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CASE EQUIPMENT RECEIVABLES TRUST 1998-B
SALE AND SERVICING AGREEMENT
among
CASE EQUIPMENT RECEIVABLES TRUST 1998-B,
as Issuer,
and
CASE RECEIVABLES II INC.,
as Seller,
and
CASE CREDIT CORPORATION,
as Servicer.
Dated as of August 1, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions..................................1
SECTION 1.1. Definitions..................................................1
SECTION 1.2. Other Definitional Provisions................................1
ARTICLE II
Conveyance of Receivables.........................2
SECTION 2.1. Conveyance of Initial Receivables............................2
SECTION 2.2. Conveyance of Subsequent Receivables.........................3
ARTICLE III
The Receivables................................6
SECTION 3.1. Representations and Warranties of Seller.....................6
SECTION 3.2. Repurchase upon Breach.......................................7
SECTION 3.3. Custody of Receivable Files..................................8
SECTION 3.4. Duties of Servicer as Custodian..............................8
SECTION 3.5. Instructions; Authority To Act...............................9
SECTION 3.6. Custodian's Indemnification..................................9
SECTION 3.7. Effective Period and Termination.............................9
ARTICLE IV
Administration and Servicing of Receivables................10
SECTION 4.1. Duties of Servicer...........................................10
SECTION 4.2. Collection and Allocation of Receivable Payments.............11
SECTION 4.3. Realization upon Receivables.................................11
SECTION 4.4. Maintenance of Security Interests in Financed Equipment......11
SECTION 4.5. Covenants of Servicer........................................12
SECTION 4.6. Purchase of Receivables upon Breach..........................12
SECTION 4.7. Servicing Fee................................................12
SECTION 4.8. Servicer's Certificate.......................................12
SECTION 4.9. Annual Statement as to Compliance; Notice of Default.........13
SECTION 4.10. Annual Independent Certified Public Accountants' Report.....13
SECTION 4.11. Access to Certain Documentation and Information
Regarding Receivables...........................14
SECTION 4.12. Servicer Expenses...........................................14
SECTION 4.13. Appointment of Subservicer..................................14
ARTICLE V
Distributions: Spread Account;
Statements to Certificateholders and Noteholders...............14
SECTION 5.1. Establishment of Trust Accounts..............................14
SECTION 5.2. Collections..................................................17
SECTION 5.3. Application of Collections...................................17
SECTION 5.4. Additional Deposits..........................................17
SECTION 5.5. Distributions................................................18
SECTION 5.6. Spread Account...............................................19
SECTION 5.7. Pre-Funding Account..........................................20
SECTION 5.8. Negative Carry Account.......................................21
SECTION 5.9. [Intentionally Omitted]......................................21
SECTION 5.10. Statements to Certificateholders and Noteholders............21
SECTION 5.11. Net Deposits................................................22
ARTICLE VI
The Seller.................................23
SECTION 6.1. Representations of Seller....................................23
SECTION 6.2. Corporate Existence..........................................24
SECTION 6.3. Liability of Seller; Indemnities.............................25
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller..........................26
SECTION 6.5. Limitation on Liability of Seller and Others.................26
SECTION 6.6. Seller May Own Certificates or Notes.........................27
ARTICLE VII
The Servicer..................................27
SECTION 7.1. Representations of Servicer..................................27
SECTION 7.2. Indemnities of Servicer......................................29
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer........................30
SECTION 7.4. Limitation on Liability of Servicer and Others...............31
SECTION 7.5. Credit Not to Resign as Servicer.............................32
SECTION 7.6. Servicer to Act as Administrator.............................32
ARTICLE VIII
Default...................................32
SECTION 8.1. Servicer Default.............................................32
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Page
SECTION 8.2. Appointment of Successor Servicer............................33
SECTION 8.3. Notification to Noteholders and Certificateholders...........34
SECTION 8.4. Waiver of Past Defaults......................................35
ARTICLE IX
Termination...................................35
SECTION 9.1. Optional Purchase of All Receivables.........................35
ARTICLE X
Miscellaneous Provisions............................37
SECTION 10.1. Amendment...................................................37
SECTION 10.2. Protection of Title to Trust................................38
SECTION 10.3. Notices.....................................................40
SECTION 10.4. Assignment..................................................41
SECTION 10.5. Limitations on Rights of Others.............................41
SECTION 10.6. Severability................................................41
SECTION 10.7. Separate Counterparts.......................................41
SECTION 10.8. Headings....................................................41
SECTION 10.9. Governing Law...............................................41
SECTION 10.10. Assignment to Indenture Trustee............................41
SECTION 10.11. Nonpetition Covenants......................................42
SECTION 10.12. Limitation of Liability of Trustee and Indenture Trustee...42
iii
SCHEDULES AND EXHIBITS
SCHEDULE A Location of Receivables Files
EXHIBIT A Form of Noteholder's Statement Pursuant to Section 5.10(a)
EXHIBIT B Form of Certificateholder's Statement Pursuant to Section 5.10(a)
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Second-Tier Assignment
EXHIBIT E Form of Second-Tier Subsequent Transfer Assignment
EXHIBIT F Form of Accountants' Letter in Connection with Second-Tier
Subsequent Transfer Assignment
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SALE AND SERVICING AGREEMENT (as amended or otherwise modified,
this "Agreement") dated as of August 1, 1998, among CASE EQUIPMENT
RECEIVABLES TRUST 1998-B, a Delaware business trust (the "Issuer"), CASE
RECEIVABLES II INC., a Delaware corporation (the "Seller"), and CASE CREDIT
CORPORATION, a Delaware corporation (the "Servicer").
RECITALS
WHEREAS, the Issuer desires to purchase a portfolio of Contracts
purchased or originated by Case Credit Corporation ("Credit"), in the
ordinary course of business and sold to the Seller on a monthly basis
pursuant to a Receivables Purchase Agreement, dated as of August 1, 1994,
between Credit and the Seller (as it may be amended and supplemented from
time to time, the "Liquidity Receivables Purchase Agreement") and/or a
Purchase Agreement dated the date hereof between Credit and the Seller;
WHEREAS, the Seller is willing to sell such Contracts to the
Issuer; and
WHEREAS, Credit is willing to service such Contracts.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Capitalized terms used herein and not
otherwise defined herein are defined in Appendix A to the Indenture, dated
as of the date hereof, between Case Equipment Receivables Trust 1998-B and
▇▇▇▇▇▇ Trust and Savings Bank.
SECTION 1.2. Other Definitional Provisions. (a) All terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles as in effect
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on the date hereof. To the extent that the definitions of accounting terms
in this Agreement or in any such certificate or other document are
inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in
any such certificate or other document shall control.
(c) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule
and Exhibit references contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including, without
limitation,".
(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Initial Receivables. In consideration
of the Issuer's delivery to or upon the order of the Seller on the Closing
Date of the net proceeds from the sale of the Notes and the Certificates
and the other amounts to be distributed from time to time to the Seller in
accordance with this Agreement, the Seller does hereby sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse
(subject to the obligations herein), all of its right, title and interest
in, to and under:
(a) the Initial Receivables, including all documents
constituting chattel paper included therewith, and all obligations
of the Obligors thereunder, including all moneys paid thereunder
on or after the Initial Cutoff Date;
(b) the security interests in the Financed Equipment
granted by Obligors pursuant to the Initial Receivables and any
other interest of the Seller in such Financed Equipment;
(c) any proceeds with respect to the Initial Receivables
from claims on insurance policies covering Financed Equipment or
Obligors;
(d) the Liquidity Receivables Purchase Agreement (only
with respect to Owned Contracts included in the Initial
Receivables) and the Purchase Agreement, including the right of
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the Seller to cause Credit to repurchase Initial Receivables
from the Seller under the circumstances described therein;
(e) any proceeds from recourse to Dealers with respect to
the Initial Receivables other than any interest in the Dealers'
reserve accounts maintained with Credit;
(f) any Financed Equipment that shall have secured an
Initial Receivable and that shall have been acquired by or on
behalf of the Trust;
(g) all funds on deposit from time to time in the Trust
Accounts, including the Spread Account Initial Deposit, the Yield
Supplement Account Initial Deposit, the Negative Carry Account
Initial Deposit and the Pre-Funded Amount, and in all investments
and proceeds thereof (including all income thereon); and
(h) the proceeds of any and all of the foregoing (other
than Recoveries).
The above assignment shall be evidenced by a duly executed written
assignment in substantially the form of Exhibit D (the "Second-Tier
Assignment"). The Purchase Price for the Initial Receivables shall equal
$524,899,028.57, of which (x) $512,399,028.57 shall be paid by the Issuer
to the Seller in immediately available funds on the Closing Date and (y)
the balance shall constitute the Deferred Purchase Price and be paid as
provided for in this Agreement or shall be paid by issuance of the
Certificates to the Seller.
SECTION 2.2. Conveyance of Subsequent Receivables. (a) Subject to
the conditions set forth in clause (b) below, in consideration of the
Trustee's delivery on the related Subsequent Transfer Date to or upon the
order of the Seller of the amount described in Section 5.7(a) to be
delivered to the Seller, the Seller does hereby sell, transfer, assign, set
over and otherwise convey to the Issuer, without recourse (subject to the
obligations herein), all of its right, title and interest in, to and under:
(i) the Subsequent Receivables listed on Schedule A to
the related Second-Tier Subsequent Transfer Assignment, including
all documents constituting chattel paper included therewith, and
all obligations of the Obligors thereunder, including all moneys
paid thereunder on or after the related Subsequent Cutoff Date;
(ii) the security interests in the Financed Equipment
granted by Obligors pursuant to such Subsequent Receivables and
any other interest of the Seller in such Financed Equipment;
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(iii) any proceeds with respect to such Subsequent
Receivables from claims on insurance policies covering Financed
Equipment or Obligors;
(iv) the Purchase Agreement, including the right of the
Seller to cause Credit to repurchase Subsequent Receivables from
the Seller under the circumstances described therein;
(v) any proceeds with respect to such Subsequent
Receivables from recourse to Dealers other than any interest in
the Dealers' reserve accounts maintained with Credit;
(vi) any Financed Equipment that shall have secured any
such Subsequent Receivable and that shall have been acquired by or
on behalf of the Trust; and
(vii) the proceeds of any and all of the foregoing (other
than Recoveries).
(b) The Seller shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
clause (a) only upon the satisfaction of each of the following conditions
precedent on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have delivered to the Trustee and
the Indenture Trustee a duly executed written assignment in
substantially the form of Exhibit E (the "Second-Tier Subsequent
Transfer Assignment"), which shall include a Schedule A to the
Second-Tier Subsequent Transfer
Assignment listing the Subsequent Receivables;
(ii) the Seller shall, to the extent required by Section
5.2, have deposited in the Collection Account all collections in
respect of the Subsequent Receivables;
(iii) as of such Subsequent Transfer Date: (A) the Seller
was not insolvent and will not become insolvent as a result of the
transfer of Subsequent Receivables on such Subsequent Transfer
Date, (B) the Seller did not intend to incur or believe that it
would incur debts that would be beyond the Seller's ability to pay
as such debts matured, (C) such transfer was not made with actual
intent to hinder, delay or defraud any Person and (D) the assets
of the Seller did not constitute unreasonably small capital to
carry out its business as conducted;
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(iv) the applicable Spread Account Initial Deposit for
such Subsequent Transfer Date shall have been made;
(v) the applicable Yield Supplement Account Initial
Deposit for such Subsequent Transfer Date shall have been made;
(vi) the Receivables in the Trust, including the
Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, shall meet the following criteria: (A)
the weighted average original term of the Receivables in the Trust
will not be greater than 55.0 months, and (B) not more than 51.5%
of the aggregate Contract Value of the Receivables in the Trust
will represent Contracts for the financing of construction
equipment;
(vii) the Funding Period shall not have terminated;
(viii) each of the representations and warranties made by
the Seller pursuant to Section 3.1 of this Agreement and by the
Originator pursuant to Section 3.2(b) of the Purchase Agreement,
in each case with respect to the Subsequent Receivables, shall be
true and correct as of such Subsequent Transfer Date, and the
Seller shall have performed all obligations to be performed by it
hereunder on or prior to such Subsequent Transfer Date;
(ix) the Seller shall, at its own expense, on or prior to
such Subsequent Transfer Date, indicate in its computer files that
the Subsequent Receivables identified in the related Second-Tier
Subsequent Transfer Assignment have been sold to the Issuer
pursuant to this Agreement and the Second-Tier Subsequent Transfer
Assignment;
(x) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in
the Trust Estate and the first perfected security interest of the
Indenture Trustee in the Collateral;
(xi) no selection procedures believed by the Seller to be
adverse to the interests of the Trust, the Noteholders or the
Certificateholders shall have been utilized in selecting the
Subsequent Receivables;
(xii) the addition of the Subsequent Receivables will not
result in a material adverse tax consequence to the Trust, the
Noteholders or the Certificateholders;
(xiii) the Seller shall have provided the Indenture
Trustee, the Trustee and the Rating Agencies a statement listing
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the aggregate Contract Value of such Subsequent Receivables and
any other information reasonably requested by any of the foregoing
with respect to such Subsequent Receivables;
(xiv) the Seller shall have delivered: (A) to the Rating
Agencies, an Opinion of Counsel with respect to the transfer of
such Subsequent Receivables substantially in the form of the
Opinion of Counsel delivered to the Rating Agencies on the Closing
Date and (B) to the Trustee and the Indenture Trustee, the Opinion
of Counsel required by Section 10.2(i)(1);
(xv) the Seller shall have delivered to the Trustee and
the Indenture Trustee a letter of a firm of independent certified
public accountants confirming the satisfaction of the conditions
set forth in clause (vi) with respect to the Subsequent
Receivables, and covering substantially the same matters with
respect to the Subsequent Receivables as are set forth in Exhibit
F hereto;
(xvi) the Seller shall have delivered to the Indenture
Trustee and the Trustee an Officers' Certificate confirming the
satisfaction of each condition specified in this clause (b)
(substantially in the form attached hereto as Annex A to the
Second-Tier Subsequent Transfer Assignment); and
(xvii) ▇▇▇▇▇'▇ shall have received written notification
from the Seller of the addition of all such Subsequent
Receivables.
(c) The Seller covenants to transfer to the Issuer pursuant to
clause (a) Subsequent Receivables with an aggregate Contract Value equal to
$99,770,760.98, subject only to availability thereof.
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller. The Seller
makes the following representations and warranties as to the Receivables on
which the Issuer is deemed to have relied in acquiring the Receivables.
Such representations and warranties speak as of the execution and delivery
of this Agreement and as of the Closing Date, in the case of the Initial
Receivables, and as of the applicable Subsequent Transfer Date, in the case
of the Subsequent Receivables, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
6
(a) Title. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from
the Seller to the Issuer and that the beneficial interest in and title to
the Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy or similar law. No Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the Issuer.
Immediately prior to the transfer and assignment herein contemplated, the
Seller had good title to each Receivable, free and clear of all Liens and,
immediately upon the transfer thereof, the Issuer shall have good title to
each Receivable, free and clear of all Liens; and the transfer and
assignment of the Receivables to the Issuer has been perfected under the
UCC.
(b) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Issuer a first priority perfected
ownership interest in the Receivables, and to give the Indenture Trustee a
first priority perfected security interest therein, have been made.
SECTION 3.2. Repurchase upon Breach. (a) The Seller, the Servicer
or the Trustee, as the case may be, shall inform the other parties to this
Agreement and the Indenture Trustee promptly, in writing, upon the
discovery of any breach of the Seller's representations and warranties made
pursuant to Section 3.1 or Section 6.1 or Credit's representations and
warranties made pursuant to Section 3.2(b) of the Liquidity Receivables
Purchase Agreement or Section 3.2(b) of the Purchase Agreement. Unless any
such breach shall have been cured by the last day of the second (or, if the
Seller elects, the first) Collection Period after such breach is discovered
by the Trustee or in which the Trustee receives written notice from the
Seller or the Servicer of such breach, the Seller shall be obligated, and,
if necessary, the Seller or the Trustee shall enforce the obligation of
Credit under the Liquidity Receivables Purchase Agreement or the Purchase
Agreement, as applicable, to repurchase any Receivable materially and
adversely affected by any such breach as of such last day. As consideration
for the repurchase of the Receivable, the Seller shall remit the Purchase
Amount in the manner specified in Section 5.4; provided, however, that the
obligation of the Seller to repurchase any Receivable arising solely as a
result of a breach of Credit's representations and warranties pursuant to
Section 3.2(b) of the Liquidity Receivables Purchase Agreement or Section
3.2(b) of the Purchase Agreement is subject to the receipt by the Seller of
the Purchase Amount from Credit. Subject to the provisions of Section 6.3,
the sole remedy of the Issuer, the Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders with respect to a breach of the
representations and warranties pursuant to Section 3.1 and the agreement
contained in this Section shall be to require the Seller to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein, and to enforce Credit's obligation to the Seller to repurchase such
7
Receivables pursuant to the Liquidity Receivables Purchase Agreement or the
Purchase Agreement, as applicable.
(b) With respect to all Receivables repurchased by the Seller
pursuant to this Agreement, the Issuer shall sell, transfer, assign, set
over and otherwise convey to the Seller, without recourse, representation
or warranty, all of the Issuer's right, title and interest in, to and under
such Receivables, and all security and documents relating thereto.
SECTION 3.3. Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs,
the Issuer hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act for the benefit of the Issuer and the
Indenture Trustee as custodian of the following documents or instruments,
which are hereby constructively delivered to the Indenture Trustee, as
pledgee of the Issuer (or, in the case of the Subsequent Receivables, will
as of the applicable Subsequent Transfer Date be constructively delivered
to the Indenture Trustee, as pledgee of the Issuer) with respect to each
Receivable:
(a) the original fully executed copy of the Receivable;
(b) a record or facsimile of the original credit
application fully executed by the Obligor;
(c) the original certificate of title or file stamped
copy of the UCC financing statement or such other documents that
the Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of Credit in the
Financed Equipment; and
(d) any and all other documents that the Servicer or the
Seller shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor or any of the
Financed Equipment.
SECTION 3.4. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files for
the benefit of the Issuer and the Indenture Trustee and maintain such
accurate and complete accounts, records and computer systems pertaining to
each Receivable File as shall enable the Issuer to comply with this
Agreement. In performing its duties as custodian, the Servicer shall act
with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the receivable files relating to all
comparable equipment receivables that the Servicer services for itself or
others. The Servicer shall conduct, or cause to be conducted, periodic
audits of the Receivable Files and the related accounts, records and computer
8
systems, in such a manner as shall enable the Issuer or the Indenture
Trustee to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the Issuer and the Indenture Trustee any
failure on its part to hold the Receivable Files and maintain its accounts,
records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein shall be
deemed to require an initial review or any periodic review by the Issuer,
the Trustee or the Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule A
to this Agreement or at such other office as shall be specified to the
Issuer and the Indenture Trustee by written notice not later than 90 days
after any change in location. The Servicer shall make available for
inspection by the Seller, the Issuer and the Indenture Trustee or their
respective duly authorized representatives, attorneys or auditors a list of
locations of the Receivable Files and the related accounts, records and
computer systems maintained by the Servicer at such times during normal
business hours as the Seller, the Issuer or the Indenture Trustee shall
instruct.
SECTION 3.5. Instructions; Authority To Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by a Trust Officer of
the Indenture Trustee.
SECTION 3.6. Custodian's Indemnification. The Servicer as
custodian shall indemnify the Trust, the Trustee and the Indenture Trustee
(and each of their officers, directors, employees and agents) for any and
all liabilities, obligations, losses, compensatory damages, payments, costs
or expenses of any kind whatsoever that may be imposed on, incurred by or
asserted against the Trust, the Trustee or the Indenture Trustee (or any of
their officers, directors and agents) as the result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer
as custodian of the Receivable Files; provided, however, that the Servicer
shall not be liable: (a) to the Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the
Trustee and (b) to the Indenture Trustee for any portion of any such amount
resulting from the wilful misfeasance, bad faith or negligence of the
Indenture Trustee.
SECTION 3.7. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Initial Cutoff
Date and shall continue in full force and effect until terminated pursuant
to this Section. If any Servicer shall resign as Servicer in accordance
with this Agreement or if all of the rights and obligations of any Servicer
shall have been terminated under Section 8.1, the appointment of such
Servicer as custodian shall be terminated by:
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(a) the Indenture Trustee, (b) the Noteholders of Notes evidencing not less
than 25% of the Note Balance, (c) with the consent of Noteholders of Notes
evidencing not less than 25% of the Note Balance, the Trustee or (d)
Certificateholders evidencing not less than 25% of the Certificate Balance,
in the same manner as the Indenture Trustee or such Holders may terminate
the rights and obligations of the Servicer under Section 8.1. The Indenture
Trustee or, with the consent of the Indenture Trustee, the Trustee may
terminate the Servicer's appointment as custodian, with cause, at any time
upon written notification to the Servicer, and without cause upon 30 days'
prior written notification to the Servicer. As soon as practicable after
any termination of such appointment, the Servicer shall deliver the
Receivable Files to the Indenture Trustee or the Indenture Trustee's agent
at such place(s) as the Indenture Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer. The Servicer, for the benefit of
the Issuer, and (to the extent provided herein) the Indenture Trustee shall
manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable equipment receivables that it
services for itself or others. The Servicer's duties shall include
collection and posting of all payments, responding to inquiries of Obligors
on such Receivables, investigating delinquencies, sending payment coupons
to Obligors, reporting tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Trustee and
the Indenture Trustee with respect to distributions. Subject to Section
4.2, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the
generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Trustee, the
Indenture Trustee, the Certificateholders, the Noteholders or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to
such Receivables or the Financed Equipment securing such Receivables. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Issuer shall thereupon be deemed to have automatically assigned, solely for
the purpose of collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may
not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce such Receivable, the Trustee
shall, at the Servicer's expense and direction, take steps to enforce such
Receivable, including bringing suit in its name or the name of the Trust,
10
the Indenture Trustee, the Certificateholders or the Noteholders. The
Trustee or the Indenture Trustee shall, upon the written request of the
Servicer, furnish the Servicer with any powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection and Allocation of Receivable Payments. The
Servicer shall make reasonable efforts to collect all payments called for
under the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all
comparable equipment receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in
accordance with the customary servicing procedures it follows with respect
to all comparable equipment receivables that it services for itself or
others. The Servicer may grant extensions or adjustments on a Receivable;
provided, however, that if the Servicer extends the date for final payment
by the Obligor of any Receivable beyond the Final Scheduled Maturity Date,
it shall promptly purchase the Receivable from the Issuer in accordance
with Section 4.6. The Servicer may, in its discretion, waive any late
payment charge or any other fees (other than extension fees or any other
fees that represent interest charges on deferred Scheduled Payments) that
may be collected in the ordinary course of servicing a Receivable. The
Servicer shall not agree to any decrease of the interest rate on any
Receivable or reduce the aggregate amount of the Scheduled Payments due on
any Receivable.
SECTION 4.3. Realization upon Receivables. For the benefit of the
Issuer and the Indenture Trustee, the Servicer shall use reasonable
efforts, consistent with its customary servicing procedures, to repossess
or otherwise convert the ownership of the Financed Equipment securing any
Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of equipment receivables, which may include reasonable efforts to
realize upon any recourse to Dealers and selling the Financed Equipment at
public or private sale. The foregoing shall be subject to the provision
that, in any case in which the Financed Equipment shall have suffered
damage, the Servicer shall not expend funds in connection with the repair
or the repossession of such Financed Equipment unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 4.4. Maintenance of Security Interests in Financed
Equipment. The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed
Equipment. The Servicer is hereby authorized to take such steps as are
11
necessary to re-perfect such security interest for the benefit of the
Issuer and the Indenture Trustee in the event of the relocation of a
Financed Equipment or for any other reason.
SECTION 4.5. Covenants of Servicer. The Servicer shall not release
the Financed Equipment securing any Receivable from the security interest
granted by such Receivable in whole or in part except in the event of
payment in full by the Obligor thereunder or repossession, nor shall the
Servicer impair the rights of the Issuer, the Indenture Trustee, the
Certificateholders or the Noteholders or in such Receivables. The Servicer
shall, in accordance with its customary servicing procedures, require that
each Obligor shall have obtained physical damage insurance covering the
Financed Equipment as of the execution of the Receivable.
SECTION 4.6. Purchase of Receivables upon Breach. The Servicer or
the Trustee shall inform the other party, the Indenture Trustee, the Seller
and Credit promptly, in writing, upon the discovery of any breach pursuant
to Section 4.2, 4.4 or 4.5. Unless the breach shall have been cured by the
last day of the Collection Period in which such breach is discovered, the
Servicer shall purchase any Receivable materially and adversely affected by
such breach as of such last day. If the Servicer takes any action during
any Collection Period pursuant to Section 4.2 that impairs the rights of
the Issuer, the Indenture Trustee, the Certificateholders or the
Noteholders in any Receivable or as otherwise provided in Section 4.2, the
Servicer shall purchase such Receivable as of the last day of such
Collection Period. As consideration for the purchase of any such Receivable
pursuant to either of the two preceding sentences, the Servicer shall remit
the Purchase Amount in the manner specified in Section 5.4. Subject to
Section 7.2, the sole remedy of the Issuer, the Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders with respect to a breach
pursuant to Section 4.2, 4.4 or 4.5 shall be to require the Servicer to
purchase Receivables pursuant to this Section. The Trustee shall have no
duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the purchase of any Receivable pursuant to this
Section.
SECTION 4.7. Servicing Fee. The Servicing Fee for each Collection
Period shall be equal to 1/12th of 1.00% of the Pool Balance as of the first
day of such Collection Period.
SECTION 4.8. Servicer's Certificate. On each Determination Date
the Servicer shall deliver to the Trustee, the Indenture Trustee and the
Seller, with a copy to the Rating Agencies, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.5 and 5.6 and the deposits to the Collection Account pursuant to
Section 5.2 for the Collection Period preceding the date of such Servicer's
Certificate. Receivables to be repurchased by the Seller or purchased by
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the Servicer shall be identified by the Servicer by account number with
respect to such Receivable (as specified in the schedule of Receivables
delivered on the Closing Date or attached to the applicable Second-Tier
Subsequent Transfer Assignment).
SECTION 4.9. Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Trustee and the Indenture Trustee, on
or before April 30th of each year, an Officers' Certificate, dated as of
December 31 of the preceding year, stating that: (i) a review of the
activities of the Servicer during the preceding 12-month period (or, in the
case of the first such certificate, from the Initial Cutoff Date to
December 31, 1998) and of its performance under this Agreement has been
made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year or, if there has
been a default in the fulfillment of any such obligation, specifying each
such default known to such officers and the nature and status thereof. The
Indenture Trustee shall send a copy of such Certificate and the report
referred to in Section 4.10 to the Rating Agencies. A copy of such
Certificate and report may be obtained by any Certificateholder or
Noteholder by a request in writing to the Trustee addressed to the
Corporate Trust Office. Upon the written request of the Trustee, the
Indenture Trustee will promptly furnish the Trustee a list of Noteholders
as of the date specified by the Trustee.
(b) The Servicer shall deliver to the Trustee, the Indenture
Trustee and the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice in an Officers' Certificate of any event that, with the giving of
notice or lapse of time, or both, would become a Servicer Default under
Section 8.1(a) or (b).
SECTION 4.10. Annual Independent Certified Public Accountants'
Report. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer or the
Seller, to deliver to the Trustee and the Indenture Trustee on or before
April 30 of each year a report, addressed to the Board of Directors of the
Servicer, the Trustee and the Indenture Trustee, summarizing the results of
certain procedures with respect to certain documents and records relating
to the servicing of the Receivables during the preceding calendar year (or,
in the case of the first such report, during the period from the Initial
Cutoff Date to December 31, 1998). The procedures to be performed and
reported upon by the independent public accountants shall be those agreed
to by the Servicer and the Indenture Trustee.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
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SECTION 4.11. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to the Trustee and the
Indenture Trustee access to the Receivable Files in such cases where the
Trustee or the Indenture Trustee shall be required by applicable statutes
or regulations to review such documentation. Access shall be afforded
without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information
as a result of such obligation shall not constitute a breach of this
Section.
SECTION 4.12. Servicer Expenses. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of independent accountants,
taxes imposed on the Servicer and expenses incurred in connection with
distributions and reports to Certificateholders and the Noteholders.
SECTION 4.13. Appointment of Subservicer. The Servicer may at any
time appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder; provided, however, that the Rating Agency Condition
shall have been satisfied in connection therewith; and provided further,
that the Servicer shall remain obligated and be liable to the Issuer, the
Trustee, the Indenture Trustee the Certificateholders and the Noteholders
for the servicing and administering of the Receivables in accordance with
the provisions hereof without diminution of such obligation and liability
by virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing
and administering the Receivables. The fees and expenses of the subservicer
shall be as agreed between the Servicer and its subservicer from time to
time and none of the Issuer, the Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders shall have any responsibility
therefor.
ARTICLE V
Distributions: Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts. (a)(i) The Servicer,
for the benefit of the Noteholders and the Certificateholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (the "Collection Account"), bearing a designation clearly
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indicating that the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders.
(ii) The Servicer, for the benefit of the Noteholders,
shall establish and maintain in the name of the Indenture Trustee
an Eligible Deposit Account (the "Note Distribution Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders.
(iii) The Servicer, for the benefit of the Noteholders,
shall establish and maintain in the name of the Indenture Trustee
an Eligible Deposit Account (the "Spread Account"), bearing a
designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders.
(iv) The Servicer, for the benefit of the Noteholders and
the Certificateholders, shall establish and maintain in the name
of the Indenture Trustee an Eligible Deposit Account (the
"Pre-Funding Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders.
(v) The Servicer, for the benefit of the Noteholders and
the Certificateholders, shall establish and maintain in the name
of the Indenture Trustee an Eligible Deposit Account (the
"Negative Carry Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders.
(vi) The Servicer, for the benefit of the Noteholders and
the Certificateholders, shall establish and maintain in the name
of the Indenture Trustee an Eligible Deposit Account (the "Yield
Supplement Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders.
(b) Funds on deposit in the Collection Account, the Note
Distribution Account, the Spread Account, the Pre-Funding Account, the
Negative Carry Account and the Yield Supplement Account, (collectively, the
"Trust Accounts") shall be invested or reinvested by the Indenture Trustee
in Eligible Investments selected by and as directed in writing by the
Servicer (which written direction may be in the form of standing
instructions); provided, however, it is understood and agreed that the
Indenture Trustee shall not be liable for the selection of, or any loss
arising from such investment in, Eligible Investments. All such Eligible
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Investments shall be held by the Indenture Trustee for the benefit of the
Noteholders and the Certificateholders or the Noteholders, as applicable
(and for the purposes of Article 8 of the UCC, each Eligible Investment is
intended to constitute a Financial Asset, and each of the Trust Accounts is
intended to constitute a Securities Account); provided, that on each
Transfer Date, all Investment Earnings on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Total Distribution Amount. Other than as permitted by the
Rating Agencies, funds on deposit in the Trust Accounts shall be invested
in Eligible Investments that will mature so that such funds will be
available at the close of business on the Transfer Date preceding the
following Payment Date; provided, however, that funds on deposit in Trust
Accounts may be invested in Eligible Investments of the entity serving as
Indenture Trustee that may mature so that such funds will be available on
the Payment Date. Funds deposited in a Trust Account on the Transfer Date
that precedes a Payment Date upon the maturity of any Eligible Investments
are not required to be invested overnight.
(c)(i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts
and in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust Estate.
The Trust Accounts shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders and the
Certificateholders or the Noteholders, as the case may be. If, at any time,
any of the Trust Accounts ceases to be an Eligible Deposit Account, the
Indenture Trustee (or the Servicer on its behalf) 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 Trust Account as an
Eligible Deposit Account and shall transfer any cash and/or any investments
held in the no-longer Eligible Deposit Account to such new Trust Account.
(ii) With respect to the Trust Account Property, the
Indenture Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in Eligible Deposit
Accounts, subject to the last sentence of Section
5.1(c)(i); and each such Eligible Deposit Account shall
be subject to the exclusive custody and control of the
Indenture Trustee, and the Indenture Trustee shall have
sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes
a Certificated Security shall be delivered to the
Indenture Trustee in accordance with paragraph (i) of the
definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Indenture Trustee;
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(C) any such Trust Account Property that
constitutes an Uncertificated Security (including any
investments in money market mutual funds, but excluding
any Federal Book Entry Security) shall be delivered to
the Indenture Trustee in accordance with paragraph (ii)
of the definition of "Delivery" and shall be maintained,
pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its
nominee's) ownership of such security; and
(D) with respect to any Trust Account Property
that constitutes a Federal Book Entry Security, the
Indenture Trustee shall maintain and obtain Control over
such property.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Trustee, with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose
of permitting the Servicer or the Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
(d) All Trust Accounts will initially be established at the
Indenture Trustee.
SECTION 5.2. Collections. The Servicer shall remit within two
Business Days of receipt thereof to the Collection Account all payments by
or on behalf of the Obligors with respect to the Receivables, and all
Liquidation Proceeds, both as collected during the Collection Period.
Notwithstanding the foregoing, for so long as: (i) Credit remains the
Servicer, (ii) no Servicer Default shall have occurred and be continuing
and (iii) prior to ceasing daily remittances, the Rating Agency Condition
shall have been satisfied (and any conditions or limitations imposed by the
Rating Agencies in connection therewith are complied with), the Servicer
shall remit such collections with respect to the related Collection Period
to the Collection Account on the Transfer Date immediately following the
end of such Collection Period. For purposes of this Article V, the phrase
"payments by or on behalf of the Obligors" shall mean payments made with
respect to the Receivables by Persons other than the Servicer or the
Seller.
SECTION 5.3. Application of Collections. (a) With respect to each
Receivable, all collections for the Collection Period shall be applied to the
related Scheduled Payment.
(b) All Liquidation Proceeds shall be applied to the related
Receivable.
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SECTION 5.4. Additional Deposits. The Servicer and the Seller
shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Receivables on the
Transfer Date related to the Collection Period on the last day of which the
purchase occurs, and the Servicer shall deposit therein all amounts to be
paid under Section 9.1 on the Transfer Date falling in the Collection
Period referred to in Section 9.1. The Servicer will deposit the aggregate
Purchase Amount with respect to Purchased Receivables when such obligations
are due, unless the Servicer shall not be required to make daily deposits
pursuant to Section 5.2, in which case such deposits shall be made on the
Transfer Date following the related Collection Period.
SECTION 5.5. Distributions. (a) On each Determination Date, the
Servicer shall calculate all amounts required to determine the amounts to be
deposited in the Note Distribution Account, the Certificate Distribution
Account, the Spread Account and the Yield Supplement Account.
(b) On each Payment Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
4.8) to make the following deposits and distributions for receipt by the
Servicer or deposit in the applicable Trust Account or Certificate
Distribution Account, as applicable, by 10:00 a.m. (New York time), to the
extent of the Total Distribution Amount, in the following order of
priority:
(i) to the Administrator, the Administration Fee and all
unpaid Administration Fees from prior Collection Periods;
(ii) to the Note Distribution Account, the Class Interest
Amount for each Class of Class A Notes;
(iii) to the Note Distribution Account, the Class Interest
Amount for the Class B Notes;
(iv) to the Note Distribution Account, the Class Principal
Distributable Amount for each Class of Class A Notes;
(v) to the Note Distribution Account, the Class B
Noteholders' Monthly Principal Distributable Amount;
(vi) to the Spread Account to the extent necessary so
that the balance on deposit therein will equal the Specified
Spread Account Balance;
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(vii) to the Seller, the Deferred Purchase Price Interest
Amount; and then to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(viii) to the Seller, the Deferred Purchase Price Payment
Amount; and then to the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount;
(ix) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods; provided that if
Credit or an Affiliate of Credit is not the Servicer, the amounts
described in this clause (xii) will be paid prior to any other
application of funds on deposit in the Collection Account; and
(x) to the Seller, the remaining Total Distribution
Amount.
SECTION 5.6. Spread Account. (a) On the Closing Date and on each
Subsequent Transfer Date, the Seller shall deposit the applicable Spread
Account Initial Deposit into the Spread Account.
(b) If the amount on deposit in the Spread Account on any Payment
Date (after giving effect to all deposits or withdrawals therefrom on such
Payment Date) is greater than the Specified Spread Account Balance for such
Payment Date, the Servicer shall instruct the Indenture Trustee to
distribute the amount of the excess to the Seller (and its transferees and
assignees in accordance with their respective interests); provided, that
if, after giving effect to all payments made on the Notes on such Payment
Date, the sum of the Pool Balance and the Pre- Funded Amount as of the
first day of the Collection Period in which such Payment Date occurs is
less than the sum of the Note Balance and the Certificate Balance, such
excess shall not be distributed to the Seller (or such transferees or
assignees) and shall be retained in the Spread Account for application in
accordance with this Agreement. Amounts properly distributed pursuant to
this Section 5.6(b)(i) shall be deemed released from the Trust and the
security interest therein granted to the Indenture Trustee, and the Seller
(and such transferees and assignees) shall in no event thereafter be
required to refund any such distributed amounts.
(c) Following: (i) the payment in full of the aggregate
Outstanding Amount of the Notes and of all other amounts owing or to be
distributed hereunder or under the Indenture to the Noteholders, the
Trustee and the Indenture Trustee and (ii) the termination of the Trust,
any amount remaining on deposit in the Spread Account shall be distributed
to the Seller or any transferee or assignee pursuant to clause (g). The
19
Seller (and such transferees and assignees) shall in no event be required
to refund any amounts properly distributed pursuant to this Section 5.6(c).
(d) In the event that the Noteholders' Distributable Amount for a
Payment Date exceeds the amount deposited into the Note Distribution
Account pursuant to Sections 5.5(b)(ii), (iii), (iv) and (v) on such
Payment Date, the Servicer shall instruct the Indenture Trustee on such
Payment Date to withdraw from the Spread Account on such Payment Date an
amount equal to such excess, to the extent of funds available therein, and
deposit such amount into the Note Distribution Account.
(e) In the event that the Class Principal Distributable Amount for
any Class of Notes for the applicable final scheduled maturity date for
such Class of Notes exceeds the remainder of the Principal Distributable
Amount for that Payment Date after subtracting the Class Principal
Distributable Amount for each Class of Notes having priority over such
Class of Notes, the Servicer shall instruct the Indenture Trustee on such
Payment Date to withdraw from the Spread Account on such Payment Date an
amount equal to such excess, to the extent of funds available therein, and
deposit such amount into the Note Distribution Account.
(f) [Reserved]
(g) The Seller may at any time, without consent of the
Noteholders, sell, transfer, convey or assign in any manner its rights to
and interests in distributions from the Spread Account, including interest
and other investment earnings thereon; provided, that: the Rating Agency
Condition is satisfied.
SECTION 5.7. Pre-Funding Account. (a) On the Closing Date, the
Trustee will deposit, on behalf of the Seller, in the Pre-Funding Account
$99,770,760.98 from the net proceeds of the sale of the Notes and the
Certificates. On each Subsequent Transfer Date, the Servicer shall instruct
the Indenture Trustee to withdraw from the Pre-Funding Account an amount
equal to: (i) the aggregate Contract Value of the Subsequent Receivables
transferred to the Issuer on such Subsequent Transfer Date less the Spread
Account Initial Deposit and Yield Supplement Account Initial Deposit for
such Subsequent Transfer Date, and distribute such amount to or upon the
order of the Seller upon satisfaction of the conditions set forth in
Section 2.2(b) with respect to such transfer, (ii) the Spread Account
Initial Deposit for such Subsequent Transfer Date and, on behalf of the
Seller, deposit such amount in the Spread Account and (iii) the Yield
Supplement Account Initial Deposit for such Subsequent Transfer Date, and,
on behalf of the Seller, deposit such amount in the Yield Supplement
Account.
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(b) If: (i) the Pre-Funded Amount has not been reduced to zero on
the Payment Date on which the Funding Period ends (or, if the Funding
Period does not end on a Payment Date, on the first Payment Date following
the end of the Funding Period) or (ii) the Pre-Funded Amount has been
reduced to $100,000 or less on any Determination Date, in either case after
giving effect to any reductions in the Pre-Funded Amount on such date
pursuant to paragraph (a), the Servicer shall instruct the Indenture
Trustee to withdraw from the Pre-Funding Account, in the case of clause
(i), on such Payment Date or, in the case of clause (ii), on the Payment
Date immediately succeeding such Determination Date, the amount remaining
at the time in the Pre-Funding Account (such remaining amount being the
"Remaining Pre-Funded Amount") and deposit such amounts in the Collection
Account, for inclusion in the Total Distribution Amount for that Payment Date.
SECTION 5.8. Negative Carry Account. On the Closing Date, the
Seller shall deposit the Negative Carry Account Initial Deposit into the
Negative Carry Account. On each Payment Date, the Servicer will instruct
the Indenture Trustee to withdraw from the Negative Carry Account and
deposit into the Collection Account an amount equal to the Negative Carry
Amount for such Collection Period. If the amount on deposit in the Negative
Carry Account on any Payment Date (after giving effect to the withdrawal
therefrom of the Negative Carry Amount for such Payment Date) is greater
than the Required Negative Carry Account Balance, the excess will be
released to the Seller.
SECTION 5.9. Yield Supplement Account. On the Closing Date and on
each Subsequent Transfer Date, the Seller shall deposit the applicable
Yield Supplement Account Initial Deposit into the Yield Supplement Account.
On each Payment Date, the Servicer will instruct the Indenture Trustee to
withdraw from the Yield Supplement Account and deposit into the Collection
Account an amount equal to the Yield Supplement Amount for such Collection
Period. If the amount on deposit in the Yield Supplement Account on any
Payment Date (after giving effect to any deposit thereto and the withdrawal
therefrom of the Yield Supplement Amount for such Payment Date) is greater
than the Required Yield Supplement Account Balance, the excess will be
released to the Seller.
SECTION 5.10. Statements to Certificateholders and Noteholders.
(a) On each Determination Date the Servicer shall provide to the Indenture
Trustee (with a copy to the Rating Agencies), for the Indenture Trustee to
forward to each Noteholder of record, and to the Trustee, for the Trustee
to forward to each Certificateholder of record, a statement substantially
in the form of Exhibits A and B, respectively, setting forth at least the
following information as to each Class of the Notes and the Certificates to
the extent applicable:
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(i) the amount of such distribution allocable to principal
of each Class of Notes;
(ii) the amount of the distribution allocable to interest
of each Class of Notes;
(iii) the amount of the distribution allocable to (A)
Deferred Purchase Price and (B) principal of the Certificates;
(iv) the amount of the distribution allocable to interest
on the Deferred Purchase Price and the Certificates;
(v) the Pool Balance as of the close of business on the
last day of the preceding Collection Period;
(vi) the aggregate Outstanding Amount and the Note Pool
Factor for each Class of Notes, and the Certificate Balance and
the Certificate Pool Factor as of such Payment Date, after giving
effect to payments allocated to principal reported under clauses
(i) and (iii) above;
(vii) the amount of the Servicing Fee paid to the
Servicer with respect to the preceding Collection Period;
(viii) the amount of the Administration Fee paid to the
Administrator in respect of the preceding Collection Period;
(ix) the amount of the aggregate Realized Losses, if any,
for such Collection Period;
(x) the aggregate Purchase Amounts for Receivables, if
any, that were repurchased or purchased in such Collection Period;
(xi) the balance of the Spread Account on such Payment
Date, after giving effect to changes therein on such Payment Date;
(xii) for Payment Dates during the Funding Period, the
remaining Pre-Funded Amount;
(xiii) for the final Payment Date with respect to the
Funding Period, the amount of any remaining Pre-Funded Amount that
has not been used to fund the purchase of Subsequent Receivables;
22
(xiv) the balance of the Yield Supplement Account on such
Payment Date, after giving effect to changes therein on such
Payment Date; and
(xv) the balance of the Negative Carry Account on such
Payment Date, after giving effect to changes therein on such
Payment Date.
Each amount set forth pursuant to clauses (i), (ii), (iii), (iv), (vii) and
(viii) shall be expressed as a dollar amount per $1,000 of original
principal balance of a Certificate or Note, as applicable.
SECTION 5.11. Net Deposits. As an administrative convenience,
unless the Servicer is required to remit collections daily, the Servicer
will be permitted to make the deposit of collections net of distributions,
if any, to be made to the Servicer with respect to the Collection Period.
The Servicer, however, will account to the Trustee, the Indenture Trustee,
the Noteholders and the Certificateholders as if all deposits,
distributions and transfers were made individually.
ARTICLE VI
The Seller
SECTION 6.1. Representations of Seller. The Seller makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution
and delivery of this Agreement and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing
under the laws of the State of Delaware, with the corporate power
and authority to own its properties and to conduct its business as
such properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the corporate
power, authority and legal right to acquire, own and sell the
Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation 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 shall require such qualifications.
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(c) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and to carry out
its terms; the Seller has full power and authority to sell and
assign the property to be sold and assigned to and deposited with
the Issuer and has duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution,
delivery and performance of this Agreement have been, and the
execution, delivery and performance of each Second-Tier Subsequent
Transfer Assignment have been or will be on or before the related
Subsequent Transfer Date, duly authorized by the Seller by all
necessary corporate action.
(d) Binding Obligation. This Agreement constitutes, and
each Second-Tier Subsequent Transfer Assignment when executed and
delivered by the Seller will constitute, a legal, valid and
binding obligation of the Seller enforceable in accordance with
their terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
hereof do 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 certificate of incorporation
or by-laws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it shall be
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 Basic Documents); or
violate any law or, to the best of the Seller's knowledge, any
order, rule or regulation applicable to the Seller of any court or
of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Seller or its properties.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the Seller's best knowledge,
threatened, before any court, regulatory body, administrative
agency or other governmental instrumentality having jurisdiction
over the Seller or its properties: (i) asserting the invalidity of
this Agreement, the Indenture or any of the other Basic Documents,
the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of
any of the transactions contemplated by this Agreement, the
Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to
materially and adversely affect the performance by the Seller of
its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the
Notes or the Certificates or (iv) that might adversely
24
affect the Federal or state income tax attributes of the Notes or
the Certificates.
SECTION 6.2. Corporate Existence. (a) During the term of this
Agreement, the Seller will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the jurisdiction
of its incorporation and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Basic Documents and each other instrument or agreement necessary or
appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall observe
the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain corporate records and books
of account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement and
similar arrangements relating to other securitizations, the Seller
shall not commingle its assets and funds with those of its
Affiliates;
(iii) the Seller shall hold such appropriate meetings or
obtain such appropriate consents of its Board of Directors as are
necessary to authorize all the Seller's corporate actions required
by law to be authorized by the Board of Directors, shall keep
minutes of such meetings and of meetings of its stockholder(s) and
observe all other customary corporate formalities (and any
successor Seller not a corporation shall observe similar
procedures in accordance with its governing documents and
applicable law);
(iv) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between the Seller and
its Affiliates will be conducted on an arm's-length basis.
SECTION 6.3. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement.
25
(a) The Seller shall indemnify, defend and hold harmless
the Issuer, the Trustee and the Indenture Trustee (and their
officers, directors, employees and agents) from and against any
taxes that may at any time be asserted against any of them with
respect to the sale of the Receivables to the Issuer or the
issuance and original sale of the Certificates and the Notes,
including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, in the case of
the Issuer, not including any taxes asserted with respect to
ownership of the Receivables or Federal or other income taxes
arising out of the transactions contemplated by this Agreement)
and costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless
the Issuer, the Trustee and the Indenture Trustee (and their
officers, directors, employees and agents) from and against any
loss, liability or expense incurred by reason of: (i) the Seller's
willful misfeasance, bad faith or negligence in the performance of
its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and
(ii) the Seller's or the Issuer's violation of Federal or State
securities laws in connection with the offering and sale of the
Notes and the Certificates.
Indemnification under this Section shall survive the resignation
or removal of the Trustee or the Indenture Trustee or the termination of
this Agreement and the Indenture and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Seller shall have
made any indemnity payments pursuant to this Section and the Person to or
on behalf of whom such payments are made thereafter shall collect any of
such amounts from others, such Person shall promptly repay such amounts to
the Seller, without interest.
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person: (a) into which the Seller may be merged
or consolidated, (b) that may result from any merger or consolidation to
which the Seller shall be a party or (c) that may succeed to the properties
and assets of the Seller substantially as a whole, which Person (in any of
the foregoing cases) executes an agreement of assumption to perform every
obligation of the Seller under this Agreement (or is deemed by law to have
assumed such obligations), shall be the successor to the Seller hereunder
without the execution or filing of any document or any further act by any
of the parties to this Agreement; provided, however, that: (i) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 3.1 shall have been breached and no Servicer Default,
and no event that, after notice or lapse of time, or both, would become a
Servicer Default shall have occurred and be continuing, (ii) the Seller
shall have delivered to the Trustee and the Indenture Trustee an
26
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with,
(iii) the Rating Agency Condition shall have been satisfied with respect to
such transaction and (iv) the Seller shall have delivered to the Trustee
and the Indenture Trustee an Opinion of Counsel either: (A) stating that,
in the opinion of such counsel, all financing statements, continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee and
Indenture Trustee, respectively, in the Receivables and reciting the
details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement of assumption and compliance with clauses (i),
(ii), (iii) and (iv) shall be conditions to the consummation of the
transactions referred to in clauses (a), (b) or (c).
SECTION 6.5. Limitation on Liability of Seller and Others. The
Seller and any director, officer, 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 hereunder. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve
it in any expense or liability.
SECTION 6.6. Seller May Own Certificates or Notes. The Seller and
any Affiliate thereof may in its individual or any other capacity become
the owner or pledgee of Certificates or the Notes with the same rights as
it would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any other Basic Document.
Notwithstanding the foregoing, the Seller will not sell the
Certificates except to an entity (a) that has provided an opinion of
counsel to the effect that such sale will not cause the Trust to be treated
as a "publicly traded partnership" under the Code and (b) that either (i)
is not an Affiliate of the Seller or (ii) is an Affiliate of the Seller
that (A) is a subsidiary of Credit, the Certificate of Incorporation of
which contains restrictions substantially similar to the restrictions
contained in the Certificate of Incorporation of the Seller and (B) has
provided an opinion of counsel regarding substantive consolidation of such
Affiliate with Credit in the event of a bankruptcy filing by Credit which
is substantially similar to the opinion of counsel provided by Seller on
the Closing Date, and which may be subject to the same assumptions and
qualifications as that opinion.
27
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution
and delivery of the Agreement and as of the Closing Date, in the case of
the Initial Receivables, and as of the applicable Subsequent Transfer Date,
in the case of the Subsequent Receivables, and shall survive the sale of
the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing
under the laws of the state of its incorporation, with the
corporate power and authority to own its properties and to conduct
its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times,
and has, the power, authority and legal right to acquire, own,
sell and service the Receivables and to hold the Receivable Files
as custodian.
(b) Due Qualification. The Servicer is duly qualified to
do business as a foreign corporation 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 the servicing of the
Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer has the corporate
power and authority to execute and deliver this Agreement and to
carry out its terms; and the execution, delivery and performance
of this Agreement have been duly authorized by the Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer enforceable
against the Servicer in accordance with its terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
hereof 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 articles of incorporation or
by-laws of the Servicer, or any indenture, agreement or other
instrument to which the Servicer is a
28
party or by which it shall be 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 this Agreement); or violate any law or, to the best of the
Servicer's knowledge, any order, rule or regulation applicable to
the Servicer of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties.
(f) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative
agency or other governmental instrumentality having jurisdiction
over the Servicer or its properties: (i) asserting the invalidity
of this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent
the issuance of the Notes or the Certificates or the consummation
of any of the transactions contemplated by this Agreement, the
Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to
materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the
Notes or the Certificates or (iv) relating to the Servicer and
that might adversely affect the Federal or state income tax
attributes of the Notes or the Certificates.
(g) No Insolvent Obligors. As of the Initial Cutoff Date
or, in the case of the Subsequent Receivables, as of the related
Subsequent Cutoff Date, no Obligor is shown on the Receivable
Files as the subject of a bankruptcy proceeding.
SECTION 7.2. Indemnities of Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(a) The Servicer shall defend, indemnify and hold
harmless the Issuer, the Trustee, the Indenture Trustee, the
Noteholders, the Certificateholders and the Seller (and any of
their officers, directors, employees and agents) from and against
any and all costs, expenses, losses, damages, claims and
liabilities, arising out of or resulting from:
(i) the use, ownership or operation by the Servicer
or any Affiliate thereof of any of the Financed Equipment;
(ii) any taxes that may at any time be asserted
against any such Person with respect to the transactions
contemplated herein,
29
including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes
(but, in the case of the Issuer, not including any taxes
asserted with respect to, and as of the date of, the sale
of the Receivables to the Issuer or the issuance and
original sale of the Certificates, the Notes, or asserted
with respect to ownership of the Receivables, or Federal
or other income taxes arising out of distributions on the
Certificates or the Notes) and costs and expenses in
defending against the same; and
(iii) the negligence, willful misfeasance or bad
faith of the Servicer in the performance of its duties
under this Agreement or by reason of reckless disregard
of its obligations and duties under this Agreement.
(b) The Servicer shall indemnify, defend and hold
harmless the Trustee and the Indenture Trustee (and their
respective officers, directors, employees and agents) from and
against all costs, expenses, losses, claims, damages and
liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein and, in
the case of the Trustee, in the Trust Agreement contained, and, in
the case of the Indenture Trustee, in the Indenture contained,
except to the extent that such cost, expense, loss, claim, damage
or liability:
(i) shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of
the Trustee or the Indenture Trustee as applicable; or
(ii) shall arise from the breach by the Trustee
of any of its representations or warranties set forth in
Section 7.3 of the Trust Agreement.
(c) The Servicer shall pay any and all taxes levied or
assessed upon all or any part of the Trust Estate.
(d) The Servicer shall pay the Indenture Trustee and the
Trustee from time to time reasonable compensation for all services
rendered by the Indenture Trustee under the Indenture or by the
Trustee under the Trust Agreement (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust).
(e) The Servicer shall, except as otherwise expressly
provided in the Indenture or the Trust Agreement, reimburse either
the Indenture Trustee or the Trustee, respectively, upon its
request for all reasonable
30
expenses, disbursements and advances incurred or made in
accordance with the Indenture or the Trust Agreement,
respectively, (including the reasonable compensation, expenses and
disbursements of its agents and either in-house counsel or outside
counsel, but not both), except any such expense, disbursement or
advance as may be attributable to the Indenture Trustee's or the
Trustee's, respectively negligence, bad faith or willful
misfeasance.
For purposes of this Section, in the event of the termination of
the rights and obligations of the Servicer pursuant to Section 8.1, or a
resignation by the Servicer pursuant to this Agreement, the Servicer shall
be deemed to be the Servicer pending appointment of a successor Servicer
pursuant to Section 8.2.
Indemnification under this Section shall survive the resignation
or removal of the Trustee or the Indenture Trustee or the termination of
this Agreement, the Trust Agreement and the Indenture and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay
such amounts to the Servicer, without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person: (a) into which the Servicer may be
merged or consolidated, (b) that may result from any merger or
consolidation to which the Servicer shall be a party, or (c) that may
succeed to the properties and assets of the Servicer substantially as a
whole, which Person (in any of the foregoing circumstances) executes an
agreement of assumption to perform every obligation of the Servicer
hereunder (or is deemed by law to have assumed such obligations), shall be
the successor to the Servicer under this Agreement without further act on
the part of any of the parties to this Agreement; provided, however, that:
(i) immediately after giving effect to such transaction, no Servicer
Default, and no event that, after notice or lapse of time, or both, would
become a Servicer Default shall have occurred and be continuing, (ii) the
Servicer shall have delivered to the Trustee and Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with,
(iii) the Rating Agencies shall have received at least ten days' prior
written notice of such transaction and (iv) the Servicer shall have
delivered to the Trustee and the Indenture Trustee an Opinion of Counsel
either: (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments thereto have been
executed and filed that are necessary fully to preserve and protect the
31
interest of the Trustee and the Indenture Trustee, respectively, in the
Receivables and reciting the details of such filings, or (B) stating that,
in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interests. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii) and (iv) shall be conditions to
the consummation of the transactions referred to in clauses (a), (b) or (c).
SECTION 7.4. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement 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 negligence in the performance of its
duties or by reason of reckless disregard of obligations and duties under
this Agreement. The Servicer and any director, officer, 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 hereunder.
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action
that shall not be incidental to its duties to service the Receivables 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, the Basic Documents and the rights and duties of
the parties to this Agreement, the other Basic Documents and the interests
of the Certificateholders under this Agreement and the Noteholders under
the Indenture.
SECTION 7.5. Credit Not to Resign as Servicer. Subject to Section
7.3, Credit shall not resign from the obligations and duties imposed on it
as Servicer under this Agreement except upon determination that the
performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination shall be
communicated to the Trustee and the Indenture Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee and the Indenture Trustee concurrently with or
promptly after such notice. No such resignation shall become effective
until the Indenture Trustee or a successor Servicer shall have assumed the
responsibilities and obligations of Credit in accordance with Section 8.2.
32
SECTION 7.6. Servicer to Act as Administrator. In the event of the
resignation or removal of the Administrator and the failure of a successor
Administrator to have been appointed and to have accepted such appointment
as successor Administrator, the Servicer shall become the successor
Administrator and shall be bound by the terms of the Administration
Agreement.
ARTICLE VIII
Default
SECTION 8.1. Servicer Default. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts or the
Certificate Distribution Account any required payment or to direct
the Indenture Trustee or the Trustee to make any required
distributions therefrom, which failure continues unremedied for
three Business Days after written notice of such failure is
received by the Servicer from the Trustee or the Indenture Trustee
or after discovery of such failure by an officer of the Servicer;
(b) any failure by the Servicer or the Seller, as the
case may be, duly to observe or to perform in any material respect
any other covenants or agreements (other than as set forth in
clause (a)) of the Servicer or the Seller (as the case may be) set
forth in this Agreement or any other Basic Document, which failure
shall: (i) materially and adversely affect the rights of
Certificateholders or Noteholders and (ii) continue unremedied for
a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given:
(A) to the Servicer or the Seller (as the case may be) by the
Trustee or the Indenture Trustee or (B) to the Servicer or the
Seller (as the case may be) and to the Trustee and the Indenture
Trustee, by the Noteholders or Certificateholders, as applicable,
evidencing not less than 25% of the Outstanding Amount of the
Notes or 25% of the Certificate Balance; or
(c) an Insolvency Event occurs with respect to the Seller
or the Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee, or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Servicer (and to the Indenture Trustee
and the Trustee if given by the Noteholders), may terminate all the rights
33
and obligations (other than the obligations set forth in Section 7.2) of
the Servicer under this Agreement. 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 Notes, the Certificates, the
Receivables or otherwise, shall, without further action, pass to and be
vested in the Indenture Trustee or such successor Servicer as may be
appointed under Section 8.2; and, without limitation, the Indenture Trustee
and the Trustee are hereby authorized and empowered to execute and deliver,
for the benefit of the predecessor 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 Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Indenture Trustee and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this
Agreement, including the transfer to the successor Servicer for
administration by it of: (i) all cash amounts that shall at the time be
held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to a Receivable and (ii) all Receivable Files.
All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Receivable Files to the successor Servicer
and amending this Agreement to reflect its succession as Servicer shall be
paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. Upon receipt of notice of the
occurrence of a Servicer Default, the Trustee shall give notice thereof to
the Rating Agencies.
SECTION 8.2. Appointment of Successor Servicer. (a) Upon the
Servicer's receipt of notice of termination, pursuant to Section 8.1, or
the Servicer's resignation in accordance with this Agreement, the
predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of: (x) the date 45 days from the delivery to
the Trustee and the Indenture Trustee of written notice of such resignation
(or written confirmation of such notice) in accordance with this Agreement
and (y) the date upon which the predecessor Servicer shall become unable to
act as Servicer, as specified in the notice of resignation and accompanying
Opinion of Counsel. In the event of the Servicer's termination hereunder,
the Issuer shall appoint a successor Servicer acceptable to the Indenture
Trustee, and the successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Indenture Trustee. In the
event that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section, the Indenture Trustee without further action shall automatically
be appointed the successor Servicer and shall be entitled to the Servicing
34
Fee. Notwithstanding the above, the Indenture Trustee shall, if it shall be
unable so to act, appoint or petition a court of competent jurisdiction to
appoint any established institution, having a net worth of not less than
$50,000,000 and whose regular business shall include the servicing of
receivables, as the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the
Indenture Trustee acting as successor Servicer) shall be the successor in
all respects to the predecessor Servicer (except with respect to
responsibilities and obligations of the predecessor Servicer set forth in
Section 7.2) and shall be subject to all the responsibilities, duties and
liabilities arising thereafter relating thereto placed on the predecessor
Servicer and shall be entitled to the Servicing Fee and all the rights
granted to the predecessor Servicer by this Agreement. Any successor
Servicer shall from time to time provide to Credit such information as
Credit shall request with respect to the Receivables and collections
thereon.
(c) Subject to the last sentence of clause (a), the Servicer may
not resign unless it is prohibited from serving as such by law as evidenced
by an Opinion of Counsel to such effect delivered to the Indenture Trustee
and the Trustee.
SECTION 8.3. Notification to Noteholders and Certificateholders.
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to this Article VIII, the Trustee shall give prompt written notice
thereof to the Certificateholders and the Indenture Trustee shall give
prompt written notice thereof to the Noteholders and the Rating Agencies.
SECTION 8.4. Waiver of Past Defaults. The Noteholders of Notes
evidencing not less than a majority of the Note Balance (or the Holders of
Certificates evidencing not less than a majority of the Certificate
Balance, in the case of any default that does not adversely affect the
Indenture Trustee or the Noteholders) may, on behalf of all the Noteholders
and Certificateholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the
Trust 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 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 thereto.
35
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables. (a) As of the
first day of any Collection Period immediately preceding a Payment Date as
of which the Pool Balance is 10% or less of the Initial Pool Balance, the
Servicer shall have the option to purchase all of the Trust Estate, other
than the Trust Accounts. To exercise such option, the Servicer shall
deposit, pursuant to Section 5.4, in the Collection Account an amount equal
to the aggregate Purchase Amount for the Receivables plus the appraised
value of any such other property held by the Trust, such value to be
determined by an appraiser mutually agreed upon by the Servicer, the
Trustee and the Indenture Trustee, and shall succeed to all interests in,
to and under the Trust Estate, other than the Trust Accounts.
(b) Upon any sale of the assets of the Trust pursuant to Section
9.2 of the Trust Agreement, the Servicer shall instruct the Indenture
Trustee to deposit the proceeds from such sale after all payments and
reserves therefrom have been made (the "Insolvency Proceeds") in the
Collection Account. On the Payment Date on, or, if such proceeds are not so
deposited on a Payment Date, on the first Payment Date following the date
on which the Insolvency Proceeds are deposited in the Collection Account,
the Servicer shall instruct the Indenture Trustee to make the following
deposits (after the application on such Payment Date of the Total
Distribution Amount and funds on deposit in the Spread Account pursuant to
Sections 5.5 and 5.6) from the Insolvency Proceeds and any funds remaining
on deposit in the Spread Account (including the proceeds of any sale of
investments therein as described in the following sentence):
(i) first, to the Note Distribution Account, any portion
of the Class A Noteholders' Interest Distributable Amount and the
Outstanding Amount of the Class A Notes (after giving effect to
the reduction resulting from the deposits made in the Note
Distribution Account on such Payment Date and on prior Payment
Dates) not otherwise deposited into the Note
Distribution Account on such Payment Date;
(ii) second, to the Note Distribution Account, any
portion of the Class B Noteholders' Interest Distributable Amount
and the Outstanding Amount of the Class B Notes (after giving
effect to the reduction resulting from the deposits made in the
Note Distribution Account on such Payment Date and on prior
Payment Dates) not otherwise deposited into the Note
Distribution Account on such Payment Date;
(iii) third, to the Certificate Distribution Account, any
portion of the Certificateholders' Interest Distributable Amount
36
not otherwise deposited into the Certificate Distribution Account on
such Payment Date; and
(iv) fourth, to the Certificate Distribution Account, the
Certificate Balance (after giving effect to the reduction
resulting from the deposits made in the Certificate Distribution
Account on such Payment Date).
Any investments on deposit in the Spread Account that will not mature on or
before such Payment Date shall be sold by the Indenture Trustee at such
time as will result in the Indenture Trustee receiving the proceeds from
such sale not later than the Transfer Date preceding such Payment Date. Any
Insolvency Proceeds remaining after the deposits described above shall be
paid to the Seller.
(c) As described in Article IX of the Trust Agreement, notice of
any termination of the Trust shall be given by the Servicer to the Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
and the Trustee will succeed to the rights of, and assume the obligations
of, the Indenture Trustee pursuant to this Agreement.
ARTICLE X
Miscellaneous Provisions
SECTION 10.1. Amendment. The Agreement may be amended from time to
time by a written amendment duly executed and delivered by the Seller, the
Servicer and the Issuer, with the written consent of the Indenture Trustee,
but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions in this
Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Trustee and the
Indenture Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
The Specified Spread Account Balance may be reduced or the
definition thereof otherwise modified without the consent of any of the
Noteholders or the Certificateholders if the Rating Agency Condition is
satisfied.
37
This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the written consent of the
Indenture Trustee, but without the consent of any of the Noteholders or the
Certificateholders, to: (x) replace the Spread Account with another form of
credit enhancement as long as such substitution will not result in a
reduction or withdrawal of the rating of any Class of the Notes or the
Certificates or (y) add credit enhancement for the benefit of any Class of
the Notes or the Certificates.
This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the written consent of (a) the
Indenture Trustee, (b) Noteholders holding Notes evidencing not less than a
majority of the Note Balance, and (c) the Holders of Certificates
evidencing not less than a majority of the Certificate Balance, for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall: (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made
for the benefit of the Noteholders or the Certificateholders or (b) reduce
the aforesaid percentage of the Notes and the Certificates that are
required to consent to any such amendment, without the consent of the
holders of all the outstanding Notes and Certificates.
Promptly after the execution of any such amendment or consent (or,
in the case of the Rating Agencies, 10 days prior thereto), the Trustee
shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
the Noteholders pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Trustee and the Indenture Trustee shall be entitled to receive and rely
upon: (i) an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all
conditions precedent to such execution and delivery by the Trustee and the
Indenture Trustee have been satisfied and (ii) the Opinion of Counsel
referred to in Section 10.2(i)(1). The Trustee and the Indenture Trustee
may, but shall not be obligated to, enter into any such amendment that
affects the Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
38
SECTION 10.2. Protection of Title to Trust. (a) The Seller shall
execute and file such financing statements, and cause to be executed and
filed such continuation statements, all in such manner and in such places
as may be required by applicable law fully to preserve, maintain and
protect the right, title and interest of the Issuer and the interests of
the Indenture Trustee in the Receivables, the other property sold hereunder
and in the proceeds thereof. The Seller shall deliver (or cause to be
delivered) to the Trustee and the Indenture Trustee file- stamped copies
of, or filing receipts for, any document filed as provided above as soon as
available following such filing. The Issuer and the Indenture Trustee shall
cooperate fully with the Seller in connection with the obligations set
forth above and will execute any and all documents reasonably required to
fulfill the intent of this paragraph.
(b) 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) seriously misleading within the applicable provisions of
the UCC, unless it shall have given the Trustee and the Indenture Trustee
at least five days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements
or continuation statements.
(c) Each of the Seller and the Servicer shall have an obligation
to give the Trustee and the Indenture Trustee 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 and shall promptly
file any such amendment. The Servicer shall at all times maintain each
office from which it shall service Receivables, and its principal executive
office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit: (i) the reader
thereof to know at any time the status of such Receivable, 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 Receivable and the amounts from time to time deposited in the
Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer and
the Indenture Trustee in such Receivable and that such Receivable is owned
by the Issuer and has been pledged to ▇▇▇▇▇▇, as Indenture Trustee.
39
Indication of the Issuer's and the Indenture Trustee's interest in a
Receivable may be deleted from or modified on the Servicer's computer
systems when, and only when, the related Receivable shall have been paid in
full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
equipment receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender
or other transferee computer tapes, records or printouts (including any
restored from backup archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable
has been sold and is owned by the Issuer and has been pledged to the
Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents
at any time during normal business hours to inspect, audit and make copies
of and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables
and to each of the Servicer's Certificates furnished before such request
indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel
either: (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and
protect the interest of the Trustee and the Indenture Trustee in
the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such
interest; and
(2) within 90 days after the beginning of each calendar
year beginning with the first calendar year beginning more than
three months after the Initial Cutoff Date, an Opinion of Counsel,
dated as of a date during such 90-day period, either: (A) stating
that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the
Trustee and the Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of
40
Counsel in which such details are given, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) shall
specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the Commission
pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the
time periods specified in such sections.
SECTION 10.3. Notices. All demands, notices, directions,
instructions and communications upon or to the Seller, the Servicer, the
Issuer, the Trustee, the Indenture Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been
duly given upon receipt: (a) in the case of the Seller, to Case Receivables
II Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of: Treasurer
(telephone (▇▇▇) ▇▇▇-▇▇▇▇ and facsimile (▇▇▇) ▇▇▇-▇▇▇▇), (b) in the case of
the Servicer, to Case Credit Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer (telephone (▇▇▇) ▇▇▇-▇▇▇▇ and
facsimile (▇▇▇) ▇▇▇-▇▇▇▇), (c) in the case of the Issuer or the Trustee, at
its Corporate Trust Office, (d) in the case of the Indenture Trustee, at
its Corporate Trust Office, (e) in the case of Moody's, to ▇▇▇▇▇'▇
Investors Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and (f) in the case of Standard & Poor's, to Standard
& Poor's Ratings Services, a division of ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇
▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Asset Backed
Surveillance Department; or, as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
SECTION 10.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.4 and 7.3 and as
provided in the provisions of this Agreement concerning the resignation of
the Servicer, this Agreement may not be assigned by the Seller or the
Servicer.
SECTION 10.5. Limitations on Rights of Others. The provisions of
this Agreement are solely for the benefit of the Seller, the Servicer, the
Issuer, the Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
41
SECTION 10.6. Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 10.7. 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 10.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.9. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
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 of all right, title and
interest of the Issuer in, to and under the Receivables and/or the
assignment of any or all of the Issuer's rights and obligations hereunder
to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenants. (a) Notwithstanding any
prior termination of this Agreement, the Servicer and the Seller shall not,
prior to the date that is one year and one day after the termination of
this Agreement, with respect to the Issuer, acquiesce, petition or
otherwise invoke or cause the Issuer to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Issuer under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Issuer. The foregoing shall not limit the right of
the Servicer and the Seller to file any claim in or otherwise take any
action with respect to any such insolvency proceeding that was instituted
against the Issuer by any Person other than the Servicer or the Seller.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day after
42
the termination of this Agreement, with respect to the Seller, acquiesce,
petition or otherwise invoke or cause the Seller to invoke the process of
any court or governmental authority for the purpose of commencing or
sustaining a case against the Seller 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
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Seller. The foregoing shall not limit the
right of the Servicer to file any claim in or otherwise take any action
with respect to any such insolvency proceeding that was instituted against
the Seller by any Person other than the Servicer.
SECTION 10.12. Limitation of Liability of Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by The Bank of New York, not in its
individual capacity but solely in its capacity as Trustee of the Issuer,
and in no event shall The Bank of New York, in its individual capacity or,
except as expressly provided in the Trust Agreement, any beneficial owner
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.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by ▇▇▇▇▇▇ Trust and Savings Bank, not in
its individual capacity but solely as Indenture Trustee, and in no event
shall ▇▇▇▇▇▇ Trust and Savings Bank 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.
43
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.
CASE EQUIPMENT RECEIVABLES TRUST
1998-B
By: THE BANK OF NEW YORK,
not in its individual capacity but
solely as Trustee of the Trust
By:
Name:
Title:
CASE RECEIVABLES II INC.,
as Seller
By:
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Treasurer
CASE CREDIT CORPORATION,
as Servicer
By:
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Treasurer
Acknowledged and Accepted:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Indenture Trustee
By:
Name:
Title:
44
SCHEDULE A
to Sale and Servicing Agreement
LOCATION OF RECEIVABLES FILES
Documents relating to the Receivables are located at one of the
following Case Corporation locations:
1. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
2. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
3. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
4. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
5. ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
6. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
7. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
EXHIBIT A
to Sale and Servicing Agreement
FORM OF NOTEHOLDER'S
STATEMENT PURSUANT TO SECTION 5.10(A)
Payment Date: ______________________
(i) Amount of principal being paid on Notes:
A-1 Notes: ______________ ($_____ per $1,000 original principal amount)
A-2 Notes: ______________ ($_____ per $1,000 original principal amount)
A-3 Notes: ______________ ($_____ per $1,000 original principal amount)
A-4 Notes: ______________ ($_____ per $1,000 original principal amount)
Class B Notes: _____________ ($_____ per $1,000 original principal amount)
(ii) Amount of interest being paid on Notes:
A-1 Notes: ______________ ($_____ per $1,000 original principal amount)
A-2 Notes: ______________ ($_____ per $1,000 original principal amount)
A-3 Notes: ______________ ($_____ per $1,000 original principal amount)
A-4 Notes: ______________ ($_____ per $1,000 original principal amount)
Class B Notes: _____________ ($_____ per $1,000 original principal amount)
(iii) Pool Balance at end of the preceding Collection Period: _____
(iv) After giving effect to distributions on this Payment Date:
(a) (1) Outstanding Amount of A-1 Notes: _______
(2) Outstanding Amount of A-2 Notes: _______
(3) Outstanding Amount of A-3 Notes: _______
(4) Outstanding Amount of A-4 Notes: _______
(5) Outstanding Amount of Class B Notes: _______
(6) A-1 Note Pool Factor: _____
(7) A-2 Note Pool Factor: _____
(8) A-3 Note Pool Factor: _____
(9) A-4 Note Pool Factor: _____
(10) Class B Note Pool Factor: _____
46
(b) (1) Certificate Balance: __________
(2) Certificate Pool Factor: __________
(c) Deferred Purchase Price: _____
(v) Amount of Servicing Fee: ___ ($_____ per $1,000 original principal amount)
(vi) Amount of Administration Fee: ___ ($_____ per $1,000 original principal amount)
(vii) Aggregate Amount of Realized Losses for the Collection Period: ________
(viii) Aggregate Purchase Amounts for the Collection Period: __________
(ix) Balance of Spread Account: __________
(x) Pre-funded Amount: __________
(xi) Balance of Yield Supplement Account:__________
(xii) Balance of Negative Carry Account: __________
47
EXHIBIT B
to Sale and Servicing Agreement
FORM OF CERTIFICATEHOLDER'S
STATEMENT PURSUANT TO SECTION 5.10(A)
Payment Date: ______________________
(i) Amount of principal being paid or distributed:
(a) (1) A-1 Notes: __________
(2) A-2 Notes: __________
(3) A-3 Notes: __________
(4) A-4 Notes: __________
(5) Class B Notes: __________
(b) Certificates: ______ ($_____ per $1,000 original principal amount)
(c) Total: __________
(ii) Amount of interest being paid or distributed:
(a) (1) A-1 Notes: __________
(2) A-2 Notes: __________
(3) A-3 Notes: __________
(4) A-4 Notes: __________
(5) Class B Notes: __________
(b) Certificates: _______ ($_____ per $1,000 original principal amount)
(c) Total: __________
(iii) Pool Balance at end of the preceding Collection Period: _____
(iv) After giving effect to distributions on this Payment Date:
(a) (1) Outstanding Amount of A-1 Notes: _______
(2) Outstanding Amount of A-2 Notes: _______
(3) Outstanding Amount of A-3 Notes: _______
(4) Outstanding Amount of A-4 Notes: _______
(5) Outstanding Amount of Class B Notes: _______
(6) A-1 Note Pool Factor: _____
(7) A-2 Note Pool Factor: _____
(8) A-3 Note Pool Factor: _____
(9) A-4 Note Pool Factor: _____
(10) Class B Note Pool Factor: _____
48
(b) (1) Certificate Balance: __________
(2) Certificate Pool Factor: __________
(c) Deferred Purchase Price:_______
(v) Amount of Servicing Fee: ____ ($_____ per $1,000 original principal
amount)
(vi) Amount of Administration Fee: ____ ($_____ per $1,000 original principal
amount)
(vii) Aggregate amount of Realized Losses for the Collection Period: ________
(viii) Aggregate Purchase Amounts for the Collection Period: __________
(ix) Balance of Spread Account: __________
(x) Pre-Funded Amount:__________
(xi) Balance of Negative Carry Account: __________
49
EXHIBIT C
to Sale and Servicing Agreement
FORM OF SERVICER'S CERTIFICATE
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration - Asset Backed Finance Unit
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Indenture Trust Administration
Case Receivables II Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
▇▇▇▇▇'▇ Investors Service, Inc.
ABS Monitoring Department
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Standard & Poor's Ratings Services,
a division of ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇)
New York, New York 10004
Attention: Asset Backed Surveillance Department
50
Class A-1 Asset-Backed Notes
Class A-2 Asset-Backed Notes
Class A-3 Asset-Backed Notes
Class B Asset-Backed Notes
Certificates
[TO BE CONFORMED LATER]
Determination Date: __-___-__
DISTRIBUTION
(1) Total Distribution Amount $________
(2) Servicing Fee $________
(3) Administration Fee $________
(4) Class A Noteholder's Interest Distributable Amount: $________
o Interest on Class A Notes ($________)
o Class A Noteholder's Interest Carryover Shortfall, if any ($___________)
(5) Class B Noteholders' Interest Distributable Amount $________
o Interest on Class B Notes ($_________)
o Class B Noteholders' Interest Carryover Shortfall ($_______)
(6) A-1 Noteholders' Principal Distributable Amount $________
o A-1 Noteholders' Monthly Principal Distributable Amount ($________)
o A-1 Noteholders' Principal Carryover Shortfall ($________)
(7) A-2 Noteholders' Principal Distributable Amount $________
o A-2 Noteholders' Monthly Principal Distributable Amount ($________)
o A-2 Noteholders' Principal Carryover Shortfall ($________)
(8) A-3 Noteholders' Principal Distributable Amount $________
o A-3 Noteholders' Monthly Principal Distributable Amount ($________)
o A-3 Noteholders' Principal Carryover Shortfall ($________)
51
(9) A-3 Noteholders' Principal Distributable Amount $________
o A-3 Noteholders' Monthly Principal Distributable Amount ($________)
o A-3 Noteholders' Principal Carryover Shortfall ($________)
(10) Class B Noteholders' Monthly Principal Distributable Amount $________
o Class B Noteholders' Adjusted Principal Distributable Amount ($________)
o Class B Noteholders' Principal Carryover Shortfall ($________)
(11) NOTEHOLDERS' DISTRIBUTABLE AMOUNT (4)+(5)+(6)+(7)+(8)+(9)+(10) $________
(12) Certificateholders' Interest Distributable Amount $________
o Interest on Certificates ($________)
o Certificateholders' Interest Carryover Shortfall ($________)
(13) Certificateholders' Principal Distributable Amount $________
o Principal Distribution Amount remaining after Class A Notes paid
in full ($________) o Certificateholders' Principal Carryover
Shortfall ($________)
(14) CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT (12)+(13) $________
(15) Deposit to Spread Account (1)-((2)+(3)+(11)+(14)) $________
SPREAD ACCOUNT
(16) Spread Account Balance (after deposit from (15)) $________
(17) Specified Spread Account Balance (after all distributions and $________
adjustments): the lesser of:
(a) 2.00% of the Initial Pool Balance; and
(b) the Note Balance.
(18) Spread Account Balance over the Specified Spread Account $________
Balance (16)-(17)
52
(19) Excess in Spread Account distributed to Seller (as permitted $________
in Sections 5.6(b) and (c) of the Sale and Servicing Agreement)
(20) Amount to be withdrawn from the Spread Account and deposited $________
into the Note Distribution Account (as per Sections 5.6(d) and (f) of
the Sale and Servicing Agreement)
(21) Amount to be withdrawn from the Spread Account and deposited $________
into the Certificate Distribution Account (as per Sections 5.6(e) and
(f) of the Sale and Servicing Agreement)
(22) Final Spread Account Balance (16)-((19)+(20)+(21)) $________
MISCELLANEOUS
(23) Pool Balance at the beginning of this Collection Period $________
(24) After giving effect to all distributions on the Payment Date
during this Collection Period:
(a) Outstanding Amount of A-1 Notes $________
A-1 Note Pool Factor (_._______)
(b) Outstanding Amount of A-2 Notes $________ A-2 Note Pool
Factor (_._______)
(c) Outstanding Amount of A-3 Notes $________ A-3 Note Pool
Factor (_._______)
(d) Outstanding Amount of A-4 Notes $________ A-4 Note Pool
Factor (_._______)
(e) Outstanding Amount of Class B Notes
Class B Note Pool Factor (_._______)
(f) Outstanding Amount of Certificates $________
Certificate Pool Factor (_._______)
(25) Aggregate Purchase Amounts for the preceding Collection Period $________
53
EXHIBIT D
to Sale and Servicing Agreement
FORM OF SECOND-TIER ASSIGNMENT
For value received, in accordance with and subject to the Sale and
Servicing Agreement dated as of August 1, 1998 (the "Sale and Servicing
Agreement"), among the undersigned, Case Credit Corporation and Case
Equipment Receivables Trust 1998-B (the "Issuer"), the undersigned does
hereby sell, assign, transfer set over and otherwise convey unto the
Issuer, without recourse, all of its right, title and interest in, to and
under: (a) the Initial Receivables, including all documents constituting
chattel paper included therewith, and all obligations of the Obligors
thereunder, including all moneys paid thereunder on or after the Initial
Cutoff Date, (b) the security interests in the Financed Equipment granted
by Obligors pursuant to the Initial Receivables and any other interest of
the undersigned in such Financed Equipment, (c) any proceeds with respect
to the Initial Receivables from claims on insurance policies covering
Financed Equipment or Obligors, (d) the Liquidity Receivables Purchase
Agreement (only with respect to Contracts included in the Initial
Receivables) and the Purchase Agreement, including the right of the
undersigned to cause Case Credit Corporation to repurchase Receivables from
the undersigned under the circumstances described therein, (e) any proceeds
from recourse to Dealers with respect to the Initial Receivables other than
any interest in the Dealers' reserve accounts maintained with Case Credit
Corporation, (f) any Financed Equipment that shall have secured an Initial
Receivable and that shall have been acquired by or on behalf of the Trust,
(g) all funds on deposit from time to time in the Trust Accounts, including
the Spread Account Initial Deposit, the Yield Supplement Account Initial
Deposit, the Negative Carry Account Initial Deposit and the Pre-Funded
Amount, and in all investments and proceeds thereof (including all income
thereon), and (h) the proceeds of any and all of the foregoing (other than
Recoveries). The foregoing sale does not constitute and is not intended to
result in any assumption by the Issuer of any obligation of the undersigned
to the Obligors, insurers or any other person in connection with the
Initial Receivables, Receivables Files, any insurance policies or any
agreement or instrument relating to any of them.
This Second-Tier Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Sale and Servicing Agreement and is to be governed in all
respects by the Sale and Servicing Agreement. Capitalized terms used herein
and not otherwise defined shall have the meanings assigned to them in the
Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Second-Tier
Assignment to be duly executed as of August 1, 1998.
CASE RECEIVABLES II INC.,
By:
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Treasurer
54
EXHIBIT E
to Sale and Servicing Agreement
FORM OF SECOND-TIER SUBSEQUENT TRANSFER ASSIGNMENT
For value received, in accordance with and subject to the Sale and
Servicing Agreement dated as of August 1, 1998 (the "Sale and Servicing
Agreement"), among Case Equipment Receivables Trust 1998-B, a Delaware
business trust (the "Issuer"), Case Receivables II Inc., a Delaware
corporation (the "Seller"), and Case Credit Corporation, a Delaware
corporation, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse, all of its right, title
and interest in, to and under: (a) the Subsequent Receivables, with an
aggregate Contract Value equal to $________, listed on Schedule A hereto,
including all documents constituting chattel paper included therewith, and
all obligations of the Obligors thereunder including all moneys paid
thereunder on or after the Subsequent Cutoff Date, (b) the security
interests in the Financed Equipment granted by Obligors pursuant to such
Subsequent Receivables and any other interest of the Seller in such
Financed Equipment, (c) any proceeds with respect to such Subsequent
Receivables from claims on insurance policies covering Financed Equipment
or Obligors, (d) the Purchase Agreement, including the right of the Seller
to cause Case Credit Corporation to repurchase Subsequent Receivables from
the Seller under the circumstances described therein, (e) any proceeds from
recourse to Dealers with respect to such Subsequent Receivables other than
any interest in the Dealers' reserve accounts maintained with Case Credit
Corporation, (f) any Financed Equipment that shall have secured any such
Subsequent Receivables and that shall have been acquired by or on behalf of
the Trust, and (g) the proceeds of any and all of the foregoing (other than
Recoveries). The foregoing sale does not constitute and is not intended to
result in any assumption by the Issuer of any obligation of the Seller to
the Obligors, insurers or any other person in connection with such
Subsequent Receivables, Receivable Files, any insurance policies or any
agreement or instrument relating to any of them.
This Second-Tier Subsequent Transfer Assignment is made pursuant
to and upon the representations, warranties and agreements on the part of
the Seller contained in the Sale and Servicing Agreement (including the
Officers' Certificate of the Seller accompanying this Agreement) and is to
be governed in all respects by the Sale and Servicing Agreement.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Second-Tier
Subsequent Transfer Assignment to be duly executed as of _______________,
199_.
CASE RECEIVABLES II INC.,
By:
Name:
Title:
55
SCHEDULE A
to Second-Tier Subsequent Transfer Assignment
SCHEDULE OF SUBSEQUENT RECEIVABLES
[Attached]
56
ANNEX A
to Second-Tier Subsequent Transfer Assignment
OFFICERS' CERTIFICATE
We, the undersigned officers of Case Receivables II Inc. (the
"Company"), do hereby certify, pursuant to Section 2.2(b)(xv) of the Sale
and Servicing Agreement dated as of August 1, 1998, among the Company, Case
Equipment Receivables Trust 1998-B and Case Credit Corporation (the
"Agreement"), that all of the conditions precedent to the transfer to the
Issuer of the Subsequent Receivables listed on Schedule A to the
Second-Tier Subsequent Transfer Assignment delivered herewith, and the
other property and rights related to such Subsequent Receivables as
described in Section 2.2(a) of the Agreement, have been satisfied on or
prior to the related Subsequent Transfer Date.
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement.
IN WITNESS WHEREOF, the undersigned have caused this certificate
to be duly executed this _____ day of _______, 199_.
By:
Name:
Title:
By:
Name:
Title:
57
EXHIBIT F
to Sale and Servicing Agreement
FORM OF ACCOUNTANTS' LETTER IN CONNECTION
WITH THE SECOND-TIER SUBSEQUENT TRANSFER ASSIGNMENT PURSUANT TO
SECTION 2.2(b)(xiv) OF THE SALE AND SERVICING AGREEMENT
[Letterhead of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇]
___________, 199_
Case Receivables II Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Case Equipment Receivables Trust 1998-B
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, Incorporated
as Representative of the several Underwriters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
This letter is issued at the request of Case Receivables II Inc. (the
"Seller") with respect to the sale of certain retail receivables (the
"Subsequent Receivables") to the Case Equipment Receivables Trust 1998-B
(the "Trust") pursuant to the Sale and Servicing Agreement dated as of
August 1, 1998 (the "Sale and Servicing Agreement") among the Trust, the
Seller and Case Credit Corporation (the "Servicer"). The sale of the
Subsequent Receivables is described in the prospectus dated August 1, 1998
and the prospectus supplement dated _____________, 199__ (together, the
"Prospectus"), which relates to the offering by the Trust of Class A-1
_____% Asset Backed Notes, Class A-2 _____% Asset Backed Notes, Class A-4
Page 2
_________, 199_
_____% Asset-Backed Notes, Class A-3 _____% Asset-Backed Notes and Class B
Asset Backed Notes (collectively, the "Notes") and the _____% Asset Backed
Certificates (the "Certificates"). Capitalized terms used herein and not
otherwise defined have the meaning described in the Prospectus or the Sale
and Servicing Agreement, as applicable. In connection therewith, we
performed or have previously performed certain agreed upon procedures as
specified in the items below:
1. As previously communicated in our letter to the Seller, the Trust,
__________________, the Indenture Trustee and the Trustee dated
August _______, 1998 relating to the sale of certain retail
receivables (the "Initial Receivables") and the offering of the
Notes and the Certificates, we performed several procedures based
on a computer data file (the "Initial File") received from the
Servicer, including the following:
a. We read certain fields on the Initial File to determine
whether the data pertaining to the Initial Receivables
complied with the selection criteria as noted in our
previous letter.
b. Proved the arithmetic accuracy of the Aggregate Contract
Value and the related percentage of Initial Receivables
coded as representing construction equipment and the
Total Aggregate Contract Value of the Initial Receivables
as shown on Schedule B.
c. Proved the arithmetic accuracy of the Weighted Average
Original Term of the Initial Receivables as shown in
Schedule B.
2. On ______________, 199__, we obtained a computer data file (the
"Subsequent File") produced by and represented by the Servicer to
contain the list of the Subsequent Receivables. The Subsequent
File was received directly by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP from the
Servicer. By use of data retrieval software, we have performed the
following with respect to the information contained in the
Subsequent File:
a. We read certain fields on the Subsequent File to
determine whether the data relating to the Subsequent
Receivables complied with selection criteria 1, 2 and 4
as shown on Schedule A. For purposes of selection
criteria 3, as shown on Schedule A, we read certain
fields from the Initial File and Subsequent File to
aggregate the total Contract Value for each account
number for the purpose of determining the Contract Value
for each Obligor. The total Contract Value for each
account number was then compared to the aggregate
Contract Value to determine if the selection criteria
was achieved.
Page 3
_________, 199_
b. Proved the arithmetic accuracy of the Aggregate Contract
Value and the related percentage of the Subsequent
Receivables coded as representing construction equipment
and the Total Aggregate Contract Value of the Subsequent
Receivables as shown on Schedule B.
c. Proved the arithmetic accuracy of the Weighted Average
Original Term of the Subsequent Receivables as shown in
Schedule B.
3. We proved the arithmetic accuracy of the columnar totals for
Aggregate Contract Value of construction equipment and the Total
Aggregate Contract Value as shown on Schedule B.
4. We proved the arithmetic accuracy of the percent of total column
as shown in 1 on Schedule B by dividing the amount in the Total
Aggregate Contract Value of construction equipment column by the
amount in the Total Aggregate Contract Value column. We also
proved the arithmetic accuracy of the Weighted Average Original
Term as shown in 2 on Schedule B by summing the products of Total
Aggregate Contract Value times Weighted Average Original Term for
the Initial Receivables and the Subsequent Receivables and
dividing the resulting sum by the columnar total of the Total
Aggregate Contract Value.
The foregoing procedures do not constitute an audit conducted in accordance
with generally accepted auditing standards, and, therefore, we are unable
to and do not express an opinion on any individual balances or summaries of
selected transactions specifically set forth in this letter. Also, these
procedures would not necessarily reveal matters of significance with
respect to the findings described herein. Accordingly, we make no
representations regarding the sufficiency of the foregoing procedures for
your purposes of for questions of legal interpretation. Had we performed
additional procedures, other matters might have come to our attention that
would have been reported to you. Further, we have addressed ourselves
solely to the foregoing data in the Sale and Servicing Agreement and the
Prospectus and make no representations regarding the adequacy of disclosure
regarding whether any material facts have been omitted.
Page 4
_________, 199_
This letter is solely for the information of the addressees and is not to
be used, circulated, quoted or otherwise referred to for any other purpose
including, but not limited to, the purchase or sale of Notes or
Certificates, nor is it to be referred to in any document. Furthermore, we
undertake no responsibility to update this letter for events and
circumstances occurring after the date of this letter.
Very truly yours,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
Page 5
_________, 199_
SCHEDULE A
to Accountant's Letter
Selection Criteria Results
1. No Subsequent Receivables was more than 90 days past due as of
the applicable Subsequent Cutoff Date.
2. Each Subsequent Receivable has an APR that is equal to or greater
than ___%.
3. Each Subsequent Receivable has a Contract Value as of the
Subsequent Cutoff Date that (when combined with the Contract Value
of any other Receivables with the same or an affiliated Obligor)
does not exceed 1% of the aggregate Contract Value of all
Receivables.
4. Each Subsequent Receivable has a remaining term to maturity (i.e.,
the period from but excluding the applicable Subsequent Cutoff
Date to and including the Receivables' maturity date) of not more
than 72 months.
Page 6
_________, 199_
SCHEDULE B
to Accountant's Letter
1. Percentage of principal balance of the Receivables that represents
construction equipment:
Aggregate
Contract Value Total
of Construction Aggregate Percent of
Equipment Contract Value Total
Initial Receivables $_________ $___________ _____%
Subsequent Receivables $ $ %
========= =========== =====
Total Receivables $ $ %
========= =========== =====
2. Weighted Average Original Term of the Receivables in the Trust.
Weighted
Total Aggregate Average Original
Contract Value Term
Initial Receivables $_________ _____ months
Subsequent Receivables $ months
========= ======
Total Receivables $ months
========= ======
As noted above, the Weighted Average Original Term does not exceed 55.0
months as required by the Sale and Servicing Agreement.