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EXHIBIT 10.1
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TRUST AND SECURITY AGREEMENT
among
T & W FUNDING COMPANY I, l.L.C.
(the "Transferor")
T & W FINANCIAL CORPORATION
(the "Servicer")
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(the "Trustee" and "Back-up Servicer")
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Dated as of February 1, 1997
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TABLE OF CONTENTS
SECTION HEADING PAGE
Parties 1
Preliminary Statement...............................................................1
Trust Statement.....................................................................1
Conveyance Clause...................................................................1
ARTICLE ONE DEFINITIONS....................................................3
Section 1.01. Definitions..............................................3
ARTICLE TWO THE CERTIFICATES...............................................21
Section 2.01. Form Generally...........................................21
Section 2.02. Denomination.............................................21
Section 2.03. Execution, Authentication, Delivery and Dating...........21
Section 2.04. Temporary Certificates...................................22
Section 2.05. Registration, Registration of Transfer and Exchange......22
Section 2.06. Limitation on Transfer and Exchange......................23
Section 2.07. Mutilated, Destroyed, Lost or Stolen Certificate.........24
Section 2.08. Payment of Principal and Interest; Principal and Interest
Rights Preserved.........................................25
Section 2.09. Persons Deemed Owner.....................................27
Section 2.10. Cancellation.............................................27
Section 2.11. Intended Tax Characterization............................27
ARTICLE THREE FUNDINGS.......................................................28
Section 3.01. Fundings.................................................28
Section 3.02. Procedure for Fundings...................................28
Section 3.03. Fundings by Certificateholders...........................29
Section 3.04. Re-underwriting..........................................30
ARTICLE FOUR ISSUANCE OF CERTIFICATES; SUBSTITUTIONS OF COLLATERAL..........31
Section 4.01. Conditions to Issuance of Certificates...................31
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Section 4.02. Additional Fundings......................................33
Section 4.03. Perfection of Transfer...................................35
Section 4.04. Lease Receivables........................................36
Section 4.05. Releases.................................................38
Section 4.06. Trust Property...........................................39
Section 4.07. Notice of Release........................................39
Section 4.08. Nature of Transfer.......................................39
ARTICLE FIVE SATISFACTION AND DISCHARGE.....................................40
Section 5.01. Satisfaction and Discharge of Agreement..................40
Section 5.02. Application of Trust Money...............................40
ARTICLE SIX DEFAULTS AND REMEDIES..........................................42
Section 6.01. Events of Default........................................42
Section 6.02. Acceleration of Maturity; Rescission and Annulment.......42
Section 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee................................................. 44
Section 6.04. Remedies.................................................44
Section 6.05. Optional Preservation of Trust Property..................45
Section 6.06. Trustee May File Proofs of Claim.........................45
Section 6.07. Trustee May Enforce Claims Without Possession of
Certificates.............................................46
Section 6.08. Application of Money Collected...........................46
Section 6.09. Limitation on Suits......................................48
Section 6.10. Unconditional Right of Certificateholders to Receive
Principal and Interest...................................48
Section 6.11. Restoration of Rights and Remedies.......................48
Section 6.12. Rights and Remedies Cumulative...........................49
Section 6.13. Delay or Omission; Not Waiver............................49
Section 6.14. Control by Certificateholders............................49
Section 6.15. Waiver of Certain Events by Less than All
Certificateholders.......................................49
Section 6.16. Undertaking for Costs....................................50
Section 6.17. Waiver of Stay or Extension Laws.........................50
Section 6.18. Sale of Trust Property...................................50
Section 6.19. Action on Certificates...................................51
ARTICLE SEVEN THE TRUSTEE....................................................53
Section 7.01. Certain Duties and Responsibilities......................53
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Section 7.02. Notice of Default and Other Events.......................55
Section 7.03. Certain Rights of Trustee................................55
Section 7.04. Not Responsible for Recitals or Issuance of Certificates.56
Section 7.05. May Hold Certificates....................................57
Section 7.06. Money Held in Trust......................................57
Section 7.07. Compensation and Reimbursement...........................57
Section 7.08. Corporate Trustee Required; Eligibility..................58
Section 7.09. Resignation and Removal; Appointment of Successor........58
Section 7.10. Acceptance of Appointment by Successor...................59
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business of Trustee......................................60
Section 7.12. Co-Trustees and Separate Trustees........................60
Section 7.13. Rights with Respect to the Servicer......................61
Section 7.14. Appointment of Authenticating Agent......................61
Section 7.15. Trustee to Hold Lease Contracts..........................63
Section 7.16. Money for Certificate Payments to Be Held in Trust.......63
ARTICLE EIGHT THE POLICY.....................................................65
Section 8.01. Payments under the Policy................................65
ARTICLE NINE AMENDMENTS.....................................................66
Section 9.01. Amendments without Consent of Certificateholders.........66
Section 9.02. Amendments and Modifications to Agreement with Consent of
Certificateholders.......................................67
Section 9.03. Execution of Amendments..................................68
Section 9.04. Effect of Amendments.....................................68
Section 9.05. Reference in Certificates to Amendments..................68
Section 9.06. Amendment as to Registered Form..........................68
ARTICLE TEN REDEMPTION OF CERTIFICATES.....................................69
Section 10.01. Redemption at the Option of the Transferor; Election to
Redeem...................................................69
Section 10.02. Notice to Trustee; Deposit of Redemption Price...........69
Section 10.03. Notice of Redemption by the Transferor...................69
Section 10.04. Deposit of the Redemption Price..........................70
Section 10.05. Certificates Payable on Redemption Date..................70
Section 10.06. Release of Lease Contracts...............................70
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ARTICLE ELEVEN REPRESENTATIONS, WARRANTIES AND COVENANTS......................71
Section 11.01. Representations and Warranties...........................71
Section 11.02. Covenants................................................73
Section 11.03. Other Matters as to the Transferor.......................79
ARTICLE TWELVE ACCOUNTS AND ACCOUNTINGS.......................................80
Section 12.01. Collection of Money......................................80
Section 12.02. Collection Account.......................................80
Section 12.03. Reports by Trustee to Certificateholders.................82
ARTICLE THIRTEEN PROVISIONS OF GENERAL APPLICATION..............................84
Section 13.01. General Provisions.......................................84
Section 13.02. Acts of Certificateholders...............................84
Section 13.03. Notices, etc., to Trustee, Bond Insurer, Transferor and
Servicer.................................................84
Section 13.04. Notices to Certificateholders; Waiver....................85
Section 13.05. Effect of Headings and Table of Contents.................86
Section 13.06. Successors and Assigns...................................86
Section 13.07. Separability.............................................86
Section 13.08. Benefits of Agreement....................................86
Section 13.09. Legal Holidays...........................................86
Section 13.10. Governing Law............................................86
Section 13.11. Counterparts.............................................86
Section 13.12. Corporate Obligation.....................................86
Section 13.13. Compliance Certificates and Opinions.....................87
Section 13.14. Bond Insurer Default.....................................87
Section 13.15. Third Party Beneficiary..................................87
EXHIBITS
Exhibit A - Form of Investment Letter
Exhibit B - Form of Supplemental Grant of 5
Substitute Lease Contracts
Exhibit C - Form of Funding Report
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Exhibit D - Form of Certificate
Exhibit E - Form of Transferor Officer's Certificate pursuant to Section
4.02(b)
Exhibit F - Form of Transferor Officer's Certificate pursuant to Section
4.02(d)
Exhibit G - Form of Servicer Officer's Certificate pursuant to Section
4.02(d)
Exhibit H - Form of Transferor Officer's Certificate pursuant to Section
4.02(g)
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This TRUST AND SECURITY AGREEMENT (this "Agreement"), dated as of February
1, 1997, is by and among T & W Funding Company I, L.L.C. (the "Transferor"), T &
W Financial Corporation, as servicer (the "Servicer"), Norwest Bank Minnesota,
National Association, a national banking association, as trustee (the "Trustee")
and as back-up servicer (the "Back-up Servicer").
PRELIMINARY STATEMENT
The Transferor has duly authorized the execution and delivery of this
Agreement to provide for the issuance of the Certificates by the Trust (as
defined herein) as provided in this Agreement. All covenants and agreements made
by the Transferor, the Servicer, the Trustee and the Back-up Servicer herein are
for the benefit and security of the Holders of the Certificates. The Transferor,
the Servicer, the Trustee and the Back-up Servicer are entering into this
Agreement, and the Trustee is accepting the trusts created hereby, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.
All things necessary to make this Agreement a valid agreement of the
Transferor, the Servicer, the Trustee and the Back-up Servicer in accordance
with its terms have been done.
TRUST STATEMENT
The Transferor does hereby create and establish, pursuant to the laws of
the State of New York and this Agreement, a trust, which for convenience shall
be known as "T & W Lease-Backed Trust."
CONVEYANCE CLAUSE
The Transferor does hereby transfer, assign, set over, and otherwise convey
to the Trustee, for the ratable benefit of the Holders of the Certificates and
the Bond Insurer, all of the Transferor's rights, title and interest in and to
the following and any and all benefits accruing to the Transferor from: (a) the
Lease Receivables and Lease Contracts and all payments received on or with
respect to the Lease Contracts and Lease Receivables and due after the related
Cut-Off Date; (b) the Equipment and Leased Vehicles related to such Lease
Contracts that are owned by the Transferor and a perfected security interest of
the Transferor in any of the Equipment and Leased Vehicles that is not owned by
the Transferor; (c) any rights of the Transferor under each Insurance Policy
related to the Lease Contracts and Insurance Proceeds; (d) the Contribution
Agreement, and any other Transaction Documents to which the Transferor is a
party; (e) the Servicing Agreement; (f) all amounts from time to time on deposit
in the Collection Account
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(including any Eligible Investments and other property in such accounts); (g)
the Lease Contract Files and (h) proceeds of the foregoing (including, but not
by way of limitation, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part or are included in the proceeds of any of the foregoing), in each case
whether now owned or hereafter acquired (all of the foregoing being hereinafter
referred to as the "Trust Property"). The foregoing transfer, assignment, set
over and conveyance does not constitute and is not intended to result in a
creation or an assumption by the Trustee or any Certificateholder of any
obligation of the Transferor, the Company, the Servicer or any other Person in
connection with the Trust Property or under any agreement or instrument relating
thereto.
The Trustee acknowledges its acceptance on behalf of the Certificateholders
and the Bond Insurer of all right, title and interest previously held by the
Transferor in and to the Trust Property, and declares that it shall maintain
such right, title and interest in accordance with the provisions hereof and
agrees to perform the duties herein required to the best of its ability to the
end that the interests of the Certificateholders and the Bond Insurer may be
adequately and effectively protected.
It is the intention of the Transferor and the Trustee that this assignment
and conveyance constitute a sale of the Trust Property (other than the Lease
Contracts, the Lease Contract Files, the Leased Vehicles and the Equipment)
conveying good title thereto, and a grant or assignment of a valid first
priority perfected security interest in the Lease Contracts, the Lease Contract
Files, the Leased Vehicles and the Equipment, free and clear of all Liens, from
the Transferor to the Trust, and that the Trust Property not be part of the
Transferor's estate in the event of the insolvency or bankruptcy of the
Transferor. However, in the event that, notwithstanding the intent of the
Transferor and the Trustee, the Trust Property is held to be property of the
Transferor's estate, or if for any reason this Agreement is held or deemed to
create a security interest in the Trust Property, then (x) this Agreement shall
also be deemed to be a security agreement with respect to the Trust Property
within the meaning of Article 8 and Article 9 of the Uniform Commercial Code as
in effect in the State of New York and (y) the conveyance provided for in this
Conveyance Clause shall be deemed to be a grant (or a complete and present
assignment) by the Transferor to the Trust of a valid first priority perfected
security interest in all of the Trust Property, including without limitation,
the Transferor's right, title and interest in and to the Lease Contracts, the
Lease Receivables, the Leased Vehicles owned by the Transferor and the Equipment
owned by the Transferor and all proceeds thereof.
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ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Except as otherwise expressly provided
herein or unless the context otherwise requires, the following terms have the
respective meanings set forth below for all purposes of this Agreement, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms. Capitalized terms used herein but not otherwise defined
shall have the respective meanings assigned to such terms in the Servicing
Agreement or the Contribution Agreement.
"Act": With respect to any Certificateholder, the meaning specified in
Section 13.02 hereof.
"Accrual Date": With respect to the Certificates, the date upon which
interest begins accruing on such Certificates, as specified in such
Certificates.
"Accrual Interval": With respect to each Accrual Period other than the
Accrual Period relating to the Initial Payment Date, each period beginning on a
Payment Date (or with respect to any additional principal amounts due to a
Funding during such Accrual Period, the related Funding Date) and ending on the
day immediately prior to the earlier of the next Funding Date or Payment Date,
as appropriate. The Accrual Interval with respect to the Accrual Period relating
to the Initial Payment Date shall be the period beginning on the Accrual Date
(or with respect to any additional principal amounts due to a Funding during
such Accrual Period, the related Funding Date) and ending on the day immediately
prior to the earlier of the next Funding Date or the Initial Payment Date, as
appropriate. Each Accrual Period may consist of multiple Accrual Intervals.
"Accrual Period": The period beginning on the fifteenth day of each
month (or, in the case of the Accrual Period that is applicable to the Initial
Payment Date, beginning on the Accrual Date for such Certificates) and ending on
the fourteenth day of the immediately following month.
"Additional Lease Contract": Each Lease Contract acquired by the
Transferor and conveyed to the Trust on a Funding Date.
"Additional Servicer Fee": The amount, if any, of the fee payable in
accordance with Section 6.02(b) of the Servicing Agreement to a successor
Servicer appointed pursuant to Section 6.02 of the Servicing Agreement that is
in excess of the Servicer Fee.
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"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate IPB" or "Aggregate Implicit Principal Balance": The
aggregate of the Implicit Principal Balances of all Lease Contracts outstanding
at any time.
"Agreement": This Agreement, as supplemented, in the form when
originally executed and, if from time to time further supplemented or amended by
one or more amendments hereto pursuant to the applicable provisions hereof, as
so supplemented or amended. All references in this Agreement to designated
"Articles," "Sections," "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of this
Agreement as originally executed, or if amended or supplemented, as so amended
and supplemented. The words "herein," "hereof," "hereunder" and other words of
similar import when not related to a specific subdivision of this Agreement,
refer to this Agreement as a whole and not to any particular Article, Section,
Subsection or other subdivision of this Agreement or any supplement.
"Annualized Default Rate": For any Due Period, (i) the sum of the
Implicit Principal Balances as of the Calculation Date occurring in such Due
Period of all Lease Contracts that became Defaulted Lease Contracts during such
Due Period (including any Lease Contracts that have been purchased or
substituted) (ii) minus the sum of Recoveries and Residual Proceeds received
during such Due Period, (iii) divided by the Aggregate Implicit Principal
Balance at the beginning of the Due Period, (iv) multiplied by twelve.
"Application for Certificate of Title": With regard to each Leased
Vehicle for which a Certificate of Title has not been issued, evidence that an
application for a Certificate of Title has been submitted with the appropriate
authority.
"Assignment and Assumption Agreement": An agreement between a
Contributor and the Transferor pursuant to which such Contributor transfers
Lease Assets to the Transferor in exchange for an ownership interest in the
Transferor and an assumption by the Transferor of certain indebtedness of such
Contributor.
"Available Cash" : With respect to each Payment Date, the amounts
available in the Collection Account after payment of all amount required by
clauses (i) through (v) of Section 12.02(d) hereof.
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"Authenticating Agent": Initially, the Trustee, and thereafter any
entity appointed by the Trustee pursuant to Section 7.14 hereof.
"Back-up Servicer": Initially, Norwest Bank Minnesota, National
Association, a national banking association, and its permitted successors and
assigns under the Servicing Agreement.
"Back-up Servicer Fee": The fee payable on each Payment Date to the
Back-up Servicer in consideration for the Back-up Servicer's performance of its
duties pursuant to the Servicing Agreement as Back-up Servicer, in an amount
equal to the product of (i) one-twelfth of the Back-up Servicer Fee Rate and
(ii) the Outstanding Principal Balance of the Certificates on the preceding
Payment Date after giving effect to distributions on such date.
"Back-up Servicer Fee Rate": For any Due Period in which the Aggregate
IPB is less than $50 million, a rate equal to four one-hundredths of one percent
(0.04%) per annum. For any Due Period in which the Aggregate IPB is greater than
or equal to $50 million, a rate equal to three one-hundredths of one percent
(0.03%) per annum; provided, however, with respect to the Discount Rate the
Back-up Servicer Fee Rate shall be equal to four one-hundredths of one percent
(0.04%) per annum.
"Benefit Plan Investor": The meaning set forth in 29 C.F.R. Section
2510.3-101.
"Board of Directors": Either the board of directors of the Transferor
or of the Servicer, or any duly authorized committee of such Board.
"Board Resolution": A copy of a resolution certified by the Secretary
or an Assistant Secretary of the Transferor or of the Servicer to have been duly
adopted by its Board of Directors and to be in full force and effect on the date
of such certification and delivered to the Trustee.
"Bond Insurer": MBIA Insurance Corporation, and its permitted
successors and assigns under the Insurance Agreement.
"Bond Insurer Default": The occurrence and continuance of any of the
following events: (a) the failure by the Bond Insurer to make a payment under
the Insurance Agreement in accordance with its terms; or (b) an Insurer
Insolvency.
"Bond Insurer Premium": The meaning set forth in the Insurance
Agreement.
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"Bond Insurer Premium Rate": The meaning set forth in the Insurance
Agreement
"Business Day": Any day other than a Saturday, a Sunday or a day on
which the Bond Insurer or banking institutions in (a) New York City, or (b) the
city in which the Corporate Trust Office is located, are authorized or obligated
by law or executive order to close.
"Calculation Date": The last day of a Due Period, except that with
respect to the Initial Payment Date, the Calculation Date shall mean the related
Cut-Off Date.
"Certificate Interest Rate": Eight and two hundred seventy-five
one-thousandths percent (8.275%) per annum.
"Certificate of Title": With regard to each Leased Vehicle, the
original certificate of title relating thereto, which shall name the Transferor
as the owner of such Leased Vehicle and the Trustee as the secured party.
"Certificate Purchase Agreement": The Certificate Purchase Agreement
dated as of February 7, 1997 by and among the Company, the Transferor and Centre
Square Funding Corporation.
"Certificate Register": The meaning specified in Section 2.05 hereof.
"Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register.
"Certificates" or "Lease-Backed Certificates": The Certificates issued
under the terms of this Agreement on the Closing Date and which may vary in
principal amount as set forth herein.
"Closing Date": February 7, 1997.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateralization Percentage": As of any date of determination prior
to the end of the Funding Period, a percentage equal to the greatest of (A)
eight percent (8.0%), and (B) the product of (i) four and (ii) the concentration
percentage based on the aggregate Implicit Principal Balances of the Lease
Contracts with respect to the Customer with the largest concentration of Lease
Contracts. On and after such date, the "Collateralization Percentage" shall be
the Collateralization Percentage determined on the final day of the Funding
Period.
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"Collection Account": The trust account or accounts created and
maintained pursuant to Section 12.02 hereof.
"Company": T & W Financial Corporation, and all successors thereto in
accordance with the Contribution Agreement.
"Contributor": Each of T & W Funding Company V, L.L.C., a Delaware
limited liability company and T & W Funding Company VI, L.L.C., a Delaware
limited liability company.
"Contribution Agreement": The Contribution Agreement dated as of
February 1, 1997 by and among the Transferor, the Company and the Contributors.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at the location identified in Section 13.03 herein or such other address
as the Trustee may designate from time to time in accordance with Section 13.03,
or the principal corporate trust office of any successor Trustee.
"Customer": The lessee under each related Lease Contract, including any
guarantor of such lessee and their respective successors and assigns.
"Cut-Off Date": For each Funding, the last Business Day of the month
preceding the related Funding Date, or such other Business Day agreed to by the
Transferor, the Servicer and the Bond Insurer and set forth on the related
Funding Report.
"Default": Any occurrence or circumstance which with notice or the
lapse of time or both would become an Event of Default.
"Defaulted Lease Contract": A Lease Contract shall become a Defaulted
Lease Contract at the earlier of the day (i) when any portion of such Lease
Contract is 180 days delinquent or (ii) the Servicer determines in accordance
with its customary practices that it shall not make a Servicer Advance or that a
prior Servicer Advance is unrecoverable.
"Defaulted Lease Purchase and Substitution Limit": $2,500,000.
"Delinquency Rate": For any Due Period, the sum of the Implicit
Principal Balances of all Lease Contracts as of the Calculation Date occurring
in such Due Period with respect to which a Customer has not made the Scheduled
Payment or any portion thereof due in the prior Due Period (including any such
Lease Contracts that have been purchased or substituted),
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divided by the Aggregate Implicit Principal Balance on such Calculation Date
(including any such Lease Contracts that have been purchased or substituted).
"Delinquent Lease Contract": For any Due Period, any Lease Contract (a)
with respect to which a Customer has not made any Scheduled Payment or any
portion thereof due in such Due Period and which remains unpaid as of the
Calculation Date at the end of such Due Period and (b) which is not a Defaulted
Lease Contract.
"Delinquent Lease Purchase and Substitution Limit": $7,500,000.
"Determination Date": The fifth Business Day preceding each Payment
Date.
"Discount Rate": For each Lease Contract, the rate equal to the sum of
(i) the Certificate Interest Rate, (ii) the Back-up Servicer Fee Rate, (iii) the
Bond Insurer Premium Rate and (iv) the Trustee Fee Rate.
"Dollar(s)": Lawful money of the United States of America.
"Due Date": With respect to each Scheduled Payment and each Lease
Receivable, the date of the month on which such Scheduled Payment is due
thereunder.
"Due Period": As to any Determination Date, Payment Date or Servicer
Remittance Date, the period beginning on the first day and ending on the last
day of the calendar month preceding the month in which such Determination Date,
Payment Date or Servicer Remittance Date occurs.
"Electronic Ledgers": The electronic master records of all lease
contracts of the Company or the Servicer similar to and including the Lease
Contracts.
"Eligible Investments" shall mean book-entry securities entered on the
books of the registrar of such security and held in the name or on behalf of the
Trustee or negotiable instruments or securities represented by instruments in
bearer form (and held in the possession of the Trustee or its agent) or
registered form (registered in the name of the Trustee or its nominee) that
constitute the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Federal
Home Loan Banks or any agency or instrumentality of the United States
of America the obligations of which are backed by the full faith and
credit of the United States of America;
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(ii) (A) demand and time deposits in, certificates of deposit
of, banker's acceptances issued by or federal funds sold by any
depository institution or trust company (including the Trustee or its
agent acting in their respective commercial capacities) incorporated
under the laws of the United States of America or any State thereof and
subject to supervision and examination by federal and/or state
authorities, so long as at the time of such investment or contractual
commitment providing for such investment, such depository institution
or trust company has a short term unsecured debt rating in the highest
available rating categories of each of the Rating Agencies and provided
that each such investment has an original maturity of no more than 365
days and (B) any other demand or time deposit or deposit which is fully
insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as a
principal) rated in the highest short-term rating category by S&P and
by Moody's; provided, however, that collateral transferred pursuant to
such repurchase obligation must (A) be valued weekly at current market
price plus accrued interest, (B) pursuant to such valuation, equal, at
all times, to 105% of the cash transferred by the Trustee in exchange
for such collateral and (C) be delivered to the Trustee or, if the
Trustee is supplying the collateral, an agent for the Trustee, in such
a manner as to accomplish perfection of a security interest in the
collateral;
(iv) commercial paper having an original maturity of less than
365 days and issued by an institution having a short term unsecured
debt rating in the highest available rating category of each of the
Rating Agencies at the time of such investment;
(v) a guaranteed investment contract approved by each of the
Rating Agencies and the Bond Insurer and issued by an insurance company
or other corporation having a long term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
(vi) money market funds including money market funds managed
by the Trustee having ratings in the highest available long term rating
category of each of the Rating Agencies at the time of such investment
which invest only in other Eligible Investments; any such money market
funds which provide for demand withdrawals being conclusively deemed to
satisfy any maturity requirement for Eligible Investments set forth in
this Agreement; and
(vii) any investment approved in writing by each of the Rating
Agencies and the Bond Insurer.
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"Enumerated States": As of any date of determination, the ten states
with the largest concentration of Lease Contracts based upon the aggregate
Implicit Principal Balances of such Lease Contracts.
"Equipment": The equipment leased to the Customers pursuant to the
Lease Contracts and described by general equipment type under the column heading
"equip" on the Lease Schedule.
"Existing Indebtedness": The meaning specified in Exhibit D of the
Contribution Agreement.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended or any successor statute thereto.
"Event of Default": The meaning specified in Section 6.01 hereof.
"Final Due Date": With respect to each Lease Receivable, the final Due
Date thereunder.
"Final Payment Date": With respect to the Certificates, the date on
which the final principal payment on such Certificates is made as therein or
herein provided, whether at the Stated Maturity, or by acceleration or
redemption.
"Funding": An additional purchase of Certificates by the
Certificateholders on a Funding Date, the result of which is an increase in the
Outstanding Principal Balance of the Certificates as of such Funding Date.
"Funding Amount": As of any Funding Date, an amount equal to (A) the
Funding IPB minus (B)(i) the Required Collateralization Amount (computed taking
into account the Aggregate Implicit Principal Balance including the related
Funding IPB) minus (ii) the Required Collateralization Amount (computed prior to
the related Funding); provided, however, that the Outstanding Principal Balance
of the Certificates shall not exceed the Maximum Outstanding Certificate Amount.
"Funding Date": After the Closing Date, any Business Day during the
Funding Period on which the Transferor desires to obtain a Funding in accordance
with the terms of this Agreement; provided, however, that (a) no Fundings shall
occur on any date between a Determination Date and the related Payment Date and
(b) Fundings shall not occur more than two times per month.
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"Funding IPB": The sum of the Implicit Principal Balances of the Lease
Contracts acquired by or on behalf of the Transferor and conveyed to the Trust
on any Funding Date.
"Funding Period": The period commencing on the Closing Date through and
including the earlier to occur of (i) a Funding Period Trigger Event, (ii)
January 31, 2000, unless extended by mutual agreement among the Transferor, the
Bond Insurer and the Certificateholders; provided that Moody's receives
notification of such extension, (iii) the date designated by the Transferor upon
five Business Days prior written notice to the Certificateholders and the Bond
Insurer or (iv) the date on which the Liquidity Facility is terminated.
"Funding Period Trigger Event": Any of the following events during the
Funding Period:
(1) With respect to the Reported Company, the Tangible Net
Worth Requirement is not met; or
(2) For any three consecutive Due Periods, the average of the
Annualized Default Rates for such consecutive Due Periods was greater
than 2.5%; or
(3) For any three consecutive Due Periods, the average of the
Delinquency Rates for such consecutive Due Periods was greater than
6.0%; or
(4) A payment has been made to the Trustee by the Bond Insurer
pursuant to the Policy; or
(5) A Trigger Event has occurred; or
(6) The Reported Company defaults on any payment obligations
under any agreement evidencing indebtedness;
(7) Anytime after August 7, 1998, the Bond Insurer shall
determine that its participation in the transactions contemplated
hereunder or under any related document will have a material adverse
impact on the Bond Insurer; or
(8) WITH RESPECT TO ANY DATE OF DETERMINATION, THE AGGREGATE
IMPLICIT PRINCIPAL BALANCE IS LESS THAN THE SUM OF (A) THE REQUIRED
COLLATERALIZATION AMOUNT AND (B) THE OUTSTANDING PRINCIPAL BALANCE OF
THE CERTIFICATES AND SUCH DEFICIENCY CONTINUES UNREMEDIED FOR A PERIOD
OF 60 DAYS.
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"Funding Report": The report in the form attached hereto as Exhibit C
delivered by the Transferor to the Trustee, the Bond Insurer and the
Certificateholders in connection with a Funding.
"Guaranty Amounts": Any and all amounts paid or payable by any
individual guarantor indicated on the applicable Lease Contract.
"Holder" or "Certificateholder": The person in whose name a Certificate
is registered in the Certificate Register.
"Implicit Principal Balance": As of any date of determination, with
respect to each Lease Receivable, the present value of the remaining stream of
Scheduled Payments due with respect to such Lease Receivable after the
applicable Calculation Date (as reduced by the Servicer Fee but not reduced by
any Additional Servicer Fee) based upon discounting such Scheduled Payments
(assuming such Scheduled Payments are received on the next succeeding
Calculation Date on or after the applicable Due Dates) to such Calculation Date
at the Discount Rate, at the same frequency as the Payment Dates; except that on
the Calculation Date (w) on or immediately following the deposit into the
Collection Account of Insurance Proceeds equal to the outstanding Implicit
Principal Balance of the related Lease Contract, or the Purchase Price of a
repurchased Lease Contract, or on or immediately following the delivery of a
Substitute Lease Contract, (x) immediately on or after the date that a Lease
Contract has become a Defaulted Lease Contract, or (y) immediately preceding the
Final Payment Date with respect to the Certificates, the Implicit Principal
Balance of each such related Lease Receivable shall be zero. To the extent that
the Final Due Date of any Lease Receivable is later than the Stated Maturity of
the Certificates, any Scheduled Payments due on such Lease Receivable after the
Calculation Date immediately preceding the Stated Maturity of such Certificates
shall not be taken into account in calculating the Implicit Principal Balance of
such Lease Receivable.
"Independent" or "independent": When used with respect to any specified
Person means such a Person, who (1) is in fact independent of the Transferor,
(2) does not have any direct financial interest or any material indirect
financial interest in the Transferor or in any Affiliate of the Transferor and
(3) is not connected with the Transferor as an officer, employee, promoter,
underwriter, partner, director, or person performing similar functions. Whenever
it is herein provided that any Independent Person's opinion or certificate shall
be furnished to the Trustee, such Person shall be appointed by a Transferor
Order and approved by the Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read this definition and
that the signer is Independent within the meaning hereof.
"Independent Accountants": BDO ▇▇▇▇▇▇▇ LLP or any other firm of
independent certified public accountants of recognized national standing.
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"Initial Aggregate Implicit Principal Balance": The greatest Aggregate
Implicit Principal Balance calculated on any Calculation Date since the Closing
Date.
"Initial Payment Date": February 18, 1997.
"Insurance Agreement": The Insurance Agreement, dated as of February 1,
1997, by and among the Bond Insurer, the Transferor, the Servicer, K&P Finance
Corp. I, the Trustee and the Back-up Servicer.
"Insurance Policy": With respect to an item of Equipment or Leased
Vehicle and a Lease Contract, any insurance policy maintained by the Customer
pursuant to the related Lease Contract that covers physical damage to the
Equipment or Leased Vehicle (including policies procured by the Company, either
Contributor or the Servicer on behalf of the Customer).
"Insurance Proceeds": With respect to an item of Equipment or Leased
Vehicle and a Lease Contract, any amount received during the related Due Period
pursuant to an Insurance Policy issued with respect to such Equipment or Leased
Vehicle and the related Lease Contract, net of any costs of collecting such
amounts not otherwise reimbursed.
"Insurer": Any insurance company or other insurer providing any
Insurance Policy.
"Insurer Insolvency": The meaning set forth in the Insurance Agreement.
"Interest Distribution Amount": With respect to each Payment Date, the
amount of interest owed on the Certificates for such Payment Date.
"Investment Letter": The meaning set forth in Section 2.06 hereof.
"Lease Assets": The meaning set forth in the Contribution Agreement.
"Lease Contract File": The meaning specified in the Contribution
Agreement.
"Lease Contracts": The lease contracts and loan contracts (and all
rights with respect thereto, including all security interests, guaranties and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of any Lease Contract and all rights with respect
to any agreements or arrangements with the vendors, dealers or manufacturers of
the Equipment or Leased Vehicles to the extent specifically related to any Lease
Contract) which are pledged by the Transferor to the Trustee from time to time
pursuant to this Agreement to support payment of the Certificates and identified
on the Lease Schedule attached to a Funding Report delivered to the Trustee, the
Bond Insurer and the
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Certificateholders on any Funding Date or which are Substitute Lease Contracts,
and any amendments, riders and annexes thereto; provided, however, that, from
and after the date on which a Lease Contract is purchased or substituted by the
Company or the Transferor in accordance with Section 4.04 hereof, such
repurchased or replaced Lease Contract shall no longer constitute a Lease
Contract for purposes of the Transaction Documents.
"Lease Receivables": With respect to any Lease Contract, all of, and
the right to receive all of (i) the Scheduled Payments, (ii) any Guaranty
Amounts, (iii) any Insurance Proceeds, (iv) any Residual Proceeds, (v) any
Recoveries and (vi) any Overdue Payments.
"Lease Schedule": With respect to each Funding, the listing of Lease
Contracts and Lease Receivables attached to a Funding Report as Schedule A,
which shall include with respect to each Lease Contract listed on such Schedule:
(a) a number identifying such Lease Contract, (b) the Implicit Principal
Balance, (c) the Customer, (d) the State of the Customer's billing address, (e)
the original and remaining term, (f) the Scheduled Payment, (g) the frequency
with which Scheduled Payments are due, (h) the zip code of the Customer's
billing address, (i) the SIC Code and (j) the type of equipment, as such
schedule may be amended upon any purchase or substitution of Lease Contracts
made in accordance with the terms of the Transaction Documents.
"Leased Vehicle": An automobile or truck which is the subject of a
Lease Contract.
"Lien": Any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than liens for taxes due and payable after the
applicable Funding Date, mechanic's liens filed after the applicable Funding
Date and any liens that attach after the applicable Funding Date by operation of
law.
"Liquidated Lease Receivable": A Lease Receivable that has been
liquidated pursuant to Section 3.01(b) of the Servicing Agreement.
"Liquidity Facility": The liquidity facility established pursuant to
that certain liquidity agreement dated as of February 7, 1997 by and among
CoreStates Bank, N.A., as liquidity agent and the liquidity banks named as
parties thereto.
"Loan Contract": A Lease Contract that evidences a sale of the related
Equipment to the Customer and the retention by the lessor of a security interest
in such Equipment.
"Maximum Default Rate": 3.0%.
"Maximum Delinquency Rate": 7.0%.
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"Maximum Outstanding Certificate Amount": $100,000,000.
"Monthly Servicer's Report": The report prepared by the Servicer
pursuant to Section 4.01 of the Servicing Agreement.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. and its successors in
interest.
"Nonrecoverable Advance": A Servicer Advance that the Servicer
determines in good faith, and in accordance with its customary servicing
practices, is unlikely to be eventually repaid from Scheduled Payments made by
or on behalf of the related Customer in accordance with Section 3.04 of the
Servicing Agreement.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the President, a Vice President, the Treasurer, the Controller, an
Assistant Controller or the Secretary of the company on whose behalf the
certificate is delivered, and delivered to the Trustee, which certificate shall
comply with the applicable requirements of Section 13.13 hereof. Unless
otherwise specified, any reference in this Agreement to an Officer's Certificate
shall be to an Officer's Certificate of the Transferor.
"Opinion of Counsel": A written opinion of outside counsel who shall be
reasonably satisfactory to the Trustee and the Bond Insurer and which opinion
shall be in form and substance acceptable to the Trustee and the Bond Insurer
and shall comply with the applicable requirements of Section 13.l3 hereof.
"Outstanding": With respect to the Certificates, as of any date of
determination, all Certificates theretofore authenticated and delivered under
this Agreement except:
(a) Certificates theretofore canceled by the Certificate
Registrar or delivered to the Certificate Registrar for cancellation;
(b) Certificates for whose payment money in the necessary
amount has been theretofore irrevocably deposited with the Trustee or
any Paying Agent in trust for the Holders of such Certificates
(provided, however, that if such Certificates are to be redeemed,
notice of such redemption has been duly given pursuant to this
Agreement, satisfactory to the Trustee); and
(c) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
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provided, however, that for purposes of determining whether the Holders of the
requisite outstanding principal amount of Certificates have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by the Transferor or any Affiliate of the Transferor or the
Servicer shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded.
"Outstanding Principal Balance": As of any date of determination, the
principal amount of the Certificates outstanding as of such date.
"Overdue Payment": With respect to a Due Period and a Delinquent Lease
Contract, all payments due in a prior Due Period that the Servicer receives from
or on behalf of a Customer during the related Due Period on such Delinquent
Lease Contract, including any Servicing Charges.
"Paying Agent": The Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 7.08 hereof and is
authorized by the Transferor pursuant to Section 7.16 hereof to pay the
principal of, or interest on, any Certificates on behalf of the Trust.
"Payment Date": The fifteenth day of each calendar month (or if such
day is not a Business Day, the next succeeding Business Day) commencing on the
Initial Payment Date.
"Person": Any individual, corporation, partnership, association,
joint-stock company, limited liability company, trust (including any beneficiary
thereof) unincorporated organization or government or any agency or political
subdivision thereof.
"Policy": With respect to the Certificates, the financial guaranty
insurance policy issued by the Bond Insurer insuring the Certificates in
accordance with the terms thereof.
"Preference Claim": Shall have the meaning set forth in Section 8.01
hereof.
"Principal Distribution Amount": With respect to each Payment Date (a)
for any Payment Date prior to Stated Maturity, an amount equal to (i) if, on
such Payment Date, the Available Cash is sufficient to pay the Required
Principal Distribution Amount on such date, the Required Principal Distribution
Amount; or (ii) if, on such Payment Date, the Available Cash is not sufficient
to pay the Required Principal Distribution Amount on such date, the Available
Cash; and (b) on the Stated Maturity, an amount equal to the Outstanding
Principal Balance of the Certificates as of such date.
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"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Price": With respect to any Lease Contract repurchased by the
Company or one of the Contributors pursuant to Section 3.03 of the Contribution
Agreement or by the Transferor pursuant to Section 4.04(d) hereof or Section
3.10 of the Servicing Agreement, the sum of (i) the Implicit Principal Balance
of the related Lease Receivable on the Calculation Date on or immediately
succeeding the date when the Lease Contract is repurchased, (ii) any Scheduled
Payments with respect to the Lease Contract due on or prior to such Calculation
Date but not received through such Calculation Date and (iii) with respect to
the related Equipment or Leased Vehicle, the amount recorded in the books and
records of the Company or the Transferor as the "unguaranteed residual."
"Rating Agencies": Moody's and S&P.
"Record Date": The close of business on the last day of the month
preceding the applicable Payment Date, whether or not a Business Day, except
with respect to the Initial Payment Date, the Record Date shall be the Closing
Date.
"Recoveries": For any Due Period occurring after the date on which any
Lease Contract becomes a Defaulted Lease Contract and with respect to such
Defaulted Lease Contract, all payments that the Servicer received from or on
behalf of a Customer during such Due Period in respect of such Defaulted Lease
Contract or from liquidation or re-leasing of the related Equipment or Leased
Vehicle, including but not limited to Scheduled Payments, Overdue Payments,
Guaranty Amounts, and Insurance Proceeds, as reduced by (i) any unreimbursed
Servicer Advances with respect to such Lease Contract and (ii) any reasonably
incurred out-of-pocket expenses incurred by the Servicer in enforcing such
Defaulted Lease Contract.
"Redemption Date": A date fixed pursuant to Section 10.01 hereof.
"Redemption Price": With respect to any Certificate, and as of any
Redemption Date, the Outstanding Principal Balance of such Certificate, together
with interest accrued thereon to the Redemption Date at the Certificate Interest
Rate (exclusive of installments of interest and principal maturing on or prior
to such date, payment of which shall have been made or duly provided for to the
Holder of such Certificate on the applicable Record Date or as otherwise
provided in this Agreement).
"Redemption Record Date": With respect to any redemption of any
Certificate, a date fixed pursuant to Section 10.01 hereof.
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"Registered Holder": The Person whose name appears on the Certificate
Register on the applicable Record Date or Redemption Record Date.
"Reinvestment Income": Any interest or other earnings earned on all or
part of the Trust Property.
"Reported Company": Shall mean T & W Financial Corporation and its
Affiliates on a consolidated basis; provided, however, if T & W Financial
Corporation is no longer acting as Servicer, then "Reported Company" shall also
mean any successor Servicer appointed pursuant to this Agreement.
"Reported Company's Financial Statements": Shall include the Reported
Company's audited consolidated balance sheet, income statement, statement of
cash flows, auditors opinion letter regarding audited financial statements and
all notes to the audited financial statements.
"Required Collateralization Amount": As of any date of determination,
the greatest of (A) the Collateralization Percentage multiplied by the Aggregate
Implicit Principal Balance as of the related Calculation Date, and (B) the sum
of the aggregate Implicit Principal Balances of all the Lease Contracts under
which the three Customers with the largest aggregate Implicit Principal Balances
are obligated and (C) an amount equal to the product of (i) one-half of the
Collateralization Percentage and (ii) the Initial Aggregate Implicit Principal
Balance.
"Required Collateralization Percentage": As of any date of
determination, a percentage equal to the Required Collateralization Amount
divided by the Aggregate Implicit Principal Balance.
"Required Principal Distribution Amount": With respect to each Payment
Date, an amount equal to the Outstanding Principal Balance of the Certificates
as of the Calculation Date preceding such Payment Date, minus the product of (A)
one minus the Required Collateralization Percentage and (B) the Aggregate IPB as
of the Calculation Date preceding such Payment Date.
"Residual Proceeds": With respect to a Lease Contract that is not a
Defaulted Lease Contract and the related Equipment or Leased Vehicle, the net
proceeds (including Insurance Proceeds) of any sale, re-lease (including any
lease renewal) or other disposition of such Equipment or Leased Vehicle.
"Responsible Officer": When used with respect to the Trustee, any
officer assigned to the Corporate Trust Department (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any Trust Officer or any other Officer
of the Trustee customarily performing functions similar to those performed by
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any of the above designated officers and having direct responsibility for the
administration of this Agreement, and also, with respect to a particular matter,
any other officer, to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"S & P": Standard & Poor's Ratings Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, a corporation organized and existing under the laws of the State of
Delaware, and its successors in interest.
"Sale": The meaning specified in Section 6.18 hereof.
"Scheduled Payment": With respect to a Payment Date and a Lease
Contract, the periodic payment (exclusive of any amounts in respect of taxes)
set forth in such Lease Contract due from the Customer in the related Due
Period, calculated without regard to any modification granted pursuant to
Section 3.01(b)(v) of the Servicing Agreement; a payment made in a Due Period is
not a Scheduled Payment with respect to such Due Period unless all prior
Scheduled Payments have been made as of the date of such payment.
"Servicer": Initially, the Company, and thereafter any successor
Servicer appointed pursuant to Section 6.02 of the Servicing Agreement.
"Servicer Advance": The meaning set forth in Section 3.04 of the
Servicing Agreement.
"Servicer Fee": An amount equal to $5.00 per Lease Contract per
Scheduled Payment. The Servicer Fee shall not include the Additional Servicer
Fee.
"Servicer Remittance Date": The Determination Date.
"Servicing Agreement": The Servicing Agreement dated as of February 1,
1997 by and among the Servicer, the Transferor, the Trustee and the Back-up
Servicer, as amended or supplemented from time to time in accordance with the
terms thereof.
"Servicing Charges": The sum of (i) all late payment charges paid by
Customers on Delinquent Lease Contracts after payment in full of any Scheduled
Payments due in a prior Due Period and Scheduled Payments for the related Due
Period and (ii) any other incidental charges or fees received from a Customer,
including but not limited to, late fees, collection fees and insufficient funds
check charges.
"Servicing Officers": The persons listed on a certificate of the
Servicer from time to time delivered by the Servicer to the Transferor, the Bond
Insurer and the Trustee.
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"State": Any state of the United States of America and, in addition,
the District of Columbia and Puerto Rico.
"Stated Maturity": The Payment Date in the Due Period which is six
months following the Due Period in which the final Scheduled Payment is due with
respect to the Lease Contract funded prior to the end of the Funding Period with
the longest original term.
"Tangible Net Worth Requirement": The requirement that with respect to
the Reported Company:
(a) the total assets of the Reported Company and its
Affiliates which would be shown as assets on a consolidated balance
sheet of the Reported Company and its Affiliates as of such time
prepared in accordance with generally accepted accounting principles
consistently applied after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
the Affiliates, minus
(b) the total liabilities of the Reported Company and its
Affiliates which would be shown as liabilities on a consolidated
balance sheet of the Reported Company and its Affiliates as of such
time prepared in accordance with generally accepted accounting
principles consistently applied, minus
(c) the net book value of all assets, after deducting any
reserves applicable thereto, which would be treated as intangible under
generally accepted accounting principles consistently applied
including, without limitation, good will, trademarks, trade names,
service marks, brand names, copyrights, patents, and unamortized debt
discount and expense, organizational expenses and the excess of the
equity in any Affiliate over the cost of the investment in such
Affiliate, minus
(d) the amount of any debt obligations to the Reported Company
or any of its Affiliates by any shareholder, officer or director of the
Servicer or any such Affiliate, is equal to at least $6,000,000 with
respect to the occurrence of a Trigger Event and $7,500,000 with
respect to the occurrence of a Funding Period Trigger Event.
"Transition Cost": Any documented expenses and allocated cost of
personnel reasonably incurred by a successor Servicer or the Trustee in
connection with a transfer of servicing from the Servicer to a successor
Servicer as successor Servicer pursuant to Section 6.02 of the Servicing
Agreement, but not to exceed $50,000.
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"Transaction Documents": This Agreement, the Servicing Agreement, the
Contribution Agreement, the Assignment and Assumption Agreements, the
Certificates, the Insurance Agreement and the Policy.
"Transferor": T & W Funding Company I, L.L.C., and all successors
thereto in accordance with the terms hereof.
"Transferor Order" and "Transferor Request": A written order or request
signed in the name of the Transferor by its President or a Vice President, and
delivered to the Trustee.
"Trigger Event": Any of the following events: (1) for any three
consecutive Due Periods, the average of the Annualized Default Rates for such
consecutive Due Periods shall be equal to or greater than the Maximum Default
Rate; (2) in any Due Period, the Annualized Default Rate is equal to or greater
than three times the Maximum Default Rate; (3) in any two consecutive Due
Periods, the sum of the Annualized Default Rates for such Due Periods is equal
to or greater than three times the Maximum Default Rate; (4) for any three
consecutive Due Periods, the average of the Delinquency Rates shall be greater
than the Maximum Delinquency Rate; (5) the Tangible Net Worth Requirement is not
met; (6) there is a Servicer Event of Default, as defined in the Servicing
Agreement; (7) if both ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ are no longer officers and
directors of the Servicer or both are incapacitated for a period of six or more
consecutive months; (8) an Event of Default under this Agreement occurs and is
continuing; (9) any of the events set forth in clauses (d) or (e) of Section
6.01 occurs with respect to the Company or either of the Contributors; (10) the
Bond Insurer makes a payment to the Trustee under the Policy or (11) the
indebtedness of the Company under any of its other credit facilities has been
accelerated.
"Trust" or "T & W Lease-Backed Trust": The trust created by this
Agreement, the estate of which consists of the Trust Property.
"Trust Property": The meaning specified in the Conveyance Clause of
this Agreement.
"Trustee": Norwest Bank Minnesota, National Association, until a
successor Person shall have become the Trustee pursuant to the applicable
provisions of this Agreement, and thereafter "Trustee" shall mean such successor
Person.
"Trustee Fee": The fee payable on each Payment Date to the Trustee in
consideration for the Trustee's performance of its duties pursuant to this
Agreement as Trustee, in an amount equal to the product of one-twelfth of the
Trustee Fee Rate and (i) on the Initial Payment Date, the initial Outstanding
Principal Balance of the Certificates and (ii) on any Payment Date
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thereafter, the Outstanding Principal Balance of the Certificates on the
preceding Payment Date after giving effect to distributions on such date.
"Trustee Fee Rate": For any Due Period in which the Aggregate IPB is
less than $50 million, a rate equal to three and one-half one-hundredths of one
percent (0.035%) per annum. For any Due Period in which the Aggregate IPB is
greater than or equal to $50 million, a rate equal to two one-hundredths of one
percent (0.02%) per annum; provided, however, with respect to the Discount Rate
the Trustee Fee Rate shall be equal to three and one-half one-hundredths of one
percent (0.035%) per annum.
"Vice President": With respect to the Transferor or the Trustee, any
vice president, whether or not designated by a number or a word or words added
before or after the title "vice president."
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Article Two
The Certificates
Section 2.01. Form Generally. The Certificates shall be in
substantially the form set forth in Exhibit D hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon, as may,
consistently herewith, be determined by the officers executing such
Certificates, as evidenced by their execution of the Certificates.
The definitive Certificates shall be typewritten, printed, lithographed
or engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any manner acceptable to the Trustee and the
initial purchasers of the Certificates, all as determined by the officers
executing such Certificates, as evidenced by their execution of such
Certificates.
Section 2.02. Denomination. (a) This Agreement provides for the
issuance by the Trust of the Certificates, all subject to and in accordance with
the terms of this Agreement.
The Lease Contracts delivered in accordance with Section 4.01 on the
Closing Date or in accordance with Section 4.02 on any Funding Date, as
applicable, shall be deemed to be conveyed to the Trust by the Transferor. In
exchange for the Lease Contracts conveyed to the Trust on the Closing Date the
Trustee shall, on the Closing Date, transfer the proceeds the Trust receives
from the sale of the Certificates to the Transferor. On each subsequent Funding
Date, the Transferor shall receive the applicable Funding Amount from the
Trustee in exchange for the Lease Contracts conveyed to the Trust relating to
such Funding. Such Funding Amounts shall be paid to the Transferor in accordance
with Section 3.03(b).
(b) On the Closing Date the Trust shall issue the Certificates in the
initial aggregate principal amount of $11,166,448.64. The Outstanding Principal
Balance of the Certificates shall be adjusted on each Funding Date and/or
Payment Date in connection with subsequent Fundings or the repayment of
principal. The aggregate principal amount of the Certificates which may be
authenticated and delivered under this Agreement shall be $100,000,000, except
for Certificates authenticated and delivered upon registration of transfer or in
exchange for or in lieu of, other Certificates pursuant to Sections 2.04, 2.05,
2.07 or 9.05 hereof. The Certificates shall be issuable only as registered
Certificates without coupons in denominations of at least $100,000 and any
amount in excess thereof; provided, however, that, the foregoing shall not
restrict or prevent the transfer in accordance with Sections 2.05 and 2.06
hereof of any such Certificate with a remaining aggregate principal amount
outstanding of less than $100,000.
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Section 2.03. Execution, Authentication, Delivery and Dating. The
Certificates shall be executed on behalf of the Trust by a Responsible Officer
of the Trustee. Such signature on the Certificates must be manual.
Certificates bearing the manual signatures of individuals who were at
the time when such signatures were affixed, authorized to sign on behalf of the
Trust shall be valid, binding obligations, notwithstanding that such individuals
or any of them have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates.
The Certificates shall bear on its face the Closing Date and be dated
as of the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by the Trustee or by any Authenticating Agent by the manual signature
of one of its authorized officers, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder.
Section 2.04. Temporary Certificates. Pending the preparation of
definitive Certificates, the Transferor may direct the Trustee to execute, and
upon Transferor Order, the Trustee shall authenticate and deliver, temporary
Certificates which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any denomination, containing the same terms and
representing the same rights as the definitive Certificates in lieu of which
they are issued.
If temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Certificates, a Responsible Officer of
the Trustee shall execute and the Trustee shall authenticate and deliver in
exchange therefor one or more definitive Certificates of any authorized
denominations and of a like initial aggregate principal amount and Stated
Maturity. Until so exchanged, the temporary Certificates shall in all respects
be entitled to the same benefits under this Agreement as definitive
Certificates.
Section 2.05. Registration, Registration of Transfer and Exchange. (a)
The Trustee shall cause to be kept at its Corporate Trust Office a register (the
"Certificate Register"), in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for
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the registration of Certificates and the registration of transfers of
Certificates. The Bond Insurer shall have the right to examine the Certificate
Register at all reasonable times. The Trustee shall provide the Bond Insurer, at
its request, a list of the names and addresses of the Certificateholders as
appears in the Certificate Register.
(b) Only upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office and subject to the conditions set forth in Section
2.06 hereof, a Responsible Officer of the Trustee shall execute, and the Trustee
or its agent shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of any authorized
denominations, and of a like aggregate principal amount and Stated Maturity.
(c) At the option of the Holder, a Certificate may be exchanged for
other Certificates of any authorized denominations and of a like aggregate
principal amount and Stated Maturity, upon surrender of the Certificates to be
exchanged at such office or agency. Whenever any Certificates are so surrendered
for exchange, a Responsible Officer of the Trustee shall execute, and the
Trustee or its agent shall authenticate and deliver, the Certificates which the
Certificateholder making the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be the valid obligations of the Trust, evidencing
the same debt and entitled to the same benefits under this Agreement, as the
Certificates surrendered upon such registration of such transfer or exchange.
Every Certificate presented or surrendered for registration of transfer
or exchange shall (if so required by the Trustee) be duly endorsed or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed, by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates,
other than exchanges pursuant to Section 2.04 or 9.05 hereof not involving any
registration of transfer.
Notwithstanding anything else to the contrary contained in this
Agreement, the obligation of the Trust to pay the principal of and interest on
the Certificates is not a general obligation of the Trust, but is limited solely
to the Trust Property and the Policy.
Section 2.06. Limitation on Transfer and Exchange. (a) The Certificates
have not been registered or qualified under the Securities Act of 1933, as
amended (the "1933 Act") or the
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securities laws of any state. No transfer of any Certificate shall be made
unless that transfer is made in a transaction which does not require
registration or qualification under the 1933 Act or under applicable state
securities or "Blue Sky" laws. In the event that a transfer is to be made
without registration or qualification, such Certificateholder's prospective
transferee shall either (i) deliver to the Trustee an investment letter
substantially in the form set forth on Exhibit A hereto, or other applicable
document (the "Investment Letter") or (ii) deliver to the Trustee an opinion of
counsel that the transfer is exempt from such registration or qualification
(which opinion shall not be at the expense of the Transferor, the Trustee, the
Bond Insurer, the Servicer or the Trust). The Trustee is not obligated to
register or qualify the Certificates under the 1933 Act or any other securities
law. Any such Holder desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the Bond Insurer, the Trust and the Transferor
against any liability, cost or expense (including attorneys' fees) that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws. The Trustee shall promptly, after receipt of such
information as is set forth in the next succeeding sentence, furnish to any
Holder, or any prospective transferee designated by a Holder, the information
required to be delivered to Holders and prospective transferees of Certificates
in connection with resales of the Certificates to permit compliance with Rule
144A of the 1933 Act in connection with such resales. Such information shall be
provided to the Trustee by the Servicer.
(b) No acquisition or transfer of a Certificate or any interest therein
may be made to any "Benefit Plan Investor" (as defined in 29 C.F.R.
Section 2510.3-101) or to any Person who is directly or indirectly purchasing
such Certificates or an interest therein on behalf of, as named fiduciary of, as
trustee of, or with assets of, such a Benefit Plan Investor unless the Trustee
is provided with evidence that establishes to the satisfaction of the Trustee
that (i) either no "prohibited transaction" under ERISA or the Code will occur
in connection with such prospective acquiror's or transferee's acquisition and
holding of the Certificates or that the acquisition and holding of the
Certificates by such prospective acquiror or transferee is subject to a
statutory or administrative exemption, and (ii) that the prospective acquiror's
or transferee's acquisition and holding will not subject the Transferor, the
Servicer or the Trustee to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
explicitly undertaken in the Transaction Documents.
(c) No acquisition or transfer of a Certificate or any interest therein
may be made during the Funding Period without the prior written consent of the
Transferor.
(d) The Trustee shall have no liability to the Trust or any
Certificateholder arising from a transfer of any such Certificate in reliance
upon a certification described in this Section 2.06.
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Section 2.07. Mutilated, Destroyed, Lost or Stolen Certificate. If (i)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Bond Insurer
such security or indemnity as may be required by the Trustee or the Bond Insurer
to save the Trust, the Trustee and the Bond Insurer or any agent of them
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, a Responsible Officer of the Trustee
shall execute and, the Trustee shall authenticate and deliver, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same tenor, initial principal amount and Stated Maturity,
bearing a number not contemporaneously Outstanding. If after the delivery of
such new Certificate, a bona fide purchaser of the original Certificate in lieu
of which such new Certificate was issued presents for payment such original
Certificate, the Trust, the Trustee and the Bond Insurer shall be entitled to
recover such new Certificate from the person to whom it was delivered or any
person taking therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expenses incurred by the Trust, the Trustee or the Bond
Insurer or any agent of any of them in connection therewith. If any such
mutilated, destroyed, lost or stolen Certificate shall have become or shall be
about to become due and payable, or shall have become subject to redemption in
full, instead of issuing a new Certificate, the Trustee may pay such Certificate
without surrender thereof, except that any mutilated Certificate shall be
surrendered.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates,
other than exchanges pursuant to Section 2.04 or 9.05 hereof not involving any
registration of transfer. Upon the issuance of any new Certificate under this
Section, the Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Certificate issued pursuant to this Section 2.07, in lieu of
any destroyed, lost or stolen Certificate, shall constitute an original
additional contractual obligation of the Trust, whether or not the destroyed,
lost or stolen Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and proportionately
with any and all other Certificates duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
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Section 2.08. Payment of Principal and Interest; Principal and Interest
Rights Preserved. (a) Interest shall accrue on the Outstanding Principal Balance
of the Certificates for each applicable Accrual Period (or the Accrual Intervals
comprising each such Accrual Period) at the Certificate Interest Rate on the
basis of a 360-day year and actual days elapsed until the last day preceding the
Final Payment Date and (to the extent that the payment of such interest shall be
legally enforceable) on any overdue installment of interest from the date such
interest became due and payable (giving effect to any applicable grace periods)
until fully paid. Interest shall be due and payable in arrears on each Payment
Date, with each payment of interest calculated as described above on the
Outstanding Principal Balance of the Certificates on the Business Day
immediately following the preceding Payment Date or on the Closing Date, if
there has not been any preceding Payment Date. Notwithstanding the foregoing,
with respect to any Fundings with respect to the Certificates occurring since
the preceding Payment Date, interest shall be calculated with respect to each
Accrual Interval based upon the actual number of days elapsed during such
Accrual Interval and the Outstanding Principal Balance as of such Payment Date
or Funding Date, as appropriate. In making any such interest payment, if the
interest calculation with respect to a Certificate shall result in a portion of
such payment being less than $0.01, then such payment shall be decreased to the
nearest whole cent, and no subsequent adjustment shall be made in respect
thereof.
(b) The principal of each Certificate shall be payable in installments
ending no later than the applicable Stated Maturity thereof unless such
Certificate becomes due and payable at an earlier date by declaration of
acceleration, call for redemption or otherwise. All reductions in the principal
amount of a Certificate effected by payments of installments of principal made
on any Payment Date shall be binding upon all future Holders of such Certificate
and of any Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, whether or not such payment is noted on
such Certificate. Each installment of principal payable on the Certificates
shall be in an amount equal to the Principal Distribution Amount, if any,
available to be paid in accordance with the priorities of Section 12.02(d)
hereof. The principal payable on the Certificates shall be paid on each Payment
Date beginning on the first Payment Date and ending on the Final Payment Date.
All payments of principal with respect to all of the Certificates, shall be made
on a pro rata basis based upon the ratio that the Outstanding Principal Balance
of a Certificate bears to the Outstanding Principal Balance of all Outstanding
Certificates; provided, however, that if as a result of such proration a portion
of such principal would be less than $.01, then such payment shall be increased
to the nearest whole cent, and such portion shall be deducted from the next
succeeding principal payment.
(c) The principal of and interest on the Certificates are payable by
check mailed by first-class mail to the Person whose name appears as the
Registered Holder of such Certificate on the Certificate Register at the address
of such Person as it appears on the Certificate Register or by wire transfer in
immediately available funds to the account specified in writing to the Trustee
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by such Registered Holder at least five Business Days prior to the Record Date
for the Payment Date on which wire transfers will commence, in such coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts. Except as set forth in the
final sentence of this Section 2.08(c), all payments on the Certificates shall
be paid without any requirement of presentment. The Trustee shall notify the
Person in whose name a Certificate is registered at the close of business on the
Record Date next preceding the Payment Date on which the Trustee expects that
the final installment of principal of such Certificate will be paid that the
Trustee expects that such final installment will be paid on such Payment Date.
Such notice shall be mailed no later than the fifteenth day prior to such
Payment Date and shall specify the place where such Certificate may be
surrendered. Funds representing any such checks returned undeliverable shall be
held in accordance with Section 7.16 hereof. Each Certificateholder shall
surrender its Certificate to the Trustee prior to payment of the final
installment of principal of such Certificate.
(d) Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Certificates, if the Certificates
have become or been declared due and payable following an Event of Default and
such acceleration of maturity and its consequences have not been rescinded and
annulled, then payments of principal of and interest on such Certificates shall
be made in accordance with Section 6.08 hereof.
(e) Each Holder of a Certificate, by acceptance of its Certificate,
agrees that during the term of this Agreement and for one year and one day after
the termination hereof, such Holder or any Affiliate thereof 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 Transferor.
Section 2.09. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Certificate, the Trustee and any agent of the
Trustee or the Bond Insurer shall treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
payments of principal of and interest on such Certificate and for all other
purposes whatsoever, whether or not such Certificate be overdue, and neither the
Trustee, the Bond Insurer nor any agent of the Trustee or the Bond Insurer shall
be affected by notice to the contrary.
Section 2.10. Cancellation. All Certificates surrendered to the Trustee
for payment, registration of transfer or exchange (including Certificates
surrendered to any Person other than the Trustee which shall be delivered to the
Trustee) shall be promptly canceled by the Trustee. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates canceled as
provided in this Section 2.10, except as expressly permitted by this Agreement.
All canceled
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Certificates held by the Trustee shall be disposed of by the Trustee as is
customary with its standard practice.
Section 2.11. Intended Tax Characterization. The parties hereto,
including the Certificateholders, agree that it is their mutual intent that, for
all applicable purposes, the Certificates shall constitute indebtedness.
Further, each party hereto, including the Certificateholders, hereby covenants
to every other party hereto to treat the Certificates as indebtedness for all
applicable purposes in all tax filings, reports and returns and otherwise, and
further covenants that neither it nor any of its Affiliates will take or
participate in the taking of, or permit to be taken, any action that is
inconsistent with the treatment of the Certificates as indebtedness for tax
purposes. All successors and assigns of the parties hereto, including the
Certificateholders, shall be bound by the provisions hereof.
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Article Three
Fundings
Section 3.01. Fundings. (a) During the Funding Period the Transferor
shall acquire Additional Lease Contracts pursuant to the Contribution Agreement
with the proceeds of a Funding. Such Additional Lease Contracts shall be deemed
to be conveyed to the Trust upon the delivery to the Trustee of the Assignment
and Assumption Agreement or Agreements, as appropriate, and the related Funding
Report in accordance with Section 4.02.
(b) The Funding Amount for the Lease Contracts acquired by the Trust on
a Funding Date shall be determined by the Servicer on behalf of the Transferor
and shall be reflected in the Funding Report with respect to Lease Contracts
identified on the related Lease Schedule attached to the Funding Report for such
Funding. Such Additional Lease Contracts shall become subject to this Agreement
and the related Lease Contract Files shall be held by the Trustee.
(c) The Transferor may acquire funds from a corresponding increase in
the Outstanding Principal Balance of the Certificates in the following manner
and amounts on any Funding Date throughout the Funding Period:
(i) on the Closing Date, the Trustee will issue the
Certificates and the Transferor may receive funds from the sale of such
Certificates in an amount greater than or equal to 1,000,000; provided,
however, that the Outstanding Principal Balance of the Certificates
pursuant to this subsection (c) shall not be greater than $100,000,000;
and
(ii) the Transferor may on any Funding Date during the Funding
Period, receive additional funds from a corresponding increase in the
Outstanding Principal Balance of the Certificates; provided, however
that the conditions in Section 4.02 are satisfied and the aggregate
Funding Amount for any one month is no more than $10,000,000.
Section 3.02. Procedure for Fundings.
(a) Conditions Precedent. Each Funding is subject to the satisfaction
of the following conditions precedent on the relevant date specified below and
the conditions precedent set forth in Section 4.02 hereof:
(i) three Business Days advance notification by the Transferor
to the Servicer, the Bond Insurer, the Certificateholders and the
Trustee (in writing or by facsimile notification) of a request for a
Funding to occur and the related Funding Date;
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(ii) no later than 11:00 a.m. (New York time) the fifth
Business Day immediately prior to the requested Funding Date, the
Transferor shall have delivered to the Servicer, the Back-up Servicer,
the Bond Insurer and the Certificateholders, by a diskette or
electronic transfer in a format acceptable to the Servicer, the Back-up
Servicer, the Bond Insurer and the Certificateholders, a list of the
proposed Lease Contracts to be funded, and providing for each such
Lease Contract all information required to be provided in the Lease i
Schedule as provided in the definition thereof and the Lease Contracts
that have been transferred to the Trust pursuant to this Agreement
prior to such date; provided, however, the Transferor shall notify the
Back-up Servicer and the Bond Insurer in writing no later than one
Business Day prior to the delivery or electronic transfer described
herein; and
(iii) no later than 1:00 p.m. (New York time) the fifth
Business Day immediately prior to the requested Funding Date, the
Transferor shall have delivered to the Trustee the sole original
executed counterpart of each Lease Contract and all other items
included in the Lease Contract File, subject to exceptions as shall
have been approved by the Certificateholders and the Bond Insurer.
With respect to each Lease Contract, the Trustee shall notify the Bond
Insurer and the Company if any of the documents set forth in clauses (i), (ii)
or (iv) of the definition of "Lease Contract File" is not complete on its face
or is missing from the related Lease Contract File.
(b) Preparation of Funding Report. The Servicer shall review such
diskette or electronic transfer I specified in clause (a)(ii) above and prepare
a Funding Report from the information provided in such diskette or electronic
transfer, the existing information regarding all other Lease Contracts and the
existing information used to generate the Monthly Servicer's Report. No later
than 10:00 a.m. (New York time) on each Business Day immediately preceding a
proposed Funding Date, the Servicer shall fax or hand deliver the Funding
Report, and the amount of the Funding to be funded by Certificateholders, to the
Transferor, the Bond Insurer and the Certificateholders and the Transferor shall
thereupon execute such report and fax it to the Trustee no later than 11:00 a.m.
(New York time) on such date of receipt.
Section 3.03. Fundings by Certificateholders. (a) The
Certificateholders shall have agreed by their acceptance of their Certificates
and execution of an Investment Letter, on the terms and conditions set forth
herein to make Fundings to the Trust on behalf of the Transferor on the Closing
Date and from time to time thereafter on any Funding Date during the Funding
Period, as specified by the Transferor in accordance with Section 3.03(b) below.
(b) Subject to the terms hereof, each Certificateholder will make
available to the Trustee the Funding Amount that is specified in the Funding
Report (which shall be an amount
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equal to such Certificateholder's pro rata share of the Funding Amount) at
Norwest Bank Minnesota, N.A. ABA #▇▇▇▇▇▇▇▇▇, Account #▇▇-▇▇-▇▇▇ for further
credit to Account #▇▇▇▇▇▇▇▇ in the name of T & W Funding Company I, L.L.C. by
2:00 p.m. (New York time) on the applicable Funding Date in immediately
available funds. The Trustee shall simultaneously transfer such Funding Amount
to the Transferor in accordance with the written instructions of the Transferor.
Such amounts received by the Trustee from the Certificateholders shall be held
by the Trustee as part of the Trust Property until disbursed to the Transferor.
Such amounts shall not be commingled with any other monies held by the Trustee.
(c) The failure of any Certificateholder to remit its pro rata share of
any Funding Amount on the Closing Date or any Funding Date shall not relieve any
other Certificateholder of any obligation hereunder to make its pro rata share
of a Funding Amount on such Funding Date. Any nondefaulting Certificateholder
may, but is not required to, fund the portion of the Funding Amount not funded
by the defaulting Certificateholder. If the nondefaulting Certificateholder does
not fund the portion of the Funding Amount by the defaulting Certificateholder,
the Funding Amount shall be reduced by the defaulting Certificateholder's
portion of the Funding Amount and the Transferor shall have all remedies
available to it under applicable law in respect of the defaulting
Certificateholder.
(d) Immediately following each Funding or payment of principal on any
Certificates, the Trustee shall make an appropriate notation in the Certificate
Register indicating the amount and date of the Funding or payment.
(e) If any errors have been discovered in any Funding Report by the
Independent Accountants or the Back-up Servicer pursuant to Section 4.03 or
Section 7.05, as the case may be, of the Servicing Agreement, the Lease Contract
which is the subject of such error shall be repurchased in accordance with
Section 3.03 of the Contribution Agreement or Section 4.04(b) of this Agreement,
as appropriate.
Section 3.04. Re-underwriting. On a quarterly basis, at the Bond
Insurer's request and expense, the Transferor shall cause a third party
acceptable to the Bond Insurer to re-underwrite a sample of the Lease Contracts
sold to the Trust since the last re-underwriting review. The scope of such
review shall be acceptable to the Bond Insurer.
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Article Four
Issuance of Certificates; Substitutions of Collateral
Section 4.01. Conditions to Issuance of Certificates. On the Closing
Date, subject to the conditions in Article III hereof, upon receipt by the Bond
Insurer of item (a) below and the Trustee of items (a) and (b) below at least
two Business Days prior to the Closing Date and upon receipt by the Bond Insurer
and the Trustee of items (c) through (o) below on the Closing Date, the
Transferor will direct the Trustee to authenticate and the Trustee will
authenticate the Certificates.
(a) a Funding Report with the Lease Schedule attached thereto;
(b) the sole original executed counterpart of each Lease
Contract and all other items included in the Lease Contract File,
subject to such exceptions as shall have been approved by the
Certificateholders and with respect to Leased Vehicles the Certificates
of Title or the Applications for Certificates of Title;
(c) a Board Resolution of each of the Transferor and the
Servicer authorizing, as applicable, the execution, delivery and
performance of the Transaction Documents and the transactions
contemplated hereby and by the other Transaction Documents, certified
by the Secretary or an Assistant Secretary of the Transferor and the
Servicer, as applicable;
(d) a copy of an officially certified document, dated not more
than 30 days prior to the Closing Date, evidencing the due organization
and good standing of each of the Transferor and the Servicer in their
respective states of incorporation;
(e) copies of the Articles of Incorporation, Certificate of
Formation and By-Laws and Limited Liability Company Agreement, as
applicable, of each of the Transferor and the Servicer, certified by
the Secretary or an Assistant Secretary of the Transferor and the
Servicer, as applicable and evidence of the issuance by the Transferor
of its membership interests;
(f) (A) evidence of filing with the Secretary of State of the
state (and with the relevant county, if required by the applicable
state law) of the appropriate Contributor's chief executive office of
UCC-1 financing statements executed by the appropriate Contributor, as
debtor, and naming the Transferor as secured party, the Trustee for the
benefit of the Certificateholders and the Bond Insurer as assignee and
the Lease Assets as collateral; and (B) evidence of filing with the
Secretary of State of the state (and with the
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relevant county, if required by the applicable state law) of the
Transferor's chief executive office of UCC-1 financing statements executed by
the Transferor, as debtor, and naming the Trustee for the benefit of the
Certificateholders and the Bond Insurer as secured party, and the Trust Property
as collateral;
(g) a certificate listing the Servicing Officers of the
Servicer as of the Closing Date;
(h) an executed copy of the Servicing Agreement and the
Contribution Agreement;
(i) evidence of the deposit by the Transferor into the
Collection Account of any amounts paid on the Lease Contracts since the
related Cut-Off Date;
(j) the Transferor and the Servicer shall have delivered to
the Trustee an Officers' Certificate of the Transferor or the Servicer,
as appropriate, to the effect that (A) the funding on the Closing Date
will not result in the occurrence of a Funding Period Trigger Event or
a Default under this Agreement or the Servicing Agreement and the
Transferor or the Servicer, as appropriate, is not in Default under
this Agreement or the Servicing Agreement, (B) the funding on the
Closing Date will not result in a breach of any of the terms,
conditions or provisions of, or constitute a Default under, any
agreement or instrument to which the Transferor or the Servicer, as
appropriate, is a party or by which it is bound, or any order of any
court or administrative agency entered in any proceeding to which the
Transferor or the Servicer (C) the representations and warranties made
by the Transferor or the Servicer, as applicable, in the Contribution
Agreement, this Agreement, the Insurance Agreement, the Hedge
Assignment (as defined in the Certificate Purchase Agreement), the Swap
Agreement (as defined in the Certificate Purchase Agreement), the
Servicing Agreement and the Certificate Purchase Agreement are true and
correct in all material respects on the Closing Date, as appropriate,
is a party or by which it may be bound or to which it may be subject
and (D) all conditions precedent provided in this Agreement and the
Servicing Agreement relating to such funding have been compiled with;
(k) Counsel to the Transferor shall have delivered its
Opinions of Counsel with respect to the treatment of the transfers from
the Contributors to the Transferor as a "true sale," certain bankruptcy
issues with respect to the Transferor and its Affiliates and the
perfected first priority security interest of the Trustee in the Trust
Property and the treatment of the Certificates as debt;
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(l) the sum of (A) the initial Outstanding Principal Balance
of Certificates and (B) the Required Collateralization Amount does not
exceed the Aggregate Implicit Principal Balance;
(m) neither an Event of Default nor a Funding Period Trigger
Event has occurred;
(n) the Bond Insurer has delivered the Policy and the Bond
Insurer shall have received the fees, premium and expenses due and
owing to the Bond Insurer; and
(o) such other documents as the Trustee, the Bond Insurer or
the Certificateholders may reasonably require.
The Bond Insurer shall have agreed by the delivery of its Policy to the
Trustee on the Closing Date that the conditions precedent in this Section 4.01
have been satisfied to the Bond Insurer's satisfaction. The Certificateholders
shall have agreed by their payment of the Funding Amount in accordance with
Section 3.03(b) hereof that the conditions precedent in this Section 4.01 have
been satisfied to their satisfaction.
With respect to each Lease Contract, the Trustee shall notify the Bond
Insurer and the Company if any of the documents set forth in clauses (i), (ii)
or (iv) of the definition of "Lease Contract File" is defective or missing from
the related Lease Contract File.
Section 4.02. Additional Fundings. After the Closing Date, the
obligation of the Certificateholders to provide funds to the Trust on behalf of
the Transferor and the obligation of the Trustee to transfer such funds to the
Transferor on each Funding Date is subject to the satisfaction of the conditions
in Article III hereof and of the following conditions on or before the related
Funding Date:
(a) the Transferor shall have delivered to the 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 including Certificates of Title with respect to each
Leased Vehicle;
(b) the Transferor shall have delivered to the Trustee and the
Bond Insurer an Officer's Certificate in the form attached hereto as
Exhibit E certifying that all of the terms of the Contribution
Agreement have been complied with and all of the representations and
warranties are true and correct as of the Funding Date;
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(c) the Transferor shall have delivered to the Trustee and the
Bond Insurer a Lease Schedule and an Assignment and Assumption
Agreement or Agreements, as appropriate, subjecting any new Lease
Contracts to the provisions of the Transaction Documents;
(d) the Transferor and the Servicer shall have delivered to
the Trustee and the Bond Insurer an Officers' Certificate of the
Transferor or the Servicer, in the forms attached hereto as Exhibits F
and G, as appropriate, to the effect that (A) such Funding will not
result in the occurrence of a Funding Period Trigger Event or a Default
under this Agreement and the Transferor or the Servicer, as
appropriate, is not in Default under this Agreement or the Servicing
Agreement, (B) the Funding will not result in a breach of any of the
terms, conditions or provisions of, or constitute a Default under, any
agreement or instrument to which the Transferor or the Servicer, as
appropriate, is a party or by which it is bound, or any order of any
court or administrative agency entered in any proceeding to which the
Transferor or the Servicer, as appropriate, is a party or by which it
may be bound or to which it may be subject (C) all of the
representations and warranties of the Servicer and the Transferor
contained in the Contribution Agreement, the Certificate Purchase
Agreement, the Insurance Agreement, the Hedge Agreement (as defined in
the Certificate Purchase Agreement), the Swap Agreement (as defined in
the Certificate Purchase Agreement), the Servicing Agreement and this
Agreement are true and correct as of such Funding Date and (D) all
conditions precedent provided in this Agreement and the Servicing
Agreement relating to the Funding have been complied with;
(e) the Transferor shall have delivered to the Trustee and the
Bond Insurer evidence of (i) filing with the Secretary of State of the
state (and with the relevant county, if required by the applicable
state law) of the applicable Contributor's chief executive office of
UCC-1 financing statements executed by the applicable Contributor, as
debtor, and naming the Transferor as secured party, the Trustee for the
benefit of the Certificateholders and the Bond Insurer as assignee and
the Lease Assets as collateral, and (ii) filing with the Secretary of
State of the state (and with the relevant county, if required by the
applicable state law) of the Transferor's chief executive office of
UCC-1 financing statements executed by the Transferor, as debtor, and
naming the Trustee for the benefit of the Certificateholders and the
Bond Insurer as secured party, and the Trust Property as collateral;
(f) evidence of the deposit by the Transferor into the
Collection Account of any amounts paid under the related Lease
Contracts since the related Cut-Off Date (as certified by the
Transferor);
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(g) the Transferor shall have delivered to the Trustee and the
Bond Insurer an Officer's Certificate of the Transferor in the form
attached hereto as Exhibit H to the effect that all conditions
precedent to the Funding have been complied with;
(h) the sum of (a) the Outstanding Principal Balance of
Certificates and the Funding Amount and (b) the Required
Collateralization Amount (computed taking into account the Aggregate
Implicit Principal Balance including the Funding IPB) does not exceed
the sum of (x) the Funding IPB and (y) the Aggregate Implicit Principal
Balance of Lease Contracts conveyed to the Transferor prior to such
Funding;
(i) the Trustee shall have no actual knowledge that a Funding
Period Trigger Event has occurred;
(j) the Trustee shall have no actual knowledge that an Event
of Default has occurred or is continuing;
(k) Counsel to the Transferor shall have delivered to the
Trustee and the Bond Insurer an updated Opinion of Counsel for the
calendar quarter prior to such Funding Date with respect to the
perfected first priority security interest of the Trustee in the Trust
Property;
(l) The Policy remains in full force and effect as of such
Funding Date;
(m) Such Funding shall not result in a lowering of the rating
of the commercial paper notes issued by the Certificateholders and the
Certificateholders shall have received a letter from each of ▇▇▇▇▇'▇
and S&P confirming their rating of such commercial paper notes;
(n) Any taxes, fees and other governmental charges which are
due and payable in connection with the performance of the Contribution
Agreement, this Agreement, the Hedge Assignment (as defined in the
Certificate Purchase Agreement), the Swap Agreement (as defined in the
Certificate Purchase Agreement), the Certificate Purchase Agreement,
the Servicing Agreement and delivery of the Certificates shall have
been paid at or prior to the relevant Funding Date;
(o) All financing statements previously filed by the
Transferor and the Servicer remain in full force and effect;
(p) The Servicer shall have entered into such (i) Interest
Rate Hedge Assignments (as defined in the Certificate Purchase
Agreement) between the Servicer and
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CoreStates Bank, N.A., as Collateral Agent and (ii) Swap Agreements
(as defined in the Certificate Purchase Agreement) between the Servicer
and CoreStates Bank, N.A., as swap counterparty, as the
Certificateholders shall require;
(q) The Liquidity Facility remains in full force and effect
and no Transaction Termination Event (as defined therein) shall have
occurred and be continuing
(r) delivery of such other documents as the Trustee, the
Certificateholders or the Bond Insurer may reasonably require,
including, but not limited to an updated Opinion of Counsel for the
present calendar quarter prior to such Funding Date with respect to
certain bankruptcy issues relating to the Transferor and its
Affiliates.
The Bond Insurer shall notify the Trustee, in writing, no later than
10:00 a.m. (New York time) on the Funding Date if the Bond Insurer has not
received any of the documentation required to be delivered to the Bond Insurer
pursuant to this Section 4.02. Upon satisfaction of the above conditions, the
Trustee shall execute the related Funding Report. By their payment of the
Funding Amount in accordance with Section 3.03(b) hereof the Certificateholders
shall be deemed to have received any additional documentation required by them
pursuant to subsection (r) and shall be deemed to have agreed that the
conditions precedent in this Section 4.02 have been satisfied to their
satisfaction.
Section 4.03. Perfection of Transfer. (a) The Servicer shall file UCC-1
financing statements in the time and manner described in Section 4.01 and 4.02
hereof in accordance with such Sections except as provided in the next following
sentence. No later than 30 days after the Closing Date, with respect to
Equipment related to Lease Contracts backing the initial funding of
Certificates, and no later than 30 days after the end of each calendar quarter
with respect to Equipment related to Lease Contracts backing any subsequent
funding of Certificates, the Transferor shall file with respect to all such
Equipment related to Lease Contracts, other than Loan Contracts, UCC-1 financing
statements with the Secretaries of State of the Enumerated States, executed by
the Transferor as debtor, and naming the Trustee for the benefit of the
Certificateholders and the Bond Insurer as secured party and the Equipment
located in such States as collateral; provided that no filings naming an
individual Customer as debtor shall be required. With respect to Equipment
relating to Loan Contracts the Transferor shall file UCC-3 financing statements
with the Secretaries of State of the Enumerated States within the same time
period. From time to time, and no less than annually, the Servicer shall take or
cause to be taken such actions and execute such documents as are necessary to
perfect and protect the Trustee's interests in the Lease Contracts and the
Equipment owned by the Transferor and located in the Enumerated States against
all other Persons, including, without limitation, the filing of financing
statements, amendments thereto and continuation statements, the execution of
transfer instruments and the making of notations on or taking possession of all
records or documents of
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title. File-stamped copies of such UCC-1 financing statements and UCC-3
financing statements shall be mailed to the Trustee upon receipt by the Servicer
or the Transferor. Within 60 days after any date of determination upon which the
aggregate Implicit Principal Balance of Loan Contract equals or exceeds 4% of
the Aggregate Implicit Principal Balance, the Transferor shall cause to be
delivered to the Trustee and the Bond Insurer an Opinion of Counsel with respect
to the perfected first priority security interest of the Trustee in the
Equipment in the Enumerated States relating to such Loan Contracts.
(b) If any change in any of the Company's, either Contributor's or the
Transferor's name, identity, structure or the location of its principal place of
business or chief executive office occurs, then the Transferor shall, or the
Transferor shall cause the Company or the applicable Contributor, as the case
may be, to deliver 30 days' prior written notice of such change or relocation to
the Servicer, the Bond Insurer and the Trustee and no later than the effective
date of such change or relocation, the Servicer shall file such amendments or
statements as may be required to preserve and protect the Trustee's interests in
the Trust Property.
(c) During the term of this Agreement, the Transferor will maintain its
chief executive office and principal place of business in one of the states of
the United States.
(d) The Servicer agrees to pay all reasonable costs and disbursements
in connection with the perfection and the maintenance of perfection, as against
all third parties, of the Trustee's and the Bond Insurer's respective right,
title and interest in and to the Trust Property (other than the Equipment not
initially located in the Enumerated States).
(e) On or prior to the Closing Date, the Transferor shall provide to
the Trustee the Applications for Certificates of Title with respect to each
Leased Vehicle relating to a Lease Contract to be funded on such Closing Date.
Within 120 days of the Closing Date, the Transferor shall provide the Trustee
the original Certificate of Title with respect to each Leased Vehicle.
Section 4.04. Lease Receivables. (a) If at any time the Transferor, the
Bond Insurer or the Trustee obtains knowledge (within the meaning of 7.01(e)
hereof), discovers or is notified by the Servicer that any of the
representations and warranties of one of the Contributors or the Company in the
Contribution Agreement were incorrect at the time as of which such
representations and warranties were made, then the Person discovering such
defect, omission, or circumstance shall promptly notify the Bond Insurer and the
other parties to this Agreement.
(b) In the event any representation or warranty of one of the
Contributors or the Company in the Contribution Agreement is incorrect and
materially and adversely affects the interests of the Bond Insurer or the
Holders of the Certificates, or in the event of any breach of
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any of the representations and warranties set forth in Sections 3.01(a)(i),
3.01(a)(ii), 3.01(a)(iii), 3.01(a)(v), 3.01(a)(vi), 3.01(vii) or 3.01(a)(xxi) of
the Contribution Agreement, then the Transferor shall require the Company and
the applicable Contributor pursuant to the Contribution Agreement to eliminate
or otherwise cure the circumstance or condition which has caused such
representation or warranty to be incorrect within 30 days of discovery or notice
thereof. If the Company or the applicable Contributor fails or is unable to cure
such circumstance or condition in accordance with the Contribution Agreement
then the Transferor shall require the Company or the applicable Contributor to
substitute or purchase pursuant to the Contribution Agreement any Lease Contract
as to which such representation or warranty is incorrect within the time
specified in Section 3.03 of the Contribution Agreement; provided, however, that
after such substitution, the aggregate average remaining life on all
Certificates after such substitution is not greater than four years. The
proceeds of a purchase shall be remitted by the Transferor to the Servicer for
deposit by the Servicer in the Collection Account pursuant to Section 3.03(a) of
the Servicing Agreement. The Trustee shall not be required to calculate the
aggregate average remaining life on the Certificates.
(c) If the Transferor fails to enforce the purchase or substitution
obligation of the Company and the applicable Contributor under the Contribution
Agreement, the Trustee is hereby appointed attorney-in-fact to act on behalf of
and in the name of the Transferor to require such purchase or substitution.
(d) With respect to (i) any Lease Contract to be prepaid or terminated
early pursuant to Section 3.10 of the Servicing Agreement and (ii) any Defaulted
Lease Contract or Delinquent Lease Contract, the Transferor shall be entitled to
purchase such Lease Contract or to deliver a Substitute Lease Contract meeting
the same requirements as those specified in Section 3.04 of the Contribution
Agreement for substitutions and purchases by the Company or the applicable
Contributor upon breaches of a representation or warranty by the Company or
another Contributor thereunder; provided, however, that each and all of the
following are met,.(w) the cumulative Implicit Principal Balance of prepaid or
early terminated Lease Contracts which are substituted by the Transferor
(measured as of the date of substitution) shall not exceed 10% of the Aggregate
Implicit Principal Balance (measured as of the date of substitution), (x) the
cumulative Implicit Principal Balance of Defaulted Lease Contracts which are
purchased or substituted by the Transferor (measured as of the date of
substitution) shall not exceed the Defaulted Lease Purchase and Substitution
Limit and (y) the cumulative Implicit Principal Balance of Delinquent Lease
Contracts which are purchased or substituted by the Transferor (measured as of
the date of substitution) shall not exceed the Delinquent Lease Purchase and
Substitution Limit.
(e) The Transferor shall provide to the Trustee on the date of delivery
of any Substitute Lease Contract the items listed in (i) and (ii) below and to
the Bond Insurer the item
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listed in (i) below, and the Transferor shall provide to the Trustee and the
Bond Insurer at the end of each calendar quarter the items listed in (iii) below
with respect to any Substitute Lease Contracts substituted during such period:
(i) a supplement to the Contribution Agreement and this
Agreement substantially in the form of Exhibit A to the Contribution
Agreement and Exhibit B hereto, subjecting such Substitute Lease
Contract to the provisions hereof and thereof and providing with
respect to the Substitute Lease Contract the information set forth in
the Lease Schedule;
(ii) the original executed counterpart of the Lease Contract
relating to such Substitute Lease Contract and the Certificate of
Title, if applicable; and
(iii) evidence that financing statements have been filed with
respect to such Substitute Lease Contract in accordance with Section
4.03(a) hereof.
Section 4.05. Releases. (a) The Transferor shall be entitled to obtain
a release from the lien of this Agreement for any Lease Contract and the related
Equipment or Leased Vehicle at any time (i) after a payment by the Company or
the Transferor of the Purchase Price of the Lease Receivable, (ii) after a
Substitute Lease Contract is substituted for such Lease Contract, or (iii) upon
the termination of a Lease Contract following the sale, lease or other
disposition of the related Equipment or Leased Vehicle in accordance with
Section 3.01(b)(vii) of the Servicing Agreement, if the Transferor delivers to
the Trustee and the Bond Insurer an Officer's Certificate (A) identifying the
Lease Receivable and the related Lease Contract and Equipment or Leased Vehicle
to be released, (B) requesting the release thereof, (C) setting forth the amount
deposited in the Collection Account with respect thereto, in the event a Lease
Contract and the related Equipment or Leased Vehicle are being released from the
lien of this Agreement pursuant to (i) or (iii) above, and (D) certifying that
the amount deposited in the Collection Account (x) equals the Purchase Price of
the Lease Contract, in the event a Lease Contract and the related Equipment or
Leased Vehicle are being released from the lien of this Agreement pursuant to
(i) above or (y) equals the entire amount of Recoveries or Residual Proceeds
received with respect to such Lease Contract and related Equipment or Leased
Vehicle in the event of a release from the lien of this Agreement pursuant to
(iii) above; provided, however, that upon the termination of a Lease Contract,
any Residual Proceeds from the Equipment or Leased Vehicle shall be placed in
the Collection Account prior to the Trustee or the Transferor releasing the
Equipment or Leased Vehicle from the security interest granted to the Trustee by
the Transferor pursuant to this Agreement or to the Transferor by a Contributor
pursuant to the Contribution Agreement.
(b) Upon satisfaction of the conditions specified in subsection (a)
above, the Trustee shall release from the lien of this Agreement and deliver to
or upon the order of the Transferor
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(or to or upon the order of the Company if it has satisfied its obligations
under Section 4.04 hereof and Section 3.04 of the Contribution Agreement with
respect to a Lease Contract) the Lease Contract, the Lease Receivable and the
Equipment or Leased Vehicle described in the Transferor's request for release.
Section 4.06. Trust Property. The Trustee may, and when required by the
provisions of Articles Four, Five, Six and Twelve hereof shall, execute
instruments to release property from the lien of this Agreement, or convey the
Trustee's interest in the same, in a manner and under circumstances which are
not inconsistent with the provisions of this Agreement. No party relying upon an
instrument executed by the Trustee as provided in this Article Four shall be
bound to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any monies.
Section 4.07. Notice of Release. The Trustee shall be entitled to
receive at least 10 days' notice of any action to be taken pursuant to Section
4.05(a) hereof, accompanied by copies of any instruments involved.
Section 4.08. Nature of Transfer. To the extent that the transfer of
the Trust Property from the Transferor to the Trustee is deemed to be a secured
financing, the Transferor shall be deemed hereunder to have granted to the
Trustee, and the Transferor does hereby grant to the Trustee, a security
interest in all of the Transferor's right, title and interest in, to and under
the Trust Property, whether now owned or hereafter acquired. For purposes of
such grant, this Agreement shall constitute a security agreement under
applicable law.
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Article Five
Satisfaction and Discharge
Section 5.01. Satisfaction and Discharge of Agreement. (a) Following
payment in full of (i) all of the Certificates, (ii) the fees and charges of the
Trustee and the Back-up Servicer, (iii) all other obligations of the Transferor
under the Transaction Documents (iv) all amounts owing to the Bond Insurer under
the Insurance Agreement, and (v) the release by the Trustee of the Trust
Property in accordance with Section 5.01(b) hereof, this Agreement shall be
discharged.
(b) Upon payment in full of the amounts referred to in clauses (i)
through (iv) of Section 5.01(a) hereof, the Transferor may submit a Transferor's
Certificate to the Trustee requesting the release to the Transferor or its
designee of some or all of the Trust Property (collectively, the "Withdrawn
Collateral"), accompanied by an Opinion of Counsel reasonably acceptable to the
Bond Insurer to the effect that, after the release of the Withdrawn Collateral,
there will remain an amount in the Collection Account or otherwise subject to
this Agreement at least equal to the payments of interest due on the Outstanding
Certificates and the Principal Distribution Amount that are subject to recapture
as preferential transfers pursuant to Section 547 of the Bankruptcy Code or,
alternatively, to the effect that no such payments are subject to recapture. In
rendering such Opinion of Counsel, such counsel may rely as to factual matters,
including, without limitation, the date on which funds were received and the
source of funds, upon an Officer's Certificate. Promptly after receipt of such
Transferor's Certificate and Opinion of Counsel and authorization to release
from the Bond Insurer, the Trustee shall release the Withdrawn Collateral from
the lien of this Agreement, and deliver the Withdrawn Collateral to the
Transferor or its designee. The Transferor shall be entitled to deliver more
than one such request and Opinion of Counsel until the entire Trust Property is
released and delivered to the Transferor or its designee. Notwithstanding the
foregoing, the Bond Insurer may waive the requirement that the Transferor
deliver such Officer's Certificate and/or Opinion of Counsel and authorize the
Trustee by written direction to release all or a portion of the Collection
Account or other items of the Trust Property from the lien of this Agreement
upon payment in full of the amounts referred to in clauses (i) through (iv) of
Section 5.01(a) hereof. Notwithstanding termination of this Agreement, the
Trustee shall remain obligated to make claims under the Policy with respect to
any Preference Claim until termination of the Policy.
(c) In connection with the discharge of this Agreement and the release
of the Trust Property, the Trustee shall release from the lien of this Agreement
and deliver to or upon the order of the Transferor all property remaining in the
Trust Property and shall execute and file, at the expense of the Holder of the
Certificates, UCC financing statements evidencing such discharge and release.
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Section 5.02. Application of Trust Money. Subject to the last paragraph
of Section 7.16 hereof, all monies deposited with the Trustee pursuant to
Section 5.01 hereof shall be held in trust and if invested, shall be invested in
Eligible Investments of the type described in clause (i) of the definition
thereof, and applied by the Trustee, in accordance with the provisions of the
Certificates and this Agreement, to the payment, either directly or through any
Paying Agent as the Trustee may determine, to the Persons entitled thereto, of
the principal and interest for whose payment such money has been deposited with
the Trustee.
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Article Six
Defaults and Remedies
Section 6.01. Events of Default. "Event of Default" wherever used
herein means any one of the following events:
(a) default in the payment of any interest on any Certificate
when the same becomes due and payable; or
(b) default in the payment of any principal of any Certificate
when the same becomes due and payable; or
(c) default in the performance of any covenant of the
Transferor, or material breach of any representation or warranty of the
Transferor, in this Agreement, the Contribution Agreement, the
Insurance Agreement or the Servicing Agreement (other than a covenant
or warranty default in the performance of which or breach of which is
elsewhere in this Section specifically dealt with), and continuance of
such default or breach for a period of 30 days after the Transferor has
actual knowledge thereof; or
(d) the entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Transferor under
the United States Bankruptcy Code or any other applicable Federal or
state bankruptcy, insolvency, reorganization, liquidation or other
similar law now or hereafter in effect or any arrangement with
creditors or appointing a receiver, liquidator, assignee, trustee, or
sequestrator (or other similar official) for the Transferor or for any
substantial part of its property, or ordering the winding up or
liquidation of the Transferor's affairs, and the continuance of any
such decree or order unstayed and in effect for a period of 60
consecutive days; or
(e) the institution by the Transferor of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by the Transferor
to the institution of bankruptcy or insolvency proceedings against the
Transferor, or the filing by the Transferor of a petition or answer or
consent seeking reorganization or relief under the United States
Bankruptcy Code or any other applicable Federal or state bankruptcy
insolvency, reorganization, liquidation or other similar law now or
hereafter in effect, or the consent by the Transferor to the filing of
any such petition or to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee or sequestrator (or
other similar official) of the Transferor or of any substantial part of
the Transferor's property, or the making by the Transferor of any
assignment for the benefit of creditors, or the admission by it in
writing of its inability, or the failure by it generally, to pay its
debts as they
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become due, or the taking of corporate action by the Transferor in
furtherance of any such action.
Section 6.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default with respect to any of the Certificates at the time Outstanding
occurs and is continuing, then, and in every such case, the Trustee shall, at
the direction of the Bond Insurer, or during the continuance of a Bond Insurer
Default, the Trustee may, at the direction of the Holders of 66-2/3% in
principal amount of the Outstanding Certificates, declare the principal of all
the Certificates to be immediately due and payable, by notice given in writing
to the Trustee provided that the Bond Insurer shall not declare the principal
amount of the Outstanding Certificates immediately due and payable unless it
shall have endorsed the Policy to provide coverage for any shortfall in the
payment of accelerated principal and any interest due on the Outstanding
Certificates on the date established for redemption thereof pursuant to such
acceleration, and upon any such declaration, such principal shall become
immediately due and payable without any presentment, demand, protest or other
notice of any kind (except such notices as shall be expressly required by the
provisions of this Agreement), all of which are hereby expressly waived.
At any time after such a declaration of acceleration has been made, but
before any Sale of the Trust Property has been made or a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Bond Insurer, or if a Bond Insurer Default has occurred
and is continuing, the Holders of 66-2/3% in principal amount of the Outstanding
Certificates, by written notice to the Trustee, may rescind and annul such
declaration and its consequences if:
(1) the Transferor has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue installments of interest on all
Certificates;
(B) the principal of any Certificates which have
become due otherwise than by such declaration of acceleration
and interest thereon at the rate borne by such Certificates
from the time such principal first became due until the date
when paid; and
(C) all sums paid or advanced, together with interest
thereon, by the Trustee, the Bond Insurer or any
Certificateholder hereunder or by the Bond Insurer under the
Insurance Agreement or the Policy, and the reasonable
compensation, expenses, disbursements and advances of the
Trustee, the Bond Insurer and the Certificateholders, their
agents and counsel incurred in connection
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with the enforcement of this Agreement to the date of such
payment or deposit; and
(2) all Events of Default, other than the nonpayment of the
principal on the Certificates which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 6.15 hereof.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Section 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Transferor covenants that if an Event of Default shall occur and be
continuing and any of the Certificates have been declared due and payable and
such declaration has not been rescinded and annulled, the Transferor will, upon
demand of the Trustee and at the direction of the Bond Insurer, direct the
Trustee, for the benefit of the Holders of the Certificates, to sell the Trust
Property.
If the Transferor fails to direct the Trustee to sell the Trust
Property upon such demand, the Trustee, in its own name and as Trustee of an
express trust shall, at the direction of the Holders of 66-2/3% in principal
amount of the Outstanding Certificates, take possession of and sell the Trust
Property securing the Certificates or any portion thereof or rights or interest
therein, at one or more Sales called and conducted in any manner permitted by
law.
If an Event of Default occurs and is continuing, the Trustee shall, at
the direction of the Bond Insurer, and if a Bond Insurer Default has occurred
and is continuing the Trustee may in its discretion proceed, and shall at the
direction of the Holders of 66-2/3% in principal amount of the Outstanding
Certificates proceed, to protect and enforce its rights and the rights of the
Bond Insurer by such appropriate Proceedings as the Trustee, at the direction of
the Bond Insurer or, if a Bond Insurer Default has occurred and is continuing,
at its discretion shall deem most effectual to protect and enforce any such
rights, whether for the specific enforcement of any covenant or agreement in
this Agreement or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
Section 6.04. Remedies. If an Event of Default shall have occurred and
be continuing, the Trustee may, and shall, at the direction of the Bond Insurer
and if a Bond Insurer Default has occurred and is continuing, at the direction
of the Holders of 66-2/3% in principal amount of the Outstanding Certificates,
do one or more of the following:
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(a) institute Proceedings for the collection of all amounts
then due and payable on the Certificates or under this Agreement,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Transferor the monies adjudged due;
(b) take possession of and sell the Trust Property securing
the Certificates or any portion thereof or rights or interest therein,
at one or more Sales called and conducted in any manner permitted by
law;
(c) institute any Proceedings from time to time for the
complete or partial foreclosure of the lien created by this Agreement
with respect to the Trust Property securing the Certificates;
(d) during the continuance of a default under a Lease
Contract, exercise any of the rights of the lessor under such Lease
Contract; and
(e) exercise any remedies of a secured party under the Uniform
Commercial Code or any applicable law and take any other appropriate
action to protect and enforce the rights and remedies of the Trustee,
the Bond Insurer and the Holders of the Certificates hereunder;
provided, however, that without the consent of the Bond Insurer, or if a Bond
Insurer Default has occurred and is continuing, all the Holders of 66-2/3% in
principal amount of the Outstanding Certificates, the Trustee may not sell or
otherwise liquidate any portion of the Trust Property unless the proceeds of
such Sale or liquidation distributable to the Certificateholders are sufficient
to discharge in full the amounts then due and unpaid upon the Outstanding
Certificates for principal and interest together with any amounts owed to the
Bond Insurer under the Insurance Agreement.
Section 6.05. Optional Preservation of Trust Property. If (i) an Event
of Default shall have occurred and be continuing with respect to the
Certificates and (ii) no Certificates have been declared due and payable, or
such declaration and its consequences have been annulled and rescinded, the
Trustee shall, at the direction of the Bond Insurer, or if a Bond Insurer
Default has occurred and is continuing, the Trustee may in its sole discretion
if it determines it to be in the best interests of the Holders of the
Outstanding Certificates and shall, upon request from the Holders of 66-2/3% in
principal amount of the Outstanding Certificates elect, by giving written notice
of such election to the Transferor, to take possession of and retain the Trust
Property securing the Certificates intact, collect or cause the collection of
the proceeds thereof and make and apply all payments and deposits and maintain
all accounts in respect of such Certificates in accordance with the provisions
of Article Twelve of this Agreement. If the Trustee is unable to or is stayed
from giving such notice to the Transferor for any reason whatsoever, such
election
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shall be effective as of the time of such determination or request, as the case
may be, notwithstanding any failure to give such notice, and the Trustee shall
give such notice upon the removal or cure of such inability or stay (but shall
have no obligation to effect such removal or cure). Any such election may be
rescinded with respect to any portion of the Trust Property securing the
Certificates remaining at the time of such rescission by written notice to the
Trustee and the Transferor from the Bond Insurer or, if a Bond Insurer Default
has occurred and is continuing, from the Holders of 66-2/3% in principal amount
of the Outstanding Certificates.
Section 6.06. Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial Proceeding relating to
any obligor upon any of the Certificates or the property of such obligor or
their creditors, the Trustee (irrespective of whether the principal of any of
the Certificates shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Transferor for the payment of overdue principal or interest)
shall be entitled and empowered, to intervene in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the Certificates
issued hereunder and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel and
any other amounts due the Trustee under Section 7.07 hereof) and of the
Bond Insurer and the Certificateholders allowed in such judicial
Proceeding, and
(b) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same,
and any receiver, assignee, trustee, liquidator, or sequestrator (or other
similar official) in any such judicial Proceeding is hereby authorized by the
Bond Insurer and each Certificateholder to make such payments to the Trustee,
and in the event that the Trustee shall consent to the making of such payments
directly to the Bond Insurer and the Certificateholders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof.
Nothing contained in this Agreement shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of the Bond
Insurer or any Certificateholder any plan of reorganization, arrangement,
adjustment or composition affecting the Bond Insurer or
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any of the Certificates or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of the Bond Insurer or any
Certificateholder in any such Proceeding.
Section 6.07. Trustee May Enforce Claims Without Possession of
Certificates. (a) In all Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this Agreement to
which the Trustee shall be a party), the Trustee shall be held to represent all
of the Certificateholders, and it shall not be necessary to make any
Certificateholder a party to any such Proceedings.
(b) All rights of actions and claims under this Agreement or any of the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
Proceeding relating thereto, and any such Proceedings instituted by the Trustee
shall be brought in its own name as Trustee of an express trust, and any
recovery whether by judgment, settlement or otherwise shall, after provision for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the Certificates.
Section 6.08. Application of Money Collected. If the Certificates have
been declared due and payable following an Event of Default and such declaration
has not been rescinded or annulled, any money collected by the Trustee with
respect to the Certificates pursuant to this Article Six or otherwise and any
other money that may be held thereafter by the Trustee as security for the
Certificates shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money on account of
principal or interest, upon presentation of the Certificates and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all the Servicer Fee and other
amounts due the Servicer pursuant to Section 12.02(d)(i) hereof and to
pay the Servicer the amount necessary to reimburse the Servicer for any
other unrecovered Servicer Advances;
SECOND: To the payment to the Trustee of the Trustee Fee then
due, and any costs and expenses incurred by it in connection with
enforcing the remedies provided for in this Article Six and to the
payment to the Back-up Servicer of the Back-up Servicer fee then due;
THIRD: To the payment of the Bond Insurer of the Bond Insurer
Premium then due;
FOURTH: To the payment of the amounts then due and unpaid upon
the Certificates for interest, with interest (to the extent such
interest has been collected by the
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Trustee or a sum sufficient therefor has been collected and payment
thereof is legally enforceable at the rate prescribed therefor in the
Certificates) on overdue principal, ratably without preference or
priority of any kind, according to the amounts due and payable on the
Certificates for interest;
FIFTH: To the payments of the remaining principal amount of
Outstanding Certificates, ratably without preference or priority of any
kind;
SIXTH: To the payment to the Bond Insurer of any amounts
previously paid by the Bond Insurer under the Policy and not
theretofore repaid, together with interest thereon and any other
amounts due under the Insurance Agreement;
SEVENTH: To the payment to the Servicer of any other amounts
due the Servicer as expressly provided herein and in the Servicing
Agreement;
EIGHTH: To the payment to the Trustee and the Back-up
Servicer, any other amounts due to the Trustee or the Back-up Servicer
as expressly provided herein and in the Servicing Agreement;
NINTH: To pay to the Bond Insurer any other amounts owing
under the Insurance Agreement;
TENTH: To reimburse the Bond Insurer and the
Certificateholders for any costs or expenses incurred in connection
with any enforcement action with respect to this Agreement or the
Certificates; and
ELEVENTH: To the payment of any surplus to the Transferor.
Section 6.09. Limitation on Suits. No Holder of any Certificate shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Agreement, or for the appointment of a receiver or trustee, or for any
other remedy hereunder for so long as a Bond Insurer Default is not continuing,
and if a Bond Insurer Default is continuing, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of 66-2/3% in principal amount of the
Outstanding Certificates shall have made written request to the Trustee
to institute Proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
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(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 30 days after its receipt of such notice,
request and offer of security or indemnity has failed to institute any
such Proceedings; and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 30-day period by the Holders of
66-2/3% in principal amount of the Outstanding Certificates; it being
understood and intended that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Agreement to affect, disturb or
prejudice the rights of any other Holders of Certificates, or to obtain
or to seek to obtain priority or preference over any other Holders or
to enforce any right under this Agreement, except in the manner herein
provided and for the equal and ratable benefit of all the Holders of
Certificates.
Section 6.10. Unconditional Right of Certificateholders to Receive
Principal and Interest. The Holder of any Certificate shall have the right,
which is absolute and unconditional, to receive payment of the principal and
interest on such Certificate as such principal and interest becomes due and
payable and to institute any Proceeding for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
Section 6.11. Restoration of Rights and Remedies. If the Trustee, the
Bond Insurer or any Certificateholder has instituted any Proceeding to enforce
any right or remedy under this Agreement and such Proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee, the Bond Insurer or to such Certificateholder, then, and in every
case, the Transferor, the Trustee, the Bond Insurer and the Certificateholders
shall, subject to any determination in such Proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Trustee, the Bond Insurer and the Certificateholders shall
continue as though no such Proceeding had been instituted.
Section 6.12. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Certificates in the last paragraph of Section 2.07 hereof, no
right or remedy herein conferred upon or reserved to the Trustee, the Bond
Insurer or to the Certificateholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent permitted by
law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
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Section 6.13. Delay or Omission; Not Waiver. No delay or omission of
the Trustee, the Bond Insurer or of any Holder of any Certificate to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this Article Six or by law
to the Trustee, the Bond Insurer or to the Certificateholders may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee, the
Bond Insurer or by the Certificateholders, as the case may be.
Section 6.14. Control by Certificateholders. The Bond Insurer or, if a
Bond Insurer Default has occurred and is continuing, the Holders of 66-2/3% in
principal amount of the Outstanding Certificates shall have the right to direct
the time, method and place of conducting any Proceeding for any remedy available
to the Trustee or exercising any trust or power conferred on the Trustee;
provided that:
(a) such direction shall not be in conflict with any rule of
law or with this Agreement including, without limitation, any provision
hereof which expressly provides for approval by a greater percentage of
the aggregate principal amount of all Outstanding Certificates;
(b) any direction to the Trustee by the Certificateholders to
undertake a private Sale of the Trust Property shall be by the Holders
of all Outstanding Certificates, unless the condition set forth in
Section 6.18(b)(ii) hereof is met;
(c) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction; provided,
however, that, subject to Section 7.01 hereof, the Trustee need not
take any action which a Responsible Officer or Officers of the Trustee
in good faith determines might involve it in personal liability or be
prejudicial to the Certificateholders not consenting; and
(d) the Trustee has been furnished reasonable indemnity
against costs, expenses and liabilities which it might incur in
connection therewith as provided in Section 7.01(f) hereof.
Section 6.15. Waiver of Certain Events by Less than All
Certificateholders. The Bond Insurer, or if a Bond Insurer Default has occurred
and is continuing, the Holders of 66-2/3% in principal amount of the Outstanding
Certificates may on behalf of the Holders of all the Certificates waive any past
Default or Funding Period Trigger Event or Trigger Event hereunder and its
consequences, except:
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(a) a Default in the payment of the principal of or interest
on any Certificate, or a Default described in Sections 6.01(d) and (e)
hereof, or
(b) in respect of a covenant or provision hereof which under
Article Nine hereof cannot be modified or amended without the consent
of the Holder of each Outstanding Certificate affected.
Upon any such waiver, such Default or Funding Period Trigger Event or
Trigger Event shall cease to exist, and any Event of Default or other
consequence arising therefrom shall be deemed to have been cured for every
purpose of this Agreement; but no such waiver shall extend to any subsequent or
other Default or Funding Period Trigger Event or Trigger Event or impair any
right consequent thereon.
Section 6.16. Undertaking for Costs. All parties to this Agreement
agree, and each Holder of any Certificate by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Agreement, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 6.16 shall not apply to
any suit instituted by the Trustee or the Bond Insurer or to any suit instituted
by the Holders of 66-2/3% in principal amount of the Outstanding Certificates,
or to any suit instituted by any Certificateholder for the enforcement of the
payment of the principal of or interest on any Certificate on or after the
Stated Maturity expressed in such Certificate.
Section 6.17. Waiver of Stay or Extension Laws. The Transferor
covenants (to the extent that it may lawfully do so) that it will not, at any
time, insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, which may affect the covenants or the performance
of this Agreement; and the Transferor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 6.18. Sale of Trust Property. (a) The power to effect any sale
(a "Sale") of any portion of the Trust Property pursuant to Section 6.04 hereof
shall not be exhausted by any one or more Sales as to any portion of the Trust
Property remaining unsold, but shall continue unimpaired until the entire Trust
Property securing the Certificates shall have been sold or all amounts payable
on the Certificates and under this Agreement with respect thereto shall have
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been paid. The Trustee may from time to time postpone any Sale by public
announcement made at the time and place of such Sale.
(b) To the extent permitted by applicable law, the Trustee
shall not, in any private Sale, sell to a third party the Trust
Property, or any portion thereof unless:
(i) the Bond Insurer, or if a Bond Insurer Default
has occurred and is continuing, the Holders of 66-2/3% in
principal amount of the Outstanding Certificates, consent in
writing to or directs the Trustee to make such Sale; or
(ii) if a Bond Insurer Default has occurred and is
continuing, the proceeds of such Sale would not be less than
the sum of all amounts due to the Trustee hereunder and the
aggregate principal amount of the Outstanding Certificates and
interest due or to become due thereon on the Payment Date next
succeeding such Sale together with any amounts owing to the
Bond Insurer under the Insurance Agreement.
(c) The Trustee, the Bond Insurer or the Certificateholders
may bid for and acquire any portion of the Trust Property in connection
with a public Sale thereof, and in lieu of paying cash therefor, any
Certificateholder may make settlement for the purchase price by
crediting against amounts owing on the Certificates of such Holder or
other amounts owing to such Holder secured by this Agreement, that
portion of the net proceeds of such Sale to which such Holder would be
entitled, after deducting the reasonable costs, charges and expenses
incurred by the Trustee, the Bond Insurer or the Certificateholders in
connection with such Sale. The Certificates need not be produced in
order to complete any such Sale, or in order for the net proceeds of
such Sale to be credited against the Certificates. The Trustee, the
Bond Insurer or the Certificateholders may hold, lease, operate, manage
or otherwise deal with any property so acquired in any manner permitted
by law.
(d) The Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of
the Trust Property in connection with a Sale thereof. In addition, the
Trustee is hereby irrevocably appointed the agent and attorney-in-fact
of the Transferor to transfer and convey its interest in any portion of
the Trust Property in connection with a Sale thereof, and to take all
action necessary to effect such sale. No purchaser or transferee at
such a Sale shall be bound to ascertain the Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.
(e) The method, manner, time, place and terms of any Sale of
all or any portion of the Trust Property shall be commercially
reasonable.
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Section 6.19. Action on Certificates. The Trustee's right to seek and
recover judgment on the Certificates or under this Agreement shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Agreement. Neither the lien of this Agreement nor any
rights or remedies of the Trustee or the Certificateholders shall be impaired by
the recovery of any judgment by the Trustee against the Transferor or by the
levy of any execution under such judgment upon any portion of the Trust Property
or upon any of the assets of the Transferor.
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Article Seven
The Trustee
Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default known to the Trustee as provided in
subsection (e) below:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no
implied covenants or obligations shall be read into this Agreement
against the Trustee; and
(ii) in the absence of bad faith or negligence on its part,
the Trustee may conclusively rely as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement; but in the case of any such certificates or opinions,
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
and to determine whether or not they conform to the requirements of
this Agreement.
(b) In case an Event of Default known to the Trustee as provided in
subsection (e) below has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and shall use the
same degree of care and skill in its exercise, as a reasonable person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct or bad faith, except that:
(i) this subsection (c) shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Bond Insurer or the Holders of 66-2/3% in
principal amount of the Outstanding Certificates (or other such
percentage as may be required by the terms hereof) in accordance with
Section 6.14
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hereof relating to the time, method and place of conducting any
Proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement, the
Contribution Agreement or the Servicing Agreement; and
(iv) no provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any extraordinary activities relating
to its duties hereunder, or in the exercise of any of its rights or
powers which include discretionary judgments to be made by the Trustee,
if it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, provided that nothing contained in this
Agreement shall excuse the Trustee for failure to perform its regular
and administrative duties as Trustee as articulated under this
Agreement.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 7.01.
(e) For all purposes under this Agreement, the Trustee shall not be
deemed to have notice of any Event of Default described in Section 6.01(d) or
6.01(e) hereof or any Default described in Section 6.01(c) hereof or of any
Trigger Event or Funding Period Trigger Event unless a Responsible Officer
assigned to and working in the Trustee's corporate trust department has actual
knowledge thereof or unless written notice of any event which is in fact such an
Event of Default, Default, Trigger Event or Funding Period Trigger Event is
received by the Trustee at the Corporate Trust Office, and such notice
references any of the Certificates generally, the Transferor, the Trust Property
or this Agreement.
(f) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to enter any appearance
or in any way defend in any suit in which it may be made defendant, or to take
any steps in the execution of the trusts hereby created or in the enforcement of
any rights and powers hereunder until it shall be indemnified to its
satisfaction against any and all costs and expenses, outlays and counsel fees
and other reasonable disbursements and against all liability, except liability
that is adjudicated, in connection with any action so taken.
(g) Notwithstanding any extinguishment of all right, title and interest
of the Transferor in and to the Trust Property following an Event of Default and
a consequent declaration of acceleration of the maturity of any of the
Certificates, whether such extinguishment occurs through a Sale of the Trust
Property to another person or the acquisition
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of the Trust Property by the Trustee, the rights of the Certificateholders shall
continue to be governed by the terms of this Agreement.
(h) Notwithstanding anything to the contrary contained herein, the
provisions of subsections (e) through (g), inclusive, of this Section 7.01 shall
be subject to the provisions of subsections (a) through (c), inclusive, of this
Section 7.01.
(i) The Trustee shall provide the reports and accountings as required
pursuant to Section 12.03 hereof.
Section 7.02. Notice of Default and Other Events. Promptly after the
occurrence of any Default, Trigger Event or Funding Period Trigger Event known
to the Trustee (within the meaning of Section 7.01(e) hereof), within one
Business Day of obtaining such knowledge, the Trustee shall transmit by
telephonic, facsimile or telegraphic communication confirmed by mail to the Bond
Insurer and all Holders of Certificates, as their names and addresses appear on
the Certificate Register, notice of such Default, Trigger Event or Funding
Period Trigger Event known to the Trustee, unless in the case of notice of
Default or notice of any Funding Period Trigger Event or Trigger Event to
Certificateholders, such Default shall have been promptly cured or waived in
accordance with this Agreement.
Section 7.03. Certain Rights of Trustee. Except as otherwise provided
in Section 7.01,
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, note or other obligation, paper or document believed by it
to be genuine and to have been signed or presented by the proper party
or parties;
(b) any request or direction of the Transferor mentioned
herein shall be sufficiently evidenced by a Transferor Request or
Transferor Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officer's
Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel selected by the Trustee with due care or any
Opinion of Counsel shall be full and
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complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement at the request
or direction of any of the Certificateholders or the Bond Insurer
pursuant to this Agreement, unless such Certificateholders or the Bond
Insurer, as the case may be, shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note or other paper or document, but the Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Transferor,
upon reasonable notice and at reasonable times personally or by agent
or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys.
Section 7.04. Not Responsible for Recitals or Issuance of Certificates.
(a) The recitals contained in this Agreement and in the Certificates, except the
certificates of authentication on the Certificates, shall be taken as the
statements of the Transferor, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
condition of the Trust Property or any part thereof, or as to the title of the
Transferor thereto or as to the security afforded thereby or hereby, or as to
the validity or genuineness of any securities at any time pledged and deposited
with the Trustee hereunder or as to the validity or sufficiency of this
Agreement or any of the Certificates. The Trustee shall not be accountable for
the use or application by the Transferor of any money paid to the Transferor or
upon Transferor Order under any provisions hereof.
(b) Except as otherwise expressly provided herein and in Section 7.15
and without limiting the generality of the foregoing, the Trustee shall have no
responsibility or liability for or with respect to the existence or validity of
any Equipment or Lease Contract, the perfection of any security interest
(whether as of the date hereof or at any future time), the maintenance of or the
taking of any action to maintain such perfection, the validity of the assignment
of any portion of the Trust Property to the Trustee or of any intervening
assignment, the review of any Lease Contract (it being understood that the
Trustee has not reviewed and does not intend to review the
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substance or form of any such Lease Contract), the performance or enforcement of
any Lease Contract, the validity or sufficiency of the Policy, the compliance by
the Transferor or the Servicer with any covenant or the breach by the Transferor
or the Servicer of any warranty or representation made hereunder or in any
related document or the accuracy of any such warranty or representation, any
investment of monies in the Collection Account or any loss resulting therefrom
(other than in its individual capacity as obligor on any Eligible Investment),
the acts or omissions of the Transferor, the Servicer, the Bond Insurer or any
Customer, any action of the Servicer, taken in the name of the Trustee, or the
validity of the Servicing Agreement or the Contribution Agreement.
(c) Except as otherwise expressly provided herein, the Trustee shall
not have any obligation or liability under any Lease Contract by reason of or
arising out of this Agreement or the assignment of such Lease Contract hereunder
or the receipt by the Trustee of any payment relating to any Lease Contract
pursuant hereto, nor shall the Trustee be required or obligated in any manner to
perform or fulfill any of the obligations of the Transferor under or pursuant to
any Lease Contract, or to make any payment, or to make any inquiry as to the
nature or the sufficiency of any payment received by it, or the sufficiency of
any performance by any party, under any Lease Contract.
Section 7.05. May Hold Certificates. The Trustee, the Servicer, any
Paying Agent, any Authenticating Agent or any other agent of the Transferor, in
its individual or any other capacity, may become the owner or pledgee of
Certificates, and, if operative, may otherwise deal with the Transferor with the
same rights it would have if it were not Trustee, Servicer, Paying Agent,
Authenticating Agent or such other agent.
Section 7.06. Money Held in Trust. Money and investments held in trust
by the Trustee, the Certificate Registrar or any Paying Agent hereunder shall be
held in one or more trust accounts hereunder. The Trustee or any Paying Agent
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Transferor or otherwise specifically
provided in this Agreement.
Section 7.07. Compensation and Reimbursement. The Transferor agrees:
(a) to pay the Trustee monthly its fee for all services
rendered by it hereunder as Trustee, in the amount of the Trustee Fee
(which compensation shall not otherwise be limited by any provision of
law in regard to the compensation of a trustee of an express trust) and
to pay to the Back-up Servicer its fee for all services rendered
hereunder and under the Servicing Agreement as Back-up Servicer in the
amount of the Back-up Servicer Fee;
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(b) except as otherwise expressly provided herein, to
reimburse the Trustee or the Back-up Servicer upon its request for all
reasonable out-of-pocket expenses, disbursements and advances incurred
or made by the Trustee or the Back-up Servicer in accordance with any
provision of this Agreement or the Servicing Agreement (including the
reasonable compensation and the expenses and disbursements of the
Trustee's and Back-up Servicer's agents and counsel), except any such
expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(c) to indemnify and hold harmless the Trust and the Trustee
from and against any loss, liability, expense, damage or injury (other
than those attributable to a Certificateholder in its capacity as an
investor in any of the Certificates) sustained or suffered pursuant to
this Agreement by reason of any acts, omissions or alleged acts or
omissions arising out of activities of the Trust or the Trustee
(including without limitation any violation of any applicable laws by
the Transferor as a result of the transactions contemplated by this
Agreement), including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other expenses incurred in
connection with the defense of any actual or threatened action,
proceeding or claim; provided that the Transferor shall not indemnify
the Trustee if such loss, liability, expense, damage or injury is due
to the Trustee's gross negligence or willful misconduct, willful
misfeasance or bad faith in the performance of duties. Any
indemnification or reimbursement pursuant to this Section 7.07 shall
only be payable from the assets of the Transferor and shall not be
payable from the Trust Property. The provisions of this indemnity shall
run directly to and be enforceable by an injured person subject to the
limitations hereof and this indemnification agreement shall survive the
termination of this Agreement.
Upon the occurrence of an Event of Default resulting in an acceleration of
maturity of the Certificates that has not been rescinded and annulled, the
Trustee shall have, as security for the performance of the Trust under this
Section 7.07, a lien ranking senior to the lien of the Certificates with respect
to which any claim of the Trustee under this Section 7.07 arose upon all
property and funds held or collected as part of the Trust Property by the
Trustee in its capacity as such except the Trustee shall have no liens on the
amounts paid under the Policy. The Trustee shall not institute any Proceeding
seeking the enforcement of such lien against the Trust Property without the
consent of the Bond Insurer and if a Bond Insurer Default has occurred and is
continuing no such consent shall be required, and unless such Proceeding is in
connection with a proceeding in accordance with Article Six hereof for
enforcement of the lien of this Agreement for the benefit of the Holders of the
Certificates secured by such Trust Property after the occurrence of an Event of
Default (other than an Event of Default due solely to a breach of this Section
7.07) and a resulting declaration of acceleration of maturity of such
Certificates that has not been rescinded and annulled. All monies so collected
by the Trustee shall be applied in accordance with Section 6.08 hereof and the
Trustee shall receive amounts pursuant to
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Section 6.08 hereof only to the extent that payment thereof will not result in a
subsequent Event of Default caused by such payment to the Trustee.
Section 7.08. Corporate Trustee Required; Eligibility. There shall at
all times be a trustee hereunder which shall be a corporation, association or
national banking association organized and doing business under the laws of the
United States of America or of any state, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$100,000,000, or be a member of a consolidated bank holding company with a
combined capital and surplus of at least $100,000,000, subject to supervision or
examination by Federal or state authority and having an office within the United
States of America, and, except with respect to the initial Trustee hereunder,
which shall have a commercial paper or other short-term rating of the highest
short term rating categories by S&P and ▇▇▇▇▇'▇, or otherwise acceptable to the
Bond Insurer, or if a Bond Insurer Default is continuing, the Holders of 66-2/3%
in principal amount of the Outstanding Certificates. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section 7.08, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section
7.08, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article Seven.
Section 7.09. Resignation and Removal; Appointment of Successor. (a) No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10 hereof.
(b) The Trustee may resign at any time by giving 30 days' written
notice thereof to the Transferor, the Bond Insurer and to each
Certificateholder. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and may prescribe,
appoint a successor Trustee.
(c) The Trustee may be removed by the Bond Insurer or if a Bond Insurer
Default has occurred and is continuing, by the Holders of 66-2/3% in principal
amount of the Outstanding Certificates by notice to the Trustee, at any time if
one of the following events have occurred:
(i) the Trustee shall cease to be eligible under Section 7.08
hereof and shall fail to resign after written request therefor by the
Transferor, the Bond Insurer or by any Certificateholder, or
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(ii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or
(iii) the Trustee has failed to perform its duties in this
Agreement or has breached any representation of warranty made in this
Agreement.
(d) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause
with respect to the Certificates, the Transferor by a Board Resolution, shall
promptly appoint a successor Trustee reasonably satisfactory to the Bond
Insurer. If no successor Trustee shall have been so appointed by the Transferor
within 30 days of notice of removal or resignation and shall have accepted
appointment in the manner hereinafter provided, the Bond Insurer may appoint a
successor Trustee. If the Bond Insurer shall fail to appoint a successor Trustee
within 90 days of notice of removal or resignation, then the Holders of 66-2/3%
in principal amount of the Outstanding Certificates may petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Certificates.
(e) The Transferor shall give notice in the manner provided in Section
13.04 hereof of each resignation and each removal of the Trustee and each
appointment of a successor Trustee with respect to the Certificates to the
Certificateholders. Each notice shall include the name of the successor Trustee
and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to the
Transferor and the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee but, on request of the Transferor or the successor
Trustee, such retiring Trustee shall, upon payment of its reasonable
out-of-pocket costs and expenses, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the retiring
Trustee, and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07 hereof. Upon
request of any such successor Trustee, the Transferor shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
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Section 7.11. Merger, Conversion, Consolidation or Succession to
Business of Trustee. Any Person into which the Trustee may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, and notice thereof shall be provided by the
Trustee to the Certificateholders. In case any Certificates have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Certificates so authenticated with the same
effect as if such successor Trustee had itself authenticated such Certificates.
Section 7.12. Co-Trustees and Separate Trustees. At any time or times,
for the purpose of meeting the legal requirements of any jurisdiction in which
any of the Trust Property may at the time be located, the Transferor and the
Trustee shall have power to appoint, and, upon the written request of the
Trustee, the Bond Insurer or of the Holders representing at least 25% in
aggregate principal amount of all Outstanding Certificates, the Transferor shall
for such purpose join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Trustee and meeting the requirements of
Section 7.08 hereof, either to act as co-Trustee, jointly with the Trustee of
all or any part of such Trust Property, or to act as separate Trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or persons in the capacity
aforesaid, any property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section. If the Transferor does not join
in such appointment within 15 days after the receipt by it of a request so to
do, or in case an Event of Default has occurred and is continuing, the Trustee
alone shall have power to make such appointment.
Should any written instrument from the Transferor be reasonably
required by any co-Trustee or separate Trustee so appointed for more fully
confirming to such co-Trustee or separate Trustee such property, title, right or
power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Transferor.
Every co-Trustee or separate Trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms:
(a) the Certificates shall be authenticated and delivered by,
and all rights, powers, duties and obligations under this Agreement in
respect of the custody of
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securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee under this Agreement, shall be
exercised solely by the Trustee;
(b) the rights, powers, duties and obligations conferred or
imposed upon the Trustee by this Agreement in respect of any property
covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Trustee or by the Trustee and such
co-Trustee or separate Trustee jointly, as shall be provided in the
instrument appointing such co-Trustee or separate Trustee, except to
the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers,
duties and obligations shall be exercised and performed by such
co-Trustee or separate Trustee;
(c) the Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Transferor evidenced by a
Board Resolution, may accept the resignation of or remove any
co-Trustee or separate Trustee appointed under this Section, and, in
case an Event of Default has occurred and is continuing, the Trustee
shall have power to accept the resignation of, or remove, any such
co-Trustee or separate Trustee without the concurrence of the
Transferor. Upon the written request of the Trustee, the Transferor
shall join with the Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate
such resignation or removal. A successor to any co-Trustee or separate
Trustee that has so resigned or been removed may be appointed in the
manner provided in this Section;
(d) no co-Trustee or separate Trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee or
any other such Trustee hereunder nor shall the Trustee be liable by
reason of any act or omission of any co-Trustee or separate Trustee
selected by the Trustee with due care or appointed in accordance with
directions to the Trustee pursuant to Section 6.14; and
(e) any Act of Certificateholders delivered to the Trustee
shall be deemed to have been delivered to each such co-Trustee and
separate Trustee.
Section 7.13. Rights with Respect to the Servicer. The Trustee's rights
and obligations with respect to the Servicer shall be governed by the Servicing
Agreement.
Section 7.14. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents with respect to the Certificates which
shall be authorized to act on behalf of the Trustee to authenticate Certificates
issued upon original issue or upon exchange, registration of transfer or
pursuant to Section 2.05 hereof, and Certificates so authenticated shall
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be entitled to the benefits of this Agreement and shall be valid and obligatory
for all purposes as if authenticated by the Trustee hereunder. Wherever
reference is made in this Agreement to the authentication and delivery of
Certificates by the Trustee or the Trustee's certificate of authentication or
the delivery of Certificates to the Trustee for authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent and delivery of the
Certificates to the Authenticating Agent on behalf of the Trustee. Each
Authenticating Agent shall be acceptable to the Transferor, the Bond Insurer and
the Certificateholders and shall at all times be a corporation having a combined
capital and surplus of not less than the equivalent of $50,000,000 and subject
to supervision or examination by Federal or state authority or the equivalent
foreign authority, in the case of an Authenticating Agent who is not organized
and doing business under the laws of the United States of America, any state
thereof or the District of Columbia. If such Authenticating Agent publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Authenticating Agent shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time an Authenticating Agent shall
cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall continue to be an
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or such Authenticating Agent; provided, such
corporation shall be otherwise eligible under this Section.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee, the Bond Insurer and the Transferor. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and the Transferor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Transferor and the Bond Insurer and shall
mail written notice of such appointment by first-class mail, postage prepaid, to
all Holders of Certificates, if any, with respect to which such Authenticating
Agent will serve, as their names and addresses appear in the Certificate
Register. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No
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successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee may pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 7.07 hereof.
If an appointment is made pursuant to this Section, the Certificates
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:
This is one of the Certificates described in the within-mentioned
Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------------------------
As Authenticating Agent
By:
---------------------------------------------
Authorized Officer
Section 7.15. Trustee to Hold Lease Contracts. The Trustee shall hold
each Lease Contract, Certificates of Title and Applications for Certificates of
Title together with any documents relating thereto that may from time to time be
delivered to the Trustee, until such time as such Lease Contract is released
from the Trust Property pursuant to the terms of this Agreement or delivered to
the Servicer pursuant to the terms of the Servicing Agreement.
Except as set forth in Sections 3.02 and 4.01 hereof, the Trustee shall
be under no duty or obligation to inspect, review or examine the Lease Contracts
and other documents to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face.
Section 7.16. Money for Certificate Payments to Be Held in Trust. The
Trustee agrees, and if there is any Paying Agent other than the Trustee, the
Transferor will cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which
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such Paying Agent shall agree with the Trustee that, subject to the provisions
of this Section, such Paying Agent will:
(a) hold all sums held by it for the payment of principal or
interest on Certificates in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(b) give the Trustee, the Bond Insurer and the
Certificateholders notice of any Default by the Transferor (or any
other obligor upon the Certificates) in the making of any payment of
principal or interest; and
(c) at any time during the continuance of any such Default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
The Transferor may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, pay, or
by Transferor Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent in trust for
the payment of the principal or interest on any Certificate and remaining
unclaimed for three years after such principal or interest has become due and
payable shall be paid to the Transferor; and the Holder of such Certificate
shall thereafter, as an unsecured general creditor, and subject to any
applicable statute of limitations, look only to the Transferor for payment
thereof, and all liability of the Trustee, the Bond Insurer or such Paying Agent
with respect to such trust money or the related Certificate shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Transferor cause
to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in the
city in which the Corporate Trust Office is located, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be repaid to the Transferor; and, provided,
further, that any amounts held that are proceeds of a claim made under any
Policy shall be returned to the Bond Insurer, and the Certificateholders shall
look only to the Bond Insurer for such payments. The Trustee may also adopt and
employ, at the expense of the Transferor, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Certificateholders whose right to or interest in monies due
and payable but not claimed is
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determinable from the records of any Paying Agent, at the last address as shown
on the Certificate Register for each such Certificateholder).
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ARTICLE EIGHT
THE POLICY
Section 8.01. Payments under the Policy. If on the close of business on
the third Business Day prior to any Payment Date, the funds on deposit in the
Collection Account and available to be distributed on such Payment Date pursuant
to Section 12.02(d) are not sufficient (after taking into account the payments
required to be made on such Payment Date pursuant to Section 12.02(d)(i)-(iv))
to make the payment of amounts due on the Outstanding Certificates on such
Payment Date in accordance with Section 12.02(d)(v), the Trustee shall, no later
than 10:00 a.m., New York time, on the second Business Day immediately preceding
such Payment Date make a claim under the Policy in an amount equal to such
insufficiency. In addition, if on the close of business on the third Business
Day immediately prior to the Stated Maturity, the funds on deposit in the
Collection Account and available to be distributed on such Payment Date pursuant
to Section 12.02(d) are not sufficient (after taking into account the payments
required to be made on such Payment Date pursuant to Section 12.02(d)(i)-(v)) to
pay the Outstanding Principal Balance of Outstanding Certificates, the Trustee
shall, no later than 10:00 a.m., New York time, on the second Business Day
immediately preceding such Payment Date, make a claim under the Policy in an
amount equal to such insufficiency. Proceeds of claims on the Policy shall be
deposited in the Collection Account and shall remain uninvested and shall be
used solely to pay amounts due in respect of interest on the Certificates on
each Payment Date and principal of the Certificates at the Stated Maturity.
In addition, on any day that the Trustee has actual knowledge or
receives notice that any amount previously paid to a Certificateholder has been
subsequently recovered from such Certificateholder pursuant to a final order of
a court of competent jurisdiction that such payment constitutes a voidable
preference within the meaning of any applicable bankruptcy law to such
Certificateholder (a "Preference Claim"), the Trustee shall make a claim within
three Business Days upon the Policy for the full amount of such Preference Claim
in accordance with the terms of the Policy. Any proceeds of any such Preference
Claim received by the Trustee shall be paid to the related Certificateholder .
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ARTICLE NINE
AMENDMENTS
Section 9.01. Amendments without Consent of Certificateholders. The
Transferor, the Servicer, the Trustee and the Back-up Servicer, with the consent
of the Bond Insurer but without the consent of the Holders of any Certificates,
at any time and from time to time, may enter into one or more amendments hereto,
in form satisfactory to the Trustee, for any of the following purposes, provided
that any such amendment, as evidenced by an Opinion of Counsel if requested by
the Trustee, will not have a material adverse effect on the Holders:
(a) to correct or amplify the description of any property at any
time subject to the lien of this Agreement, or better to assure, convey
and confirm unto the Trustee any property subject or required to be
subjected to the lien of this Agreement, or to subject to the lien of
this Agreement additional property; or
(b) to evidence the succession of another Person to the
Transferor, and the assumption by such successor of the covenants of the
Transferor herein and in the Certificates contained, in accordance with
Section 11.02(o) hereof; or
(c) to add to the covenants of the Transferor, for the benefit of
the Bond Insurer or the Holders of all Certificates or to surrender any
right or power herein conferred upon the Transferor; or
(d) to convey, transfer, assign, mortgage or pledge any property
to or with the Trustee; or
(e) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provisions
with respect to matters or questions arising under this Agreement, which
shall not be inconsistent with the provisions of this Agreement; or
(f) to evidence the succession of the Trustee pursuant to Article
Seven hereof; or
(g) to add to any Events of Default.
The Trustee is hereby authorized to join in the execution of any such
amendment and to make any other appropriate agreements and stipulations that may
be therein contained, but the
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Trustee shall not be obligated to enter into any such amendment that affects the
Trustee's own rights, duties, liabilities or immunities under this Agreement or
otherwise.
Promptly after the execution by the Transferor, the Servicer, the
Trustee and the Back-up Servicer of any amendment pursuant to this Section, the
Transferor shall mail to the Rating Agencies, the Bond Insurer and each
Certificateholder a copy of such amendment.
Section 9.02. Amendments and Modifications to Agreement with Consent of
Certificateholders. (a) With the consent of the Bond Insurer and with the prior
written consent of the Holders of 66-2/3% in principal amount of the Outstanding
Certificates, by Act of said Holders delivered to the Transferor and the
Trustee, the Transferor, the Servicer, the Trustee and the Back-up Servicer may
enter into an amendment or modification of this Agreement for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of the Certificates under this Agreement (other than as described in
Section 9.01); provided, however, that no such amendment shall, without the
consent of the Holders of each Outstanding Certificate affected thereby:
(i) change the Stated Maturity of any Certificate or the due date
of any installment of principal of, or any installment of interest on,
any Certificate, or change the principal amount thereof or the
Certificate Interest Rate or change any place of payment where, or the
coin or currency in which, any Certificate or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment; or
(ii) reduce the percentage of the principal amount of Outstanding
Certificates, the consent of the Holders of which is required for any
such amendment, or the consent of the Holders of which is required for
any waiver of compliance with certain provisions of this Agreement or
Events of Default or their consequences; or
(iii) impair or adversely affect the Trust Property; or
(iv) modify or alter the definition of the term "Outstanding"; or
(v) modify or alter the provisions of the proviso to Section 6.04
hereof; or
(vi) modify any of the provisions of this Section 9.02, except to
increase the percentage of Holders required for any modification or
waiver or to provide that certain other provisions of this Agreement
cannot be modified or waived without the consent of each Holder of each
Outstanding Certificate affected thereby; or
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(vii) permit the creation of any lien ranking prior to, on a
parity with, or subordinate to the lien of this Agreement with respect to
any part of the Trust Property or terminate or release the lien of this
Agreement on any property at any time subject hereto or deprive the
Holder of any Certificate of the security afforded by the lien of this
Agreement; or
(viii) modify any of Sections 6.01(a) or (b), 6.02, 6.03, 6.18, or
Section 12.02(d) hereof.
(b) With the prior written consent of the Bond Insurer and the Holders of
not less than 66-2/3% of the principal amount of Outstanding Certificates, by
Act of said Holders delivered to the Transferor and the Trustee, the Transferor,
the Servicer, the Trustee and the Back-up Servicer may enter into amendments
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of Article Three hereof or the definitions
therein, provided that any such amendment does not modify the Agreement in a
manner described in clauses (i) through (viii) of paragraph (a) of this Section
9.02.
(c) The Trustee is hereby authorized to join in the execution of any
amendments to this Agreement pursuant to clause (a) or (b) above and to make any
further appropriate agreements and stipulations that may be therein contained,
but the Trustee shall not be obligated to enter into any such amendment that
affects the Trustee's own rights, duties, liabilities or immunities under this
Agreement. It shall not be necessary for any Act of Certificateholders under
this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the substance
thereof. Promptly after the execution by the Transferor, the Servicer, the
Trustee and the Back-up Servicer of any amendment pursuant to this Section, the
Transferor shall mail to the Rating Agencies, the Bond Insurer and the Holders
of the Certificates a copy of such amendment.
Section 9.03. Execution of Amendments. In executing any amendment
permitted by this Article or the modifications thereby of the trusts created by
this Agreement, the Trustee shall be entitled to receive upon request, and
(subject to Section 7.01 hereof) shall be fully protected in relying in good
faith upon, an Opinion of Counsel reasonably acceptable to the Trustee stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own duties or immunities under this
Agreement or otherwise.
Section 9.04. Effect of Amendments. Upon the execution of any amendment
under this Article, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby.
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Section 9.05. Reference in Certificates to Amendments. Certificates
authenticated and delivered after the execution of any amendment pursuant to
this Article may, and if required by the Trustee shall, bear a notation in form
approved by the Trustee as to any matter provided for in such amendment. If the
Transferor shall so determine, new Certificates so modified as to conform, in
the opinion of the Trustee and the Transferor, to any such amendment may be
prepared and executed by the Transferor and authenticated and delivered by the
Trustee in exchange for Outstanding Certificates.
Section 9.06. Amendment as to Registered Form. Notwithstanding anything
to the contrary contained in Sections 9.01 and 9.02 hereof, no amendment shall
be entered into by the parties to this Agreement which would result in the
Certificates not to be in registered form in accordance with Section 163(f) of
the Internal Revenue Code of 1986, as amended, unless the Transferor obtains an
Opinion of Counsel on behalf of the Trust and delivered to the Bond Insurer and
the Trustee to the effect that the failure of the Certificates to be in
registered form will not result in adverse federal tax consequences.
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ARTICLE TEN
REDEMPTION OF CERTIFICATES
Section 10.01. Redemption at the Option of the Transferor; Election to
Redeem. The Transferor shall have the option, and in the absence of the exercise
thereof the Bond Insurer shall have the option, to redeem all of the Outstanding
Certificates, at any time after the aggregate principal amount of the
Outstanding Certificates is less than 10% of the largest aggregate principal
amount of the Certificates Outstanding at any point in time.
The Transferor shall set the Redemption Date and the Redemption Record
Date for the Certificates and give notice thereof to the Trustee pursuant to
Section 10.02 hereof.
Installments of interest and principal that are due regarding the
Certificates on or prior to the Redemption Date shall continue to be payable to
the Holders of such Certificates called for redemption as of the relevant Record
Dates according to their terms and the provisions of Section 2.08 hereof. The
election of the Transferor or the Bond Insurer to redeem any Certificates
pursuant to this Section shall be evidenced by a Board Resolution or written
notice from the Bond Insurer, respectively, directing the Trustee to make the
payment of the Redemption Price on all of the Certificates to be redeemed from
monies deposited with the Trustee pursuant to Section 10.04 hereof.
Section 10.02. Notice to Trustee; Deposit of Redemption Price. In the case
of any redemption pursuant to Section 10.01 hereof, the Transferor or the Bond
Insurer shall, at least 15 days prior to the Redemption Date, notify the
Trustee, the Bond Insurer and the Certificateholders of such Redemption Date and
shall deposit into the Collection Account on the related Calculation Date an
amount equal to the Redemption Price of all Certificates to be redeemed on such
Redemption Date plus any fees and expenses due hereunder plus all amounts due to
the Bond Insurer under the Insurance Agreement.
Section 10.03. Notice of Redemption by the Transferor. Upon receipt of
such notice and such deposit set forth in Section 10.02 above, the Trustee shall
provide notice of redemption pursuant to Section 10.01 hereof by first-class
mail, postage prepaid, mailed no later than the Business Day following the
Calculation Date on which such deposit was made, to each Holder of Certificates
whose Certificates are to be redeemed, at such Holder's address in the
Certificate Register.
All notices of redemption shall state:
(a) the applicable Redemption Date;
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(b) the applicable Redemption Price; and
(c) that on such Redemption Date, the Redemption Price will
become due and payable upon each such Certificate, and that interest
thereon shall cease to accrue on such date.
Notice of redemption of Certificates shall be given by the Trustee in
the name and at the expense of the Transferor or the Bond Insurer, as
applicable. Failure to give notice of redemption, or any defect therein, to any
Holder of any Certificate selected for redemption shall not impair or affect the
validity of the redemption of any other Certificate.
Section 10.04. Deposit of the Redemption Price. On or before the
Calculation Date next preceding any Redemption Date, the Transferor or the Bond
Insurer, as applicable, shall deposit with the Trustee or with the Paying Agent
an amount of monies sufficient to pay the Redemption Price of all Certificates
which are to be redeemed on such Redemption Date plus any fees due hereunder,
and all amounts due to the Bond Insurer under the Insurance Agreement.
Section 10.05. Certificates Payable on Redemption Date. Notice of
redemption having been given as provided in Section 10.03 hereof, the
Certificates to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price and on such Redemption Date such Certificates
shall cease to bear interest. The Holders of such Certificates shall be paid the
Redemption Price by the Paying Agent on behalf of the Transferor; provided,
however, that installments of principal and interest that are due regarding such
Certificates on or prior to such Redemption Date shall be payable to the Holders
of such Certificates registered as such on the relevant Record Dates according
to their terms and the provisions of Section 2.08 hereof.
If the Holders of any Certificate called for redemption shall not be so
paid, the principal and premium on such Certificates, if any, shall, until paid,
bear interest from the applicable Redemption Date at the Certificate Interest
Rate.
Section 10.06. Release of Lease Contracts. In connection with any
redemption permitted under this Article Ten, the Transferor shall be permitted
to obtain a release of the related Lease Contracts after the Redemption Price
plus any fees and expenses due hereunder and all amounts due to the Bond Insurer
under the Insurance Agreement shall have been deposited into the Collection
Account as required by Section 10.04.
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ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01. Representations and Warranties. The Transferor hereby makes
the following representations and warranties for the benefit of the Trustee, the
Bond Insurer and the Certificateholders on which the Trustee relies in accepting
the Trust Property in trust and in authenticating the Certificates and the Bond
Insurer relies in issuing the Policy. Such representations and warranties are
made as of the Closing Date and, except as specifically provided herein, each
Funding Date, and shall survive the transfer, conveyance and assignment of the
Trust Property to the Trustee.
(a) Organization and Good Standing. The Transferor is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware and each other State where the nature of its business
requires it to qualify, except to the extent that the failure to so qualify
would not in the aggregate materially adversely affect the ability of the
Transferor to perform its obligations under this Agreement or the Contribution
Agreement.
(b) Authorization. The Transferor has the power, authority and legal
right to execute, deliver and perform this Agreement, the Servicing Agreement,
the Insurance Agreement and the Contribution Agreement and the execution,
delivery and performance of this Agreement, the Insurance Agreement and the
Contribution Agreement have been duly authorized by the Transferor by all
necessary action.
(c) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by the Trustee, the Back-up Servicer and the Transferor,
the Insurance Agreement, assuming due authorization, execution and delivery by
the Bond Insurer, the Trustee, the Back-up Servicer, the Transferor, the
Company and the Servicer, the Contribution Agreement, assuming the due
authorization, execution and delivery by the Company and each of the
Contributors, the Certificate Purchase Agreement, assuming due authorization,
execution and delivery by the Company, the Transferor and the purchaser and the
Servicing Agreement, assuming due authorization, execution and delivery by the
Transferor, the Servicer, the Back-up Servicer and the Trustee, each constitutes
a legal, valid and binding obligation of the Transferor, enforceable against the
Transferor in accordance with its terms except that (A) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws (whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
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(d) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement, the Insurance Agreement, the
Certificate Purchase Agreement, the Servicing Agreement and the Contribution
Agreement will not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or both) a
default under the Limited Liability Company Agreement of the Transferor, or any
material indenture, agreement, mortgage, deed of trust or other instrument to
which the Transferor is a party or by which it is bound, or in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of such
indenture, agreement, mortgage, deed of trust or other such instrument, other
than any Lien created or imposed pursuant to the terms of this Agreement, the
Insurance Agreement, the Certificate Purchase Agreement, the Servicing Agreement
or the Contribution Agreement, or violate any law or, to the best of the
Transferor's knowledge, any material order, rule or regulation applicable to the
Transferor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Transferor or any of its properties.
(e) No Proceedings. There are no Proceedings or investigations to which
the Transferor, or any of its Affiliates, is a party pending, or, to the
knowledge of Transferor, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality (A)
asserting the invalidity of this Agreement, the Insurance Agreement, the
Contribution Agreement or the Certificates, (B) seeking to prevent the issuance
of the Certificates or the consummation of any of the transactions contemplated
by the Contribution Agreement, the Insurance Agreement, this Agreement, the
Certificate Purchase Agreement, the Servicing Agreement or the Certificates or
(C) seeking any determination or ruling that would materially and adversely
affect the performance by the Transferor of its obligations under, or the
validity or enforceability of, this Agreement, the Insurance Agreement, the
Contribution Agreement, the Certificate Purchase Agreement, the Servicing
Agreement or the Certificates.
(f) Approvals. All approvals, authorizations, consents, orders or other
actions of any Person or of any court, governmental agency or body or official,
required in connection with the execution and delivery of this Agreement, the
Insurance Agreement, or the Contribution Agreement and with the valid and proper
authorization, issuance and sale of the Certificates pursuant to this Agreement
(except approvals of State securities officials under the Blue Sky Laws), have
been or will be taken or obtained on or prior to the Closing Date.
(g) Place of Business. The Transferor's principal place of business and
chief executive office is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(h) Transfer and Assignment. Upon the delivery to the Trustee of the
Lease Contracts and the filing of the Financing Statements described in Sections
4.01, 4.02 and 4.03 hereof,
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respectively, the Trustee for the benefit of the Certificateholders and the Bond
Insurer shall have a first priority perfected security interest in the Lease
Receivables, the Lease Contracts, the Equipment (to the extent owned by the
Transferor) initially located in the Enumerated States, and in the proceeds
thereof, except for Liens permitted under Section 11.02(a) and limited to the
extent set forth in Section 9-306 of the UCC as in effect in the applicable
jurisdiction and provided, that, the security interest of the Trustee for the
benefit of the Certificateholders and the Bond Insurer with respect to the
Equipment will not be a perfected security interest with respect to any
Equipment located initially in any States other than the Enumerated States. All
filings (including, without limitation, UCC filings) as are necessary in any
jurisdiction to perfect the ownership or other interest of the Trustee in the
Trust Property (other than that Equipment in such other States), including the
transfer of the Lease Contracts and the payments to become due thereunder, have
been made.
(i) Owners of the Transferor. The Contributors and K & P Finance Corp. I
comprise all of the owners of all of the outstanding membership interests of the
Transferor, all of which membership interests are fully paid and nonassessable
and are owned of record, free and clear of all mortgages, assignments, pledges,
security interests, warrants, options and rights to purchase.
(j) Contribution. As of the Closing Date the Transferor has entered into
the Contribution Agreement with the Contributors relating to its acquisition of
the Lease Contracts, the Lease Receivables, the Equipment and the Leased
Vehicles, and the representations and warranties made by the Company and each of
the Contributors relating to the Lease Contracts, Lease Receivables, the
Equipment and the Leased Vehicles have been validly assigned to and are for the
benefit of the Transferor, the Trustee, the Bond Insurer and the
Certificateholders and such representations and warranties are true and correct
in all material respects.
(k) The Lease Contracts. The Transferor hereby restates and makes each
of the representations and warranties with respect to the Lease Contracts, the
Lease Receivables, the Equipment and the Leased Vehicles that are made by the
Contributors and the Company in Section 3.01 of the Contribution Agreement.
(l) Taxable Income From Lease Contracts. Each of the Transferor, the
Company, the Contributors and their shareholders and members, as applicable,
shall treat the Lease Contracts as owned by the Transferor for federal, State,
and local income tax purposes, shall report and include in the computation of
the Transferor's gross income for such tax purposes the rental and other income
from the Lease Contracts, and shall deduct the interest paid or accrued with
respect to the Certificates in accordance with its applicable method of
accounting for such purposes.
Section 11.02. Covenants. The Transferor hereby makes the following
covenants for the benefit of the Trustee, the Bond Insurer and the
Certificateholders, on which the Trustee
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relies in accepting the Trust Property in trust and in authenticating the
Certificates and the Bond Insurer relies in issuing the Policy. Such covenants
shall survive the transfer, conveyance and assignment of the Trust Property to
the Trustee.
(a) No Liens. Except for the conveyances and grant of security interests
hereunder, the Transferor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any Trust
Property now existing or hereafter created, or any interest therein prior to the
termination of this Agreement. The Transferor will notify the Trustee and the
Bond Insurer of the existence of any Lien on any Trust Property immediately upon
discovery thereof and the Transferor shall defend the right, title and interest
of the Trustee in, to and under the Trust Property now existing or hereafter
created, against all claims of third parties claiming through or under the
Transferor; provided, however, that nothing in this Section 11.02(a) shall
prevent or be deemed to prohibit the Transferor from suffering to exist upon any
of the Trust Property any Liens for municipal or other local taxes and other
governmental charges if such taxes or governmental charges shall not at the time
be due and payable or if the Transferor shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.
(b) Delivery of Collections. The Transferor agrees to hold in trust and
promptly pay to the Servicer all amounts received by the Transferor in respect
of the Trust Property (other than amounts distributed to or for the benefit of
the Transferor pursuant to Section 12.02(d)(xiv) hereof).
(c) Obligations with Respect to Lease Contracts. The Transferor will
duly fulfill all obligations on its part to be fulfilled under or in connection
with each Lease Contract and will do nothing to impair the rights of the Trustee
(for the benefit of the Certificateholders and the Bond Insurer) in the Lease
Receivables, the Lease Contracts and any other Trust Property. As long as there
is no event of default under the applicable Lease Contract, the Transferor will
not disturb the Customer's quiet and peaceful possession of the related
Equipment and the Customer's unrestricted use thereof for its intended purpose.
(d) Compliance with Law. The Transferor will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Lease Contracts or any part
thereof; provided, however, that the Transferor may contest any act, regulation,
order, decree or direction in any reasonable manner which shall not materially
and adversely affect the rights of the Trustee (for the benefit of the
Certificateholders and the Bond Insurer) in the Lease Receivables, the Lease
Contracts, the related Leased Vehicles and the related Equipment. The Transferor
will comply, in all material respects, with all requirements of law applicable
to the Transferor.
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(e) Preservation of Security Interest. The Transferor shall execute and
file such continuation statements (and deliver file-stamped copies thereof to
the Trustee) and any other documents which may be required by law to fully
preserve and protect the interest of the Trustee (for the benefit of the
Certificateholders and the Bond Insurer) in the Trust Property; provided, that
the Transferor shall not be required to file financing statements or any related
agreements or documentation with respect to any Equipment not initially located
in the Enumerated States.
(f) Maintenance of Office, etc. The Transferor will not, without
providing 30 days notice to the Trustee and the Bond Insurer and without filing
such amendments to any previously filed financing statements as the Trustee or
the Bond Insurer may require or as may be required in order to maintain the
Trustee's perfected security interest in the Trust Property (other than
Equipment located initially in any states other than the Enumerated States), (a)
change the location of its principal executive office, or (b) change its name,
identity or company structure in any manner which would make any financing
statement or continuation statement filed by the Transferor in accordance with
the Servicing Agreement or this Agreement seriously misleading within the
meaning of Article 9-402(7) of any applicable enactment of the UCC.
(g) Further Assurances. Except as set forth in Section 11.02(e), the
Transferor will make, execute or endorse, acknowledge, and file or deliver to
the 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
Trust Property, as the Trustee may request and reasonably require.
(h) Notice of Liens. The Transferor shall notify the Trustee and the
Bond Insurer promptly after becoming aware of any Lien on the Trust Property,
except for any Liens for municipal or other local taxes if such taxes shall not
at the time be due or payable without penalty or if the Transferor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto.
(i) Activities of the Transferor. The Transferor (a) shall engage in
only (1) the acquisition, ownership, leasing, selling and pledging of the
property acquired by the Transferor pursuant to the Contribution Agreement, and
causing the issuance of and selling of the Certificates pursuant to this
Agreement and (2) the exercise of any powers permitted to limited liability
companies under the limited liability company law of the State of Delaware which
are incidental to the foregoing or necessary to accomplish the foregoing and the
Transferor shall incur no debt other than trade payables and expense accruals in
connection with its operations in the normal course of business; (b) will (1)
maintain its books and records separate from the books and records of any other
entity, (2) maintain separate bank accounts and no funds of the Transferor shall
be commingled with funds of any other entity, (3) keep in full effect its
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existence, rights and franchises as a limited liability company under the laws
of the State of Delaware, and will obtain and preserve its qualification to do
business as a foreign limited liability company in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement; and (c) will not (1) dissolve or liquidate in
whole or in part, (2) own any subsidiary or lend or advance any moneys to, or
make an investment in, any Person, (3) make any capital expenditures, (4)
without the unanimous consent of all of its members (A) commence any case,
proceeding or other action under any existing or future bankruptcy, insolvency
or similar law seeking to have an order for relief entered with respect to it,
or seeking reorganization, arrangement, adjustment, wind-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, (B)
seek appointment of a receiver, trustee, custodian or other similar official for
it or any part of its assets, (C) make a general assignment for the benefit of
creditors, or (D) take any action in furtherance of, or consenting or
acquiescing in, any of the foregoing, (5) guarantee (directly or indirectly),
endorse or otherwise become contingently liable (directly or indirectly) for the
obligations of, or own or purchase any stock, obligations or securities of or
any other interest in, or make any capital contribution to, any other Person,
(6) merge or consolidate with any other Person, (7) engage in any other action
that bears on whether the separate legal identity of the Transferor will be
respected, including without limitation (A) holding itself out as being liable
for the debts of any other party or (B) acting other than in its company name
and through its duly authorized officers or agents, or (8) create, incur,
assume, or in any manner become liable in respect of any indebtedness other than
trade payables and expense accruals incurred in the ordinary course of business
and which are incidental to its business purpose; provided, however, that the
Transferor may take any action prohibited by this clause (8) if (y) the
Transferor shall cause, prior to the taking of such action, an Opinion of
Counsel experienced in federal bankruptcy matters, in substance satisfactory to
the Trustee, the Certificateholders, the Bond Insurer and the Rating Agencies,
to be delivered to the Trustee, the Certificateholders, the Bond Insurer and the
Rating Agencies and (z) the Rating Agencies shall indicate in writing that the
taking of such action will not affect the then current rating of the
Certificates or the risk to the Bond Insurer in insuring the Certificates. The
Transferor shall not amend any article in its Limited Liability Company
Agreement that deals with any matter discussed above without the prior written
consent of the Bond Insurer.
(j) Directors. The Transferor agrees that at all times with respect to
it and K&P Finance Corp. I at least one of the directors and one of the
executive officers (or two persons, one of whom is serving as both a director
and an executive officer) will not be a director, officer or employee of any
direct or ultimate parent, or Affiliate of the parent or of such entity;
provided, however, that such independent director and officer may serve in
similar capacities for other "special purpose entities" formed by the Company
and its Affiliates. The Transferor's Limited Liability Company Agreement shall
at all times provide that the independent director of the independent member
shall have a fiduciary duty to the Certificateholders.
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(k) Preservation of the Equipment and the Leased Vehicles. The
Transferor warrants that it is the lawful owner and possessor of the Equipment
or Leased Vehicles (except with respect to Equipment or Leased Vehicles in which
it has a valid security interest) and that it will warrant and defend such
Equipment or Leased Vehicle against all Persons, claims and demands whatsoever.
The Transferor shall not assign, sell, pledge, or exchange, or in any way
encumber or otherwise dispose of the Equipment or Leased Vehicles, except as
permitted under this Agreement.
(l) Taxable Income from the Lease Contracts. The Transferor shall treat
the Lease Contracts as owned by it for federal, state and local income tax
purposes, shall report and include in the computation of the Transferor's gross
income for such tax purposes in its return the rental and other income from the
Lease Contracts, and shall deduct the interest paid or accrued with respect to
the Certificates in accordance with its applicable method of accounting for such
purposes.
(m) Maintenance of Office or Agency. The Transferor will maintain an
office or agency within the United States of America where the Certificates may
be presented or surrendered for payment and where notices and demand to or upon
the Transferor in respect of the Certificates and this Agreement may be served.
The Transferor hereby initially appoints the Trustee at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota for each of said purposes. The
Transferor will give 30 days prior written notice to the Trustee, the Bond
Insurer and the Certificateholders of any change in the location, of any such
office or agency. If at any time the Transferor shall fail to maintain any such
office or agency or shall fail to maintain any such office or agency or shall
fail to furnish the Trustee or the Bond Insurer with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Trustee, and the Transferor hereby appoints the Trustee its agent to receive all
such presentations, surrenders, notices and demands.
(n) Enforcement of Servicing Agreement and Contribution Agreement. The
Transferor will take all actions necessary, and diligently pursue all remedies
available to it, to the extent commercially reasonable, to enforce the
obligations of the Servicer under the Servicing Agreement and the Contribution
Agreement and the Contributors and the Company under the Contribution Agreement
and to secure its rights thereunder.
(o) Transferor May Consolidate, etc., Only on Certain Terms. The
Transferor shall not consolidate or merge with or into any other Person or
convey or transfer its properties and assets substantially as an entirety to any
Person, unless:
(i) the Person (if other than the Transferor) formed by or
surviving such consolidation or merger or which acquires by conveyance
or transfer the properties and
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assets of the Transferor substantially as an entirety shall be a Person
organized and existing as a limited purpose entity under the laws of the
United States of America or any State thereof and shall have expressly
assumed, by an agreement supplemental hereto, executed and delivered to
the Trustee and the Bond Insurer in form reasonably satisfactory to the
Trustee and the Bond Insurer, the obligation to make due and punctual
payments of the principal of and interest on the Certificates and to
perform every covenant of this Agreement on the part of the Transferor
to be performed or observed; and
(ii) the Transferor shall have caused the Trustee to have received
a letter from the Rating Agencies to the effect that the rating issued
with respect to the Certificates and the risk to the Bond Insurer in
insuring the Certificates is confirmed, notwithstanding the consummation
of such merger, consolidation, transfer or conveyance together with the
consent of the Bond Insurer to such merger, consolidation, transfer or
conveyance; and
(iii) immediately after giving effect to such transaction, no Event
of Default or Default, Trigger Event or Funding Period Trigger Event
shall have occurred and be continuing; and
(iv) the Transferor shall have delivered to the Trustee and the
Bond Insurer an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Article Eleven and that all
conditions precedent herein provided for relating to such transaction
have been complied with; and
(v) such consolidation, merger, conveyance or transfer shall be
on such terms as shall fully preserve the lien and security hereof, the
perfection and priority thereof and the rights and powers of the
Trustee, the Bond Insurer and the Certificateholders; and
(vi) the surviving entity shall be a "special purpose entity;"
i.e., shall have an organizational charter substantially similar to the
Certificate of Formation and the Limited Liability Company Agreement of
the Transferor including specific limitations on the business purposes,
and provisions for independent directors; and
(vii) the Bond Insurer shall have given its prior written consent,
which consent shall not be unreasonably withheld or delayed.
(p) Successor Substituted. Upon any consolidation or merger, or any
conveyance or transfer of the properties and assets of the Transferor
substantially as an entirety in accordance with Section 11.02(o) hereof, the
Person formed by or surviving such consolidation or merger (if
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other than the Transferor) or the Person to which such conveyance or transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Transferor under this Agreement with the same effect as if such
Person had been named as the Transferor herein. In the event of any such
conveyance or transfer, the Transferor or any successor which shall theretofore
have become such in the manner prescribed in this Article shall be released from
its liabilities as obligor and maker on the Certificates and from its
obligations under this Agreement and may be dissolved, wound-up and liquidated
at any time thereafter.
(q) Use of Proceeds. The proceeds of the sale of the Lease Contracts
will be used by the Transferor (i) to pay the Existing Indebtedness, (ii) to pay
the expenses associated with this transaction and (iii) for general corporate
purposes. None of the transactions contemplated in this Agreement, the
Contribution Agreement or the Servicing Agreement will result in a violation of
Section 7 of the Securities and Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The
Transferor does not own or intend to carry or purchase any "margin security"
within the meaning of said Regulation G, including margin securities originally
issued by it or any "margin stock" within the meaning of said Regulation U.
(r) Tax Returns. The Transferor and the Company each has filed and will
continue to file all applicable federal income tax returns until the termination
of this Agreement.
(s) The Transferor will not elect to treat the Trust as an association
taxable as a corporation for federal income tax purposes.
(t) The Transferor will not elect to treat itself as an association
taxable as a corporation for federal income tax purposes.
(u) The Transferor will not cause the Trust to issue a certificate or
other written instrument to evidence the Transferor's interests in the Trust.
Section 11.03. Other Matters as to the Transferor.
(a) Limitation on Liability of Directors, Officers, or Employees of the
Transferor. (a) The directors, officers, or employees of the Transferor shall
not be under any personal liability to the Trust, the Trustee, the
Certificateholders, the Servicer, or any other Person hereunder or pursuant to
any documents delivered hereunder, it being expressly understood that all such
liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and the issuance of the
Certificates, except with respect to liability resulting from such Person's
fraudulent or willful misconduct. The Transferor and any director
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or officer or employee or agent of the Transferor may rely in good faith on the
advice of counsel or on any documents of any kind, prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
(b) Parties Will Not Institute Insolvency Proceedings. During the term
of this Agreement and for one year and one day after the termination hereof,
none of the parties hereto or any Affiliate thereof will 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 Transferor.
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ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
Section 12.01. Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Trustee pursuant to this Agreement. The Trustee shall, upon request from the
Servicer, provide the Servicer with sufficient information regarding the amount
of collections with respect to the Lease Contracts received by the Trustee and
the other accounts held in the name of the Trustee to permit the Servicer to
perform its duties under the Servicing Agreement. The Trustee shall hold all
such money and property so received by it as part of the Trust Property and
shall apply it as provided in this Agreement. If any Lease Contract becomes a
Defaulted Lease Contract, the Trustee, upon Transferor or Servicer request may,
and upon the request of the Bond Insurer or the Certificateholders shall, take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate Proceedings. Any such
action shall be without prejudice to any right to claim a Default or Event of
Default under this Agreement and to proceed thereafter as provided in Article
Six hereof.
Section 12.02. Collection Account. (a) Prior to the Closing Date, the
Trustee shall open and maintain a trust account (the "Collection Account") for
the benefit of the Certificateholders and the Bond Insurer, for the receipt of
(i) payments remitted to the Trustee by the Servicer, (ii) proceeds of claims
made under the Policy, in accordance with Article Eight hereof, upon receipt and
(iii) any Reinvestment Income. Funds in the Collection Account shall not be
commingled with any other monies. All payments to be made from time to time by
the Trust to the Certificateholders out of funds in the Collection Account
pursuant to this Agreement shall be made by the Trustee. All monies deposited
from time to time in the Collection Account pursuant to this Agreement shall be
held by the Trustee as part of the Trust Property as herein provided.
(b) Upon Transferor Order, the Trustee shall invest the funds in the
Collection Account (other than proceeds of claims made under the Policy) in
Eligible Investments. The Transferor Order shall specify the Eligible
Investments in which the Trustee shall invest, shall state that the same are
Eligible Investments and shall further specify the percentage of funds to be
invested in each Eligible Investment. No such Eligible Investment shall mature
later than the second Business Day preceding the next following Payment Date and
shall not be sold or disposed of prior to its maturity; provided that, Eligible
Investments of the type described in clause (i) or (vi) of the definition of
Eligible Investments may mature on such Payment Date. In the absence of a
Transferor Order, the Trustee shall invest funds in the Collection Account
(other than proceeds of claims made under the Policy) in Eligible Investments
described in clause (vi) of the definition thereof. Eligible Investments shall
be made in the name of the Trustee for the
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benefit of the Certificateholders and the Bond Insurer. The Trustee shall
provide to the Servicer and the Bond Insurer at its request monthly account
statements relating to the Collection Account and such other account information
reasonably requested by the Bond Insurer.
(c) Any income or other gain from investments in Eligible Investments as
outlined in (b) above shall be credited to the Collection Account and any loss
resulting from such investments shall be charged to such account; provided,
however, that the Transferor shall make or cause to be made no later than the
applicable Payment Date a deposit to the Collection Account to the extent of any
losses therein caused as a result of the Transferor's investment instructions
provided for herein. The Trustee shall not be liable for any loss incurred on
any funds invested in Eligible Investments pursuant to the provisions of this
Section 12.02 (except to the extent that the Trustee is the obligor and has
defaulted thereon).
(d) On each Payment Date if either no Default or Event of Default shall
have occurred and be continuing or a Default or Event of Default shall have
occurred and be continuing, but the entire unpaid principal amount of the
Certificates shall not have been declared due and payable, then on such Payment
Date, after making all transfers and deposits to the Collection Account pursuant
to Section 12.02(a) hereof, the Trustee shall withdraw from the Collection
Account (other than amounts representing payments of Lease Receivables due after
the Calculation Date immediately preceding such Payment Date) including the
Reinvestment Income therein, and shall make the following disbursements in the
following order in accordance with the provisions of and instructions on the
Monthly Servicer's Report; provided that the proceeds of claims under the Policy
shall be used solely to pay the amounts due under paragraph (v) and, on the
Stated Maturity, paragraph (vi) of this Section 12.02(d); and provided further
that the Trustee shall withdraw from the Collection Account and make interest
payments based on the outstanding principal balance of the Certificates even if
it shall not have received the Monthly Servicer's Report:
(i) to pay to the Servicer: (A) the Servicer Fee; (B) the
Reinvestment Income (except to the extent previously remitted to the
Servicer); (C) the amounts necessary to reimburse the Servicer and any
successor Servicer as provided in Section 3.09(a) of the Servicing
Agreement for reasonable costs and expenses incurred by the Servicer
(including reasonable attorney's fees and out-of-pocket expenses) in
connection with the realization, attempted realization or enforcement of
rights and remedies upon Defaulted Lease Contracts, from amounts
received as Recoveries from any Defaulted Lease Contracts; (D) any
amounts received from Customers to pay the taxes described in Section
3.07 of the Servicing Agreement, to the extent deposited in the
Collection Account; (E) all amounts received in respect of Lease
Receivables as to which the Servicer has made an unrecovered Servicer
Advance, to the extent of such Servicer
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Advance; and (F) the amount necessary to reimburse the Servicer for any
Nonrecoverable Advance;
(ii) to pay to the Trustee the Trustee Fee (and, following an
Event of Default, any expenses of the Trustee previously approved by the
Bond Insurer) then due;
(iii) to pay to the Back-up Servicer the Back-up Servicer Fee (and,
following an Event of Default, any expenses of the Back-up Servicer
previously approved by the Bond Insurer) then due;
(iv) to pay to the Bond Insurer the Bond Insurer Premium then
due;
(v) to pay the Interest Distribution Amount due on that Payment
Date and any overdue interest, to be applied as provided in Section 2.08
hereof;
(vi) to pay the Principal Distribution Amount then due, to be
applied to the payment of Certificates principal as provided in Section
2.08 hereof;
(vii) to pay to the Bond Insurer any amounts previously paid by
the Bond Insurer under the Policy and not repaid plus any unpaid Bond
Insurer Premium, together with interest thereon in accordance with the
Insurance Agreement;
(viii) to pay to a successor Servicer after a successor Servicer
has been appointed pursuant to Section 6.02 of the Servicing Agreement,
the Additional Servicer Fee, if any, and to pay any successor Servicer,
or the Trustee, any Transition Costs incurred by any successor Servicer,
or the Trustee and not previously reimbursed;
(ix) on and after the Payment Date following a Trigger Event,
apply any remaining funds to the payment of principal to the Holders of
Certificates Outstanding on a pro rata basis;
(x) to pay to the Servicer, any other amounts due the Servicer
as expressly provided herein and in the Servicing Agreement other than
unreimbursed Servicer Advances;
(xi) to pay to the Servicer, any unreimbursed Servicer Advances;
(xii) to pay to the Trustee and the Back-up Servicer, any other
amounts due to the Trustee and the Back-up Servicer as expressly
provided herein and in the Servicing Agreement;
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(xiii) to pay to the Bond Insurer any other amounts owed to the
Bond Insurer pursuant to the Insurance Agreement; and
(xiv) to remit any excess funds to or at the direction of the
Transferor in accordance with the instructions on the Monthly Servicer's
Report.
(e) Upon the Transferor's or the Trustee's obtaining actual knowledge of
the occurrence of any Trigger Event, the Transferor or the Trustee, as the case
may be, shall within one Business Day of obtaining such actual knowledge notify
the Bond Insurer and the Certificateholders of such occurrence.
Section 12.03. Reports by Trustee to Certificateholders. (a) On each
Payment Date the Trustee shall account to each Holder of Certificates on which
payments of principal and interest are then being made the amount which
represents principal and the amount which represents interest, and shall
contemporaneously advise the Transferor of all such payments. The Trustee may
satisfy its obligations under this Section 12.03 by delivering the Monthly
Servicer's Report to each such Holder of the Certificates. On or before the 10th
day prior to any Final Payment Date the Trustee shall provide notice to the
Holders of the Certificates of the Final Payment Date for such Certificates.
Such notice shall include (1) a statement that interest shall cease to accrue as
of the last day preceding the date on which the Final Payment Date occurs, and
(2) shall specify the place or places at which presentation and surrender may be
made.
(b) The Trustee shall, on a monthly basis beginning on the first
Calculation Date, confirm the credit rating or, if more than one credit rating
has been assigned, each such credit rating of each institution in which funds
are invested pursuant to clause (v) of the definition of Eligible Investments
and shall promptly notify the Certificateholders and the Bond Insurer if any
such credit rating has been lowered.
(c) At least annually, or as otherwise required by law, the Trustee
shall distribute to Certificateholders any information returns or other tax
information or statements as are required by applicable tax law to be
distributed to the Certificateholders. The Servicer shall prepare or cause to be
prepared all such information for distribution by the Trustee to the
Certificateholders.
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ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
Section 13.01. General Provisions. All of the provisions of this Article
shall apply to this Agreement.
Section 13.02. Acts of Certificateholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee, and,
where it is hereby expressly required, to the Transferor. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Certificateholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.01 hereof) conclusive in favor of the
Trustee and the Transferor, if made in the manner provided in this Section
13.02.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee reasonably
deems sufficient.
(c) The ownership of Certificates shall be proved by the Certificate
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Certificate shall bind the Holder of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Transferor in reliance thereon,
whether or not notation of such action is made upon such Certificate.
Section 13.03. Notices, etc., to Trustee, Bond Insurer, Transferor and
Servicer. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Certificateholders or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with any party hereto
shall be sufficient for every purpose hereunder if in writing and telecopied or
mailed, first-class postage prepaid and addressed to the appropriate address
below:
(a) to the Trustee at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇).
Attention: Corporate Trust Services-Asset-Backed Administration/T & W
Funding Company I, L.L.C., or at any
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other address previously furnished in writing to the Transferor, the
Certificateholders, the Bond Insurer, the Servicer and the Back-up
Servicer; or
(b) to the Transferor at T & W Funding Company I, L.L.C., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (facsimile number (206)
926-0739), Attention: President, or at any other address previously
furnished in writing to the Trustee, the Certificateholders, the Bond
Insurer, the Servicer and the Back-up Servicer; or
(c) to the Servicer at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention: President, or at any
other address previously furnished in writing to the Trustee, the
Certificateholders, the Bond Insurer, the Transferor and the Back-up
Servicer; or
(d) to the Back-up Servicer at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Services/ Asset-Backed Administration, or at any other address
previously furnished in writing to the Trustee, the Certificateholders,
the Bond Insurer, the Transferor and the Servicer; or
(e) to the Bond Insurer at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (facsimile number (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Insured Portfolio
Management Structured Finance (IPM-SF), or at any other address
previously furnished in writing by the Bond Insurer to the Trustee, the
Certificateholders, the Servicer, the Back-up Servicer and the
Transferor; or
(f) to each of (i) S&P, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Asset Backed Surveillance Group, and (ii) ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Surveillance Group.
Section 13.04. Notices to Certificateholders; Waiver. Where this Agreement
provides for notice to Certificateholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class postage prepaid, to each Certificateholder affected by
such event, at his address as it appears on the Certificate Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case in which notice to Certificateholders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Certificateholder shall affect the
sufficiency of such notice with respect to other Certificateholders, and any
notice which is mailed in the manner herein provided shall conclusively be
presumed to have been duly given.
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Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Certificateholders shall be filed with the Trustee,
but such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Certificateholders when such notice is required to be
given pursuant to any provision of this Agreement, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Section 13.05. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 13.06. Successors and Assigns. All covenants and agreements in
this Agreement by the Transferor shall bind its successors and assigns, whether
so expressed or not.
Section 13.07. Separability. In case any provision in this Agreement or in
the Certificates shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Section 13.08. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, express or implied, shall give to any Person, other than the
parties hereto, the Certificateholders, and any Paying Agent which may be
appointed pursuant to the provisions hereof, and any of their successors
hereunder, any benefit or any legal or equitable right, remedy or claim under
this Agreement or under the Certificates.
Section 13.09. Legal Holidays. In any case in which the date of any
Payment Date or the Stated Maturity of the Certificates shall not be a Business
Day, then (notwithstanding any other provision of a Certificate or this
Agreement) payment of principal or interest need not be made on such date, but
may be made on the next succeeding Business Day with the same force and effect
as if made on the nominal date of the Stated Maturity or any such Payment Date
and, assuming such payment is actually made on such subsequent Business Day, no
additional interest shall accrue on the amount so paid for the period from and
after any such nominal date.
Section 13.10. Governing Law. THE AGREEMENT AND EACH CERTIFICATE SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF NEW
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YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD
TO THE CONFLICT OF LAWS PROVISIONS OF ANY STATE.
Section 13.11. Counterparts. The Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 13.12. Corporate Obligation. No recourse may be taken, directly or
indirectly, against any incorporator, subscriber to the capital stock,
stockholder, employee, officer or director of the Transferor or of any
predecessor or successor of the Transferor with respect to the Transferor's
obligations under this Agreement or any certificate or other writing delivered
in connection herewith.
Section 13.13. Compliance Certificates and Opinions. Upon any application,
order or request by the Transferor or the Servicer to the Trustee to take any
action under any provision of this Agreement for which a specific request is
required under this Agreement, the Transferor or the Servicer, as applicable,
shall furnish to the Trustee an Officer's Certificate of the Transferor or the
Servicer, as applicable, stating that all conditions precedent, if any, provided
for in this Agreement relating to the proposed action have been complied with,
except that in the case of any such application or request as to which the
furnishing of a different certificate is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement shall include:
(a) a statement that each individual signing such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual,
such individual has made such examination or investigation as is
necessary to enable such individual to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 13.14. Bond Insurer Default. If a Bond Insurer Default occurs and
is continuing, the Bond Insurer's right to consent hereunder and to direct the
Trustee shall be suspended until remedied and, during such suspension, in all
provisions of this Agreement wherein the Bond Insurer's consent or direction is
required or permitted, the consent or direction of the Holders of not less than
a majority in principal amount of Outstanding Certificates shall be required or
permitted unless the terms of this Agreement require the consent or direction of
a larger number of Holders.
Section 13.15. Third Party Beneficiary. The Bond Insurer is an express
third party beneficiary of this Agreement and is entitled to enforce this
Agreement as if it were a party hereto.
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IN WITNESS WHEREOF, the Transferor, the Servicer, the Trustee and the
Back-Up Servicer have caused this Agreement to be duly executed by their
respective officers thereunto duly authorized as of the date and year first
above written.
T & W FUNDING COMPANY I, L.L.C., as
Transferor
By: /s/ ▇▇▇▇▇▇▇ ▇. PRICE
--------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Price
Title: President
T & W FINANCIAL CORPORATION, as
Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee and Back-up
Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Corporate Trust Officer
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EXHIBIT A
FORM OF INVESTMENT LETTER
T & W FUNDING COMPANY I, L.L.C.
LEASE-BACKED CERTIFICATES
T & W Funding Company I, L.L.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Norwest Bank Minnesota, National Association,
as Trustee
▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The undersigned hereby certifies on behalf of the purchaser named below
(the "Purchaser") as follows:
1. I ________________________________________, am the chief
financial officer, a person fulfilling an equivalent function or other
executive officer of the Purchaser.
2. I am familiar with the provisions of Rule 144A ("Rule 144A")
under the Securities Act of 1933 (the "Act").
3. The Purchaser is a "qualified institutional buyer," as
defined in Rule 144A.
4. The Purchaser is aware that the Transferor may rely on the
exemption from the registration requirements of the Act provided by Rule
144A.
5. The Purchaser acknowledges that the Purchaser has (i)
received such information regarding the Transferor of the Certificates
as the Purchaser may require pursuant to Rule 144A or (ii) the Purchaser
has determined not to request such information.
[6. The Purchaser is either (i) not an ERISA Plan as of the date
hereof, and the Purchaser is not acquiring Certificates for the account
of, or with the assets of, an ERISA Plan or (ii) the Purchaser is an
ERISA Plan and the Trustee has been provided with
106
evidence that establishes to the satisfaction of the Trustee that (A)
either no prohibited transaction under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or the Internal Revenue Code
of 1986, as amended (the "Code") will occur in connection with such
Purchasers acquisition and holding of the Certificates or that the
acquisition and holding of the Certificates by the Purchaser is subject
to a statutory or administrative exemption and (B) the prospective
Purchaser's acquisition and holding will not subject the Transferor, the
Servicer, the Trust, the Bond Insurer or the Trustee to any obligation
or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those explicitly undertaken in
the Transaction Documents. For these purposes, an "ERISA Plan" means on
employee benefit plan the investments of which are regulated under ERISA
and/or the Code.]
7. The Purchaser acknowledges that transfer of a Certificate can
only be effected in accordance with the Trust and Security Agreement.
The representations and warranties contained herein shall be binding
upon the heirs, executors, administrators and other successors of the
undersigned. If there is more than one signatory hereto, the obligations,
representations, warranties and agreements of the undersigned are made jointly
and severally.
Executed at _____________________, _____________________ this ________
day of _____________________, 199___.
--------------------------------------- ------------------------------------
Purchaser's Name and Title (Print) Signature of Purchaser
---------------------------------------
Address of Purchaser
---------------------------------------
Purchaser's Taxpayer Identification
or Social Security Number
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EXHIBIT B
FORM OF SUPPLEMENTAL GRANT OF
SUBSTITUTE LEASE CONTRACTS
Pursuant to Section 4.04(e) of the Trust and Security Agreement, dated
as of February 1, 1997, among T & W Funding Company I, L.L.C. (the
"Transferor"), T & W Financial Corporation (the "Servicer"), Norwest Bank
Minnesota, National Association, as Trustee (the "Trustee") and as Back-Up
Servicer, (such Trust and Security Agreement as amended and supplemented from
time to time, the "Trust and Security Agreement"), attached hereto as Schedule I
is an amendment to Schedule II to the related Assignment and Assumption
Agreement, which includes information regarding certain interests in Lease
Contracts, the related Lease Receivables and the related Equipment or related
Leased Vehicles that are hereby conveyed by the Transferor to the Trustee in
accordance with the Trust and Security Agreement. For purposes of this
Supplement, all defined terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Trust and Security Agreement.
Dated:
T & W FUNDING COMPANY I, L.L.C.
By
Name:
Title:
108
EXHIBIT B
SCHEDULE I
109
EXHIBIT C
FORM OF FUNDING REPORT
DATED: ___________________
Proposed Funding Date: ________________
Calculation Date: ________________
Aggregate IPB: $_______________
Proposed Funding IPB: $_______________
Sum of Funding IPB and Aggregate IPB: $_______________
Funding Amount: $_______________
Funding by Certificateholders: $_______________
Outstanding Certificates (as of date hereof): $_______________
Outstanding Certificates after Funding: $_______________
Largest Single Customer Concentration prior to Funding: $_______________
Largest Single Customer Concentration after Funding: $_______________
Required Collateralization Amount prior to Funding: $_______________
Required Collateralization Amount after Funding: $_______________
T & W FUNDING COMPANY I, L.L.C.
By
Its
------------------------------------
Accepted By:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
110
By
---------------------------------------
Its
---------------------------------
C-110
111
SCHEDULE A - LEASE CONTRACTS TO BE FUNDED
ACCT. NO. BALANCE LESSEE STATE OTERM RTERM PAYMENT ZIP
C-111
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EXHIBIT D
FORM OF LEASE-BACKED CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS. THE TRANSFER OF THIS CERTIFICATE IS SUBJECT TO CERTAIN
RESTRICTIONS AND CONDITIONS SET FORTH IN THE TRUST AND SECURITY AGREEMENT UNDER
WHICH THIS CERTIFICATE IS ISSUED (A COPY OF WHICH IS AVAILABLE FROM THE TRUSTEE
UPON REQUEST).
DUE TO THE PROVISIONS FOR THE PAYMENT OF PRINCIPAL AND FUNDINGS ON THE
CERTIFICATE CONTAINED HEREIN, THE OUTSTANDING PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. ANYONE
PURCHASING THIS CERTIFICATE MAY ASCERTAIN THE OUTSTANDING PRINCIPAL BALANCE
HEREOF BY INQUIRY OF THE TRUSTEE.
No. R-1 INITIAL PRINCIPAL AMOUNT: $_________
(as reduced or increased on Schedule I hereto)
MAXIMUM PRINCIPAL AMOUNT: $100,000,000
T & W LEASE-BACKED TRUST
LEASE-BACKED CERTIFICATE
CLOSING DATE: February 7, 1997
This certifies that ____________ is the registered holder (the
"Registered Holder") of an interest in certain assets of the T & W Lease-Backed
Trust (the "Trust") created pursuant to a Trust and Security Agreement dated
February 1, 1997 (herein called the "Trust and Security Agreement"), among T & W
Funding Company I, L.L.C. (the "Transferor"), T & W Financial Corporation, as
Servicer (the "Servicer"), Norwest Bank Minnesota, National Association, as
Trustee (the "Trustee," which term includes any successor Trustee under the
Trust and Security Agreement) and as Back-up Servicer (the "Back-up Servicer").
To the extent not otherwise defined herein, the capitalized terms used herein
have the meaning ascribed to them in the Trust and Security Agreement.
The Registered Holder hereof is entitled to receive the Principal
Distribution Amount and interest at the per annum rate described below on the
fifteenth day of each calendar month or, if
113
such fifteenth day is not a Business Day, the Business Day immediately following
(each, a "Payment Date"), for the period from and including the delivery date
set forth above (the "Closing Date") through the Stated Maturity. The Principal
Distribution Amount will be paid to the Person in whose name this Certificate is
registered on the Record Date for such Payment Date, which shall be the close of
business on the last day of the month prior to such Payment Date (whether or not
a Business Day).
This Certificate is a duly authorized Certificate of the Trust
designated as its Lease-Backed Certificates, (herein called the "Certificate"
issued under the Trust and Security Agreement.
Interest will accrue on the Outstanding Principal Balance of the
Certificates for each applicable Accrual Period (or the Accrual Intervals
comprising each such Accrual Period) at the Certificate Interest Rate on the
basis of a 360-day year and actual days elapsed until the last day preceding the
Final Payment Date and (to the extent that the payment of such interest shall be
legally enforceable) on any overdue installment of interest from the date such
interest became due and payable (giving effect to any applicable grace periods)
until fully paid. Interest will be due and payable in arrears on each Payment
Date, with each payment of interest calculated as described above on the
Outstanding Principal Balance of the Certificates on the Business Day
immediately following the preceding Payment Date or on the Closing Date, if
there has not been any preceding Payment Date. Notwithstanding the foregoing,
with respect to any Fundings with respect to the Certificates occurring since
the preceding Payment Date, interest shall be calculated with respect to each
Accrual Interval based upon the actual number of days elapsed during such
Accrual Interval and the Outstanding Principal Balance as of such Payment Date
or Funding Date, as appropriate. In making any such interest payment, if the
interest calculation with respect to a Certificate shall result in a portion of
such payment being less than $0.01, then such payment shall be decreased to the
nearest whole cent, and no subsequent adjustment shall be made in respect
thereof.
The principal and interest on this Certificate are payable by check
mailed by first-class mail to the Person whose name appears as the Registered
Holder of this Certificate on the Certificate Register at the address of such
Person as it appears on the Certificate Register, or by wire transfer in
immediately available funds to the account specified in writing to the Trustee
by the Registered Holder at least five Business Days prior to the Record Date
for the Payment Date on which wire transfers will commence, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. Funds represented by checks
returned undelivered will be held for payment to the Person entitled thereto,
subject to the terms of the Trust and Security Agreement.
D-113
114
The Certificates are secured by certain Lease Assets described in the
Trust and Security Agreement.
Unless earlier declared due and payable by reason of an Event of
Default, the Certificates are payable only at the time and in the manner
provided in the Trust and Security Agreement and are not redeemable or
prepayable at the option of the Transferor before such time, except that the
Transferor, or the Bond Insurer under certain circumstances, may at any time
after the aggregate principal amount of the outstanding Certificates declines to
10% or less of the largest principal amount of the outstanding Certificates at
any point in time instruct the Trustee to redeem all of the Certificates
Outstanding at a redemption price equal to the aggregate principal amount
thereof outstanding plus accrued and unpaid interest thereon to the date of
redemption. If an Event of Default as defined in the Trust and Security
Agreement shall occur and be continuing, the principal of all the Certificates
may become or be declared due and payable in the manner and with the effect
provided in the Trust and Security Agreement.
Prior to due presentment for registration of transfer of this
Certificate, the Transferor, the Trustee, the Bond Insurer and any agent of the
Transferor, the Bond Insurer or the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes whether or not this
Certificate be overdue, and neither the Transferor, the Trustee, the Bond
Insurer, nor any such agent shall be affected by notice to the contrary.
The Trust and Security Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Transferor and the rights of the Holders of the Certificates
under the Trust and Security Agreement at any time by the Transferor, the
Trustee, the Back-up Servicer and the Servicer with the consent of the Bond
Insurer and Holders of 66-2/3% in principal amount of Certificates at the time
Outstanding. The Trust and Security Agreement also contains provisions
permitting the Bond Insurer or, if a Bond Insurer Default has occurred and is
continuing Holders of specified percentages in aggregate principal amount of the
Certificates at the time Outstanding, on behalf of the Holders of all
Certificates, to waive compliance by the Transferor with certain provisions of
the Trust and Security Agreement and certain past defaults under the Trust and
Security Agreement and their consequences. Any such consent or waiver by the
Holder of this Certificate shall be conclusive and binding upon such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the registration of transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Certificate.
Each Holder of a Certificate, by acceptance of its Certificate, agrees
that during the term of the Trust and Security Agreement and for one year and
one day after the termination thereof, such Holder or any Affiliate thereof will
not file any involuntary petition or otherwise institute
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any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any Federal or state bankruptcy or similar
law against the Transferor.
Each Certificateholder by its acceptance of a Certificate covenants to
every party to the Trust and Security Agreement to treat the Certificates as
indebtedness for all applicable tax purposes in all tax filings, reports and
returns and otherwise, and further covenants that neither it nor any of its
Affiliates will take or participate in the taking of, or permit to be taken, any
action that is inconsistent with the treatment of the Certificates as
indebtedness for tax purposes.
The Certificates are issuable only in registered form without coupons in
such authorized denominations as provided in the Trust and Security Agreement
and subject to certain limitations therein set forth.
This Certificate and the Trust and Security Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York,
without regard to conflicts of laws principles.
No reference herein to the Trust and Security Agreement and no provision
of this Certificate or of the Trust and Security Agreement shall alter or impair
the obligation of the Trust, which is absolute and unconditional, to pay the
principal of and interest on a Certificate, but solely from the Trust Property
at the times, place and rate, and in the coin or currency, herein prescribed.
STATEMENT OF INSURANCE
OBLIGATIONS: $100,000,000
T & W Leased-Backed Trust
Lease-Backed Certificates
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of the Bond Insurance Policy
(the "Policy"), thereby unconditionally and irrevocably guarantees to any Owner
that an amount equal to each full and complete Insured Payment will be received
by Norwest Bank Minnesota, National Association, or its successor, as trustee
for the Owners (the "Trustee"), on behalf of the Owners, for distribution by the
Trustee to each Owner of each Owner's proportionate share of the Insured
Payment. The Insurer's obligations under the Policy with respect to a particular
Insured Payment shall be discharged to the extent funds equal to the applicable
Insured Payment are received by the Trustee, whether or not such funds are
properly applied by the Trustee. Insured Payments shall be made only at the time
set forth in the Policy, and no accelerated Insured Payments shall
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be made regardless of any acceleration of the Obligations, unless such
acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, the Policy does not cover
shortfalls, if any, attributable to the liability of the Transferor, the Trust
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of
such preference payment, (ii) an opinion of counsel satisfactory to the Insurer
that such order is final and not subject to appeal, (iii) an assignment in such
form as is reasonably required by the Insurer, irrevocably assigning to the
Insurer all rights and claims of the Owner relating to or arising under the
Obligations against the debtor which made such preference payment or otherwise
with respect to such preference payment and (iv) appropriate instruments to
effect the appointment of the Insurer as agent for such Owner in any legal
proceeding related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy no later
than 12:00 noon New York City time on the later of the Payment Date on which the
related Deficiency Amount is due or the second Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below); provided that
if such Notice is received after 12:00 noon New York City time on such Business
Day, it will be deemed to be received on the following Business Day. If any such
Notice received by the Fiscal Agent is not in proper form or is otherwise
insufficient for the purpose of making claim under the Policy, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated therein,
will be disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by
wire transfer of immediately available funds in the amount of the Insured
Payment less, in respect of Insured Payments related
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to Preference Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit, or cause to be deposited, sufficient funds to
make payments due under the Policy.
Subject to the terms of the Agreement, the Insurer shall be subrogated
to the rights of each Owner to receive payments under the Obligations to the
extent of any payment by the Insurer under the Policy.
As used in the Policy, the following terms shall have the following
meanings:
"Agreement" means the Trust and Security Agreement dated as of February
1, 1997 among T & W Funding Company I, L.L.C., T & W Financial Corporation, as
servicer, and the Trustee, as trustee and as back-up servicer, without regard to
any amendment or supplement thereto unless such amendment or supplement has been
approved in writing by the Insurer in accordance with the terms of the
Agreement.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which the Insurer or banking institutions in New York City or in the city in
which the corporate trust office of the Trustee under the Agreement is located
are authorized or obligated by law or executive order to close.
"Deficiency Amount" means (i) for any Payment Date, any shortfall in
amounts available in the Collection Account to pay the interest due on the
Obligations under Section 12.02(d)(v) of the Agreement after payment of all
amounts payable pursuant to Section 12.02(d)(i) through (iv) of the Agreement,
plus (ii) on the Stated Maturity any shortfall in amounts available in the
Collection Account to pay the Outstanding Principal Balance after the payment of
all amounts payable pursuant to Section 12.02(d)(i) through (v) of the
Agreement.
"Insured Payment" means (i) as of any Payment Date, any Deficiency
Amount and (ii) any unpaid Preference Amount.
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by telecopy substantially in the form of Exhibit A attached to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
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"Owner" means Holder (as defined in the Agreement) who, on the
applicable Payment Date, is entitled under the terms of the applicable
Obligation to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Policy and not otherwise defined therein
shall have the respective meanings set forth in the Agreement as of the date of
execution of the Policy, without giving effect to any subsequent amendment to or
modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice under the Policy or service of process on the Fiscal Agent of
the Insurer may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Municipal Registrar and Paying Agency.
The Policy is being issued under and pursuant to, and shall be construed
under, the laws of the State of New York, without giving effect to the conflict
of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on the Policy
is not refundable for any reason, including payment, or provision being made for
payment, prior to maturity of the Obligations.
MBIA INSURANCE CORPORATION
Unless the certificate of authentication hereon has been executed by the
Trustee by manual signature, this Certificate shall not be entitled to any
benefit under the Trust and Security Agreement or be valid or obligatory for any
purpose.
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Unless this Certificate has been executed on behalf of the Trust by the Trustee,
by manual signature of an authorized signatory of the Trustee, this Certificate
shall not be entitled to any benefit under the Trust and Security Agreement, or
be valid for any purpose.
T & W LEASE-BACKED TRUST
By NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Trustee
By
Authorized Signatory
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SCHEDULE I
PRINCIPAL DISTRIBUTION AMOUNT
AND FUNDING AMOUNTS
Initial Principal Amount: $_____________
Closing Date: February 7, 1997
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AMOUNT OF PRINCIPAL REPAID Funding Amounts Unpaid Principal Balance
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Notation
AMT Date AMT Date AMT Total Made By
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[FORM OF TRUSTEE'S
CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates described in the within-mentioned Trust
and Security Agreement.
Dated:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
By
--------------------------------------------------
Authorized Signatory
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EXHIBIT E
T & W LEASE-BACKED TRUST
LEASE-BACKED CERTIFICATES
CERTIFICATE PURSUANT TO THE TRUST AND SECURITY AGREEMENT
I, _______________, do hereby certify that I am the _____________ of
T & W Funding Company I, L.L.C. (the "Transferor") and that I have reviewed the
Trust and Security Agreement (the "Trust and Security Agreement") dated as of
February 1, 1997, among the Transferor, T & W Financial Corporation, as
Servicer, Norwest Bank Minnesota, National Association, as Back-up Servicer and
as Trustee. Capitalized terms used but not defined herein are used with the
meanings set forth in the Trust and Security Agreement.
Pursuant to the Trust and Security Agreement I hereby certify, to the
best of my knowledge based upon reasonable investigation, that the
representations and warranties of the Transferor contained in the Contribution
Agreement are true and correct on and as of the date hereof (the "Funding Date")
with the same effect as if made on the Funding Date, and that all of the terms
of the Contribution Agreement have been complied with.
IN WITNESS WHEREOF, I have hereunto set my hand, this __th day of
___________, 199_.
T & W FUNDING COMPANY I, L.L.C.
By
Title:
[SEAL]
123
EXHIBIT F
T & W LEASE-BACKED TRUST
LEASE-BACKED CERTIFICATES
CERTIFICATE PURSUANT TO THE TRUST AND SECURITY AGREEMENT
I, _______________, do hereby certify that I am the _____________ of
T & W Funding Company I, L.L.C. (the "Transferor") and that I have reviewed the
Trust and Security Agreement (the "Trust and Security Agreement") dated as of
February 1, 1997, among the Transferor, T & W Financial Corporation, as
Servicer, Norwest Bank Minnesota, National Association, as Back-up Servicer and
as Trustee and the Servicing Agreement dated as of February 1, 1997, among the
Servicer, the Transferor, the Trustee and the Back-up Servicer. Capitalized
terms used but not defined herein are used with the meanings set forth in the
Trust and Security Agreement.
Pursuant to the Trust and Security Agreement I hereby certify, to the
best of my knowledge based upon reasonable investigation, that:
(a) that the Transferor is not in Default under the Trust and
Security Agreement or the Servicing Agreement and that the Funding will
not result in the occurrence of a Funding Period Trigger Event or a
Default under the Trust and Security Agreement.
(b) that the Funding will not result in a breach of any of the
terms, conditions or provisions of, or constitute a Default under, any
agreement or instrument to which the Transferor is a party or by which
it is bound, or, to the best of my knowledge, any order of any court or
administrative agency entered in any proceeding to which the Transferor
is a party or by which it may be bound or to which it may be subject;
and
(c) all of the representations and warranties of the Servicer and
the Transferor contained in the Contribution Agreement, the Certificate
Purchase Agreement, the Insurance Agreement, the Hedge Agreement (as
defined in the Certificate Purchase Agreement), the Swap Agreement (as
defined in the Certificate Purchase Agreement), the Servicing Agreement
and Trust and Security Agreement are true and correct as of such Funding
Date
(d) that all conditions precedent provided in the Trust and
Security Agreement and the Servicing Agreement relating to the Funding
have been complied with.
124
IN WITNESS WHEREOF, I have hereunto set my hand, this __th day of
__________, 199_.
T & W FUNDING COMPANY I, L.L.C.
By
Title:
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125
EXHIBIT G
T & W FINANCIAL CORPORATION
CERTIFICATE PURSUANT TO THE TRUST AND SECURITY AGREEMENT
I, _______________, hereby certify that I am the _____________ of T & W
Financial Corporation (the "Servicer") and that I have read the Trust and
Security Agreement dated as of February 1, 1997 (the "Trust and Security
Agreement"), among T & W Funding Company I, L.L.C., the Servicer, Norwest Bank
Minnesota, National Association, as Back-up Servicer and as Trustee and the
Servicing Agreement dated as of February 1, 1997, among the Servicer, the
Transferor, the Trustee and the Back-up Servicer. Capitalized terms used but not
defined herein are used with the meanings set forth in the Trust and Security
Agreement.
Pursuant to the Trust and Security Agreement I hereby certify, to the
best of my knowledge based upon reasonable investigation:
(a) that the Servicer is not in Default under the Trust and
Security Agreement or the Servicing Agreement and that the Funding will
not result in the occurrence of a Funding Period Trigger Event or a
Default under the Trust and Security Agreement.
(b) that the Funding will not result in a breach of any of the
terms, conditions or provisions of, or constitute a Default under, any
agreement or instrument to which the Servicer is a party or by which it
is bound, or, to the best of my knowledge, any order of any court or
administrative agency entered in any proceeding to which the Servicer is
a party or by which it may be bound or to which it may be subject; and
(c) all of the representations and warranties of the Servicer and
the Transferor contained in the Contribution Agreement, the Certificate
Purchase Agreement, the Insurance Agreement, the Hedge Agreement (as
defined in the Certificate Purchase Agreement), the Swap Agreement (as
defined in the Certificate Purchase Agreement), the Servicing Agreement
and the Trust and Security Agreement are true and correct as of such
Funding Date
(d) that all conditions precedent provided in the Trust and
Security Agreement and the Servicing Agreement relating to the Funding
have been complied with.
IN WITNESS WHEREOF, I have hereunto set my hand, this __th day of
__________, 199_.
T & W FINANCIAL CORPORATION
126
By
Title:
G-126
127
EXHIBIT H
T & W LEASE-BACKED TRUST
LEASE-BACKED CERTIFICATES
CERTIFICATE PURSUANT TO THE TRUST AND SECURITY AGREEMENT
I, _______________, do hereby certify that I am the ______________ of
T & W Funding Company I, L.L.C. (the "Transferor") and that I have reviewed the
Trust and Security Agreement (the "Trust and Security Agreement") dated as of
February 1, 1997, among the Transferor, T & W Financial Corporation, as
Servicer, Norwest Bank Minnesota, National Association, as Back-up Servicer and
as Trustee. Capitalized terms used but not defined herein are used with the
meanings set forth in the Trust and Security Agreement.
Pursuant to the Trust and Security Agreement I hereby certify, to the
best of my knowledge based upon reasonable investigation, that all the
conditions precedent to the Funding have been complied with.
IN WITNESS WHEREOF, I have hereunto set my hand, this __th day of
__________, 199_.
T & W FUNDING COMPANY I, L.L.C.
By
Title: