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EXHIBIT 10.22
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Insurer
T & W LEASING INC.,
as Company
T & W LEASING INC.,
as Servicer
T & W FUNDING COMPANY IV, L.L.C.,
as Issuer
K & P FINANCE CORP.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Backup Servicer
INSURANCE AGREEMENT
T & W FUNDING COMPANY IV, L.L.C.
LEASE-BACKED NOTES, SERIES 1995-1
Dated as of July 1, 1995
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TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be a part of this Insurance Agreement. All capitalized terms
used in this Agreement and not otherwise defined shall have the meanings set
forth in Article I of this Agreement.)
Page
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ARTICLE I
DEFINITIONS
Section 1.01. General Definitions ...................................................................2
Section 1.02. Generic Terms .........................................................................4
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Company, the Issuer and the Servicer.............4
Section 2.02. Affirmative Covenants of the Company, the Issuer and the Servicer......................6
Section 2,03. Negative Covenants of the Company and Issuer..........................................11
ARTICLE III
THE NOTE INSURANCE POLICY; SECURITY
Section 3.01. Agreement To Issue the Note Insurance Policy..........................................11
Section 3.02. Conditions Precedent to Issuance of the Note Insurance Policy Relating to the Notes.. 12
Section 3.03. Premium ..............................................................................16
Section 3.04. Indemnification ......................................................................16
Section 3.05. Payment Procedure ....................................................................18
Section 3.06. Subrogation ..........................................................................18
Section 3.07. Reimbursement and Additional Payment Obligation ......................................19
Section 3.08. Reimbursement of Insurer Following Exercise of Clean-up Call .........................20
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ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement ..............................20
Section 4.02. Waiver of Rights; Further Assurances and Corrective Instruments 20
Section 4.03. Obligations Absolute ...........................................21
Section 4.04. Assignments; Reinsurance; Third-Party Rights ...................21
Section 4.05. Liability of Insurer ...........................................22
Section 4.06. Control by Insurer .............................................22
Section 4.07. Covenants of the Indenture Trustee and Backup Servicer .........22
Section 4.08. Covenants of K & P Finance Corp ................................23
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults .......................................................23
Section 5.02. Remedies; No Remedy Exclusive ..................................24
Section 5.03. Waivers ........................................................25
Section 5.04. Insurer Will Not Institute Insolvency Proceedings ..............25
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Changes and Modifications ..........................26
Section 6.02. Notices ........................................................26
Section 6.03. Severability ...................................................27
Section 6.04. Governing Law ..................................................28
Section 6.05. Consent to Jurisdiction and Venue, Etc. ........................28
Section 6.06. Consent of Insurer .............................................29
Section 6.07. Counterparts ...................................................29
Section 6.08. Recitals .......................................................29
Section 6.09. Headings .......................................................29
Section 6.10. Parties Not To Institute Insolvency Proceedings ................29
TESTIMONIUM ..................................................................26
SIGNATURES ...................................................................26
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INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT is made as of July 1, 1995 by and among MBIA
INSURANCE CORPORATION (the "Insurer"), T & W LEASING INC., in its capacity as
Company (the "Company"), T & W LEASING INC., in its capacity as Servicer (the
"Servicer"), T & W FUNDING COMPANY IV, L.L.C., in its capacity as Issuer (the
"Issuer"), K & P FINANCE CORP. and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
in its capacities as Indenture Trustee (the "Indenture Trustee") and backup
servicer (the "Backup Servicer") under the Indenture (as defined below).
RECITALS:
1. The Indenture Trustee is authenticating $53,295,306.36 principal
amount of 6.19% Lease-Backed Notes, (the "Initial Notes" and together with any
additional Tranches of Notes issued pursuant to the Indenture, the "Notes"),
provided that the terms and conditions of this Agreement and the other
Transaction Documents have been satisfied, pursuant to an indenture (the
"Indenture") as more specifically defined below. The Initial Notes will be
secured by the Collateral pledged pursuant to the Indenture. The Collateral will
consist of the Trust Estate as defined in the Indenture.
2. The Company and the Issuer have requested that the Insurer issue
from time to time separate Note Insurance Policies to guarantee payment of
Insured Payments (as defined in the Note Insurance Policies), upon such terms
and conditions as were mutually agreed upon by the parties and subject to the
terms and conditions of each Note Insurance Policy.
3. The parties hereto desire to specify the conditions precedent to
the issuance of the Note Insurance Policies by the Insurer, the indemnity and
reimbursement to be provided by the Company and the Issuer in respect of amounts
paid by the Insurer under the Note Insurance Policies, the security to be
provided to the Insurer by the Company as an inducement for the Insurer to
deliver the Note Insurance Policies and to provide for certain other matters.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, the Insurer, the Company, the Issuer, the Servicer, the Backup
Servicer and the Indenture Trustee agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. General Definitions. The terms defined in this Article I
shall have the meanings provided herein for all purposes of this Agreement,
unless the context clearly requires otherwise, in both singular and plural form,
as appropriate. Capitalized terms used in this Agreement but not otherwise
defined herein will have the meanings ascribed to such terms in the Indenture.
"Adverse Selection Procedure" means any method of selecting or
identifying Lease Contracts eligible to be included in the Collateral for
inclusion therein, other than as outlined in the Commitment, that materially and
adversely affects the representative nature of the sample of Lease Contracts so
selected and decreases the probability that the Indenture Trustee will receive
an uninterrupted flow of payments of principal and interest under the Lease
Contracts.
"Agreement" means this Insurance Agreement dated as of July 1, 1995,
including any amendments or any supplements hereto as herein permitted.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City or in the city in which the
Corporate Trust Office of the Indenture Trustee is located, are authorized or
obligated by law or executive order to close.
"Closing Date" means July 28, 1995.
"Collateral" means the Trust Estate as defined in the Indenture.
"Commitment" means the Commitment Letter dated as of July 25, 1995
between the Company and the Insurer.
"Contribution Agreement" means The Contribution Agreement dated as of
July 1, 1995 between the Issuer, the Contributors and the Company as the same
may be amended or supplemented from time to time in accordance with the terms
thereof.
"Contributor" means each of T & W Finance Corp. III, T & W Finance Corp.
IV and T & W Finance Company V, L.L.C.
"Controlling Party" means the Insurer, so long as no Insurer Insolvency
shall have occurred or Insurer Default shall have occurred and be continuing,
and, thereafter, the Indenture Trustee.
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"Date of Issuance" means the date on which the Note Insurance Policy is
issued.
"Event of Default" means any event of default set forth in Section 5.01
hereof.
"Indenture" means the Indenture dated as of July 1, 1995 among the
Company, Servicer, Issuer, Indenture Trustee and Backup Servicer including any
amendments and supplements thereto as therein and herein permitted.
"Initial Premium" means the amount set forth in the first paragraph of
Paragraph 1.a.(i) and the first and second paragraph of Paragraph 1a.(ii) of
the Commitment.
"Insurer" means MBIA Insurance Corporation.
"Insurer Default" means the occurrence and continuance of any failure of
the Insurer to make payments under the Note Insurance Policy in accordance with
its terms.
"Insurer Insolvency" means (i) the entry of a decree or order of a court
or agency having jurisdiction in respect of the Insurer in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or appointing a conservator or receiver or liquidator or rehabilitator or
other similar official of the Insurer or of any substantial part of its
property, or the entering of an order for the winding up or liquidation of the
affairs of the Insurer and the continuance of any such decree or order
undischarged or unstayed and in force for a period of 90 consecutive days; (ii)
the Insurer shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of debt,
marshalling of assets and liabilities, rehabilitation or similar proceedings of
or relating to the Insurer or of or relating to all or substantially all of its
property; or (iii) the Insurer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of or
otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"Late Payment Rate" means the rate of interest as is publicly announced
by Citibank, N.A. at its principal office in New York, New York as its prime
rate (any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 2%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under law applicable to this Agreement limiting interest rates.
"MBIA Premium" means the amount set forth in the second paragraph of
Paragraph 1a.(i) and the third paragraph of Paragraph 1a.(ii) of the Commitment.
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"Note Insurance Policy" means any Note Insurance Policy issued with
respect to any Tranche of Notes, and any endorsement thereto issued by the
Insurer to the Indenture Trustee.
"Reported Company's Financial Statements" shall have the meaning set
forth in the Servicing Agreement.
"S&P" means Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc., its successors and their assigns, and, if such corporation shall for any
reason no longer perform the functions of a securities rating agency, "S&P"
shall be deemed to refer to any other nationally recognized rating agency
designated by the Company with the approval of the Insurer.
"State" means the State of New York.
"Term of the Agreement" shall be determined as provided in
Section 4.01.
"Transaction Documents" means this Agreement, the Indenture, the
Servicing Agreement, the Contribution Agreement, the Notes and the Note
Insurance Policy.
Section 1.02. Genetic Terms. All words used herein shall be construed to
be of such gender or number as the circumstances require. This "Agreement" shall
mean this Agreement as a whole and as the same may, from time to time hereafter,
be amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to
this Agreement as a whole and not to any particular paragraph, clause or other
subdivision hereof, unless otherwise specifically noted.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Company, the Issuer
and the Servicer. The Company, the Issuer and the Servicer represent and warrant
to, and covenant with, the other parties hereto (in each case only as to matters
concerning itself) as follows:
(a) Representations and Warranties of Company, the Issuer and
Servicer Contained in Other Transaction Documents. All of the
representations and warranties made by the Company, the Issuer or the
Servicer, as the case may be, in any of the Transaction Documents are
incorporated as if fully set forth herein for the benefit of the Insurer
and are true and correct as of the Closing Date.
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(b) Due Qualification. Each of the Company, the Issuer and
the Servicer have obtained all necessary licenses, permits, charters,
registrations and approvals (together, "approvals") required to be
obtained by the Company, the Issuer and the Servicer which failure to
obtain would render any portion of the Transaction Documents
unenforceable by the Company, the Issuer, the Servicer or any other
party to the Transaction Documents, as the case may be, and would have a
material adverse effect on the Insurer or the Noteholders.
(c) Pending Litigation or Other Proceeding. There is no
pending action, proceeding or investigation before any court,
governmental or administrative agency or arbitrator against or affecting
the Company, the Issuer or the Servicer or, to the Company's, the
Issuer's or the Servicer's knowledge, any threatened action or
proceeding before any of the foregoing, which, if decided adversely to
the Company, the Issuer or the Servicer, would materially and adversely
affect the ability of the Company, the Issuer or the Servicer to perform
their respective obligations under the Transaction Documents or would
have a materially adverse effect on the Insurer or the Noteholders.
(d) Valid and Binding Agreement. The Transaction Documents
to which the Company, the Issuer or the Servicer, respectively, is a
party constitute, and when executed (if not previously) will constitute,
the legal, valid and binding agreements of the Company, the Issuer and
the Servicer, respectively, enforceable against the Company, the Issuer
and the Servicer in accordance with their respective terms, except as
the enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or limiting
creditors' rights generally or general equitable principles, as such
relate to the Company, the Issuer or the Servicer. The Company, the
Issuer and the Servicer hereby agree and covenant that each will not at
any time in the future, deny that the Transaction Documents to which the
Company, the Issuer or the Servicer, respectively, is a party constitute
the valid, legal and binding agreements of the Company, the Issuer and
the Servicer, respectively, except to the extent that the Company, the
Issuer or the Servicer is compelled to do so by law or regulation.
(e) Financial Statements. The Reported Company's Financial
Statements, copies of which have been furnished to the Insurer, (i) are,
as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of the companies reported therein as
of the dates and for the periods indicated and (iii) have been prepared
in accordance with generally accepted accounting principles consistently
applied, except as noted therein and subject to year-end adjustments
with respect to interim statements. Since the date of the most recent
Reported Company's Financial Statements, there has been no material
adverse change in such condition or operations.
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(f) Compliance With Law, Regulations, Etc. None of the
Company, the Issuer or the Servicer has notice or any reason to believe
that any practice, procedure or policy employed by the Company, the
Issuer or the Servicer in the conduct of its business violates any law,
regulation, judgment or agreement applicable to the Company, the Issuer
or the Servicer which, if enforced, would have a material adverse effect
on the ability of the Servicer, the Company or the Issuer, as the case
may be, to perform its respective obligations under the Transaction
Documents. None of the Issuer, the Company and the Servicer is in breach
of or in default under any applicable law or administrative regulation
of the State of Washington or Delaware or any department, division,
agency or instrumentality thereof or of the United States or any
applicable judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Company is a
party or is otherwise subject which, if enforced, would have a material
adverse effect on the ability of the Servicer, the Company or the
Issuer, as the case may be, to perform its respective obligations under
the Transaction Documents.
(g) Delivery of Information. The Company alone represents
and warrants that none of the Transaction Documents nor any other
information furnished to the Insurer by or on behalf of the Company
contain any statement of a material fact by the Company which was untrue
or misleading in any material respect when made. Since the furnishing of
such information, there has been no change nor any development or event
involving a prospective change which would render any of the Transaction
Documents or other information furnished to the Insurer untrue or
misleading in a material respect.
(h) Securities Laws Compliance. The Company, the Servicer
and the Issuer represent and warrant that neither the offer nor the sale
of the Notes has been or will be in violation of the Securities Act of
1933, and none of the Company, the Issuer or the Servicer is required to
be registered as an "investment company" under the Investment Company
Act of 1940, as amended.
(i) Federal Reserve Board Regulations. No part of the
proceeds of the Notes will be used by the Company or the Issuer to
purchase or carry any "margin stock" within the meaning of Regulation G
of the Board of Governors of the Federal Reserve System.
Section 2.02. Affirmative Covenants of the Company, the Issuer and the
Servicer. The Company, the Issuer and the Servicer hereby covenant and agree
that during the term of this Agreement:
(a) Compliance With Agreements. The Company, the Issuer and
the Servicer shall comply in all material respects with the terms and
conditions of the Transaction
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Documents to which each, respectively, is a party and, unless the
Insurer shall otherwise consent, none of the Company, the Issuer or the
Servicer shall agree to any amendment to or modification of the terms of
any of the Transaction Documents to which each, respectively, is a
party.
(b) Corporate Existence. The Company, the Issuer and the
Servicer shall maintain their respective existences and continue to be
duly organized, duly qualified and duly authorized.
(c) The Company To Provide Financial Statements;
Accountants' Reports; Other Information. The Company and the Servicer
shall keep or cause to be kept in reasonable detail books and records of
account of the Company's or the Servicer's books and records relating to
its obligations assumed under the Transaction Documents, in accordance
with its operating rules and procedures. The Company and the Servicer
shall each furnish or cause to be furnished to the Insurer:
(i) Financial Statements. All reports required to be
furnished under Section 4.02(a) of the Servicing Agreement.
(ii) Initial and Monthly Reports. On or before the
Closing Date, the Company will provide the Insurer with the
Lease Schedule for the Notes. Thereafter, not later than 12:00
noon New York City time on each Determination Date, the Servicer
shall deliver to the Insurer the report required by Section 4.01
of the Servicing Agreement setting forth, among other things,
(A) the outstanding Aggregate Implicit Principal Balance of all
Lease Contracts, (B) the Required Collateralization Amount and
(C) the outstanding principal balance of the Notes.
(iii) Other Reports and Information. The Company shall
also furnish, with reasonable promptness, such other financial
data, financial reports relating to the Company prepared by
third parties and other data relating to the Company which are
commonly prepared and can be provided without undue effort, as
the Insurer may reasonably request. Costs associated with
providing such information shall, if requested by the Company,
be paid by the Insurer.
(d) The Issuer Member Meetings. The Issuer shall have annual
meetings of its members and shall prepare income and franchise tax
returns as appropriate. The Issuer shall deliver to the Insurer copies
of the minutes of such meetings no later than April 30 of each year and
such tax returns promptly upon filing but in no event later than August
31 of each year, beginning in 1996.
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(e) Certificate of Compliance. The Servicer shall deliver to
the Insurer concurrently with the delivery of the Financial Statements
required pursuant to paragraph (c) above the reports to the Indenture
Trustee and other statements required to be delivered under Sections
4.02, 4.03 and 4.05 of the Servicing Agreement.
(f) Access to Records; Discussions With Officers and
Accountants. The Company, the Issuer and the Servicer shall, upon the
request of the Insurer, permit the Insurer, or its authorized agent, at
reasonable times and upon reasonable notice:
(i) to inspect such books and records of the
Company, the Issuer or the Servicer, as the case may be, as may
relate to the Notes, the Lease Contracts, the obligations of the
Company, the Issuer or the Servicer, as the case may be, under
the Transaction Documents and the transactions consummated in
connection herewith;
(ii) to discuss the affairs, finances and accounts of
the Company, the Issuer or the Servicer as such relate to the
performance by it of its obligations under the Transaction
Documents with an appropriate officer of the Company, the Issuer
or the Servicer, as the case may be; and
(iii) to discuss the affairs, finances and accounts of
the Company, the Issuer or the Servicer as such relate to the
performance by it of its obligations under the Transaction
Documents with the Company's, the Issuer's or the Servicer's
independent public accountants, as the case may be, provided
that an appropriate officer of the Company, the Issuer or the
Servicer, as the case may be, shall have the right to be present
during such discussions, and provided further that the Insurer
shall pay any fees of such accountants associated with such
discussions.
Such inspections and discussions shall be conducted during
normal business hours and shall not unreasonably disrupt the business of
the Company, the Issuer or the Servicer. The books and records of the
Company will be maintained at the address of the Company designated
herein for receipt of notices, unless the Company shall otherwise advise
the parties hereto in writing, the books and records of the Issuer will
be maintained at the address of the Issuer designated herein for receipt
of notices, unless the Issuer shall otherwise advise the parties hereto
in writing, and the books and records of the Servicer will be maintained
at the address of the Servicer designated herein for receipt of notices,
unless the Servicer shall otherwise advise the parties hereto in
writing.
The Insurer shall keep confidential any matter of which it
becomes aware through such inspections or discussions, except as may be
otherwise required, by regulation, law or
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court order or requested by appropriate governmental authorities or as
necessary to enforce any of the provisions of the Transaction Documents.
(g) Inform Insurer of Material Events. Each of the Company,
the Issuer and the Servicer shall promptly inform, the Insurer and the
Indenture Trustee in writing of the following:
(i) any default or any fact or event which results,
or which with notice or the passage of time, or both, would
result in an Event of Default or Servicer Event of Default under
any Transaction Document or would constitute a material breach
of a representation, warranty or covenant by it under any
Transaction Document;
(ii) the submission of any claim or the initiation of
any legal process, litigation or administrative or judicial
investigation against it in any federal, state or local court or
before any governmental body or agency, or before any
arbitration board, or any such proceedings threatened by any
governmental agency, which, if adversely determined, would have
a material adverse effect upon its ability to perform its
obligations under any Transaction Document;
(iii) the submission of any claim or the initiation of
any legal process, litigation or administrative or judicial
investigation in any federal, state or local court or before any
arbitration board, or any such proceeding threatened by any
governmental agency, which, if adversely determined, would have
a material adverse effect on the Trust Estate;
(iv) the commencement of any proceedings under any
applicable bankruptcy, reorganization, liquidation, insolvency
or other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, trustee or other
similar official shall have been, or may be, appointed or
requested; and
(v) the receipt of notice from any agency or
governmental body having authority over the conduct of its
business that it is to cease and desist, or to undertake any,
practice, program, procedure or policy employed by it in the
conduct of the business of either of them, and such cessation or
undertaking will materially adversely affect its ability to
perform its obligations under the Transaction Documents.
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(h) Further Assurances. The parties hereto agree to
reasonably cooperate with S&P and ▇▇▇▇▇'▇ in connection with any review
which may be undertaken by S&P and ▇▇▇▇▇'▇ after the date hereof.
(i) Redemption of Notes. The Issuer shall, on or before the
fifteenth day preceding the date on which any party exercises its right
to cause the redemption of all Notes pursuant to Section 10.01 of the
Indenture, deliver written notice to the Insurer of such election
containing the information required to be delivered to the Noteholders
pursuant to Section 10.03 of the Indenture.
(j) Servicing of Lease Contracts. The Servicer shall perform
such actions with respect to the Lease Contracts as are provided in
Articles 3 and 4 of the Servicing Agreement. The parties hereto, with
the exception of the Indenture Trustee and the Backup Servicer, will
provide the Insurer with written notice of any change or amendment to
any Transaction Document as currently in effect and agree not to make
any change or amendment to any Transaction Document without the prior
written consent of the Insurer.
(k) Third-Party Rights. Subject to the prior rights of the
Noteholders, the Company agrees that the Insurer shall have all of the
rights of a third-party beneficiary of, and pursuant to, the Company's
agreements under the Contribution Agreement, and the Servicer and Issuer
agree that the Insurer shall have all of the rights of a third-party
beneficiary of, and pursuant to, the Servicer's and the Issuer's
agreements under the Indenture and the Servicing Agreement.
(l) Maintenance of Trust Estate. On or before each April 15,
so long as any of the Notes are outstanding, the Servicer shall furnish
to the Insurer and the Indenture Trustee an officer's certificate either
stating that such action has been taken with respect to the recording,
filing, rerecording and refiling of any financing statements and
continuation statements as is necessary to maintain the interest of the
Indenture Trustee created by the Indenture with respect to the
Collateral and reciting the details of such action or stating that no
such action is necessary to maintain such interests. Such officer's
certificate shall also describe the recording, filing, rerecording and
refiling of any financing statements and continuation statements that
will be required to maintain the interest of the Indenture Trustee in
the Collateral until the date such next officer's certificate is due.
The Servicer will use its best efforts to cause any necessary recordings
or filings to be made with respect to the Collateral.
(m) [RESERVED].
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(n) Servicer's Indemnity. Notwithstanding anything in
subsection 3.07(a) hereof, the Servicer shall pay to the Insurer an
amount equal to any amount paid by the Insurer because of the Servicer's
failure to deposit into the Collection Account any amount required to
be so deposited by it pursuant to the Indenture or the Servicing
Agreement, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect to any
unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment) at a
rate of interest equal to the Late Payment Rate.
Section 2.03. Negative Covenants of the Company and Issuer. The Company
and the Issuer agree and covenant with the Insurer that at all times during the
Term of the Agreement:
(a) Adverse Selection Procedure. The Company and the Issuer
will not use any Adverse Selection Procedure in selecting the Lease
Contracts to be pledged to the Indenture Trustee from the outstanding
Lease Contracts that qualify under the Indenture for inclusion in the
Collateral.
(b) Impairment of Rights. The Company and the Issuer each
agree and covenant with the Insurer that at all times during the Term of
the Agreement the Company and the Issuer shall not take any action, or
decline to take any action if reasonably requested by the Insurer, if
such action or failure to take action will interfere with the
enforcement of any rights under any of the Transaction Documents.
(c) Amendment to Certificate of Incorporation. The Issuer
shall not amend its certificate of incorporation without the Insurer's
prior written consent.
ARTICLE III
THE NOTE INSURANCE POLICIES; SECURITY
Section 3.01. Agreement To Issue the Note Insurance Policies. The
Insurer agrees, subject to the conditions set forth in Section 3.02(a) hereof,
to issue the Note Insurance Policy relating to the Initial Notes on the Closing
Date. The Insurer agrees, subject to the conditions set forth in Section 3.02(b)
hereof, to issue additional Note Insurance Policies relating to additional
tranches of Notes on the related Delivery Dates.
Section 3.02. Conditions Precedent. (a) To Issuance of the Initial Note
Insurance Policy. The Company and the Issuer shall have complied with the terms
and satisfied the conditions precedent set forth below:
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(i) Payment of the premium in accordance with Section 3.03 hereof;
(ii) Payment of or satisfactory arrangements for payment by the
Company or the Issuer of (a) rating agency fees of S&P and Moody's; and (b) the
fees and expenses incurred by the Insurer in connection with the issuance of
such Note Insurance Policy and the offer and sale of the Initial Notes,
including fees and expenses of counsel to the Insurer and accountants for the
Insurer, all in accordance with the terms of the Commitment. The fees for any
other rating agency shall be paid by the party requesting such other agency's
rating, unless such other agency is a substitute for S&P or Moody's in the event
that S&P or ▇▇▇▇▇'▇ is no longer rating securities, in which case the cost for
such agency shall be paid by the Company or the Issuer;
(iii) Receipt by the Insurer of a fully executed copy of the
Transaction Documents;
(iv) Receipt by the Insurer of certified copies of the resolutions
of the board of directors of the Company authorizing the execution and delivery
and performance of the Transaction Documents and the other matters contemplated
thereby, and of all other documents evidencing any other action of the Company
necessary to enter into the Transaction Documents, all in form and substance
acceptable to the Insurer and its counsel;
(v) Receipt by the Insurer of certified copies of the resolutions of
the board of directors of the Issuer authorizing the execution and delivery and
performance of the Transaction Documents and the other matters contemplated
thereby, and of all other documents evidencing any other action of the Issuer
necessary to enter into the Transaction Documents, all in form and substance
acceptable to the Insurer and its counsel;
(vi) Receipt by the Insurer of favorable opinions of counsel,
including counsel to the Company, the Issuer, the Indenture Trustee and
transaction counsel, addressed to the Insurer in form and substance reasonably
acceptable to the Insurer and its counsel;
(vii) Receipt by the Insurer of true and correct copies of any
governmental approvals necessary for the transactions contemplated by the
Transaction Documents;
(viii) Receipt from S&P and Moody's of the highest long-term rating on
the Initial Notes;
(ix) The Insurer shall have received a certificate of an authorized
officer of the Company certifying the name and true signatures of the officers
of the Company executing the Transaction Documents;
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(x) The Insurer shall have received a certificate of an authorized
officer of the Issuer certifying the name and true signatures of the officers of
the Issuer executing the Transaction Documents;
(xi) The Insurer shall have received a certificate of the Company to
the effect that (i) the Reported Company's Financial Statements which have been
furnished to the Insurer are, as of the date thereof, complete and correct in
all material respects; present fairly the financial condition of the Company, as
of the date thereof; and have been prepared in accordance with generally
accepted accounting principles consistently applied (except as noted therein and
subject to year-end adjustments for interim statements) and (ii) there has been
no material adverse change in such conditions or operations;
(xii) The Insurer shall have received copies of any agreements
relating to the placement of the Initial Notes, and specifically be entitled to
rely on such agreements;
(xiii) The Insurer shall have received copies of each of the documents,
and specifically be entitled to rely on the documents, required to be delivered
to the Indenture Trustee pursuant to Section 4.01 of the Indenture, except that
the Insurer shall not receive copies of the original executed counterparts of
each Lease Contract or the related Lease Contract File;
(xiv) Delivery of such other documents, customary closing
certificates, instruments, approvals or opinions as are reasonably requested by
the Insurer;
(xv) Compliance with all other terms, conditions and requirements of
the Commitment;
(xvi) The Insurer and its counsel shall have determined that all the
Lease Contracts, documents, certificates and opinions to be delivered in
connection with the Initial Notes conform to the terms of the Indenture, the
Commitment and this Agreement; and
(xvii) S&P shall have informed the Insurer that S&P will assign a
shadow rating of at least "BBB-" on the Initial Notes.
Issuance of such Note Insurance Policy will be conclusive evidence of
satisfaction or waiver of any of the conditions set forth in this Section
3.02(a).
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(b) To Issuance of Additional Note Insurance Policies Relating to the Additional
Tranches of Notes. The Company and the Issuer shall have complied with the terms
and satisfied the conditions precedent set forth below:
(i) Payment of the premium in accordance with Section 3.03 hereof;
(ii) Payment of or satisfactory arrangements for payment by the
Company or the Issuer of (a) rating agency fees of S&P and Moody's; and (b) the
fees and expenses incurred by the Insurer in connection with the issuance of
such Note Insurance Policy and the offer and sale of the Notes, including fees
and expenses of accountants for the Insurer, all in accordance with the terms of
the Commitment. The fees for any other rating agency shall be paid by the party
requesting such other agency's rating, unless such other agency is a substitute
for S&P or Moody's in the event that S&P or ▇▇▇▇▇'▇ is no longer rating
securities, in which case the cost for such agency shall be paid by the Company
or the Issuer;
(iii) Receipt by the Insurer of a fully executed copy of the
Transaction Documents;
(iv) Receipt by the Insurer of certified copies of the resolutions of
the board of directors of the Company authorizing the execution and delivery and
performance of the Transaction Documents and the other matters contemplated
thereby, and of all other documents evidencing any other action of the Company
necessary to enter into the Transaction Documents, all in form and substance
acceptable to the Insurer and its counsel;
(v) Receipt by the Insurer of certified copies of the resolutions of
the board of directors of the Issuer authorizing the execution and delivery and
performance of the Transaction Documents and the other matters contemplated
thereby, and of all other documents evidencing any other action of the Issuer
necessary to enter into the Transaction Documents, all in form and substance
acceptable to the Insurer and its counsel;
(vi) Receipt by the Insurer of favorable opinions of counsel,
including counsel to the Company, the Issuer, the Indenture Trustee and
transaction counsel, (including "bring downs" of the true sale and perfection
opinions delivered on the Closing Date) addressed to the Insurer in form and
substance reasonably acceptable to the Insurer and its counsel;
(vii) Receipt by the Insurer of true and correct copies of any
governmental approvals necessary for the transactions contemplated by the
Transaction Documents;
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(viii) The Rating Agencies shall not have notified the Issuer, the
Servicer, the Back-up Servicer, the Bond Insurer and the Indenture Trustee in
writing that such issuance will result in a reduction or withdrawal of the
rating assigned by it to the Outstanding Notes of any Tranche including the
Tranche to be issued;
(ix) The Insurer 4a have received copies of any agreements relating
to the placement of the Notes, and specifically be entitled to rely on such
agreements;
(x) The Insurer shall have received copies of each of the documents,
and specifically be entitled to rely on the documents, required to be delivered
to the Indenture Trustee pursuant to Section 4.01 of the Indenture, except that
the Insurer shall not receive copies of the original executed counterparts of
each Lease Contract or the related Lease Contract File;
(xi) Delivery of such other documents, customary closing
certificates, instruments, approvals or opinions as are reasonably requested by
the Insurer;
(xii) Compliance with all other terms, conditions and requirements of
the Commitment;
(xiii) The Issuer shall have delivered to the Indenture Trustee, the
Bond Insurer and the Coordinator the related Funding Report at least one
Business Day prior to the related Delivery Date, in a form satisfactory to the
Indenture Trustee, to be acknowledged by each of the Indenture Trustee, the Bond
Insurer and the Coordinator;
(xiv) The Issuer shall have delivered to the Indenture Trustee the
original executed counterpart of each Lease Contract identified in the related
Lease Schedule and the Lease Contract File relating to such Lease Contract;.
(xv) The Insurer shall have determined that the Lease Contracts, all
documents, certificates and opinions to be delivered in connection with the
Notes conform to the terms of the Indenture, the Commitment and this Agreement;
(xvi) S&P shall have informed the Insurer that S&P will assign a
shadow rating of at least "BBB-" on the Notes.
(xvii) The Issuer shall have notified the Insurer in writing of the
intended issuance of any additional Tranche of Notes not later than ten Business
Days before the intended Delivery Date, and the Servicer shall have provided the
Insurer all information necessary
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for the Insurer to determine the accuracy of the proposed funding amount
and compliance with any concentration restrictions, not later than five
Business Days before the intended date of issuance;
(xviii) The Issuer shall issue additional Tranches of fixed rate
Notes in minimum size of $5,000,000 and additional Tranches of floating
rate Notes in minimum size of $ 1,000,000 per Tranche; and
(xix) Prior to the issuance of additional Tranches of floating
rate Notes, the Issuer shall provide a Floating Rate Cap Agreement that is
satisfactory to the Insurer and its counsel.
Issuance of such Note Insurance Policy will be conclusive evidence of
satisfaction or waiver of any of the conditions set forth in this Section
3.02(b).
Section 3.03. Premium. In consideration of the issuance by the Insurer
of each Note Insurance Policy, the Issuer shall pay to the Insurer on the
Closing Date the Initial Premium. The MBIA Premium shall be payable in
accordance with Section 12.02(d)(v) of the Indenture commencing on the
applicable dates set forth in the Commitment so long as no Insurer Default or
Insurer Insolvency has occurred. The Initial Premium and the MBIA Premium shall
be nonrefundable without regard to whether the Insurer makes any payment under
any Note Insurance Policy or any other circumstances relating to the Notes or
provision being made for payment of the Notes prior to maturity.
Section 3.04. Indemnification. (a) In addition to any and all rights of
indemnification or any other rights of the Insurer pursuant hereto or under law
or equity, the Company and the Issuer agree to pay, and to protect, indemnify
and save harmless, the Insurer and its officers, directors, shareholders,
employees, agents, including each person, if any, who controls the Insurer
within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities and Exchange Act of 1934, as amended,
from and against any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or obligations
whatsoever (herein collectively referred to as "Liabilities") of any nature
arising out of or relating to the transactions contemplated by the Transaction
Documents by reason of:
(i) any act or omission of the Company, Servicer or the
Issuer in connection with the offering, issuance, sale or delivery of
the Notes other than by reason of false or misleading information
provided by the Insurer in writing in connection with such offering;
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(ii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of the
Company, the Servicer or the Issuer;
(iii) the violation by the Company, the Servicer or the Issuer
of any federal or state securities, banking or antitrust laws, rules or
regulations in connection with the issuance, offer and sale of the Notes
or the transactions contemplated by the Transaction Documents;
(iv) the violation by the Company, the Servicer or the Issuer
of any federal or state laws, rules or regulations relating to the
maximum amount of interest permitted to be received on account of the
loan of money or with respect to the Lease Contracts;
(v) the breach by the Company, the Servicer or the Issuer of
any of its obligations under this Agreement or any of the Transaction
Documents; and
(vi) the breach by the Company, the Servicer or the Issuer of
any representation or warranty on the part of the Company, the Servicer
or the Issuer contained in the Transaction Documents or in any
certificate furnished or delivered to the Insurer thereunder.
This indemnity provision shall survive the termination of this Agreement and
shall survive until the statute of limitations has run on any causes of action
which arise from one of these reasons and until all suits filed as a result
thereof have been finally concluded.
Notwithstanding any provision or obligation to the contrary set forth in
this Agreement or any instrument now or hereafter securing, affecting or
relating to any obligation of the Company, the Servicer or the Issuer under this
Agreement, including, without limitation, the Indenture, no individual
representative of the Company, the Servicer or the Issuer (including, without
limitation, employees, officers, directors and shareholders thereof) shall have
any personal liability under this Agreement including, without limitation, any
liability for the performance or observance or nonperformance or nonobservance
of any covenant or obligation of the Company, the Servicer or the Issuer or for
breach of any representation or warranty contained in this Agreement.
(b) Any party which proposes to assert the right to be indemnified
under this Section 3.04 will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
is to be made against the Company, the Servicer or the Issuer under this Section
3.04, notify the Company, the Servicer or the Issuer of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. In case any
action, suit or proceeding shall be brought against any indemnified party and it
shall notify the Company, the Servicer or the Issuer of the commencement
thereof, the Company, the Servicer or
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the Issuer shall be entitled to participate in, and, to the extent that it shall
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the Company, the Servicer or the Issuer
to such indemnified party of its election so to assume the defense thereof, the
Company, the Servicer or the Issuer shall not be liable to such indemnified
party for any legal or other expenses other than reasonable costs of
investigation subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action the defense of which is assumed by the Company, the
Servicer or the Issuer in accordance with the terms of this subsection (b), but
the fees and expenses of such counsel shall be at the expense of such
indemnified party unless the employment of counsel by such indemnified party has
been authorized by the Company, the Servicer or the Issuer. The Company, the
Servicer or the Issuer shall not be liable for any settlement of any action or
claim effected without its consent.
Section 3.05. Payment Procedure. If the Insurer makes any payment under
the Note Insurance Policy, the Company, the Servicer and the Indenture Trustee
shall accept, except in the case of manifest error, a voucher or other evidence
of payment as prima facie evidence that such payment was properly made. In the
event of any payment by the Insurer, the Company, the Servicer and the Indenture
Trustee agree to accept a voucher or other evidence of payment complete on its
face as prima facie evidence of the propriety thereof and the liability therefor
of the Insurer except in the case of manifest error. All payments to be made to
the Insurer under this Agreement shall be made to the Insurer in lawful currency
of the United States of America in immediately available funds at the notice
address for the Insurer as specified in the Indenture on the date when due.
Payments to be made to the Insurer under this Agreement shall bear interest
payable to the extent provided in this Agreement at the Late Payment Rate from
the date when due to the date paid.
Section 3.06. Subrogation. Upon any payment by the Insurer pursuant to
the Note Insurance Policy, the Insurer shall be fully subrogated to the rights
of the Noteholders to the extent of such payment, pursuant to the priority set
forth in Section 6.08 of the Indenture. The Indenture Trustee acknowledges such
subrogation and, further, agrees to execute such instruments prepared by the
Insurer and to take such reasonable actions as, in the sole judgment of the
Insurer, are necessary to evidence such subrogation and to perfect the rights of
the Insurer to receive any moneys paid or payable under the Indenture, provided
that the Indenture Trustee can legally take such action consistent with its
obligations under the Indenture, and the Indenture Trustee shall be indemnified
by the Insurer for any reasonable expense that results from such action.
Section 3.07. Reimbursement and Additional Payment Obligation. (a) To
the extent provided in Section 6.08 of the Indenture, after the required payment
of the MBIA Premium therefrom, the Insurer shall be entitled to reimbursement
for any payment made by the Insurer under the Note Insurance Policy, in an
amount equal to the amount so paid and all amounts
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previously paid that remain unreimbursed, together with interest on any and all
amounts remaining unreimbursed (to the extent permitted by law, if in respect of
any unreimbursed amounts representing interest) from the date such amounts
became due until paid in full (after as well as before judgment), at a rate of
interest equal to the Late Payment Rate; provided that, the sole source of
reimbursement for payments made by the Insurer under the Note Insurance Policy
shall be pursuant to Section 6.08 of the Indenture and no person or entity shall
be personally liable for the payment of such amounts.
(b) The Company and the Issuer agree to pay to the Insurer as follows:
anything in subsection 3.07(a) hereof to the contrary notwithstanding, the
Insurer shall be entitled to reimbursement from the Company for payments made
under the Note Insurance Policy arising as a result of the Company's or the
Issuer's, as the case may be, failure to repurchase any Lease Contract if it is
not repurchased when required to be repurchased by it pursuant to Section 4.03
of the Indenture, Section 3.03 of the Contribution Agreement or Section 3.10 of
the Servicing Agreement, together with interest on any and all amounts remaining
unreimbursed (to the extent permitted by law, if in respect of any unreimbursed
amounts representing interest) from the date such amounts became due until paid
in full (after as well as before judgment), at a rate of interest equal to the
Late Payment Rate.
(c) The Company, the Issuer and the Servicer agree to pay to the Insurer
as follows: any and all charges, fees, costs and expenses that the Insurer may
reasonably pay or incur, including, but not limited to, attorneys' and
accountants' fees and expenses, in connection with (i) any accounts established
to facilitate payments under the Note Insurance Policy to the extent the Insurer
has not been immediately reimbursed on the date that any amount is paid by the
Insurer under the Note Insurance Policy, (ii) the enforcement, defense or
preservation of any rights in respect of any of the Transaction Documents,
including defending, monitoring or participating in any litigation or proceeding
(including any insolvency or bankruptcy proceeding in respect of the Company,
the Issuer or the Servicer or any affiliate of any of them) relating to any of
the Transaction Documents or any party to any of the Transaction Documents in
its capacity as such a party, or (iii) any amendment, waiver or other action
with respect to, or related to, any Transaction Document, whether or not
executed or completed; costs and expenses shall include a reasonable allocation
of compensation and overhead attributable to the time of employees of the
Insurer spent in connection with the actions described in clause (ii) above, and
the Insurer reserves the right to charge a reasonable fee as a condition to
executing any waiver or consent proposed in respect of any of the Transaction
Documents.
(d) All amounts to be paid pursuant to subsection (a) above shall be due
and payable without demand, and all amounts to be paid pursuant to subsection
(b) above shall be due and payable upon demand. All such amounts shall be
payable in the priority and in the manner provided in the Transaction Documents
relating thereto, provided that upon the occurrence of any
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Servicer Event of Default under the Servicing Agreement, the Insurer shall have
the rights provided for herein and therein.
Section 3.08. Reimbursement of Insurer Following Redemption at the
Option of the Issuer. Following termination of the Indenture pursuant to Section
10.01 of the Indenture, the Issuer agrees to reimburse the Insurer for any
Insured Payments required to be made pursuant to the Note Insurance Policy
subsequent to the date of such termination.
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement. This Agreement shall
take effect on the Date of Issuance and shall remain in effect until such time
as the Insurer is no longer subject to a claim under any Note Insurance Policy
and all amounts payable by the Company, the Issuer or the Servicer hereunder or
under the Indenture and under the Notes have been paid in full.
Section 4.02. Waiver of Rights; Further Assurances and Corrective
Instruments. (a) Excepting at such times as an Insurer Insolvency or default in
payment under any Note Insurance Policy shall exist or shall have occurred and
be continuing, none of the Company, the Issuer, the Servicer or the Indenture
Trustee shall grant any waiver of rights under any of the Transaction Documents
to which any of them is a party without the prior written consent of the
Insurer, and any amendment or supplement to the Transaction Documents without
the written consent of the Insurer shall be null and void and of no force or
effect.
(b) Each of the Company, the Issuer, the Servicer and the Indenture
Trustee agrees that it will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as the Insurer may reasonably request and as
may reasonably be required to effectuate the intention of or facilitate the
performance of this Agreement, provided that the Company, the Indenture Trustee
(consistent with its obligations under the Indenture), the Issuer or the
Servicer, as the case may be, can legally take such action and the Company, the
Issuer, the Indenture Trustee or the Servicer, as the case may be, shall be
indemnified by the Insurer for any reasonable expenses resulting from such
action.
Section 4.03. Obligations Absolute. The obligations of the Company, the
Issuer and the Servicer hereunder shall be absolute and unconditional, and shall
not be subject to, and the Company, the Issuer and the Servicer hereby waive any
of their rights of, abatement, diminution, postponement or deduction, or to any
defense other than payment, or to any right of setoff or recoupment arising out
of any breach under any of the Transaction Documents, by any party thereto or
any beneficiary thereof, or out of any obligation at any time owing to the
Company, the
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Issuer or the Servicer. Nothing herein shall be construed as prohibiting the
Company, the Issuer or the Servicer from pursuing any rights or remedies they
may have against any other person or entity in a separate legal proceeding. The
obligations of the Company, the Issuer and the Servicer hereunder are absolute
and unconditional and will be paid or performed strictly in accordance with this
Agreement.
Section 4.04. Assignments; Reinsurance; Third-Party Rights. (a) This
Agreement shall be a continuing obligation of the Company, the Issuer and the
Servicer and shall (i) be binding upon the Company, the Issuer and the Servicer
and their respective successors and assigns and (ii) inure to the benefit of and
be enforceable by the Insurer and its successors, transferees and assigns.
Neither the Company, the Issuer nor the Servicer may assign this Agreement, or
delegate any of its duties hereunder, without the prior written consent of the
Insurer.
(b) The Insurer shall have the right to give participations in its
rights under this Agreement and to enter into contracts of reinsurance with
respect to any Note Insurance Policy and each such participant or reinsurer
shall be entitled to the benefit of any representation, warranty, covenant and
obligation of the Company, the Issuer and the Servicer hereunder as if such
participant or reinsurer was a party hereto; provided that no such grant of
participation shall operate to relieve the Insurer of liability on any Note
Insurance Policy, and provided further that no such participation or contract of
reinsurance shall require the Servicer, the Indenture Trustee, the Company or
the Issuer to deal with any person other than the Insurer.
(c) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any person, including, particularly, any Noteholder,
other than the Insurer, against the Company, the Issuer or the Servicer, and all
the terms, covenants, conditions, promises and agreements contained herein shall
be for the sole and exclusive benefit of the parties hereto and their
successors. Neither the Indenture Trustee nor any Noteholder shall have any
right to payment from the premium paid pursuant to Section 3.03 hereof.
Section 4.05. Liability of Insurer. The Insurer shall not be responsible
for any act or omission of the Indenture Trustee with respect to its use of any
Note Insurance Policy. Neither the Insurer nor any of its officers, directors or
employees shall be liable or responsible for: (a) the use which may be made of
any Note Insurance Policy by or for any acts or omissions of the Indenture
Trustee in connection therewith; or (b) the validity, sufficiency, accuracy or
genuineness of documents, or of any endorsement(s) thereon, submitted by any
person in connection with a claim under any Note Insurance Policy, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged. In furtherance and not in limitation of the
foregoing, the Insurer may accept documents that appear on their face to be in
order, without responsibility for further investigation.
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Section 4.06. Control by Insurer. So long as an Insurer Default
has not occurred and so long as no Insurer Insolvency has occurred, upon
the occurrence and during the continuation of any Servicer Event of
Default described in Section 6.01 of the Servicing Agreement, the
Insurer shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture
Trustee provided that such direction shall not be in conflict with any
rule of law or with any provision of this Agreement or the Indenture.
Section 4.07. Covenants of the Indenture Trustee and Backup
Servicer. The Indenture Trustee and the Backup Servicer shall comply in
all material respects with the terms and conditions of the Transaction
Documents to which each, respectively, is a party, and, provided there
does not exist an Insurer Insolvency or Insurer Default, neither the
Indenture Trustee nor the Backup Servicer shall agree to any amendment
to or modification of the terms of any of the Transaction Documents to
which each, respectively, is a party unless the Insurer shall otherwise
consent.
Section 4.08. Covenants of K & P Finance Corp.
(a) Meetings. K & P Finance Corp. shall have annual meetings
of its shareholders and shall prepare income and franchise tax returns
as appropriate. The Issuer shall deliver to the Insurer copies of the
minutes of such meetings no later than April 30 of each year and such
tax returns promptly upon filing but in no event later than August 31 of
each year, beginning in 1996.
(b) Amendment to Certificate of Incorporation. K & P Finance
Corp. shall not amend its certificate of incorporation without the
Insurer's prior written consent.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults. The occurrence of any of the following
events shall constitute an Event of Default:
(a) Any representation or warranty made by the
Company, the Issuer or the Servicer hereunder or under the
Transaction Documents, or in any certificate furnished hereunder
or under the Transaction Documents, shall prove to be untrue or
incomplete in any material respect;
(b)(i) The Company or the Issuer shall fail to pay when
due any amount payable by the Company or the Issuer hereunder or
(ii) a legislative body has enacted any law that declares or a
court of competent jurisdiction shall find or rule that any of
the Transaction
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Documents are not valid and binding on the Company, the Servicer or the Issuer
to which it is a party;
(c) The occurrence and continuance of a "Servicer Event of Default"
under the Servicing Agreement (as defined therein);
(d) Any failure on the part of the Company, the Issuer or the Servicer
duly to observe or perform in any material respect any other of the covenants or
agreements on the part of the Company, the Issuer or the Servicer contained in
this Agreement or in any other Transaction Document which continues unremedied
for a period of 45 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Company, the
Issuer or the Servicer, as the case may be, by the Insurer (with a copy to
Indenture Trustee) or by the Indenture Trustee (with a copy to the Insurer);
(e) Any material party thereto shall breach any material representation
or warranty or fail to observe any material covenant or agreement contained in
any Transaction Document (except for the obligations described under paragraph
(a) or (c) above), and such failure shall continue for a period of 45 days after
written notice given to the Company or such other party; provided that, if such
failure shall be of a nature that it cannot be cured within 45 days, such
failure shall not constitute an Event of Default hereunder if within such 45-day
period the Company or such other party shall have given notice to the Insurer of
corrective action it proposes to take, which corrective action is agreed in
writing by the Insurer to be satisfactory and the Company or such other party
shall thereafter pursue such corrective action diligently until such default is
cured;
(f) A decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or the appointment
of a conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Company, the Issuer or the Servicer and such
decree or order shall have remained in force undischarged or unstayed for a
period of 90 consecutive days;
(g) The Company, the Issuer or the Servicer shall consent to the
appointment of a conservator or receiver or liquidator or other similar official
in any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Company, the Issuer or the Servicer
or of or relating to all or substantially all of the property of either; or
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(h) The Company, the Issuer or the Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of or otherwise voluntarily commence a
case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations.
Section 5.02. Remedies; No Remedy Exclusive. (a) Upon the occurrence of
an Event of Default, the Controlling Party may exercise any one or more of the
rights and remedies set forth below against the party in default:
(i) declare all indebtedness of every type or description
owed by such party to the Insurer to be immediately due and payable, and
the same shall thereupon be immediately due and payable;
(ii) exercise any rights and remedies under any of the
Transaction Documents in accordance with the terms of such Transaction
Document or direct the Indenture Trustee to exercise such remedies in
accordance with the terms of the Indenture or the Servicing Agreement;
or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due
and thereafter to become due under any of the Transaction Documents or
to enforce performance and observance of any obligation, agreement or
covenant of the Company, the Issuer or the Servicer under any of the
Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved to the Controlling Party is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under any of the Transaction Documents or
existing at law or in equity. No delay or omission to exercise any right or
power accruing under any of the Transaction Documents upon the happening of any
event set forth in Section 5.01 hereof shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Insurer to exercise any remedy reserved to the Insurer in this
Article, it shall not be necessary to give any notice, other than such notice as
may be required in this Article.
Section 5.03. Waivers. (a) No failure by the Insurer to exercise, and no
delay by the Insurer in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies
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provided herein to the Insurer are declared in every case to be cumulative and
not exclusive of any remedies provided by law or equity.
(b) The Insurer shall have the right, to be exercised in its
complete discretion, to waive any Event of Default hereunder, by a writing
setting forth the terms, conditions and extent of such waiver signed by the
Insurer and delivered to the Indenture Trustee, the Company and the Servicer.
Unless such writing expressly provides to the contrary, any waiver so granted
shall extend only to the specific event or occurrence which gave rise to the
Event of Default so waived and not to any other similar event or occurrence
which occurs subsequent to the date of such waiver.
Section 5.04. INSURER WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS. So long
as this Agreement is in effect, the Insurer will not file any involuntary
petition or otherwise institute any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other proceeding under any federal or
state bankruptcy or similar law against the Issuer.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may
be amended, changed, modified, altered or terminated only by written instrument
or written instruments signed by the parties hereto. The Company hereby agrees
to promptly provide a copy of any amendment to this Agreement to the Indenture
Trustee. The Company and the Insurer also agree to provide prior written
notification to both ▇▇▇▇▇'▇ and S&P of any amendment to this Agreement.
Section 6.02. NOTICES. All demands, notices and other communications to
be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telexed or telecopied to the recipient as follows:
To the Insurer: MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Structured Surveillance to Insured Portfolio
Management - Structured Finance (IPM-SF)
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
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To the Company: T & W Leasing, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.:(▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
To the Issuer: T & W Funding Company IV, L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
To the Servicer: T & W Leasing, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
To K & P Finance Corp. K & P Finance Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
To the Backup Servicer: Norwest Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
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To the Indenture Trustee: Norwest Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon delivery, except when telexed
or telecopied, in which case, effective upon telex or telecopy against receipt
of answerback or written confirmation.
An affidavit by any Person representing or acting on behalf of any party
hereto, as to such mailing, having the registry receipt attached, shall be
conclusive evidence of the mailing of such demand, notice or communication.
Section 6.03. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
the parties hereto agree that such holding shall not invalidate or render
unenforceable any other provision hereof. The parties hereto further agree that
the holding by any court of competent jurisdiction that any remedy pursued by
the Insurer hereunder is unavailable or unenforceable shall not affect in any
way the ability of the Insurer to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. This Agreement shall be construed, and the
obligations, rights and remedies of the parties hereunder shall be determined,
in accordance with the laws of the State of New York.
Section 6.05. CONSENT TO JURISDICTION AND VENUE, ETC. The Company, the
Issuer, the Servicer, the Indenture Trustee and the Backup Servicer each
irrevocably (a) agrees that any suit, action or other legal proceeding arising
out of or relating to this Agreement, the Indenture or any of the other
Transaction Documents may be brought in a court of record in the State of New
York or in the Courts of the United States of America located in such state, (b)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (c) waives any objection which they may have to the laying of
venue of any such suit, action or proceeding in any of such courts and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Company, the Issuer, the Servicer, the Indenture Trustee and the
Backup Servicer each hereby irrevocably appoint CT Corporation System, Suite
1301, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as their agent to receive on
behalf of the Company, the Issuer, the Servicer, the Indenture Trustee and the
Backup Servicer, as the case may be, and their respective properties service of
copies of the summons and complaint and other process which may be served in any
such suit,
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action or proceeding (the "Process Agent"). Such service may be made by mailing
or delivering a copy of such process to the Company, the Issuer, the Servicer,
the Indenture Trustee or the Backup Servicer, as the case may be, in care of the
Process Agent at the Process Agent's above address, and the Company, the Issuer,
the Servicer, the Indenture Trustee and the Backup Servicer each hereby
irrevocably authorize and direct the Process Agent to accept such service on
their behalf. The Insurer agrees to mail to the Company, the Issuer, the
Servicer, the Indenture Trustee or the Backup Servicer, as the case may be, at
its address provided in Section 6.02 hereof a copy of any summons, complaint or
other process mailed or delivered by it to the Process Agent. As an alternative
method of service, the Company, the Issuer, the Servicer, the Indenture Trustee
and the Backup Servicer each also irrevocably consent to the service of any and
all process in any such action or proceeding by mailing of copies of such
process to the Company, the Issuer, the Servicer, the Indenture Trustee or the
Backup Servicer, as the case may be, at its address provided in Section 6.02
hereof. The Company, the Issuer, the Servicer, the Indenture Trustee and the
Backup Servicer each agree that a final, nonappealable judgment in any such
suit, action or proceeding shall be conclusive and may be enforced in other
jurisdictions by execution on the judgment or in any other manner provided by
law. All mailings under this Section 6.05 shall be by certified mail, return
receipt requested.
Nothing in this Section 6.05 shall affect the right of the Insurer to
serve legal process in any other manner permitted by law or affect the right of
the Insurer to bring any suit, action or proceeding against the Company, the
Issuer, the Servicer, the Indenture Trustee or the Backup Servicer or their
respective property in the courts of any other jurisdiction.
Section 6.06. CONSENT OF INSURER. In the event that the Insurer's
consent is required under the terms hereof or any term of any other Transaction
Document, it is understood and agreed that the determination whether to grant or
withhold such consent shall be made solely by the Insurer in its absolute
discretion. The Insurer hereby agrees that it will respond to any request for
consent in a timely manner, taking into consideration the business of the
Company, the Issuer and the Servicer.
Section 6.07. COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 6.08. RECITALS. All of the recitals hereinabove set forth are
incorporated in this Agreement by reference.
Section 6.09. HEADINGS. The headings of sections contained in this
Agreement are provided for convenience only. They form no part of this Agreement
and shall not affect its construction or interpretation. All references to
sections or subsections of this Agreement refer to the corresponding sections or
subsections of this Agreement.
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Section 6.10. PARTIES NOT TO INSTITUTE INSOLVENCY PROCEEDINGS. So
long as this Agreement is in effect, and for one year following its termination,
none of the parties hereto will file any involuntary petition or otherwise
institute any bankruptcy, reorganization, moratorium, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against the Issuer.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all
as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By /s/ UNINTELLIGIBLE
----------------------------------------
T & W LEASING, INC., as Company
By /s/ ▇▇▇▇▇▇▇ ▇. PRICE
----------------------------------------
T & W LEASING, INC., as Servicer
By /s/ ▇▇▇▇▇▇▇ ▇. PRICE
----------------------------------------
T & W FUNDING COMPANY IV, L.L.C., as
Issuer
By /s/ ▇▇▇▇▇▇▇ ▇. PRICE
----------------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee
By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Backup Servicer
By /s/ ▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
K & P FINANCE CORP.
By /s/ ▇▇▇▇▇▇▇ ▇. PRICE
----------------------------------------