Exhibit 4.3
RECEIVABLES PLEDGE AGREEMENT
by and among
ABFS FINANCE LLC 1999-A,
as Transferor
ABFS RESIDUAL LLC 1999-A,
as Transferor
PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION,
as Depositor
ABFS EQUIPMENT CONTRACT TRUST 1999-A,
as Issuer
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
Dated as of June 1, 1999
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................ 2
SECTION 1.01 Definitions................................................. 2
SECTION 1.02 Other Definitional Provisions............................... 2
ARTICLE II PLEDGE OF CONVEYED ASSETS......................................... 3
SECTION 2.01 Designation; Pledge; Acceptance............................. 3
SECTION 2.02 Custody of Contract Files................................... 4
SECTION 2.03 Terms of the Pledged Notes.................................. 4
SECTION 2.04 Events of Default........................................... 5
SECTION 2.05 Acceleration of Maturity, Rescission and Annulment.......... 7
SECTION 2.06 Remedies.................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES................................... 8
SECTION 3.01 Representations and Warranties of the Transferors........... 8
SECTION 3.02 Representations and Warranties of the Originator with respect
to the Conveyed Assets...................................... 10
SECTION 3.03 Representations and Warranties of the Depositor............. 11
SECTION 3.04 Substitution of Contracts and Equipment by the Originator... 12
ARTICLE IV COVENANTS......................................................... 12
SECTION 4.01 Transferor Covenants........................................ 12
SECTION 4.02 Pledge of Pledged Property...................................16
ARTICLE V CONDITIONS PRECEDENT............................................... 16
SECTION 5.01 Conditions to Issuer's Obligations.......................... 16
SECTION 5.02 Conditions to the Transferors' Obligations.................. 17
ARTICLE VI TERMINATION....................................................... 18
SECTION 6.01 Termination................................................. 18
SECTION 6.02 Effect of Termination....................................... 18
ARTICLE VII MISCELLANEOUS PROVISIONS......................................... 18
SECTION 7.01 Amendment................................................... 18
SECTION 7.02 GOVERNING LAW............................................... 18
SECTION 7.03 Notices..................................................... 19
SECTION 7.04 Severability of Provisions.................................. 19
SECTION 7.05 Assignment.................................................. 19
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SECTION 7.06 Further Assurances.......................................... 20
SECTION 7.07 No Waiver; Cumulative Remedies.............................. 20
SECTION 7.08 Counterparts................................................ 20
SECTION 7.09 Binding Effect: Third-Party Beneficiaries................... 20
SECTION 7.10 Merger and Integration...................................... 20
SECTION 7.11 Headings.................................................... 20
SECTION 7.12 Schedules and Exhibits...................................... 20
SECTION 7.13 No Bankruptcy Petition Against the Transferors, the Manager
or the Trust................................................ 20
Schedule I - List of Initial Contracts
Exhibit A - Form of Subsequent Receivables Pledge Agreement
Exhibit B - Form of Pledged Notes
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This RECEIVABLES PLEDGE AGREEMENT, dated as of June 1, 1999 (this
"Agreement"), by and among ABFS FINANCE LLC 1999-A, a Delaware limited liability
company ("Transferor I"), ABFS RESIDUAL LLC 1999-A, a Delaware limited liability
company ("Transferor II", and, together with Transferor I, the "Transferors"),
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a Delaware corporation (the
"Depositor"), ABFS EQUIPMENT CONTRACT TRUST 1999-A, a Delaware statutory
business trust, as issuer (the "Trust" or the "Issuer"), and THE CHASE MANHATTAN
BANK, a New York banking corporation, as indenture trustee (the "Indenture
Trustee").
WITNESSETH:
WHEREAS, pursuant to a Receivables Sale Agreement, dated as of June 1,
1999 (the "Receivables Sale Agreement"), by and among the Transferors and
American Business Leasing, Inc. (the "Originator"), Transferor I acquired the
Originator's right, title and interest in and to certain Contracts and
Transferor II acquired the Originator's right, title and interest in and to the
ownership interest or security interest of the Originator in each item of
Equipment and any Residual Receipts; and
WHEREAS, the Issuer is a Delaware statutory business trust formed
pursuant to the Trust Agreement, dated as of June 1, 1999 (the "Trust
Agreement"), among the Transferors, the Depositor and First Union Trust Company,
National Association, as owner trustee (the "Owner Trustee"); and
WHEREAS, the Transferors desire to issue the Pledged Notes to the Trust,
and as collateral security therefor, pledge to the Trust, all of their
respective rights and interests in and to such Conveyed Assets, upon the terms
and conditions hereinafter set forth; and
WHEREAS, the Trust intends to pledge all of its right, title and
interest in and to the Pledged Property to The Chase Manhattan Bank, as
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer,
under the Indenture, dated as of June 1, 1999 (the "Indenture"), among the
Issuer, the Originator, as Servicer (the "Servicer"), and The Chase Manhattan
Bank, as indenture trustee (the "Indenture Trustee") and back-up Servicer (the
"Back-up Servicer"); and
WHEREAS, the Transferors desire to pledge to the Trust, all of their
respective rights, and interests in, to and under the Receivables Sale Agreement
and this Agreement; and
WHEREAS, each of the Transferors and the Trust agree that all
representations, warranties, covenants and agreements made by it herein shall be
for the benefit of the Noteholders, the Depositor, the Residual Holders, the
Note Insurer, the Collateral Agent, the Owner Trustee and the Indenture
Trustee.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Whenever used in this Agreement, capitalized
terms used herein but not defined herein shall have the meanings set forth in
Annex A to the Indenture.
SECTION 1.02 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term defined in this Agreement
will have the meaning assigned to such term in this Agreement when used in any
certificate or other document made or delivered pursuant to this Agreement,
unless such term is otherwise defined therein.
(b) Accounting Terms. As used in this Agreement, accounting terms which
are not defined pursuant to Section 1.01 have the respective meanings given to
them under GAAP, as in effect on the date of this Agreement. To the extent that
the definitions of accounting terms in this Agreement are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this Agreement
will control.
(c) "Hereof," etc. The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement; and Article,
Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
(d) Number and Gender. Each defined term used in this Agreement has a
comparable meaning when used in its plural or singular form. Each
gender-specific term used in this Agreement has a comparable meaning whether
used in a masculine, feminine or gender-neutral form.
(e) Including. Whenever the term "including" (whether or not that term
is followed by the phrase "but not limited to" or "without limitation" or words
of similar effect) is used in this Agreement in connection with a listing of
items within a particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or exclusive
listing of, the items within that classification.
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ARTICLE II
PLEDGE OF CONVEYED ASSETS
SECTION 2.01 Designation; Pledge; Acceptance. (a) There is hereby
created two notes to be issued pursuant to this Agreement to be known as the
"ABFS Pledged Notes", Class A (the "Class A Pledged Notes") and Class B (the
"Class B Pledged Notes" and, together with the Class A Pledged Notes, the
"Pledged Notes"). The obligors with respect to the Pledged Notes are ABFS
Finance and ABFS Residual jointly and severally. The Pledged Notes shall be in
the form set forth in Exhibit B hereto.
(b) Subject to the terms and condition of this Agreement, in
consideration of the receipt by the Transferors of $58,806,460.72 and the Class
B Notes, the Depositor, as sponsor of the Trust, hereby directs the Transferors
to pledge, and the Transferors hereby agree to pledge, on the Closing Date, all
of their respective right, and interest in and to (i) the Receivables Sale
Agreement and all Subsequent Receivables Sale Agreements entered into from time
to time pursuant to the terms of the Receivables Sale Agreement and (ii) the
Initial Conveyed Assets and all Substitute Conveyed Assets acquired by the
Transferors from time to time to the Trust (collectively, the "Transferor
Collateral"), to secure the obligations under the Pledged Notes.
(c) Subject to the terms and conditions of this Agreement, the
Transferors may pledge Subsequent Conveyed Assets to the Trust. Each such pledge
of Subsequent Conveyed Assets shall be evidenced by the execution and delivery
by the Transferors, the Depositor, the Issuer and the Indenture Trustee of a
Subsequent Receivables Pledge Agreement in the form of Exhibit A hereto. Each
such pledge shall be effective as of the related Subsequent Funding Date. In
consideration for the pledge of such Subsequent Conveyed Assets, the Trust shall
make an additional advance of funds under the Pledged Notes on the related
Subsequent Funding Date in an amount equal to 95.3% of the Discounted Contract
Principal Balance of the related Subsequent Contracts, such advance of funds to
be allocated as follows: the Class A Accelerated Percentage of such amount to be
allocated to the Class A Pledged Note and the Class B Accelerated Percentage of
such amount to be allocated to the Class B Pledged Note.
(d) It is the intention of the Transferors, which intention is
acknowledged by the Indenture Trustee, that this Agreement shall be deemed to be
a security agreement within the meaning of Article 8 and Article 9 of the UCC,
and the pledge provided for by this Section 2.01 and elsewhere herein shall be
deemed to be a grant by the Transferors to the Trust, of (i) a valid
first-priority perfected security interest in all of the Transferors' rights and
interests in and to the Conveyed Assets, Subsequent Conveyed Assets and
Substitute Conveyed Assets except that (A) such security interest is not granted
with respect to Equipment not owned by the Transferors and (B) with respect to
the Equipment owned by the Transferors, the priority of such security interest
is limited to the extent that UCC financing statements have been filed in
accordance with the Filing Requirements, and (ii) a valid assignment of the
security interests of the Transferors in the Equipment not owned by the
Transferors. The Transferors hereby grant and assign such interest, in each case
to the Trust, to secure the obligations of the
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Transferors to the Indenture Trustee and the Trust under this Agreement and
the Pledged Notes. That portion of the Conveyed Assets owned by each
Transferor shall secure the obligations of the Transferor under both
of the Pledged Notes.
(e) In connection with each pledge of Conveyed Assets, each Transferor
agrees to record and file, at its own expense, financing statements (and
thereafter will file continuation statements with respect to such financing
statements) with respect to such Conveyed Assets, meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect and to maintain the perfection of, (x) the transfer, conveyance and
contribution of such Conveyed Assets (subject to the Filing Requirements with
respect to the Equipment) from the Originator to the Transferors, (y) the pledge
of such Conveyed Assets (subject to the Filing Requirements with respect to the
Equipment) from the Transferors to the Trust, and (z) the pledge of the related
Pledged Property from the Trust to the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, and to deliver a file-stamped copy of such
financing statements or other evidence of such filings to the Issuer (and copies
to the Indenture Trustee and the Note Insurer) on or prior to each Conveyance
Date.
(f) The Transferors and the Originator represent that as of the Closing
Date, UCC-1 financing statements will have been filed against the Obligor and in
favor of the related Source or the Originator in respect of each item of
Equipment having an Original Equipment Cost greater than $25,000. In addition,
the Transferors represent that as of the Closing Date or immediately thereafter,
UCC 1 financing statements naming (i) the Originator as "debtor", Transferor II,
as "secured party" and the Indenture Trustee, as "assignee", and (ii) Transferor
II, as "debtor" and the Indenture Trustee, as "secured party", will be filed
with respect to the Conveyed Assets with the Secretary of State of each of the
50 States, other than Georgia, Louisiana, Maryland, Oklahoma and Tennessee.
(g) The Trust acknowledges its acceptance, simultaneously with the
execution and delivery of this Agreement, of the pledge of (i) the Transferor
Collateral and (ii) the Initial Conveyed Assets and all Subsequent Conveyed
Assets and the assignment of the Transferors' security interest in all right,
title and interest in and to the Conveyed Assets as collateral security for the
Pledged Notes and declares that the Indenture Trustee holds and will continue to
hold the pledge of the foregoing and the assignment of the Transferors' security
interest in such right, title and interest in and to the Conveyed Assets for the
use and purpose and subject to the terms and provisions of this Agreement.
SECTION 2.02 Custody of Contract Files. In connection with the pledge of
the Contracts to the Trust, pursuant to this Agreement, the Originator will
physically convey the Contract Files and the original executed counterparts of
each Contract to the Collateral Agent, on behalf of the Indenture Trustee, as
bailee on behalf of the Noteholders and the Note Insurer, in accordance with the
terms of the Indenture.
SECTION 2.03 Terms of the Pledged Notes. (a) The Class A Pledged Note
represents the right to receive repayment of an amount equal to (x) Class A
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Accelerated Percentage of the Aggregate Discounted Contract Principal Balance of
the Contracts then pledged to the Indenture Trustee, on behalf of the Trust, as
collateral security for the Pledged Notes, (y) interest on such amount at the
sum of (i) Weighted Average Class A Note Rate, (ii) the Servicer Fee Rate, (iii)
the Back-up Servicer Fee Rate, (iv) the Indenture Trustee Fee Rate and (v) the
Premium Rate times a fraction, the numerator of which is the Class A Percentage,
and the denominator of which is the Class A Accelerated Percentage (such sum of
(i) through (v), the "Class A Pledged Note Rate") and (z) until the Class A Note
Principal Balance has been reduced to zero, 100% of the sum of (A) any Residual
Receipts (up to the Booked Residual Value of the related Contract),
Reacquisition Amounts and Prepayment Amounts actually collected during the
preceding Collection Period and (B) any Defaulted Contract Amounts relating to
such Collection Period. On each Payment Date, a portion of such amount equal to
the sum of (x) the Class A Pledged Percentage of the amounts set forth in
Section 3.04(b)(i), (ii), (iii), (iv), (vi), (vii), (xv), (xvi) and (xvii) of
the Indenture and (y) 100% of the amounts set forth in Section 3.04(b)(v),
(viii), (x) and (xi) of the Indenture, shall be due on the Class A Pledged Note.
(b) The Class B Pledged Note represents the right to receive repayment
of an amount equal to (x) Class B Accelerated Percentage of the Aggregate
Discounted Contract Principal Balance of the Contracts then pledged to the
Indenture Trustee, on behalf of the Trust, as collateral security for the
Pledged Notes, (y) interest on such amount at the sum of (i) Class B Note Rate,
(ii) the Servicer Fee Rate, (iii) the Back-up Servicer Fee Rate and (iv) the
Indenture Trustee Fee Rate (such sum of (i) through (iv), the "Class B Pledged
Note Rate") and (z) after the Class A Note Principal Balance has been reduced to
zero, and until the Class B Note Principal Balance has been reduced to zero,
100% of the sum of (A) any Residual Receipts (up to the Booked Residual Value of
the related Contract), Reacquisition Amounts and Prepayment Amounts actually
collected during the preceding Collection Period and (B) any Defaulted Contract
Amounts relating to such Collection Period. On each Payment Date, a portion of
such amount equal to the sum of (x) the Class B Pledged Percentage of the
amounts set forth in Section 3.04(b)(i), (ii), (iii), (iv), (vi), (vii), (xv),
(xvi) and (xvii) of the Indenture and (y) 100% of the amounts set forth in
Section 3.04(b)(ix), (xii), (xiii) and (xiv) of the Indenture, shall be due on
the Class B Pledged Note.
(c) Interest on any amount owed pursuant to Sections 2.03(a) and (b)
that is not timely paid when due shall accrue interest until paid at the Class A
Note Rate or the Class B Note Rate, as applicable, plus 1%.
(d) In no event shall the amount payable on any Payment Date in respect
of the Class A Pledged Note and the Class B Pledged Note be less than the
aggregate amount of Available Funds for such Payment Date.
SECTION 2.04 Events of Default. "Transferor Event of Default" wherever
used herein means any one of the following events (whatever the reason for such
Transferor Event of Default and without regard to whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any judgment,
decree or
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order of any court or any order, rule or regulation of any administrative
or governmental body):
(a) failure to distribute or cause to be distributed to the
Trust, all or part of any payment required to be made on each Payment Date
under the terms of such Pledged Notes or this Agreement when due and
payable; or
(b) default in the performance, or breach, or any other
covenant of the Transferors in this Agreement, and continuance of such
default or breach for a period of thirty (30) days after the earliest of (i)
any officer of either of the Transferors first acquiring the knowledge
thereof, (ii) the Indenture Trustee's giving written notice thereof to the
Transferors, or (iii) the Note Insurer or the Holders of the Pledged Notes
giving written notice thereof to the Transferors and the Indenture Trustee;
or
(c) any representation or warranty of the Transferors made in
this Agreement or any other writing provided to the Depositor, the Note
Insurer, the Issuer or the Indenture Trustee proves to be incorrect in any
material respect as of the time when the same has been made; provided,
however, that the breach of any representation or warranty made by the
Agreement will be deemed to be "material" only if it negatively affects the
Issuer, the Note Insurer, the enforceability of this Indenture or the
Pledged Notes; or
(d) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of either of the
Transferors in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other similar
law or (B) a decree or order adjudging either of the Transferors as
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment, or composition of or in
respect of either of the Transferors under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of the Transferors or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(e) the commencement by either the Transferors of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law or of any
other case or preceding to be adjudicated as bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in respect
of either the Transferor in an involuntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization,
or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee,
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sequestrator, or similar official of any such Person or of any substantial
part or its property, or the making by it of an assignment for the benefit
of creditors, or the failure of any such Person to pay is debts
generally as they become due, or the taking of corporate action by any such
Person in furtherance of any such action; or
(f) an event of default shall have occurred and be continuing
under the Insurance Agreement; or
(g) an Event of Default shall have occurred and be continuing
under the Indenture.
SECTION 2.05 Acceleration of Maturity, Rescission and Annulment. (a) If
a Transferor Event of Default occurs and is continuing, then and in every such
case the Indenture Trustee, at the written direction of the Controlling Party
shall declare the principal of all of the Pledged Notes to be immediately due
and payable, by a notice in writing to the Transferors and the Servicer, and
upon any such declaration such principal (together with all accrued and
previously unpaid interest) shall become immediately due and payable; provided,
that, with respect to Transferor Events of Default enumerated in Section 2.04
(d) and (e), the principal of all Pledged Notes shall become immediately due and
payable without further action of any person. The Indenture Trustee shall give
notice to each Noteholder, the Depositor, the Collateral Agent, the Note Insurer
and the Rating Agencies of such declaration.
(b) At any time, after such a declaration of acceleration has been
made, but before any sale of the Transferor Collateral has been made or a
judgment or decree for payment of the money due has been obtained by the
Indenture Trustee as hereinafter in this Article II provided, the Controlling
Party, by written notice to the Servicer and the Indenture Trustee, may rescind
and annul such declaration and its consequence if monies have been paid or
deposited with the Indenture Trustee in a sum sufficient to pay all overdue
installments due on all Pledged Notes.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Subsequent to any such declaration of acceleration and so long as such
declaration and its consequences have not been rescinded and annulled, prior to
the exercise by the Indenture Trustee of the remedies set forth in Section 2.06
hereof, the Indenture Trustee shall give the Issuer, the Depositor, the
Collateral Agent, the Noteholders and the Note Insurer ten days' notice of its
intention to take such actions.
SECTION 2.06 Remedies. If a Transferor Event of Default shall have
occurred and be continuing, the Trust (or a subsequent holder of a Pledged
Note), at the written direction of the Controlling Party, shall do one or more
of the following as shall be directed by the Controlling Party:
(a) institute, in its own name, proceedings for the collection of
the entire amount of remaining unpaid on the Pledged Notes, or under this
agreement
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in respect of the Notes, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Conveyed Assets securing
the Pledged Notes the monies adjudged due;
(b) sell the Conveyed Assets or any portion thereof or rights or
interest therein, at one or more sales called and conducted in any
commercially reasonable manager permitted by law;
(c) institute Proceedings from time to time for the complete or
partial foreclosure of this Agreement with respect to the Conveyed Assets
securing the Pledged Notes; or
(d) exercise any remedies of a secured party under the UCC or
other applicable law and take any other appropriate action to protect and
enforce the rights and remedies of the Issuer the Indenture Trustee, the
Depositor, the Collateral Agent, the Note Insurer or the Noteholders
hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Transferors. Each of
the Transferors hereby makes the following representations and warranties for
the benefit of the Owner Trustee, the Depositor, the Note Insurer, the
Collateral Agent, the Indenture Trustee and the Noteholders. Such
representations and warranties speak as of the Closing Date, each Subsequent
Funding Date and each Transfer Date.
(a) Organization and Good Standing. Each of the Transferors is a
limited liability company duly organized and validly existing in good
standing under the laws of the State of Delaware, with full power and
authority to own its properties and to conduct its business as presently
conducted and has the power, authority and legal right to acquire and own
the Conveyed Assets;
(b) Due Qualification. Each of the Transferors is duly qualified
to do business as a foreign limited liability company in good standing, and
has obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
requires such qualification, except to the extent that the failure to be so
qualified, licensed or approved would not, in the aggregate, materially and
adversely affect the ability of such Transferor to comply with the terms of
this Agreement and the other Transaction Documents to which it is a party;
(c) Power and Authority. Each of the Transferors has the power
and authority to execute and deliver this Agreement and the other
Transaction Documents to which it is a party and to carry out their
respective terms; and the execution, delivery, and performance of this
Agreement and other Transaction
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Documents to which it is a party have been duly authorized by such
Transferor by all necessary action;
(d) Due Execution and Delivery. This Agreement and the other
Transaction Documents to which it is a party have been duly executed and
delivered on behalf of each Transferor;
(e) Binding Obligations. This Agreement and the other Transaction
Documents to which it is a party constitute legal, valid, and binding
obligations of each Transferor and are enforceable in accordance with their
respective terms subject as to enforceability to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law);
(f) No Violation. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and
other Transaction Documents to which it is a party will not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice of lapse of time) a default under,
the Certificate of Formation or Limited Liability Company Agreement of
either Transferor, or any material term to any indenture to which either
Transferor is a party or violate any law or any order, injunction, writ,
rule or regulation applicable to either Transferor of any court or of any
federal or state regulatory body, administrative agency or other
Governmental Authority having jurisdiction over either Transferor or any
of its properties which would have a material adverse effect on the
Conveyed Assets;
(g) Membership Interests. The Originator is the owner of 99% of
the membership interests of each of the Transferors, each of which are owned
of record, free and clear of all mortgages, assignments, pledges and
security interests;
(h) No Proceedings. There are no proceedings or investigations
pending or, to the knowledge of each of the Transferors, threatened, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (A) asserting the invalidity of or any of the
Transaction Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by any of the Transaction Documents or (C) seeking
any determination or ruling that would materially and adversely affect the
performance by either Transferor of its obligations under, or the validity
or enforceability of, any of the Transaction Documents;
(i) Approvals and Compliance. All approvals, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official,
required in connection with the execution and delivery of the Transaction
Documents, have been or will be taken or obtained on or prior to the Closing
Date and each Transferor is in
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compliance with all applicable laws, rules, regulations and orders with
respect to such Transferor, its business and properties and all
Conveyed Assets;
(j) Solvency. Each Transferor is solvent and will not be rendered
insolvent by the transactions contemplated by this Agreement and the other
Transaction Documents and each Transferor has an adequate amount of capital
to conduct its business in the ordinary course and to carry out its
obligations under this Agreement and the other Transaction Documents;
(k) Subsidiaries. Neither of the Transferors has any subsidiaries
other than the Trust;
(l) Tax Returns. Each Transferor has filed on a timely basis all
tax returns (federal, state and local) required to be filed and has paid or
made adequate provisions for the payment of all taxes, assessments and other
governmental charges due from such Transferor;
(m) Principal Place of Business. The principal place of business
and chief executive office of each Transferor is located at the address of
such Transferor set forth herein and, there are now no, and during the past
four months there have not been, any other locations where such Transferor
is located (as that term is used in the UCC in the state of such location)
except that, with respect to such changes occurring after the date of this
Agreement, as shall have been specifically disclosed to the Servicer, the
Note Insurer, the Depositor and the Indenture Trustee in writing; and
(n) Legal Name. The legal name of each Transferor is as set forth
in the related signature line of this Agreement and neither Transferor has
changed its name since its incorporation and since its incorporation, such
Transferor did not use, nor does such Transferor now use, any trade names,
fictitious names, assumed names or "doing business as" names.
SECTION 3.02 Representations and Warranties of the Originator with
respect to the Conveyed Assets. (a) With respect to each Contract, the related
Transferor hereby assigns to the Issuer the representations, warranties and
covenants of the Originator set forth in Section 3.03 of the Receivables Sale
Agreement and Section 2.02 of the Servicing Agreement. Such representations,
warranties and covenants are made or deemed to be made, (x) with respect to the
Initial Conveyed Assets, as of the Cut-Off Date, (y) with respect to the
Subsequent Conveyed Assets, as of the Subsequent Cut-Off Date, and (z) with
respect to the Substitute Conveyed Assets, as of the related Transfer Date.
(b) Upon the discovery by the Issuer, the Depositor, either Transferor,
the Originator, the Indenture Trustee, the Collateral Agent or the Note Insurer
of a breach of any of the representations or warranties set forth in Section
2.02 of the Servicing Agreement that materially and adversely affects any
Contract, the related Equipment or the related Contract File, as the case may
be, or if the Servicer fails to cause delivery of
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evidence of filing or copies of any UCC financing statement in accordance with
the Servicing Agreement (any such event, a "Warranty Event"), the party
discovering such breach shall give prompt written notice to the other parties
hereto, the Originator, the Depositor, the Indenture Trustee, the Collateral
Agent, the Servicer and the Note Insurer, and the Originator shall be required
to reacquire or replace such Contract in accordance with Article IV of the
Indenture.
SECTION 3.03 Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Originator,
Transferors, the Trust, the Owner Trustee, the Collateral Agent, the Note
Insurer and the Indenture Trustee, as of the date of execution of this Agreement
and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
execute, deliver and perform, and to enter into and consummate all the
transactions contemplated by this Agreement;
(c) This Agreement has been duly and validly authorized, executed
and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Transferors, the Trust and the
Indenture Trustee, constitutes the legal, valid and binding agreement of the
Depositor, enforceable against the Depositor in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in
equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or
court is required for the execution, delivery and performance of or
compliance by the Depositor with this Agreement or the consummation by the
Depositor of any of the transactions contemplated hereby, except such as
have been made on or prior to the Closing Date; and
(e) None of the execution and delivery of this Agreement,
the consummation of the other transactions contemplated hereby, or
thefulfillment of or compliance with the terms and conditions of
this Agreement, (i) conflicts or will conflict with the charter or
bylaws of the Depositor or conflicts or will conflict with or results or
will result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any indenture, deed of trust, contract or other agreement or
other instrument to which the Depositor is a party or by which it is bound
and which is material to the Depositor, or (ii) results or will result in
a violation of any law, rule, regulation, order, judgment or decree of
any court or governmental authority having jurisdiction over the
Depositor.
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SECTION 3.04 Substitution of Contracts and Equipment by the Originator.
(a) With respect to a substitution of Contracts in accordance with the
provisions of this Section 3.04, each proposed Substitute Contract must (i) be
an Eligible Contract, (ii) satisfy all of the representations and warranties set
forth in Section 2.02 of the Servicing Agreement, (iii) have a Discounted
Contract Principal Balance of not less than the Discounted Contract Principal
Balance of the Contract being replaced, (iv) have a Booked Residual Value of not
less than the Booked Residual Value of the Contract being replaced, and (v)
satisfy the requirements of Section 4.02(d) of the Indenture. For purposes of
determining compliance with clauses (iii) and (iv) of the preceding sentence, if
more than one Substitute Contract is being provided on any date, the Discounted
Contract Principal Balances and Booked Residual Values of the Substitute
Contracts and the Contracts being replaced shall be determined on an aggregate
basis.
(b) Any substitution of a Contract pursuant to this Agreement will be
effected by (i) delivery to the Collateral Agent, on behalf of the Indenture
Trustee, of the Contract File for each such Substitute Contracts, (ii) filing of
any UCC financing statements necessary to comply with the Filing Requirements
and to perfect the interest of the Indenture Trustee in the Substitute
Contracts, (iii) delivery to the Indenture Trustee of a supplement to the List
of Contracts reflecting such substitution, and (iv) delivery to the Transferor
and the Collateral Agent and the Indenture Trustee of a release request for the
replaced Contract and the originally executed trust receipt relating thereto.
(c) Upon completion of any substitution in accordance with this Section
3.04, the Substitute Contract, the related Equipment and any other related
Conveyed Assets will constitute part of the collateral for the Pledged Notes.
ARTICLE IV
COVENANTS
SECTION 4.01 Transferor Covenants. Each of the Transferors hereby
covenant and agree with the Issuer, the Owner Trustee, the Note Insurer, the
Depositor, the Collateral Agent, the Noteholders and the Indenture Trustee with
respect to itself as follows:
(a) Preservation of Security Interest. Each of the Transferors
shall execute and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain, and protect
the respective right, title and interest of the Issuer, the Note Insurer and
the Indenture Trustee in the Conveyed Assets. The Transferors shall deliver
(or cause to be delivered) to the Collateral Agent, on behalf of the
Indenture Trustee, file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such
filing.
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(b) Preservation of Name, etc. Neither of the Transferors will
change its name, identity or corporate structure in any manner that would,
could, or might make any financing statement or continuation statement filed
by such Transferor in accordance with paragraph (a) above or under any
Transaction Document seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Issuer, the Note
Insurer, the Depositor, the Collateral Agent and the Indenture Trustee at
least 60 days' prior written notice thereof.
(c) Preservation of Office. Each of the Transferors will give the
Issuer, the Depositor, the Collateral Agent, the Note Insurer 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.
(d) Obligations with Respect to Conveyed Assets. Each of the
Transferors will duly fulfill all obligations on its part to be fulfilled
under or in connection with each Contract and each Source Agreement, and
will do nothing to impair the rights of the Issuer, the Note Insurer, the
Depositor, the Collateral Agent or the Indenture Trustee in any of the
Conveyed Assets.
(e) Compliance with Law. Each of the Transferors will comply, in
all material respects, with all acts, rules, requisitions, orders, decrees
and directions of any Governmental Authority applicable to its business and
to the Conveyed Assets or any part thereof; provided, however, that either
of the Transferors may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not materially and adversely
affect the rights of the Indenture Trustee, the Note Insurer, the Depositor,
the Collateral Agent or the Issuer in any of the Conveyed Assets.
(f) Conveyance of Conveyed Assets; Security Interests. Except
for the transfers and conveyances hereunder, or under any Transaction
Document, the Transferors will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any
Lien, on the Transferor Collateral, or any interest therein and the
Transferors shall defend the right, title, and interest of the Issuer,
the Indenture Trustee, the Note Insurer, the Depositor, the
Collateral Agent and their respective successors and assigns in, to,
and under the Conveyed Assets, against all claims of third parties
claiming, through or under the Originator; provided, however, that nothing
in this Section 4.01(f) shall prevent or be deemed to prohibit the
Transferors from suffering to exist upon any of the Conveyed Assets any
Liens for municipal or other local taxes if such taxes shall not at the
time be due and payable or if the related Transferor shall concurrently
be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with
respect thereto and such contests pose no risk of forfeiture.
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(g) Notification of Breach. The related Transferor will advise
the Issuer, the Indenture Trustee, the Depositor, the Collateral Agent and
the Note Insurer promptly, in reasonable detail, upon discovery of the
occurrence of any breach by such Transferor of any of its representations,
warranties and covenants contained herein.
(h) Further Assurances. Each of the Transferors will make,
execute or endorse, acknowledge and file or deliver to the Issuer, the
Note Insurer, the Depositor, the Collateral Agent and the Indenture
Trustee from time to time such schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further
steps relating to the Conveyed Assets and other rights covered by this
Agreement, as the Issuer, the Indenture Trustee, the Depositor, the
Collateral Agent and the Note Insurer may request and reasonably require;
provided, that no UCC filing will be required with respect to the
Equipment, except as required by the Filing Requirements.
(i) Indemnification. Each of the Transferors agrees to
indemnify, defend and hold the Issuer, the Owner Trustee, the Depositor,
the Collateral Agent, the Indenture Trustee and the Note Insurer harmless
from and against any and all loss, liability, damage, judgment, claim,
deficiency, or expense (including interest, penalties, reasonable
attorneys' fees and amounts paid in settlement) to which any of them may
become subject insofar as such loss, liability, damage, judgment, claim,
deficiency, or expense arises out of or is based upon a breach by such
Transferor of its representations and warranties contained in Article
III, its covenants contained in Section 4.01, or in any certificate or in
any schedule delivered by such Transferor hereunder, being untrue in any
material respect at any time. The obligations of the Transferors under
this Section 4.01(i) shall be considered to have been relied upon by the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Collateral Agent and the Note Insurer and shall survive the execution,
delivery, performance and termination of this Agreement regardless of
any investigation made by the Issuer, the Depositor, the Collateral
Agent, the Indenture Trustee and the Note Insurer or on their respective
behalf. THE INDEMNIFICATION OBLIGATIONS OF THE TRANSFERORS PURSUANT TO
THE PRECEDING PROVISIONS OF THIS PARAGRAPH SHALL APPLY REGARDLESS OF ANY
NEGLIGENCE OR OTHER FAULT ON THE PART OF THE ISSUER, THE DEPOSITOR, THE
COLLATERAL AGENT, THE INDENTURE TRUSTEE, THE NOTE INSURER OR ANY OF THEIR
RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS.
(j) Notice of Liens. The related Transferor shall notify the
Issuer, the Indenture Trustee, the Depositor, the Collateral Agent and the
Note Insurer promptly after becoming aware of any Lien on any Conveyed
Asset.
(k) Taxes. Each Transferor shall promptly pay all applicable
taxes required to be paid in connection with the pledge of the Conveyed
Assets and acknowledges that the Issuer shall have no responsibility
with respect thereto.
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Each Transferor shall promptly pay and discharge, or cause the payment and
discharge of, all federal income taxes (and all other material taxes) when
due and payable by each such Transferor, except (i) such as may be paid
thereafter without penalty or (ii) such as may be contested in good faith by
appropriate proceedings and for which an adequate reserve has been
established and is maintained in accordance with GAAP. Each Transferor shall
promptly notify the Issuer, the Indenture Trustee, the Depositor, the
Collateral Agent, the Noteholders, the Rating Agencies and the Note Insurer
of any material challenge, contest or proceeding pending by or against such
Transferor before any taxing authority.
(l) Taxes and Other Liabilities. Each Transferor shall promptly
pay and discharge all material taxes, assessments, fees, claims and other
governmental charges when due and payable by such Transferor, except (i)
such as may be paid thereafter without penalty or (ii) such as may be
contested in good faith by appropriate proceedings and for which an adequate
reserve has been established and is maintained in accordance with GAAP. Each
Transferor shall promptly notify the Issuer, the Note Insurer, the Rating
Agencies and the Indenture Trustee of any material challenge, contest or
proceeding pending by or against such Transferor before any taxing
authority.
(m) Non-Consolidation. Each Transferor shall take all action
necessary to maintain the separate existence of such Transferor and the
Manager on the one hand, and the Originator on the other hand, so that the
separate existence of such Transferor and the Manager would not be ignored
in the event of a bankruptcy of the Originator.
(n) Indebtedness. Neither Transferor shall incur any Indebtedness
other than the Pledged Notes.
(o) Operation of Transferor. Each of the Transferors shall be
operated in such a manner that it should not be substantively consolidated
in the trust estate of another Person (that is, such that the separate legal
existence of such Transferor and such Person should be disregarded) and in
that regard, each Transferor shall:
(i) not engage in any action that would cause the
separate legal identity of such Transferor not to be respected,
including, without limitation, (x) holding itself out as being liable
for the debts of any other party or (y) acting other than through its
duly authorized agents;
(ii) not incur, assume or guarantee any indebtedness
except for such indebtedness as may be incurred by such Transferor in
connection with the issuance of the Pledged Notes, the Notes or as
otherwise permitted by the Note Insurer;
(iii) not commingle its funds with those of any other
entity;
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(iv) act solely in its name in the conduct
of its business and shall conduct its business so as not to mislead
others as to the identity of the entity with which they are concerned;
(v) maintain company records and books of account and
shall not commingle its company records and books of account with the
records and books of account of any entity;
(vi) not engage in any business or activity other than
in connection with or relating to the activities allowed by its
Certificate of Formation and/or Limited Liability Company Agreement;
(vii) not form, or cause to be formed, any
subsidiaries;
(viii) comply with all restrictions and covenants in,
and shall not fail to comply with the corporate formalities established
in, the Certificate of Formation and/or Limited Liability Company
Agreement;
(ix) maintain separate bank accounts, if any;
(x) not act as an agent of the Originator; and
(xi) have as its managing member a limited purpose
corporation who maintains at all times one independent director as
required by its Certificate of Incorporation and/or Bylaws.
SECTION 4.02 Pledge of Pledged Property. Each Transferor understands
that the Issuer intends to pledge its interest in the Pledged Notes, the
Transferor Collateral and its rights under this Agreement to the Indenture
Trustee, on behalf of the Note Insurer and the Noteholders, pursuant to the
Indenture. Each Transferor agrees that any such assignee of the Issuer may
exercise the rights of the Issuer hereunder without any consent or action by the
Issuer and shall be entitled to all of the benefits of the Issuer hereunder to
the extent provided for in such assignment.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions to Issuer's Obligations. The obligation of the
Issuer to accept the pledge of the Initial Conveyed Assets on the Closing Date
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of each Transferor and
the Depositor contained in this Agreement shall be true and correct on the
Closing Date with the same effect as though such representations and
warranties had been made on such date;
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(b) All information concerning the Initial Conveyed Assets
provided to the Issuer shall be true and correct as of the Cut-Off Date in
all material respects;
(c) Each Transferor shall have delivered to the Issuer a List of
Contracts with respect to its respective Contracts as of the Cut-Off Date
and shall have substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) Each Transferor shall have recorded and filed, at its expense,
any financing statement with respect to the Initial Conveyed Assets to be
pledged from time to time to the Indenture Trustee, on behalf of the Issuer,
from each Transferor pursuant to this Agreement meeting the requirements of
applicable state law in such manner in such jurisdictions as are necessary
to perfect the pledge of the Initial Conveyed Assets from each Transferor to
the Indenture Trustee, on behalf of the Issuer, and shall deliver a
file-stamped copy of such financing statements or other evidence of such
filings to the Indenture Trustee;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Issuer, and the Issuer shall have
received from each Transferor copies of all documents (including, without
limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Issuer may reasonably have requested; and
(f) All respective conditions necessary to vest in each Transferor
good title, free and clear of all Liens (other than Liens permitted in the
proviso contained in Section 4.01(f) hereof), to the Contracts and
Equipment, as applicable, shall have been satisfied.
SECTION 5.02 Conditions to the Transferors' Obligations. The
obligations of each Transferor to pledge the Initial Conveyed Assets and the
Transferor Collateral to the Issuer on the Closing Date shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of the Issuer and the
Depositor contained in this Agreement shall be true and correct with the
same effect as though such representations and warranties had been made on
such date; and
(b) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to each Transferor, and each Transferor
shall have received from the Issuer copies of all documents (including,
without limitation, records of corporate proceedings) relevant to the
transactions herein contemplated as each Transferor may reasonably have
requested;
17
provided, however, that upon the issuance of the Pledged Notes to the Issuer,
the Transferors shall be deemed to have accepted or waived all of the
conditions precedent set forth above.
ARTICLE VI
TERMINATION
SECTION 6.01 Termination. The respective obligations and
responsibilities of each of the Transferors, the Depositor, and the Issuer
created by this Agreement shall terminate upon the latest of: (i) the maturity
or other liquidation of the last Contract and the disposition of any amounts
received upon disposition of any Defaulted Contracts and any Equipment leased
thereunder; (ii) the distribution to the Issuer of all amounts required to be
paid thereto pursuant to the Pledged Notes and this Agreement; (iii) the
termination of the Indenture in accordance with the terms thereof and (iv) the
payment of all amounts owing to the Note Insurer under the Transaction
Documents; provided, however, that (A) the indemnifications contained in Section
4.01(i) herein and (B) the covenant contained in Section 7.13 hereof, shall
survive the termination of this Agreement.
SECTION 6.02 Effect of Termination. No termination or rejection or
failure to assume the executory obligations of this Agreement in the bankruptcy
of either of the Transferors, the Depositor, or the Issuer shall be deemed to
impair or affect the obligations pertaining to any executed contribution or
executed obligations, including, without limitation, pre-termination breaches of
representations and warranties by either of the Transferors, the Depositor, or
the Issuer. Without limiting the foregoing, prior to termination, neither the
failure of the Transferors to deliver a Transferors Certificate pursuant to
Section 4.02, nor the failure of the Originator to pay a Reacquisition Amount
shall render such transfer or obligation executory, nor shall the continued
duties of the parties pursuant to Article IV or Section 7.06 of this Agreement
render an executed contribution executory.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.01 Amendment. This Agreement may be amended from time to time
by the parties hereto only with (x) the prior written consent of the Servicer,
the Indenture Trustee and the Note Insurer (or, in the event of a Note Insurer
Default, the Majority Holders) and (y) satisfaction of the Rating Agency
Condition.
SECTION 7.02 GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE
18
AND TO BE PERFORMED THEREIN AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 7.03 Notices. All demands, notices, and communications under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (i) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (ii) when delivered by courier with appropriate
evidence of receipt; or (iii) upon transmission via facsimile or telex with
appropriate evidence of receipt (a) in the case of the Issuer, c/o First Union
Trust Company, National Association, at One ▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (b) in the case of the Indenture
Trustee, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Global
Trust Services, telecopy (▇▇▇) ▇▇▇-▇▇▇▇; (c) in the case of Transferor I, c/o
American Business Financial Services, Inc., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel, telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (d) in the case of Transferor II, c/o
American Business Financial Services, Inc., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel, telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (e) in the case of the Depositor, ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Managing Director--Asset
Backed Finance, telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (f) in the case of the Collateral
Agent, at the address set forth in the Servicing Agreement, and (g) in the case
of the Note Insurer, the Rating Agencies or the Owner Trustee, at their
respective addresses set forth in Section 11.06 of the Indenture. Either party
may alter the address to which communications are to be sent by giving notice of
such change of address in conformity with the provisions of this Section 7.03
for giving notice and by otherwise complying with any applicable terms of this
Agreement, including, but not limited to, subsections 4.01(b) and (c).
SECTION 7.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 7.05 Assignment. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by the
Transferors, without the prior written consent of the Issuer, the Depositor, the
Note Insurer (or, in the event of a Note Insurer Default, the Majority Holders)
and the Indenture Trustee (acting upon the written direction of the Controlling
Party) and, except as provided in Section 4.03, this Agreement may not be
assigned by the Issuer without the prior written consent of the Transferors, the
Depositor, the Note Insurer (or, in the event of a Note Insurer Default, the
Majority Holders) and the Indenture Trustee. Whether or not expressly stated,
all representations, warranties, covenants and agreements of the Issuer, the
Depositor, and the Transferors in this Agreement, or in any
19
document delivered by any of them in connection with this Agreement, shall be
for the benefit of, and shall be exercisable by, the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.
SECTION 7.06 Further Assurances. Each of the parties hereto agrees to
do such further acts and things and to execute and deliver to the Indenture
Trustee or the Collateral Agent, acting on its behalf, such additional
assignments, agreements, powers and instruments as are required by the Indenture
Trustee or the Collateral Agent, acting on its behalf, or the Note Insurer to
carry into effect the purposes of this Agreement or to better assure and confirm
unto the Indenture Trustee or the Note Insurer its rights, powers and remedies
hereunder.
SECTION 7.07 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of either Transferor, the Depositor or the
Issuer, any right, remedy, power or privilege hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise hereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privilege provided by law.
SECTION 7.08 Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which shall constitute one and the same
instrument.
SECTION 7.09 Binding Effect: Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto. The Owner
Trustee, the Collateral Agent, the Note Insurer and the Noteholders are intended
third party beneficiaries of this Agreement.
SECTION 7.10 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 7.11 Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 7.12 Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this Agreement
and are incorporated into this Agreement for all purposes.
SECTION 7.13 No Bankruptcy Petition Against the Transferors, the
Manager or the Trust. Each of the parties hereto agrees that, prior to the date
that is one year and one day after the payment in full of the of the latest
maturing Notes issued by the Trust, it will not institute against any of the
Transferors, the Manager or the Trust, or
20
join any other Person in instituting against any of the Transferors, the Manager
or the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under the laws of the United States
or any state of the United States. This Section 7.13 shall survive the
termination of this Agreement.
[Remainder of Page Intentionally Left Blank]
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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.
ABFS EQUIPMENT CONTRACT TRUST
1999-A, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________
Name:
Title:
ABFS FINANCE LLC 1999-A,
as Transferor I
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
ABFS RESIDUAL LLC 1999-A,
as Transferor II
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as indenture trustee
By:_____________________________
Name:
Title:
[Signature Page for Receivables Pledge Agreement]
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By:_____________________________
Name:
Title:
[Signature Page for Receivables Pledge Agreement]
SCHEDULE I
LIST OF INITIAL CONTRACTS
EXHIBIT A
FORM OF SUBSEQUENT
RECEIVABLES PLEDGE AGREEMENT
This SUBSEQUENT RECEIVABLES PLEDGE AGREEMENT, dated as of ____________
(the "Subsequent Funding Date"), by and among ABFS Finance LLC 1999-A, a
Delaware limited liability company ("Transferor I"), and ABFS Residual LLC
1999-A, a Delaware limited liability company ("Transferor II" and, together with
Transferor I, the "Transferors"), Prudential Securities Secured Financing
Corporation, as depositor (the "Depositor"), ABFS EQUIPMENT CONTRACT TRUST
1999-A, a Delaware business trust, as issuer (the "Trust" or the "Issuer"), and
THE CHASE MANHATTAN BANK, a New York banking corporation, as indenture trustee
(the "Indenture Trustee").
WITNESSETH:
Reference is hereby made to that certain Receivables Pledge Agreement,
dated as of June 1, 1999 (the "Receivables Pledge Agreement"), by and among the
Issuer, the Transferors, the Depositor and the Indenture Trustee. Pursuant to
the Receivables Pledge Agreement, the Transferors agreed to sell, convey and
transfer, and the Trust agreed to accept, from time to time, Subsequent Conveyed
Assets. The Receivables Pledge Agreement provides that each such sale,
conveyance and transfer of Subsequent Conveyed Assets be evidenced by the
execution and delivery of a Subsequent Receivables Pledge Agreement such as this
Subsequent Receivables Pledge Agreement (this "Agreement").
The "Subsequent Contracts" are those listed on the List of Subsequent
Contracts attached hereto.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Section 1. Definitions. For the purposes of this Agreement,
capitalized terms used herein but not otherwise defined shall have the
respective meanings assigned to such terms in the Receivables Pledge Agreement
or in Annex A to the Indenture.
Section 2. Designation; Pledge; Acceptance. (a) Subject to the terms
and condition of this Agreement, the Depositor, as sponsor of the Trust, hereby
directs the Transferors to pledge, and the Transferors hereby agree to pledge,
on the Subsequent Funding Date, all of their respective rights and interests in
and to the Subsequent Conveyed Assets to the Trust, to secure the obligations
under the Pledged Notes.
(b) It is the intention of the Transferors, which intention is
acknowledged by the Trust, the Depositor and the Indenture Trustee, that this
Agreement shall be deemed to be a security agreement within the meaning of
Article 8 and Article 9 of the UCC, and the pledge provided for by this Section
2 shall be deemed to be a grant
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by the Transferors to the Trust, of (i) a valid first-priority perfected
security interest in all of the Transferors' rights and interests in and to the
Subsequent Conveyed Assets, except that (A) such security interest is not
granted with respect to Equipment not owned by the Transferors and (B) with
respect to the Equipment, owned by the Transferors, the priority of such
security interest is limited to the extent that UCC financing statements have
been filed in accordance with the Filing Requirements, and (ii) a valid
assignment of the security interests of the Transferors in the Equipment not
owned by the Transferors. The Transferors hereby grant and assign such interest,
in each case to the Trust, to secure the obligations of the Transferors to the
Indenture Trustee and the Trust under this Agreement and the Pledged Notes. That
portion of the Subsequent Conveyed Assets owned by each Transferor shall secure
the obligations of the Transferor under both the Pledged Notes.
(c) The Indenture Trustee acknowledges its acceptance, simultaneously
with the execution and delivery of this Agreement, of the pledge of and security
interest in all right, title and interest in and to the Subsequent Conveyed
Assets and declares that the Indenture Trustee holds and will continue to hold
the pledge of and security interest in all of Transferors' such right and
interest in and to the Subsequent Conveyed Assets for the benefit of the Issuer
as owner of the Pledged Notes for the use and purpose and subject to the terms
and provisions of this Agreement.
Section 3. Representations and Warranties of the Transferors. (a) With
respect to each Subsequent Contract, the related Transferor hereby assigns to
the Issuer the representations, warranties and covenants of the Originator set
forth in Section 3.02 of the Receivables Pledge Agreement and Section 2.02 of
the Servicing Agreement.
Upon the discovery by the Issuer, either Transferor, the Originator,
the Depositor, the Collateral Agent, the Indenture Trustee or the Note Insurer
of a breach of any of the representations or warranties set forth in Section
2.02 of the Servicing Agreement that materially and adversely affects any
Contract, the related Equipment or the related Contract File, as the case may
be, or if the Servicer fails to cause delivery of evidence of filing or copies
of any UCC financing statement in accordance with the Servicing Agreement (any
such event, a "Warranty Event"), the party discovering such breach shall give
prompt written notice to the other parties hereto, the Originator, the Indenture
Trustee, the Trust, the Depositor, the Collateral Agent and the Note Insurer,
and the Originator shall be required to reacquire or replace such Contract in
accordance with Article IV of the Indenture.
Each Transferor understands that the Issuer intends to pledge its
interest in the Pledged Notes, the Transferor Collateral and its rights under
this Agreement to the Indenture Trustee, on behalf of the Noteholders and the
Note Insurer, pursuant to the Indenture. Each Transferor agrees that any such
assignee of the Issuer may exercise the rights of the Issuer hereunder without
any consent or action by the Issuer and shall be entitled to all of the benefits
of the Issuer hereunder to the extent provided for in such assignment.
A-2
Section 4. Amendment. This Agreement may be amended from time to time
by the parties hereto only with (x) the prior written consent of the Servicer,
the Indenture Trustee and the Note Insurer (or, in the event of a Note Insurer
Default, the Majority Holders) and (y) satisfaction of the Rating Agency
Condition.
Section 5. GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 4 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 6. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which shall
constitute one and the same instrument.
Section 7. Binding Effect; Third-Party Beneficiaries. This Agreement
will inure to the benefit of and be binding upon the parties hereto. The
Indenture Trustee, the Owner Trustee, the Note Insurer, the Collateral Agent and
the Noteholders are intended third party beneficiaries of this Agreement.
Section 8. Headings. The headings herein are for purposes
of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.
Section 9. Exhibits. The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
[Remainder of Page Intentionally Left Blank]
A-3
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.
ABFS EQUIPMENT CONTRACT TRUST
1999-A, as Issuer
By: FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner
Trustee under the Trust Agreement
By:_____________________________
Name:
Title:
ABFS FINANCE LLC 1999-A, as
Transferor I
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
ABFS RESIDUAL LLC 1999-A, as
Transferor II
By: ABFS Special Purpose Management,
Inc., as Managing Member
By:_____________________________
Name:
Title:
▇-▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, as
indenture trustee
By:_____________________________
Name:
Title:
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as
Depositor
By:_____________________________
Name:
Title:
A-5
EXHIBIT B
FORM OF PLEDGED NOTES
CLASS [A][B] PLEDGED NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE ONLY (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A OR (C) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT SUBJECT, IN THE CASE OF CLAUSES (B) OR (C)
ABOVE, TO COMPLIANCE BY THE HOLDER AND THE TRANSFEREE WITH THE PROVISIONS OF
THE INDENTURE APPLICABLE TO SUCH TRANSFER.
-----------------------------
ABFS FINANCE LLC 1999-A, a Delaware limited liability company ("ABFS
Finance"), and ABFS RESIDUAL LLC 1999-A, a Delaware limited liability company
("ABFS Residual", and together with ABFS Finance, the "Transferors"), hereby
agree to pay, jointly and severally, to ABFS EQUIPMENT CONTRACT TRUST 1999-A
(the "Trust"), (a) the principal sum of the Class [A][B] Accelerated Percentage
of the Aggregate Discounted Contract Principal Balance of all Contracts owned by
the Transferors from time to time (such amount, the "Class [A][B] Pledged
Principal Amount"), (b) interest monthly in arrears on the unpaid portion of
said principal sum (and, to the extent that the payment of such interest shall
be legally enforceable, on any overdue installment, of interest on this Note) on
the 15th day of each month or, if such 15th day is not a Business Day, the
Business Day immediately following (each, a "Payment Date"), commencing in July
1999, for the period commencing on and including the immediately preceding
Payment Date (or, with respect to the initial Payment Date, on June 15, 1999)
and ending on and including the day immediately preceding such Payment Date,
until such unpaid principal is fully paid, at a rate per annum equal to the sum
of (i) the [Weighted Average Class A Note Rate][Class B Note Rate], (ii) the
Servicer Fee Rate, (iii) the Back-up Servicer Fee Rate, [and] (iv) the Indenture
Trustee Fee Rate [[Class A Pledged Note] and (v) the Premium Rate times a
fraction, the numerator of which is the Class A Percentage, and the denominator
of which is the Class A
B-1
Accelerated Percentage] (such sum of (i) through [(v)]
[(iv)], the Class [A][B] Pledged Note Rate"), and (c) [Class A Pledged Note --
until the Class A Note Principal Balance has been reduced to zero, 100%][Class B
Pledged Note -- after the Class A Note Principal Balance has been reduced to
zero, and until the Class B Note Principal Balance has been reduced to zero,
100%] of the sum of (i) any Residual Receipts (up to the Booked Residual Value
of the related Contract), Reacquisition Amounts and Prepayment Amounts actually
collected during the preceding Collection Period and (ii) any Defaulted Contract
Amounts relating to such Collection Period; provided, however, that, interest on
any amount of principal or interest that is not timely paid when due shall
accrue interest until paid at the Class [A][B] Note Rate plus 1%; and provided,
further, that, in no event shall the amount payable on any Payment Date in
respect of the Class A Pledged Note and the Class B Pledged Note be less than
the amount payable on the Class A Note and the Class B Note on such Payment
Date.
This Class [A][B] Pledged Note has been issued pursuant to the terms of
the Receivables Pledge Agreement, dated as of June 1, 1999 (the "Agreement"),
among the Transferors, the Trust, Prudential Securities Secured Financing
Corporation, as Depositor (the "Depositor"), and The Chase Manhattan Bank, as
Indenture Trustee (the "Indenture Trustee"). The property pledged by the
Transferors to the Trust as security for the Class A Pledged Note and the Class
B Pledged Note includes, among other things, the Contracts, certain interest in
the related Equipment, all Scheduled Payments, Final Scheduled Payments,
Residual Receipts (up to the Booked Residual Value with respect to the related
Contract), Defaulted Contract Recoveries and other monies due thereunder after
the close of business on May 31, 1999 (the "Initial Cut-Off Date"), and other
property.
Payments made on the Class [A][B] Pledged Note will be used by the
Indenture Trustee to make certain payments required under the Indenture, dated
as of June 1, 1999 (the "Indenture"), by and among the Trust, American Business
Leasing, Inc., as Servicer (the "Servicer") and The Chase Manhattan Bank, as
Indenture Trustee and as Back-up Servicer (the "Back-up Servicer"). To the
extent not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in Annex A to the Indenture.
This Class [A][B] Pledged Note is limited in right of payment to
certain collections and recoveries respecting the Contracts, all as more
specifically set forth in the Agreement and in the Indenture. The holder hereof,
by its acceptance of this Class [A][B] Pledged Note, agrees to look solely to
the funds in the Collection Account to the extent available for payment to the
holder hereof for payment hereunder. [The amount due on this Class A Pledged
Note on each Payment Date will equal the sum of (x) the Class A Pledged
Percentage of the amounts due under Section 3.04(b)(i), (ii), (iii), (iv), (vi),
(vii), (xv), (xvi) and (xvii) of the Indenture and (y) 100% of the amounts due
under Section 3.04(b)(v), (viii), (x) and (xi) of the Indenture, for such
Payment Date.] [The amount due on this Class B Pledged Note on each Payment Date
will equal the sum of (x) the Class B Pledged Percentage of the amounts due
under Section 3.04(b)(i), (ii), (iii), (iv), (vi), (vii), (xv), (xvi) and (xvii)
of the Indenture and (y) 100% of the amounts due under Section 3.04(b)(ix),
(xii), (xiii) and (xiv) of the Indenture, for such Payment Date.]
B-2
This Class [A][B] Pledged Note is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the holder
of this Class A Pledged Note, by virtue of the acceptance hereof, assents and by
which such holder is bound. Pursuant to the Agreement, the Transferors shall, in
addition to the Class [A][B] Pledged Note, issue the Class [A][B] Pledged Note
(the "Class [A][B] Pledged Note" and, together with the Class [A][B] Pledged
Notes, the "Pledged Notes"). This Class [A][B] Note does not purport to
summarize the Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and immunities of the
Transferors.
Unless earlier declared, or they otherwise become, due and payable by
reason of a Transferor Event of Default, the Pledged Notes are payable only at
the time and in the manner provided in the Agreement and are not redeemable or
prepayable before such time except that the Servicer will have the option,
subject to certain conditions set forth in the Agreement and in the Indenture,
including the deposit of the sum specified in the Indenture, to cause early
retirement of the Pledged Notes as of any Payment Date on which the Offered
Notes are redeemed. If a Transferor Event of Default, as defined in the
Agreement, shall occur and be continuing, the principal of all of the Pledged
Notes may become or be declared immediately due and payable in the manner and
with the effect provided in the Agreement.
The Servicer, the Transferors, the Trust, the Note Issuer, the
Depositor, the Collateral Agent and the Indenture Trustee and any agent of any
of the foregoing may treat the person in whose name this Class [A][B] Pledged
Note is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by any notice to the contrary.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
B-3
IN WITNESS WHEREOF, the undersigned has caused this Class
[A][B] Pledged Note to be duly executed.
ABFS FINANCE LLC 1999-A
By: ABFS Special Purpose Management, Inc., as
Managing Member
By:_____________________________
Name:
Title:
ABFS RESIDUAL LLC 1999-A
By: ABFS Special Purpose Management, Inc., as
Managing Member
By:_____________________________
Name:
Title:
Dated: June __, 1999
B-4