually accrued on the Class B-2 Notes, in respect of such Interest
Period based on the Asset Rate.
Class B-2 Notes: The Class B-2 Floating Rate Equipment Loan Backed Notes.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: A securities broker, dealer, bank, trust
company, clearing corporation or other financial institution or other Person for
whom from time to time a Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
Closing: As defined in Section 2.03 of Purchase Agreement.
Closing Date: November 28, 2000.
Code: The Internal Revenue Code of 1986, as amended from time to time, and
the Treasury Regulations promulgated thereunder.
Code Collateral: Any property a security interest in which may be
perfected by filing under the applicable UCC.
Collateral Documents: As defined in Section 2.03 of the Pooling and
Servicing Agreement.
Collection Account: The account designated as such, established and
maintained pursuant to Section 5.01(a)(i) of the Pooling and Servicing
Agreement.
Collections: All payments received on or with respect to the Loans or the
collateral securing the Loans.
Combined Loans: For a Pool or the Trust as of the applicable Substitution
Date or Replacement Date with respect to any addition of Substitute Loans or
Replacement Loans, the aggregate of all Loans in such Pool or the Trust as of
the last day of the prior Monthly Period and all Replacement Loans and
Substitute Loans added or to be added to such Pool or the Trust after the last
day of the prior Monthly Period through and including such Substitution Date or
Replacement Date.
Consolidated Cash Interest Expense: As defined in the Credit Agreement.
Consolidated Interest Coverage Ratio: As defined in the Credit Agreement.
Consolidated Leverage Ratio: As defined in the Credit Agreement.
Contract Management System: The computerized electronic contract
management system maintained by the Servicer for all Loans and other agreements
similar to the Loans.
8
Controlling Party: For so long as the Class A Notes are outstanding, and
no Insurer Default has occurred, the Insurer; if the Class A Notes are
outstanding and an Insurer Default has occurred, the holders of a majority in
principal amount of the then outstanding Class A Notes; if no Class A Notes are
outstanding and all amounts payable to the Insurer have not been paid in full or
the Ambac Policy is still outstanding, the Insurer; if no Class A Notes are
outstanding and all amounts payable to the Insurer have been paid in full and
the Ambac Policy is no longer outstanding, the Holders of a majority in
principal amount of the then outstanding Class B Notes, and if no Notes are
outstanding and all amounts payable to the Insurer have been paid in full and
the Ambac Policy is no longer outstanding, the holder of the Certificates shall
constitute the "Controlling Party."
Conveyed Assets: As defined in Section 2.01 of the Purchase Agreement.
Corporate Trust Office: With respect to the Indenture Trustee or the Owner
Trustee, the principal office at which at any particular time the corporate
trust business of the Indenture Trustee or Owner Trustee, respectively, shall be
administered, which offices at the Closing Date are located, in the case of the
Indenture Trustee, at The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, Attn: Corporate Trust Administration, ABS Group, (fax)
000-000-0000, and in the case of the Owner Trustee, at Wilmington Trust Company,
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx XXX, Xxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, Attn: W. Xxxxx Xxxxxxxxxx.
Credit Agreement: The Credit Agreement, dated as of May 5, 1998 among the
Servicer, Xxxxxx Brothers Inc. as Arranger, Xxxxxx Commercial Paper Inc. as
Syndication Agent and General Electric Capital Corporation as Administrative
Agent, as amended, modified or supplemented through the Closing Date but not
thereafter (without any waivers thereto), a true and complete copy of which has
been provided to the Insurer.
Credit and Collection Policy: The credit and collection policy and
procedures of the initial Servicer as in effect on the Closing Date, a true and
complete copy of which (to the extent reflected in written form) has been
provided to the Insurer, as the same shall be amended from time to time as
permitted by the Pooling and Servicing Agreement or, if a successor Servicer
shall have been appointed, the standard credit and collection policies of such
successor Servicer as shall be in effect from time to time provided that such
credit and collection policies shall have been approved by the Insurer (it being
understood that the Insurer has approved the credit and collection policies
provided to the Insurer by BNY Asset Solutions LLC).
Cumulative Trigger: If as of any date, the aggregate of the Loan Balances
of Loans which became Defaulted Loans as of the date such Loans became Defaulted
Loans exceeds 12.0% of the Aggregate Initial Loan Balance of the Trust.
Custodial Agreement: The Custodial Agreement, dated as of November 28,
2000 among the Custodian, the Servicer and the Indenture Trustee, as amended or
supplemented or replaced from time to time.
Custodian: The custodian named from time to time in the Custodial
Agreement.
9
Custodian Receipt Certification: The receipt delivered by the Custodian to
the Indenture Trustee certifying that all Collateral Documents pertaining to a
Loan have been received by the Custodian.
Cutoff Date: The Initial Cutoff Date, any Subsequent Cutoff Date, any
Replacement Cutoff Date or any Substitution Cutoff Date.
Default: Any occurrence that is, or with notice or the lapse of time or
both would become, an Event of Default.
Defaulted Loan: A Loan as to which (1) the Servicer (a) has reasonably
determined in accordance with its Servicing Standards that eventual payment of
amounts owing on such Loan is unlikely or (b) has repossessed the Equipment or
other collateral securing such Loan or (2) any related Scheduled Payment is at
least 90 days past due.
Default Ratio: For any Monthly Period, a fraction expressed as a
percentage equal to (i) the aggregate Loan Balance of Loans which first became
Defaulted Loans during such Monthly Period divided by (ii) the Aggregate Loan
Balance of the Trust as of the first day of such Monthly Period.
Definitive Certificates: The Certificates specified in Section 3.13 of the
Trust Agreement.
Definitive Notes: The Notes specified in Section 2.12 of the Indenture.
Delinquency Ratio: For any Monthly Period, a fraction expressed as a
percentage equal to (i) the aggregate Loan Balance of Loans which first became
unpaid for 61 days past their due dates divided by (ii) the Aggregate Loan
Balance of the Trust as of the first day of such Monthly Period.
Designated Account Property: The Designated Accounts, all amounts and
investments held from time to time in any Designated Account (whether in the
form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), including the Reserve Account Initial
Deposit, and all proceeds of the foregoing.
Designated Accounts: The Collection Account, the Note Distribution Account
and the Reserve Account, collectively.
Designated Loans: Loans listed on a schedule to the related PA Assignment.
Distribution Compliance Period: As defined in Section 2.15 of the
Indenture.
Determination Date: The day that is three Business Days prior to the
Distribution Date.
Distribution Date: With respect to a Monthly Period, the 15th day of the
next succeeding calendar month or, if such 15th day is not a Business Day, the
next succeeding Business Day, commencing December 15, 2000.
10
Early Payout Event: The occurrence of a Portfolio Trigger.
Effective Insurance Premium Rate. The premium rate specified in the Ambac
Policy times the outstanding principal balance of the Class A-2 Notes as of the
last day of the prior Monthly Period divided by the Aggregate Loan Balance of
the Loans in Pool 2 as of the first day of the prior Monthly Period.
Eligibility Criteria: As of the applicable Cutoff Date, each Loan must
satisfy each of the following requirements:
(a) The Loan is secured by Equipment;
(b) The Loan is not more than sixty days delinquent and the related
Obligor is not in bankruptcy;
(c) The Loan has a Loan Balance of not more than $1,500,000;
(d) The Loan has an original term of not less than twelve months nor more
than 96 months;
(e) The Loan has a remaining term of not less than six months nor more
than 96 months, and has a final Scheduled Payment not later than, with
respect to the Initial Loans, October 31, 2007, and with respect to all
other Loans, April 30, 2008;
(f) The principal place of business of the Obligor is located in either
the United States or Canada; and
(g) The Loan is denominated in United States Dollars or Canadian Dollars.
(h) (a) if the loan has a fixed interest rate, the loan must have an
interest rate of not less than, with respect to Initial Loans, 9.00% per
annum or for all other Loans, 9.35% per annum nor, in each case, more than
17.00% per annum and (b) if the loan has a variable interest rate, the
loan must have an interest rate based on the prime rate and the margin
over the prime rate on such loan must not be less than 0.00% nor more
6.00% (excepting any loans currently subject to promotional rates).
(i) the written information provided by the Seller, the Originator or the
Servicer to the Issuer, the Indenture Trustee or the Insurer with respect
to any Loan and the Equipment subject to such Loan is true and correct in
all material respects;
(j) the representations and warranties set forth in Section 3.01 of the
Purchase Agreement are true, correct and complete as to each and every
Loan;
(k) no provision of the Loan has been waived, altered or modified in any
respect more than once after the applicable Cutoff Date;
11
(l) the Loan constitutes "chattel paper" as defined under the UCC;
(m) the Obligor is an individual or is organized under the laws of any
state of the United States or any province of Canada;
(n) the Loan does not require the prior written consent of an Obligor for,
or contain any other restriction on, the transfer or assignment of the
Loan;
(o) unless the Initial Loan Balance was $25,000 or less, the Obligor under
the Loan is required to maintain casualty insurance or to self-insure with
respect to the related collateral under the Loan in an amount at least
equal to the Initial Loan Balance;
(p) the Loan is not subject to any guarantee by the Originator or any
affiliate of the Originator, the Obligor is not an affiliate of the
Originator, and neither the Servicer nor the Originator has established
any specific credit reserve that relates solely to the related Obligor;
(q) the Loan provides that the lender party providing the financing
thereunder, as applicable, may accelerate all remaining Scheduled Payments
(subject to all applicable grace periods) if a payment default has
occurred under such Loan;
(r) the Loan is not a "Lease" as defined in Section 2A-103(1)(j) of the
UCC and is not a lease intended as a security interest within the meaning
of Section 1-201(37) of the UCC;
(s) with respect to such Loan, the Originator has no material performance
obligation in favor of the Obligor, and the Obligor is solely responsible
for all maintenance, repairs and taxes to be paid with respect to the
related Equipment;
(t) the Loan provides for Scheduled Payments that fully repay the amount
financed over the term of the Loan;
(u) other than an initial 90 day deferral period, if any, the Loan
provides that the Obligor thereunder is required to make at least one
Scheduled Payment per month during the term of the Loan;
(v) the assets financed pursuant to such Loan consist primarily of
commercial stand alone laundry equipment and related accessories and
leasehold improvements;
(w) with respect to all Loans with an Initial Loan Balance in excess of
$75,000, the owner of any real property (and any mortgage thereon) on
which the Equipment is located has, by written consent, waived any liens
or claims thereon and agreed to permit the Originator or its appointee to
take over and operate the leased premises and assume or sublet the lease;
(x) all Equipment associated with such Loan has been delivered, inspected,
installed, is in good working condition, is free of disputes, claims or
encumbrances, and
12
either (A) such Equipment has been accepted by the Obligor as satisfactory
or (B) as of the date of determination, the Obligor has made at least one
Scheduled Payment;
(y) the Obligor has irrevocably waived any claim or offset against the
Originator and recognized the Originator's right to enforce the Loan
according to its terms free of any defenses, offsets or counterclaims, and
the Obligor is obligated to pay all scheduled principal and interest on
the related Equipment Note regardless of the performance of the related
Equipment;
(z) the Loan Balance of such Loan has not been reduced by the amount of
any security deposit held by the Servicer or the Seller;
(aa) all Scheduled Payments relating to the Loan Balance as of the Cutoff
Date were unpaid as of the Cutoff Date; and
(bb) the Loan is substantially in the form of one of the forms attached
hereto as Exhibit D or approved in writing by the Controlling Party.
Eligible Deposit Account: Either (i) a segregated account with an Eligible
Institution or (ii) a segregated trust account with the corporate trust
department of 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), having corporate trust powers and
acting as trustee for funds deposited in such account so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories for long-term unsecured debt
which signifies investment grade.
Eligible Institution: 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), (A) which has either (1) a
long-term unsecured debt rating of at least "AA" from Standard & Poor's Ratings
Services and "Aa2" from Xxxxx'x Investors Service or (2) a short-term unsecured
debt or certificate of deposit rating of at least "A-1+" from Standard & Poor's
Ratings Services and "P-1" from Xxxxx'x Investors Service, (B) whose deposits
are insured by the FDIC and (C) having a combined capital and surplus of at
least $50,000,000 as set forth in its most recent published annual report of
condition.
Eligible Investments: Book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form which, with
respect to funds in the Collection Account, consist of an amount not in excess
of 20% of the Aggregate Loan Balance as of the preceding Accounting Date which
may be invested in investments which have a rating from Standard & Poor's
Ratings Services of "A-1" rather than "A-1+," if such investments otherwise
constitute any of (i) through (viii) below, and which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America
13
or any state thereof (or any domestic branch of a foreign bank) and
subject to supervision and examination by Federal or state banking or
depository institution authorities; provided, however, that at the time of
the investment or contractual commitment to invest therein, the commercial
paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other
than such depository institution or trust company) thereof shall have a
credit rating from each of the Rating Agencies in the highest investment
category for short-term unsecured debt obligations or certificates of
deposit granted thereby;
(iii) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category for short-term unsecured debt
obligations or certificates of deposit granted thereby;
(iv) investments in money market or common trust funds having a
rating from each of the Rating Agencies in the highest investment category
for short-term unsecured debt obligations or certificates of deposit
granted thereby (including funds for which the Indenture Trustee or the
Owner Trustee or any of their respective affiliates is investment manager
or advisor, so long as such fund shall have such rating);
(v) bankers' acceptances issued by any depository institution or
trust company referred to in clause (ii) above;
(vi) 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) a depository institution or trust
company (acting as principal) described in clause (ii) or (B) a depository
institution or trust company the deposits of which are insured by FDIC or
(y) the counterparty for which has a rating from each of the Rating
Agencies in the highest investment category for short-term unsecured debt
obligations, the collateral for which is held by a custodial bank for the
benefit of the Trust or the Indenture Trustee, is marked to market daily
and is maintained in an amount that exceeds the amount of such repurchase
obligation, and which requires liquidation of the collateral immediately
upon the amount of such collateral being less than the amount of such
repurchase obligation (unless the counterparty immediately satisfies the
repurchase obligation upon being notified of such shortfall);
(vii) commercial paper master notes having, at the time of the
investment or contractual commitment to invest therein, a rating from each
of the Rating Agencies in the highest investment category for short-term
unsecured debt obligations; and
(viii) any other investment permitted by each of the Rating
Agencies.
in each case, other than as permitted by the Rating Agencies, maturing not later
than the Business Day immediately preceding the next Distribution Date.
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Eligible Loan: A loan that meets the Eligibility Criteria for inclusion in
a Pool.
Equipment: The stand alone commercial laundry equipment and related
accessories, including any additions, substitutions or accessions thereto,
securing an Obligor's indebtedness under a Loan, other than pursuant to cross
collateralization provisions in such Loan as described in clause (d) of the
definition of Exempt Collateral. A Loan may be secured by one or more items of
Equipment.
Equipment Note: A commercial loan evidenced by a note and secured by
Equipment, including, after the applicable addition date, Replacement Loans and
Substitute Loans.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Event of Default: An event described in Section 5.1 of the Indenture.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Date: As defined in Section 2.1 of the Indenture.
Executive Officer: With respect to any corporation, the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer, President, Executive
Vice President, any Vice President or the Treasurer of such corporation; with
respect to any partnership, any general partner thereof; and with respect to any
limited liability company, the Chief Executive Officer, Chief Financial Officer,
any Vice President, the Treasurer or the Controller.
Exempt Collateral: All (a) Insurance Policies, (b) security deposits
relating to any Loan, (c) collateral securing a Loan which originally had a Loan
Balance of $10,000 or less and with respect to which, in accordance with
standard underwriting policies of ALS, ALS did not perfect its security
interests in an aggregate amount for all Loans not to exceed 0.25% of the
Aggregate Loan Balance, (d) collateral for loans which were not transferred to
the trust which is collateral for the Loans solely as a result of a cross
collateralization provision, and (e) collateral constituting real property, a
leasehold improvement or a fixture or an interest in real property, a leasehold
improvement or a fixture.
Expenses: The expenses described in Section 6.9 of the Trust Agreement.
FDIC: Federal Deposit Insurance Corporation or any successor agency.
Final Scheduled Distribution Date: With respect to a class of Notes, the
Distribution Date set forth below opposite such Securities:
Class A-1 Notes: May 2009
Class A-2 Notes: May 2009
Class B-1 Notes: May 2009
Class B-2 Notes: May 2009
15
Financial Asset: Has the meaning given such term in Revised Article 8. As
used herein, the Financial Asset "related to" a Security Entitlement is the
Financial Asset in which the entitlement holder (as defined in Revised Article
8) holding such Security Entitlement has the rights and property interest
specified in Revised Article 8.
Full Prepayment: With respect to a Monthly Period, a Prepayment of the
entire Loan Balance of such Loan and all accrued and unpaid interest and other
outstanding amounts thereon.
Global Notes: The Permanent Regulation S Global Notes, the Temporary
Regulation S Global Notes and the Rule 144A Global Note.
Governmental Authority: Any applicable Federal, state, county, municipal
governmental judicial or regulatory authority.
Grant: To mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of, the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
Guaranties: With respect to any Loan, personal or commercial guaranties of
an Obligor's performance with respect thereto.
Holder: The Person in whose name a Note or Certificate is registered on
the Note Register or the Certificate Register, as applicable.
Indemnified Parties: The Persons specified in Section 6.9 of the Trust
Agreement.
Indenture: The Indenture, dated as of November 28, 2000 between the Issuer
and the Indenture Trustee, as amended and supplemented from time to time.
Indenture Trustee: The Bank of New York, a New York banking corporation,
not in its individual capacity but solely as trustee under the Indenture, or any
successor trustee under the Indenture.
Independent: When used with respect to any specified Person, that the
Person (i) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller, ALS and any Affiliate of any of the foregoing Persons, (ii)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller, ALS or any Affiliate
of any of the foregoing Persons and (iii) is not connected with the Issuer, any
such other obligor,
16
the Seller, ALS or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
Independent Certificate: A certificate or opinion to be delivered to the
Indenture Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.1 of the Indenture, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in the Indenture and that the signer is Independent within the meaning thereof.
Indirect Participant: A securities broker, dealer, bank, trust company or
other Person that clears through or maintains a custodial relationship with a
Clearing Agency Participant, either directly or indirectly.
Initial Assignment: Any Initial PA Assignment or Initial PSA Assignment.
Initial Conveyed Assets: As defined in Section 2.01 of the Purchase
Agreement.
Initial Cutoff Date: October 1, 2000.
Initial Loans: As defined in Section 2.01(a) of the Pooling and Servicing
Agreement.
Initial Loan Balance: With respect to a Loan, the aggregate amount
advanced under such Loan toward the purchase price of the Equipment, including
insurance premiums, service and warranty contracts, federal excise and sales
taxes and other items customarily financed as part of an Equipment Note and
related costs, less payments received from the Obligor prior to the Cutoff Date
with respect to such Loan to principal.
Initial PA Assignment: As defined in Section 2.01(a) of the Purchase
Agreement.
Initial PSA Assignment: As defined in Section 2.01 of the Pooling and
Servicing Agreement.
Initial Reserve Account Deposit: 1.0% of the Aggregate Initial Loan
Balance.
Insolvency Event: With respect to a specified Person, (i) the entry of a
decree or order by a court, agency or supervisory authority having jurisdiction
in the premises for the appointment of a conservator, receiver or liquidator for
such Person, in any bankruptcy, insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of such Person's affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; (ii) the
consent by such Person to the appointment of a conservator, receiver or
liquidator in any bankruptcy, insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to such Person or
of or relating to substantially all of such Person's property, or (iii) such
Person shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations.
17
Institutional Accredited Investor: An institutional "accredited investor"
as defined in Rule 501(a)(1)-(3),(7) or (8) (all of the equity investors of
which are accredited investors specified in Rule 501(a)(1),(2),(3) or (7)) of
Regulation D under the Securities Act.
Insurance Policy: With respect to a Loan, an insurance policy covering
physical damage, credit life, credit disability, theft, mechanical breakdown or
similar event to any item of Equipment securing such Loan.
Insurance Proceeds: With respect to any Loan, proceeds of any Insurance
Policy with respect to such Loan.
Insured Amount: As defined in the Ambac Policy.
Insured Payment: As defined in the Ambac Policy.
Insurer Default: The Insurer has failed (and continues to fail) to make
any payment required under the Ambac Policy in accordance with the terms
thereof.
Insurer: Ambac Assurance Corporation, a Wisconsin corporation.
Interest Only Period Loan: With respect to any Determination Date, any
Loan for which the Scheduled Payment relating to the period containing such
Determination Date did not include a scheduled payment of principal.
Interest Only Period Loan Ratio: For a Pool as of any Determination Date,
the result of the aggregate Loan Balance of all Interest Only Period Loans of
the Combined Loans of such Pool divided by the aggregate Loan Balance of all
Loans (including Interest Only Period Loans) of the Combined Loans of such Pool.
Interest Period: The period of time in which interest on the unpaid
principal balance of each class of Notes will accrue at the applicable Interest
Rate from the Closing Date or the most recent Distribution Date on which
interest has been paid to but excluding the next Distribution Date.
Interest Rate: For any Distribution Date, (a) with respect to the Class
A-1 Notes, 7.09% per annum, (b) with respect to the Class A-2 Notes, the lesser
of (i) LIBOR plus 0.40% per annum and (ii) the Asset Rate, (c) with respect to
the Class B-1 Notes, 9.00% per annum, and (d) with respect to the Class B-2
Notes, the lesser of (i) LIBOR plus 2.75% per annum, and (ii) the Asset Rate.
Interested Parties: The Issuer and each other party identified or
described in the Purchase Agreement or the Transfer and Servicing Agreements as
having an interest as owner, trustee, secured party or Beneficiary with respect
to the Purchased Property.
Investment Earnings: Investment earnings on funds deposited in the
Designated Accounts, the Lockbox Account and the Certificate Distribution
Account, net of losses and investment expenses, during the applicable Monthly
Period.
18
Issuer: The party named as such in the Pooling and Servicing Agreement and
in the Indenture until a successor replaces it and, thereafter, means the
successor.
Issuer Order and Issuer Request: A written order or request signed in the
name of the Issuer by any one of its Authorized Officers and delivered to the
Indenture Trustee.
LIBOR: With respect to each Distribution Date, the rate for deposits in
-----
U.S. Dollars for a period of one month which appears on Telerate Service Page
3750 as of 11:00 a.m., London time, on the day that is two LIBOR Business Days
prior to the preceding Distribution Date (or in the case of the first
Distribution Date, the Closing Date). If the rate does not appear on that date
on Telerate Service Page 3750 (or any other page as may replace that page on
that service, or if that service is no longer offered, any other service for
displaying LIBOR or comparable rates as may be selected by the Indenture Trustee
after consultation with the Seller), then LIBOR will be the Reference Bank Rate.
LIBOR Business Day: Any day on which commercial banks in London are open
for business.
Lien: Any security interest, lien, charge, pledge, equity or encumbrance
of any kind other than (i) liens for taxes not yet due and payable, (ii)
mechanics' liens, (iii) any liens that attach by operation of law, and any (iv)
liens being contested by appropriate measures.
Liquidation Expenses: The out of pocket expenses reasonably incurred by
the Servicer in connection with the repossession, refurbishment and disposition
of the collateral relating to a Defaulted Loan.
Liquidation Proceeds: The proceeds of the liquidation of any Defaulted
Loan, net of Liquidation Expenses.
LLC Agreement: The Limited Liability Company Agreement of the Seller,
dated as of November 28, 2000, as amended, supplemented or modified from time to
time.
Loan: An Equipment Note in Pool 1 or Pool 2 and all rights and obligations
thereunder.
Loan Balance: With respect to any Loan, as of an Accounting Date, the
Initial Loan Balance thereof minus the sum of: (i) the principal portion of all
Scheduled Payments received on or after the applicable Cutoff Date and on or
prior to the Accounting Date, (ii) the principal portion of all Prepayments
received, and (iii) the principal portion of proceeds from any Insurance
Policies covering the Equipment, Liquidation Proceeds and proceeds from any
Guaranties received and allocated to principal by the Servicer (it being
understood that Servicer Advances with respect to any Loan do not decrease the
Loan Balance of such Loan).
Loan File: The documents listed in Section 2.03 of the Pooling and
Servicing Agreement pertaining to a particular Loan, all other documents or
instruments evidencing or governing such Loan and all other agreements,
instruments, documents and records maintained by the Servicer on behalf of the
Issuer and relating to such Loan.
19
Loan Schedule: The list of Loans to be delivered to the Custodian in
connection with the delivery of Collateral Documents.
Lockbox: The post office box specified in the Lockbox Agreement.
Lockbox Account: As defined in Section 5.01(a)(iv) of the Pooling and
Servicing Agreement.
Lockbox Agreement: The Lockbox Agreement, dated as of November 28, 2000,
among the Servicer, the Issuer, the Indenture Trustee, Mellon Bank, N.A. and
Mellon Financial Services Corporation #1 as amended, supplemented or modified or
superceded from time to time.
Lockbox Bank: Mellon Bank, any successor in interest thereof or any other
Lockbox Bank designated by the Servicer and acceptable to the Insurer and the
Indenture Trustee.
Monthly Advance: The amount, as of an Accounting Date, which the Servicer
advances on the respective Loan pursuant to Section 5.06 of the Pooling and
Servicing Agreement.
Monthly Advance Reimbursement Amount: With respect to a Pool for any
Distribution Date, the aggregate for each Loan in such Pool of the sum of (a)
amounts received in the related Monthly Period on each Loan to the extent that
the Servicer has previously made an unreimbursed Monthly Advance, (b) to the
extent that the Servicer, in its sole discretion, determines that any prior
unreimbursed Monthly Advances are not collectable, the unreimbursed amounts of
those Monthly Advances and (c) the amount of any unreimbursed Monthly Advances
under the Lockbox Agreement.
Monthly Period: With respect to a Determination Date, a Record Date and a
Distribution Date, the calendar month preceding the month in which such date
occurs. With respect to an Accounting Date, the calendar month in which such
Accounting Date occurs.
Monthly Report: As defined in Section 4.09 of the Pooling and Servicing
Agreement.
New York UCC: The UCC as in effect in the State of New York.
Noteholders: Holders of the Notes pursuant to the Indenture and, with
respect to any class of Notes, Holders of such class of Notes pursuant to the
Indenture.
Note Depository: The depositary from time to time selected by the
Indenture Trustee on behalf of the Trust in whose name the Notes are registered
prior to the issue of Definitive Notes. The first Note Depository shall be Cede
& Co., the nominee of the initial Clearing Agency.
Note Depository Agreement: The agreement, dated the Closing Date, among
the Issuer, the Indenture Trustee and The Depository Trust Company, as the
initial Clearing Agency relating to the Class A Notes, substantially in the form
of Exhibit C to the Indenture, as the same may be amended and supplemented from
time to time.
Note Distribution Account: The account designated as such, established and
maintained pursuant to Section 5.01(a)(ii) of the Pooling and Servicing
Agreement.
20
Note Owner: With respect to a Book-Entry Note, the Person who is the
beneficial 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 as a Clearing Agency Participant or as an Indirect
Participant, in each case in accordance with the rules of such Clearing Agency).
Note Pool Factor: With respect to any class of Notes and any Distribution
Date, a seven-digit decimal figure computed by the Servicer which is equal to
the Note Principal Balance for such class as of the close of such Distribution
Date divided by the initial Note Principal Balance for such class.
Note Principal Balance: With respect to any class of Notes and any
Distribution Date, the initial aggregate principal balance of such class of
Notes, reduced by all previous payments to the Noteholders of such class in
respect of principal of such Notes.
Note Register: With respect to any class of Notes, the register of such
Notes specified in Section 2.4 of the Indenture.
Note Registrar: The registrar at any time of the Note Register, appointed
pursuant to Section 2.4 of the Indenture.
Notes: Collectively, the Class A Notes and the Class B Notes.
Obligor: With respect to any Loan, the purchaser or any co-purchaser of
the related Equipment or any other Person, other than the maker of any Guaranty,
who owes payments under a Loan.
Officer's Certificate: A certificate signed by any Authorized Officer of
the Issuer, under the circumstances described in, and otherwise complying with,
the applicable requirements of Section 11.1 of the Indenture, and delivered to
the Indenture Trustee. Unless otherwise specified, any reference in the
Indenture to an officer's certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel, who may, except as
otherwise expressly provided, be an employee of the Seller or the Servicer. In
addition, for purposes of the Indenture: (i) such counsel shall be satisfactory
to the Indenture Trustee and the Insurer; (ii) the opinion shall be addressed to
the Indenture Trustee as Trustee and the Insurer and (iii) the opinion shall
comply with any applicable requirements of Section 11.1 of the Indenture and
shall be in form and substance satisfactory to the Indenture Trustee and the
Insurer.
Optional Purchase Price: As defined in Section 9.01 of the Pooling and
Servicing Agreement.
Outstanding: With respect to the Notes, as of the date of determination,
all Notes theretofore authenticated and delivered under the Indenture except:
21
(i) Notes theretofore canceled by the Indenture Trustee or delivered
to the Indenture Trustee for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
in trust for the Holders of such Notes; provided, however, that if such
Notes are to be redeemed, notice of such redemption has been duly given
pursuant to the Indenture or provision therefor, satisfactory to the
Indenture Trustee, has been made; and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Basic Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture Trustee shall
be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Indenture Trustee knows to be so
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgor's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.
Outstanding Amount: As of any date, the aggregate principal amount of all
Notes, or a class of Notes, as applicable, Outstanding at such date.
Outstanding Monthly Advances: As of an Accounting Date with respect to a
Loan, all Monthly Advances made as of or prior to such Accounting Date with
respect to such Loan minus the portion of Monthly Advance Reimbursement Amounts
received with respect to such amounts on any date prior to such Accounting Date
pursuant to Section 8.2 of the Indenture.
Owner: For purposes of the Purchase Agreement, the Custodial Agreement and
the Pooling and Servicing Agreement, the "Owner" of a Loan means (i) ALER until
the execution and delivery of the Transfer and Servicing Agreements and (ii)
thereafter, the Issuer; provided that ALS or ALER, as applicable, shall be the
"Owner" of any Loan from and after the time that such Person shall acquire such
Loan, pursuant to Section 5.04 of the Purchase Agreement, Section 2.06 and 3.08,
as applicable, of the Pooling and Servicing Agreement, any other provision of
the Transfer and Servicing Agreements.
Owner Trust Estate: All right, title and interest of the Trust in and to
the property and rights assigned to the Trust pursuant to Article II of the
Pooling and Servicing Agreement, all funds on deposit from time to time in the
Lockbox Account, Reserve Account, Collection Account and the Certificate
Distribution Account and all other property of the Trust from time to time,
including any rights of the Owner Trustee and the Trust pursuant to the Pooling
and Servicing Agreement and the Administration Agreement.
22
Owner Trustee: Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as trustee under the Trust Agreement,
or any successor trustee under the Trust Agreement.
PA Assignment: As defined in Section 2.01(b) of the Purchase Agreement.
Partial Prepayment: With respect to a Distribution Date and to any Loan, a
Prepayment other than a Full Prepayment.
Party: A Party as defined in Section 6.01 of the Pooling and Servicing
Agreement.
Paying Agent: With respect to the Indenture, the Indenture Trustee or any
other Person that meets the eligibility standards for the Indenture Trustee
specified in Section 6.11 of the Indenture and is authorized by the Issuer to
make the payments to and distributions from the Collection Account and the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer. With respect to the Trust Agreement, any paying agent
or co-paying agent appointed pursuant to Section 3.9 of the Trust Agreement that
meets the eligibility standards for the Owner Trustee specified in Section 6.13
of the Trust Agreement, and initially the Owner Trustee.
Permanent Regulation S Global Notes: As defined in Section 2.1 of the
Indenture.
Person: Any legal person, including any individual, corporation, limited
liability company, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
Physical Property: (i) Bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery and (ii) certificated securities.
Pool: Pool 1 or Pool 2.
Pool 1: A segregated pool of fixed-rate Equipment Notes originated by ALS
and listed on the Schedule of Loans.
Pool 2: A segregated pool of floating-rate Equipment Notes originated by
ALS and listed on the Schedule of Loans.
Pool Criteria: With respect to any addition of Substitute Loans or
Replacement Loans to a Pool, as of the applicable Cutoff Date for such addition,
or, if applicable, the amendment, modification, extension or assumption of any
Loan as required under the Pooling and Servicing Agreement, the following
criteria must be met:
(i) if the Loans are being added to Pool 1, the Weighted Average
Annual Percentage Rate of the Combined Loans in Pool 1 as of the last day
of the prior Monthly Period must not be less than the Weighted Average
Annual Percentage Rate of the Loans
23
in such Pool (prior to giving effect to such additions) as of the last day
of the prior Monthly Period minus 0.10%;
(ii) if the Loans are being added to Pool 2, the Weighted Average
Margin over the prime rate of the Combined Loans in Pool 2 as of the last
day of the prior Monthly Period must not be less than the Weighted Average
Margin over the prime rate of the Loans in such Pool (prior to giving
effect to such additions) as of the last day of the prior Monthly Period
minus 0.10%;
(iii) the Weighted Average Remaining Term of the Combined Loans in
the Trust as of the last day of the prior Monthly Period must not be
greater than the Weighted Average Remaining Term of the Loans in the Trust
(prior to giving effect to such additions) as of the last day of the prior
Monthly Period plus 2.0 months;
(iv) if Interest Only Period Loans are being added, the Interest
Only Period Loan Ratio of the Combined Loans in the Trust as of the last
day of the prior Monthly Period must not be greater than 25.0%;
(v) if Balloon Loans are being added, the Balloon Loan Ratio of the
Combined Loans in the Trust as of the last day of the prior Monthly Period
must not be greater than 5.0%;
(vi) if any Loan being added is denominated in Canadian dollars or
whose Obligor has its principal place of business in Canada, the aggregate
Loan Balance for the Combined Loans in the Trust which (A) are denominated
in Canadian dollars or (B) are obligations of Obligors whose principal
place of business is located in Canada must not in total exceed 1% of the
Aggregate Loan Balance as of the last day of the prior Monthly Period for
the Trust;
(vii) if a Loan is being added whose Obligor is the Obligor with the
largest aggregate Loan Balance outstanding as of the applicable Accounting
Date, the aggregate Loan Balance for the Combined Loans in the Trust as of
the last day of the prior Monthly Period of the Loans of such Obligor must
not exceed 6.5% of the Aggregate Loan Balance as of the last day of the
prior Monthly Period for the Trust.
(viii) if a Loan whose Obligor is one of the Top Four Obligors is
being added, the aggregate Loan Balance for the Combined Loans in the
Trust as of the last day of the prior Monthly Period of the Loans of the
Top Four Obligors must not exceed the greater of 14.11% of the Aggregate
Loan Balance as of the last day of the prior Monthly Period for such Pool
or the percentage of the Aggregate Loan Balance of the Loans of the Top
Four Obligors as of the last day of the prior Monthly Period; and
(ix) the aggregate Loan Balance for the Combined Loans in the Trust
as of the last day of the prior Monthly Period on the Loans of any Obligor
other than the Top Four Obligors must not exceed 1.5% of the Aggregate
Loan Balance of the Trust as of the last day of the prior Monthly Period
for such Pool if Loans of such Obligor are added to the Trust.
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Pooling and Servicing Agreement: The Pooling and Servicing Agreement,
dated as of November 28, 2000, among ALS, the Seller and the Issuer, as amended,
supplemented or modified from time to time.
Portfolio Trigger: The average of the Delinquency Ratio for the prior
three consecutive Monthly Periods shall exceed 2.0% or the average of the
Default Ratio for the prior three consecutive Monthly Periods shall exceed 1.0%.
Predecessor Note: With respect to any particular Note, every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition, any Note authenticated
and delivered under Section 2.5 of the Indenture in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
Preference Amount: As defined in the Ambac Policy.
Prepayment: Collections on a Loan held by the Trust made during a Monthly
Period (including Warranty Payments and Administrative Purchase Payments) which
are not late fees, prepayment charges or certain other similar fees or charges
and which would be allocated to principal prepayments pursuant to Section 3.11
of the Pooling and Servicing Agreement.
Principal Distributable Amount: With respect to each Pool and for any
Distribution Date, an amount equal to (a) the Aggregate Loan Balance of the
related Pool as of the close of business on the Accounting Date second preceding
such Distribution Date or, in the case of the first Distribution Date, the
Initial Cutoff Date minus (b) the Aggregate Loan Balance of the related Pool as
of the close of business on the Accounting Date immediately preceding such
Distribution Date, in each case including the Loan Balance as of the applicable
Accounting Date of any Replacement Loan or Substitute Loan added or to be added
during the Monthly Period following such Accounting Date but excluding any
Warranty Loan for which a Substitute Loan was or is to be added during the
Monthly Period following such Accounting Date.
Private Holder: As defined in Section 2.15 of the Indenture.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Program: As defined in subsection 4.02(a) of the Pooling and Servicing
Agreement.
Purchase Agreement: The Purchase Agreement, dated as of November 28, 2000,
between ALS and the Seller, as amended, supplemented or modified from time to
time.
Purchase Date: As defined in Section 2.01 of the Purchase Agreement.
Purchase Price: As defined in subsection 2.02 of the Purchase Agreement.
25
Purchased Property: As of any date, means all of the Designated Loans and
the Related Security transferred by ALS to ALER pursuant to Section 2.01 of the
Purchase Agreement as of or prior to such date.
QIB: Qualified Institutional Buyers as defined in the Rule 144A of the
Securities Act.
Rating Agencies: As of any date, the nationally recognized statistical
rating organizations requested by the Seller to provide ratings on the Notes
which are rating the Notes on such date.
Rating Agency Condition: With respect to any action, the condition that
each Rating Agency shall have been given at least 10 days (or such shorter
period as is acceptable to each Rating Agency), prior notice thereof and that
each of the Rating Agencies shall have notified the Seller, the Servicer the
Issuer and the Insurer in writing that such action shall not result in a
downgrade or withdrawal of the then current rating of the Notes.
Record Date: (i) with respect to the Notes and with respect to any
Distribution Date, the close of business on the day immediately preceding such
Distribution Date, or if Definitive Notes are issued, the last day of the
preceding Monthly Period; and (ii) with respect to the Certificates and with
respect to any Distribution Date, the last day of the preceding Monthly Period.
Redemption Date: The Distribution Date specified by the Servicer or the
Issuer pursuant to Section 10.1(a) of the Indenture.
Redemption Price: An amount equal to the aggregate of the Outstanding
Amount of such Notes, together with all accrued and unpaid interest thereon as
of the Redemption Date and Carryover Amounts.
Reference Bank Rate: With respect to any Distribution Date, the per annum
rate determined on the basis of the rates at which deposits in U.S. Dollars are
offered by the reference banks (which will be four major banks that are engaged
in transactions in the London interbank market, selected by the Indenture
Trustee after consultation with the Seller) as of 11:00 a.m., London time, on
the day that is two LIBOR Business Days prior to the immediately preceding
Distribution Date to prime banks in the London interbank market for a period of
one month, in amounts approximately equal to the principal amount of the then
outstanding Series 2 Notes. The Indenture Trustee will request the principal
London office of each of the reference banks to provide a quotation of its rate.
If at least two quotations are provided, the rate will be the arithmetic mean of
the quotations, rounded upwards to the nearest one-sixteenth of one percent. If
on that date fewer than two quotations are provided as requested, the rate will
be the arithmetic mean, rounded upwards to the nearest one-sixteenth of one
percent, of the rates quoted by one or more major banks in New York City,
selected by the Indenture Trustee after consultation with the Seller, as of
11:00 a.m., New York City time, on that date to leading European banks for
United States dollar deposits for a period of one month in amounts approximately
equal to the principal amount of either class of Series 2 Notes then
outstanding. If no quotation can be obtained, then the Reference Bank Rate will
be the rate for the prior Distribution Date.
26
Registered Holder: The Person in whose name a Note is registered on the
Note Register on the applicable Record Date.
Reimbursement Amount: As defined in the Ambac Policy.
Related Security: As defined in Section 2.01 of the Purchase Agreement.
Replacement Assignment: As defined in Section 2.02 of the Pooling and
Servicing Agreement.
Replacement Cutoff Date: The close of business on the last day of the
month preceding the Replacement Date.
Replacement Date: As defined in Section 2.02 of the Pooling and Servicing
Agreement.
Replacement Loan: As defined in Section 2.02 of the Pooling and Servicing
Agreement.
Repurchase Event: As defined in Section 5.04 of the Purchase Agreement.
Required Deposit Rating: A rating on short-term unsecured debt obligations
of P-1 by Xxxxx'x Investors Service and A-1+ by Standard & Poor's Ratings
Services. Any requirement that short-term unsecured debt obligations have the
"Required Deposit Rating" means that such short-term unsecured debt obligations
have the foregoing required ratings from each of such rating agencies.
Reserve Account: The account designated as such, established and
maintained pursuant to Section 4.07(a) of the Pooling and Servicing Agreement.
Reserve Account Property: As defined in the Granting Clause of the
Indenture.
Responsible Officer: With respect to the Indenture Trustee or the Owner
Trustee, any officer within the Corporate Trust Office of such trustee, and,
with respect to the Servicer, the President, any Vice President, Assistant Vice
President, Secretary, Assistant Secretary or any other officer or assistant
officer of such Person customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
Revised Article 8: Revised Article 8 (1994 Version) (and corresponding
amendments to Article 9) as promulgated in 1994 by the National Conference of
Commissioners on Uniform State Laws, in the form in which it has been adopted in
the State of New York.
Rule 144A: Rule 144A under the Securities Act.
Rule 144A Global Note: As defined in Section 2.1 of the Indenture.
Schedule of Designated Loans: With respect to any PA Assignment, the
Schedule of Loans attached thereto as Schedule I.
27
Schedule of Loans: The schedule of Loans, annexed to the Pooling and
Servicing Agreement and on file at the locations listed on Exhibit C to the
Pooling and Servicing Agreement, as it may be amended from time to time in
accordance with the Pooling and Servicing Agreement.
Scheduled Payment: A payment which (i) is in the amount required under the
terms of a Loan then in effect, except, in the case of any Loan secured by more
than one items of Equipment, including any changes in the terms of such Loan
resulting from a Full Prepayment with respect to any item of Equipment related
thereto, (ii) is payable by the Obligor and (iii) includes finance charges
equivalent to the then applicable Annual Percentage Rate. When Scheduled Payment
is used with reference to a Distribution Date, it means the payment which is due
in the related Monthly Period; provided, however, that in the case of the first
Distribution Date, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Initial Cutoff Date.
Securities: The Notes and the Certificates.
Securities Act: The Securities Act of 1933, as amended.
Securities Intermediary: As defined in Section 5.01(b)(i) of the Pooling
and Servicing Agreement.
Security Entitlement: Has the meaning given such term in Section
8-102(a)(17) of the New York UCC.
Securityholder: Any of the Noteholders or Certificateholders.
Seller: The Person executing the Pooling and Servicing Agreement as the
Seller, or its successor in interest pursuant to Section 6.03 of the Pooling and
Servicing Agreement.
Series: Either or both of the Series 1 Notes or the Series 2 Notes.
Series 1 Notes: The Class A-1 Notes and the Class B-1 Notes.
Series 2 Notes: The Class A-2 Notes and the Class B-2 Notes.
Servicer: The Person executing the Pooling and Servicing Agreement as the
Servicer, or its successor in interest pursuant to Section 7.02 of the Pooling
and Servicing Agreement.
Servicer Default: As defined in Section 8.01 of the Pooling and Servicing
Agreement.
Servicer Default Trigger: The average of the Delinquency Ratio for the
prior three consecutive Monthly Periods shall exceed 3.0% or the average of the
Default Ratio for the prior three consecutive Monthly Periods shall exceed 1.5%.
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Servicer's Certificate: A certificate, completed by and executed on behalf
of the Servicer, in accordance with Section 3.10 of the Pooling and Servicing
Agreement.
Servicing Standards: As defined in Section 3.01 of the Pooling and
Servicing Agreement.
Specified Reserve Account Balance: With respect to any Distribution Date
means the lesser of (a) 1.75% of the Aggregate Initial Loan Balance and (b) the
outstanding principal balance of the Notes.
Subsequent Assignment: Any Subsequent PA Assignment, Substitution
Assignment or Replacement Assignment.
Subsequent Conveyed Assets: As defined in Section 2.01 of the Purchase
Agreement.
Subsequent Cutoff Date: The Accounting Date for the Monthly Period ending
prior to the transfer of a Designated Loan by means of the applicable Subsequent
Assignment.
Subsequent PA Assignment: As defined in Section 2.01(b) of the Purchase
Agreement.
Subsequent Purchase Date: As defined in Section 2.01 of the Purchase
Agreement.
Substitute Loans: As defined in Section 2.07 of the Pooling and Servicing
Agreement.
Substitution Assignment: As defined in Section 2.07 of the Pooling and
Servicing Agreement.
Substitution Cutoff Date: The close of business on the last day of the
month preceding the Substitution Date.
Substitution Date: As defined in Section 2.07(a) of the Pooling and
Servicing Agreement.
Supplemental Servicing Fee: All late fees, prepayment charges and other
administrative fees and expenses or similar charges allowed by applicable law
with respect to Loans, collected (from whatever source) on the Loans held by the
Trust during the applicable Monthly Period less, if paid by the Issuer and not
already offset against the Total Servicing Fee or the Supplemental Servicing
Fee, any conversion fee payable in connection with the appointment of the
Back-up Servicer as successor Servicer that was payable by the Servicer to whom
such Supplemental Servicing Fee is payable or any payment to the Lockbox Bank
(other than reimbursement of the Lockbox Bank for amounts transferred to the
Issuer in error).
Temporary Notes: The Notes specified as such in Section 2.3 of the
Indenture.
Temporary Regulation S Global Notes: As defined in Section 2.1 of the
Indenture.
Top Four Obligors: With respect to all Loans in the Trust, the Obligors
with the four largest respective aggregate Loan Balance amounts outstanding as
of the applicable Accounting Date.
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Total Servicing Fee: The sum of the Basic Servicing Fee and any unpaid
Basic Servicing Fees from all prior Distribution Dates less, if paid by the
Issuer and not already off set against the Total Servicing Fee or the
Supplemental Servicing Fee, any conversion fee payable in connection with the
appointment of the Back-up Servicer as successor Servicer that was payable by
the Servicer to whom such Total Servicing Fee is payable or any payment to the
Lockbox Bank other than reimbursement of the Lockbox Bank for amounts
transferred to the Issuer in error.
Transfer and Servicing Agreements: The Purchase Agreement, the assignments
pursuant to Section 2.01 of the Purchase Agreement, the Pooling and Servicing
Agreement, the Trust Agreement, the Indenture, the Administration Agreement and
the Custodial Agreement.
Treasury Regulations: The regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
Trust: Alliance Laundry Equipment Receivables Trust 2000-A, a Delaware
business trust created by the Trust Agreement.
Trust Agreement: The Trust Agreement dated as of November 28, 2000 between
the Seller and the Owner Trustee as amended, modified or supplemented from time
to time.
Trust Estate: As defined in the Granting Clause of the Indenture.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939 as in force on
the date hereof, unless otherwise specifically provided.
Trustees: The Owner Trustee and the Indenture Trustee.
UCC: The Uniform Commercial Code as in effect from time to time in the
relevant jurisdiction.
Uncertificated Security: As of any date, has the meaning given to such
term under the applicable UCC as in effect on such date.
U.S. Person: The meaning specified under Regulation S of the Securities
Act.
Warranty Event: With respect to a Loan, the receipt by the Seller of
notice of an event or condition that with the passage of time would result in
such Loan becoming a Warranty Loan.
Warranty Loan: A Loan which the Warranty Purchaser has become obligated to
repurchase pursuant to Section 2.03 or 2.06 of the Pooling and Servicing
Agreement or Section 5.04 of the Purchase Agreement.
Warranty Payment: With respect to a Distribution Date and to a Warranty
Loan repurchased as of the related Accounting Date, the sum of (i) the Loan
Balance of such Loan, (ii)
30
the interest portion of all due and past due and unpaid Scheduled Payments and
(iii) any other amounts due and owing on such Loan.
Warranty Purchaser: Either (i) the Seller pursuant to Section 2.06 of the
Pooling and Servicing Agreement or (ii) ALS pursuant to Section 5.04 of the
Purchase Agreement.
Weighted Average Annual Percentage Rate: For any Accounting Date, a
percentage equal to the sum for all Loans in Pool 1 of the product of each
Loan's (a) Loan Balance and (b) Annual Percentage Rate, divided by the Aggregate
Loan Balance of Pool 1.
Weighted Average Margin: For any Accounting Date, a percentage equal to
the sum for all Loans in Pool 2 of the product of each Loan's (a) Loan Balance
and (b) margin over the prime rate used to calculate the interest rate for such
Loan, divided by the Aggregate Loan Balance of Pool 2.
Weighted Average Remaining Term: For any Accounting Date, the sum for all
Loans in a Pool of the product of each Loan's (i) Loan Balance and (ii)
remaining number of Scheduled Payments, divided by the Aggregate Loan Balance of
that Pool.
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PART II - RULES OF CONSTRUCTION
(a) Accounting Terms. As used in this Appendix or the Basic Documents,
accounting terms which are not defined, and accounting terms partly defined,
herein or therein shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Appendix or the Basic Documents are inconsistent with
the meanings of such terms under generally accepted accounting principles, the
definitions contained in this Appendix or the Basic Documents will control.
(b) "Hereof," etc. The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Appendix or any Basic Document will refer to
this Appendix or such Basic Document as a whole and not to any particular
provision of this Appendix or such Basic Document; and Section, Schedule and
Exhibit references contained in this Appendix or any Basic Document are
references to Sections, Schedules and Exhibits in or to this Appendix or such
Basic Document unless otherwise specified. The word "or" is not exclusive.
(c) Reference to Distribution Dates. With respect to any Distribution
Date, the "related Monthly Period," and the "related Record Date," will mean the
Monthly Period and Record Date, respectively, immediately preceding such
Distribution Date, and the relationships among Monthly Periods and Record Dates
will be correlative to the foregoing relationships.
(d) Number and Gender. Each defined term used in this Appendix or the
Basic Documents has a comparable meaning when used in its plural or singular
form. Each gender-specific term used in this Appendix or the Basic Documents has
a comparable meaning whether used in a masculine, feminine or gender-neutral
form.
(e) Including. Whenever the term "including" (whether or not that term is
followed by the phrase "but not limited to" or "without limitation" or words of
similar effect) is used in this Appendix or the Basic Documents in connection
with a listing of items within a particular classification, that listing will be
interpreted to be illustrative only and will not be interpreted as a limitation
on, or exclusive listing of, the items within that classification.
32
