EXHIBIT 10.2
================================================================================
FORM OF
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
POOLING AND SERVICING AGREEMENT
among
PROVIDENT EQUIPMENT LEASE TRUST 1998-A,
as Issuer,
and
PROVIDENT LEASE RECEIVABLES CORPORATION,
as Transferor,
and
INFORMATION LEASING CORPORATION,
as Servicer
Dated as of September 1, 1998
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.1. Definitions.....................................................................1
SECTION 1.2. Other Definitional Provisions...................................................1
ARTICLE II
Conveyance of Leases
SECTION 2.1. Conveyance of Leases............................................................2
ARTICLE III
The Leases
SECTION 3.1. Representations and Warranties of Transferor....................................3
SECTION 3.2. Custody of Lease Files..........................................................3
SECTION 3.3. Duties of Servicer as Custodian.................................................4
SECTION 3.4. Instructions; Authority To Act..................................................5
SECTION 3.5. Custodian's Indemnification.....................................................5
SECTION 3.6. Effective Period and Termination................................................5
ARTICLE IV
Administration and Servicing of Leases
SECTION 4.1. Duties of Servicer..............................................................6
SECTION 4.2. Collection and Allocation of Lease Payments.....................................6
SECTION 4.3. Administration of Leases........................................................7
SECTION 4.4. Lease Amendments and Modifications..............................................8
SECTION 4.5. Non-Performing Leases...........................................................9
SECTION 4.6. Costs of Servicing; Servicing Fee; Administrative Expenses.....................10
SECTION 4.7. Other Transactions.............................................................11
SECTION 4.8. Monthly Status Reports; Servicing Reports......................................11
SECTION 4.9. Annual Independent Public Accountant's Report..................................12
SECTION 4.10. Access to Certain Documentation and Information Regarding Leases...............13
SECTION 4.11. Appointment of Subservicer.....................................................13
ARTICLE V
Servicer Advances and Transferor's Obligations
SECTION 5.1. Servicer Advances..............................................................14
Page
SECTION 5.2. Transferor Repurchases; Other Payments.........................................14
SECTION 5.3. Payment Advices................................................................16
SECTION 5.4. Substitution...................................................................16
SECTION 5.5. Procedure for Substitution.....................................................17
SECTION 5.6. Objection and Repurchase.......................................................18
SECTION 5.7. Transferor's and Servicer's Subsequent Obligations.............................18
ARTICLE VI
Distributions: Trust Accounts;
Statements to Certificateholders and Noteholders
SECTION 6.1. Establishment of Trust Accounts................................................19
SECTION 6.2. Collections....................................................................21
SECTION 6.3. Distributions..................................................................22
SECTION 6.4. The Reserve Account and the Residual Account...................................25
SECTION 6.5. Payaheads
SECTION 6.6. Net Deposits...................................................................27
ARTICLE VII
Transferor
SECTION 7.1. Representations of Transferor..................................................27
SECTION 7.2. Corporate Existence............................................................28
SECTION 7.3. Liability of Transferor; Indemnities...........................................29
SECTION 7.4. Merger or Consolidation of, or Assumption of the Obligations of,
Transferor...............................................................30
SECTION 7.5. Limitation on Liability of Transferor and Others...............................31
SECTION 7.6. Transferor May Own Certificates or Notes.......................................31
ARTICLE VIII
Servicer
SECTION 8.1. Representations of Servicer....................................................31
SECTION 8.2. Indemnities of Servicer........................................................33
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer......35
SECTION 8.4. Limitation on Liability of Servicer and Others.................................35
SECTION 8.5. ILC Not to Resign as Servicer..................................................36
SECTION 8.6. Servicer to Act as Manager.....................................................36
ii
Page
ARTICLE IX
Default
SECTION 9.1. Servicer Events of Default.....................................................36
SECTION 9.2. Termination....................................................................38
SECTION 9.3. Trustee to Act; Appointment of Successor.......................................39
SECTION 9.4. Servicer to Cooperate..........................................................40
SECTION 9.5. Notification to Noteholders and Certificateholders.............................40
SECTION 9.6. Waiver of Past Defaults........................................................40
ARTICLE X
Termination
SECTION 10.1. Optional Purchase of All Leases................................................41
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment......................................................................41
SECTION 11.2. Security for Obligations.......................................................42
SECTION 11.3. Further Assurances; Financing Statements.......................................43
SECTION 11.5. Notices........................................................................43
SECTION 11.6. Assignment.....................................................................44
SECTION 11.7. Limitations on Rights of Others................................................44
SECTION 11.8. Severability...................................................................44
SECTION 11.9. Separate Counterparts..........................................................44
SECTION 11.10. Headings.......................................................................44
SECTION 11.11. Governing Law..................................................................44
SECTION 11.12. Assignment to Indenture Trustee................................................44
SECTION 11.13. Nonpetition Covenants..........................................................45
SECTION 11.14. Limitation of Liability of Trustee and Indenture Trustee.......................45
iii
SCHEDULES AND EXHIBITS
SCHEDULE 1 Leases
EXHIBIT A Form of Noteholder's Statement Pursuant to Section 5.10(a)
EXHIBIT B Form of Certificateholder's Statement Pursuant to Section 5.10(a)
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Assignment
iv
POOLING AND SERVICING AGREEMENT dated as of September 1, 1998 among
PROVIDENT EQUIPMENT LEASE TRUST 1998-A, a Delaware business trust (the
"Issuer"), PROVIDENT LEASE RECEIVABLES CORPORATION, a Delaware corporation
(the "Transferor"), and INFORMATION LEASING CORPORATION, an Ohio corporation
(the "Servicer").
RECITALS
WHEREAS, Transferor desires to transfer all right, title and interest
of Transferor in, to and under the Leases purchased by Transferor pursuant to
the Purchase Agreement, dated as of the date hereof, between Information
Leasing Corporation ("ILC") and Transferor.
WHEREAS, Issuer is willing to accept the transfer of such Leases from
Transferor; and
WHEREAS, ILC is willing to service such Leases.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to such terms in Appendix X to
the Indenture, dated as of the date hereof, between Provident Equipment Lease
Trust 1998-A and [Name of Indenture Trustee], as amended, supplemented or
otherwise modified from time to time (the "Indenture").
SECTION 1.2. Other Definitional Provisions. The other interpretive
provisions specified in Appendix X to the Indenture shall apply to this
Agreement.
ARTICLE II
Conveyance of Leases
SECTION 2.1. Conveyance of Leases. In consideration of Issuer's
delivery to or upon the order of Transferor on the Closing Date of the net
proceeds from the sale of the Notes and the Certificates and the other amounts
to be distributed from time to time to Transferor in accordance with this
Agreement, Transferor does hereby transfer, assign, set over and otherwise
convey to Issuer, without recourse (subject to the obligations herein), all of
its right, title and interest in, to and under the following (collectively,
the "Transferred Assets"):
(a) the Leases listed in Schedule 1, as such Schedule 1 is
amended or supplemented from time to time, including all instruments,
documents, books and other records relating thereto,
(b) all Lease Payments, Casualty Payments, Termination
Payments and other amounts not collected with respect thereto on or
prior to the Cut-Off Date (other than any prepayments of rent required
pursuant to the terms of any Lease at or before the commencement of
the Lease) and all Payaheads relating to payments on the Leases due
or becoming due after the Cut-Off Date, and all Substitute Leases and
all Lease Payments, Casualty Payments, Termination Payments and other
amounts not collected prior to the effective date of their respective
substitution (other than any prepayments of rent required by the
terms of any Substitute Lease at or before the commencement of the
Substitute Lease) and all Payaheads relating to payments on the
Substitute Leases due or becoming due after the effective date of
their respective Substitution,
(c) all rights of Transferor to or under any guarantees of
or collateral (including all rights of Transferor in any security
deposits) for the Lessee's obligations under any Lease and all UCC
financing statements relating to such collateral,
(d) all interests of Transferor in the Equipment at any time
subject to any Lease, including any security interest of Transferor
in the Equipment,
(e) any proceeds with respect to the Leases from claims on
insurance policies covering the Equipment or Lessees,
(f) all moneys from time to time on deposit in any of the
Trust Accounts, including all investments and income from the
investment of such moneys,
2
(g) all rights of Transferor under the Purchase Agreement,
including the right of Transferor to cause ILC to repurchase Leases
from Transferor under the circumstances described therein, and
(h) all proceeds of the foregoing, whether by voluntary or
involuntary conversion thereof.
ARTICLE III
The Leases
SECTION 3.1. Representations and Warranties of Transferor. Transferor
makes the following representations and warranties as to the Leases on which
Issuer is deemed to have relied in acquiring the Leases. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of the Initial Leases, and as of the
applicable effective date of any substitution, in the case of the Subsequent
Leases, but shall survive the transfer and assignment of the Leases to Issuer
and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Title. No Lease has been transferred, assigned or pledged by
Transferor to any Person other than Issuer. Immediately prior to the transfer
and assignment herein contemplated, Transferor had good title to each Lease,
free and clear of all Liens and, immediately upon the transfer thereof, Issuer
shall have good title to each Lease, free and clear of all Liens; and the
transfer and assignment of the Leases to Issuer has been perfected under the
UCC.
(b) All Filings Made. All filings (including UCC filings) necessary
in any jurisdiction to give Issuer a first priority perfected ownership
interest in the Leases, and to give Indenture Trustee a first priority
perfected security interest therein, have been made.
SECTION 3.2. Custody of Lease Files. To assure uniform quality in
servicing the Leases and to reduce administrative costs, Issuer hereby
revocably appoints Servicer, and Servicer hereby accepts such appointment, to
act for the benefit of Issuer and Indenture Trustee as custodian of the
following documents or instruments (collectively, the "Lease Files"), which
are hereby constructively delivered to Indenture Trustee, as pledgee of Issuer
(or, in the case of the Subsequent Leases, will as of the applicable effective
date of any substitution be constructively delivered to Indenture Trustee, as
pledgee of Issuer) with respect to each Lease:
(a) the original fully executed copy of the Lease;
3
(b) a record or facsimile of the original credit application
fully executed by the Lessee;
(c) the original certificate of title or file stamped copy
of the UCC financing statement or such other documents that Servicer
shall keep on file, in accordance with its customary procedures,
evidencing the security interest of ILC in the Equipment; and
(d) any and all other documents that Servicer or Transferor
shall keep on file, in accordance with its customary procedures,
relating to a Lease, a Lessee or any of the Equipment.
SECTION 3.3. Duties of Servicer as Custodian.
(a) Safekeeping. Servicer shall hold the Lease Files for the benefit
of Issuer and Indenture Trustee and maintain such accurate and complete
accounts, records and computer systems pertaining to each Lease File as shall
enable Issuer to comply with this Agreement. In performing its duties as
custodian, Servicer shall act in accordance with the Servicing Standard set
forth in Section 4.1. Servicer shall conduct, or cause to be conducted,
periodic audits of the Lease Files and the related accounts, records and
computer systems, in such a manner as shall enable Issuer or Indenture Trustee
to verify the accuracy of Servicer's record keeping. Servicer shall promptly
report to Issuer and Indenture Trustee any failure on its part to hold the
Lease Files and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by Issuer, Trustee or Indenture Trustee of the Lease Files.
(b) Maintenance of and Access to Records. Servicer shall maintain
each Lease File at its office in Cincinnati, Ohio, or at such other office as
shall be specified to Issuer and Indenture Trustee by written notice not later
than 60 days after any change in location. Servicer shall make available for
inspection by Transferor, Issuer and Indenture Trustee or their respective
duly authorized representatives, attorneys or auditors a list of locations of
the Lease Files and the related accounts, records and computer systems
maintained by Servicer at such times during normal business hours as
Transferor, Issuer or Indenture Trustee shall instruct. Servicer on behalf of
Noteholders shall ▇▇▇▇ conspicuously each original contractual document with a
Lessee, and its master data processing records evidencing each Lease with a
legend, acceptable to Indenture Trustee, evidencing that all right, title and
interest in the Leases has been granted to Indenture Trustee as provided in
the Indenture.
4
SECTION 3.4. Instructions; Authority To Act. Servicer shall be deemed
to have received proper instructions with respect to the Lease Files upon its
receipt of written instructions signed by a Trust Officer of Indenture
Trustee.
SECTION 3.5. Custodian's Indemnification. Servicer as custodian shall
indemnify the Trust, Trustee and Indenture Trustee (and each of their
officers, directors, employees and agents) for any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses of any
kind whatsoever that may be imposed on, incurred by or asserted against the
Trust, Trustee or Indenture Trustee (or any of their officers, directors and
agents) as the result of any improper act or omission in any way relating to
the maintenance and custody by Servicer as custodian of the Lease Files;
provided, that Servicer shall not be liable: (a) to Trustee for any portion of
any such amount resulting from the willful misfeasance, bad faith or
negligence of Trustee and (b) to Indenture Trustee for any portion of any such
amount resulting from the willful misfeasance, bad faith or negligence of
Indenture Trustee.
SECTION 3.6. Effective Period and Termination. Servicer's appointment
as custodian shall become effective as of the Cut-Off Date and shall continue
in full force and effect until terminated pursuant to this Section. If any
Servicer shall resign as Servicer in accordance with this Agreement or if all
of the rights and obligations of any Servicer shall have been terminated under
Section 9.1, the appointment of such Servicer as custodian may be terminated
by (a) Indenture Trustee, (b) Noteholders of Notes evidencing not less than
25% of the Outstanding Principal Amount of the Notes, (d) Trustee or (e)
Certificateholders evidencing not less than 25% of the Certificate Balance, in
the same manner as Indenture Trustee or such Holders may terminate the rights
and obligations of Servicer under Section 9.1. As soon as practicable after
any termination of such appointment, Servicer shall deliver the Lease Files to
Indenture Trustee or Indenture Trustee's agent at such place(s) as Indenture
Trustee may reasonably designate.
ARTICLE IV
Administration and Servicing of Leases
SECTION 4.1. Duties of Servicer. Servicer, for the benefit of Issuer,
and (to the extent provided herein and in the Indenture) Indenture Trustee,
shall manage, service, administer and make collections on the Leases from time
to time, all in accordance with (i) customary and prudent servicing procedures
for leases of a similar type, (ii) all applicable laws, rules and regulations,
and (iii) without limitation as to its obligations under the preceding clauses
(i) and (ii), no less a standard of care than that which it applies to leases
and equipment of a
5
similar type it services for its own account (collectively, the "Servicing
Standard"). Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Lessees on such Leases, investigating
delinquencies, sending payment coupons to Lessees, reporting tax information
to Lessees, accounting for collections and furnishing monthly and annual
statements to Trustee and Indenture Trustee with respect to distributions.
Subject to any contrary terms of this Agreement, Servicer shall follow its
customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, Servicer is
authorized and empowered to execute and deliver, on behalf of itself, Issuer,
Trustee, Indenture Trustee, Certificateholders, Noteholders or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to
such Lease or the Equipment securing such Lease. If Servicer shall commence a
legal proceeding to enforce a Lease, Issuer shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Lease to
Servicer. If in any enforcement suit or legal proceeding it shall be held that
Servicer may not enforce a Lease on the ground that it shall not be a real
party in interest or a holder entitled to enforce such Lease, Trustee shall,
at Servicer's expense and direction, take steps to enforce such Lease,
including bringing suit in its name or the name of Issuer, Indenture Trustee,
Certificateholders or Noteholders. Trustee or Indenture Trustee shall, upon
the written request of Servicer, furnish Servicer with any powers of attorney
and other documents reasonably necessary or appropriate to enable Servicer to
carry out its servicing and administrative duties hereunder.
SECTION 4.2. Collection and Allocation of Lease Payments. Servicer
shall provide the Lessees with appropriate invoices and such other notices as
may be required to ensure that all Lease Payments, Casualty Payments and
Termination Payments on or in respect of each Lease are remitted by the
Lessees to the address specified by Servicer. Servicer shall deposit such
payments to the Collection Account on the Required Deposit Date. Any other
amount received by Servicer from time to time from Transferor, any Lessee or
any other Person which is or is intended to be subject to the Lien of the
Indenture shall be held in trust by Servicer, as agent for Indenture Trustee
and promptly turned over to Indenture Trustee or deposited into the Collection
Account for application in accordance with the provisions of this Agreement.
SECTION 4.3. Administration of Leases. (a) Servicer shall do, and
shall have full power and authority to do, subject only to the specific
requirements and prohibitions of this Agreement, any and all things in
connection with the servicing and administration of the Leases and the
interests in the Equipment which are consistent with the Servicing Standard,
but in performing its duties hereunder, Servicer will act on behalf and for
the benefit of Issuer (and to the extent provided herein) Indenture Trustee,
subject at all times to the provisions of the
6
Indenture, without regard to any relationship which Servicer or any Affiliate
of Servicer may otherwise have with a Lessee. Servicer shall at all times act
in accordance with the provisions of each Lease, and shall observe and comply
with all requirements of law applicable to it. Except as permitted by the
terms of any Lease following a default thereunder, Servicer shall not take any
action which would result in the interference with Lessee's right to quiet
enjoyment of the Equipment subject to the Lease during the term thereof.
Servicer shall exercise with respect to each item of Equipment all rights and
remedies it, Issuer or Indenture Trustee shall have against any vendor of the
Equipment, subject to the provisions of any Lease, and shall deposit all
amounts realized from such actions into the Collection Account.
(b) Without limiting the generality of the foregoing, Servicer agrees
to, in accordance with the Servicing Standard, (i) invoice each Lessee monthly
(except quarterly, semi-annually or annually in the case of Leases which
provide for quarterly, semi-annual or annual Lease Payments, respectively) for
all Lease Payments required to be paid by such Lessee, (ii) maintain with
respect to each Lease and each item of Equipment, and with respect to each
payment by each Lessee and compliance by each Lessee with the provisions of
each Lease, complete and accurate records in the form and to the extent as
required by the Servicing Standard (which records shall be at least as
complete and accurate as those maintained by Servicer as of the date of this
Agreement), and (iii) from time to time execute, deliver and file (or cause
the same to be done), and Servicer is hereby authorized and empowered to
execute, deliver, and file on behalf of Issuer and Indenture Trustee, any and
all tax returns with respect to sales, use, personal property and other taxes
(other than corporate income tax returns) and any and all reports or licensing
applications required to be filed in any jurisdiction with respect to any
Lease or any item of Equipment and any and all required Financing Statements
and assignments of Financing Statements and such additional Financing
Statements and continuation statements with respect thereto as may from time
to time be necessary because of Lease substitutions, equipment replacements in
accordance with the provisions of any Lease or otherwise so that the ownership
interest of Issuer granted hereunder and the security interest contemplated by
the Indenture in favor of Indenture Trustee in each of the Leases, at all
times will be perfected by such filings with the appropriate UCC filing
offices. Transferor and Servicer agree to file Financing Statements on Form
UCC-1 (or any similar form) to perfect the ownership interest of Issuer
granted hereunder and the security interest of Indenture Trustee in the Leases
and the Lease Payments, and to the extent provided herein, the Equipment.
(c) Servicer will maintain, or cause to be maintained, with respect
to the Leases and the Equipment casualty and liability insurance in amounts at
least as great as those described in Section 3.4(f) of the Purchase Agreement.
Each such casualty and liability policy (i) if maintained by Servicer, shall
name Issuer and
7
Indenture Trustee as loss payees or additional insureds and (ii) if maintained
by Lessee, shall name Servicer or Indenture Trustee as loss payee and
additional insured; provided that Servicer shall cause all such policies to
name Indenture Trustee and Issuer as loss payees and additional insureds if
(A) ILC is no longer Servicer, (B) an Event of Default shall have occurred and
be continuing or (C) a Servicer Event of Default shall have occurred and be
continuing.
(d) On or prior to the Closing Date, Servicer will file the Financing
Statements and assignments of Financing Statements in accordance with the
Filing Requirements and thereafter will file such additional Financing
Statements and continuation statements and assignments with respect to the
Leases as may be necessary because of equipment replacements in accordance
with the provisions of any Lease, because of Lease substitutions pursuant to
Section 5.4, or otherwise so that (i) the ownership interest contemplated by
this Agreement in favor of Issuer and the security interest contemplated by
the Indenture in favor of Indenture Trustee in each of the Leases will be
perfected by such filings with the appropriate UCC filing offices and (ii) the
security interest contemplated by the Indenture in favor of Indenture Trustee
in Equipment subject to Leases having a Discounted Present Value of at least
75% of the aggregate Discounted Present Value of the Leases as of June 1 and
December 1 of each year following the Closing Date and Equipment relating to
not less than 75% of the Booked Residual Value of such Equipment as of June 1
and December 1 of each year following the Closing Date will be perfected by
such filings with the appropriate UCC filing offices.
(e) Servicer shall pay the Third Party Amounts, if any, owing to any
Person in a timely fashion.
SECTION 4.4. Lease Amendments and Modifications. In performing its
obligations hereunder, Servicer may, acting in the name of Issuer and without
the necessity of obtaining the prior consent of Issuer, Indenture Trustee,
Trustee or any Noteholder or Certificateholder, enter into and grant
modifications, waivers and amendments to the terms of any Lease except for
modifications, waivers or amendments that (a) are inconsistent with the
Servicing Standard, (b) would reduce the amount or extend the time for payment
of any Lease Payment, Casualty Payment or Termination Payment to be made under
a Lease (other than to permit termination of a Lease which does not otherwise
provide for termination by requiring the payment, in lieu of all future Lease
Payments with respect to the Lease or Equipment subject thereto, an amount
which equals or exceeds the Lease Repurchase Amount for such Lease as of such
date) or Lessee's absolute and unconditional obligation to make payment of the
same, (c) would reduce or adversely affect Lessee's obligation to maintain,
service, insure and care for the Equipment or would permit the alteration of
any item of Equipment in any way which could adversely affect its present or
future value or (d) otherwise,
8
individually or in connection with all other adjustments and modifications
made pursuant to this sentence, could adversely affect the interests of any of
Issuer, Seller, Indenture Trustee, Trustee, Noteholders or Certificateholders.
Notwithstanding the foregoing, Servicer may, without obtaining the prior
written consent of Issuer, Indenture Trustee, Trustee or any Noteholder or
Certificateholder, enter into and grant modifications, waivers or amendments
in addition to those referred to in the preceding sentence if such Lease is
repurchased in accordance with Section 5.2.
SECTION 4.5. Non-Performing Leases. (a) Upon receipt of notice from
Issuer, Indenture Trustee or Trustee or any other Person, or if Servicer
otherwise learns that any Lease is a Non-Performing Lease, Servicer will take
such action as is appropriate and as is consistent with the Servicing
Standard, including such action as may be necessary to cause, or attempt to
cause, Lessee thereunder to cure such non-performance (if the same may be
cured) or to terminate or attempt to terminate such Lease and to recover, or
attempt to recover, all damages resulting from such default.
(b) Servicer will use its best efforts to sell or lease any Equipment
upon the expiration or early termination of a Lease or that is subject to a
Non-Performing Lease in a timely manner and upon the most favorable terms and
conditions available at the time.
(c) If Servicer is required to sell or lease any item of Equipment
pursuant to the provisions of this Section 4.5 at a time when Servicer has
other similar items of equipment available to it, Servicer will not favor any
such other item in its remarketing efforts.
(d) All amounts realized by Servicer in the performance of its duties
hereunder with respect to any Lease or Equipment remaining subject to the Lien
of the Indenture (net of Servicer's actual out-of-pocket expenses reasonably
incurred in such realization) shall be held in trust by Servicer, for the
benefit of Issuer and Indenture Trustee and deposited into the Collection
Account for application in accordance with the provisions of the Indenture;
provided that, if (i) Servicer has made any Servicer Advances pursuant to
Section 5.1 with respect to any Lease which thereafter became a Non-Performing
Lease, and (ii) Servicer has not otherwise been fully reimbursed for such
Servicer Advances, Servicer shall reimburse itself for such Servicer Advances
from any amounts recovered with respect to such Non-Performing Lease before
depositing any such amounts into the Collection Account.
SECTION 4.6. Costs of Servicing; Servicing Fee; Administrative
Expenses. (a) All costs of servicing each Lease in the manner required by this
Article IV shall be borne by Servicer, but Servicer shall be entitled to retain,
out
9
of any amounts actually recovered by Servicer in the performance of its
obligations under Section 4.5 with respect to any Lease or the interests in
the Equipment subject thereto, Servicer's actual out-of-pocket expenses
reasonably incurred in the course of such performance with respect to such
Lease or the interests in the Equipment. (For all purposes of this Article IV
Servicer's "out-of-pocket expenses" means only those expenses incurred to
third parties (e.g., reasonable fees of outside counsel in a collection suit)
and not salaries, operating costs, overtime wages and other such "overhead"
costs or expenses of Servicer.) In addition, Servicer shall be entitled to
receive from Issuer on each Payment Date following the Closing Date a
servicing fee (the "Servicing Fee") in the amount described in paragraph (b)
and the Supplemental Servicing Fee described in paragraph (d).
(b) The amount of the Servicing Fee which Servicer shall be entitled
to receive on each Payment Date following the Closing Date shall be determined
by multiplying one-twelfth of 0.75% times the lesser of (i) the sum of the
aggregate Outstanding Principal Amount of the Notes and the Certificate
Balance, each calculated as of the preceding Payment Date, after giving effect
to all payments made on such Payment Date, and (ii) the Discounted Present
Value of the Performing Leases calculated as of the related Determination
Date.
(c) Servicer agrees to pay, out of the Servicing Fee, the Management
Fee, all Indenture Trustee's and Trustee's fees and expenses in connection
with the Notes and the Certificates (including the expenses relating to the
preparation and delivery of reports to Noteholders and Certificateholders) and
all fees of accountants in connection with the Notes and the Certificates.
(d) Servicer shall be permitted to collect and retain any late fees,
extension fees, prepayment charges and certain non-sufficient funds charges
and other administrative fees or similar charges (the "Supplemental Servicing
Fee") allowed by applicable law with respect to the Leases.
SECTION 4.7. Other Transactions. Nothing in this Agreement shall
preclude Transferor or Servicer from entering into other leases or other
financial transactions with any Lessee or selling or discounting any such
lease with any Person.
SECTION 4.8. Monthly Status Reports; Servicing Reports. (a) Within
five Business Days following each Payment Date, Servicer will send to
Indenture Trustee (copies of which Indenture Trustee shall send to each Rating
Agency and to each Noteholder and Certificateholder as provided in Section 3.4
of the Indenture a written report, signed by one of Servicer's financial
officers, (i) identifying each Lease with respect to which any Lease Payment
was 30 or more days overdue as of the end of the immediately preceding Due
Period, the
10
Discounted Present Value of such Lease as of such Payment Date, the amount
advanced by Servicer with respect to such Lease pursuant to Section 4.1 since
Servicer's previous monthly report (or, in the case of the first such report,
since the Cut-Off Date), (ii) identifying each Lease with respect to which any
Lease Payment was 60 or more days overdue as of the end of the immediately
preceding Due Period, the Discounted Present Value of such Lease as of such
Payment Date, the amount advanced by Servicer with respect to such Lease
pursuant to Section 4.1 since Servicer's previous monthly report (or, in the
case of the first such report, since the Cut-Off Date), (iii) identifying each
Lease with respect to which any Lease Payment was 90 or more days overdue as
of the end of the immediately preceding Due Period, the Discounted Present
Value of such Lease as of such Payment Date, the amount advanced by Servicer
with respect to such Lease pursuant to Section 4.1 since Servicer's previous
monthly report (or, in the case of the first such report, since the Cut-Off
Date), (iv) identifying each Lease which became a Non-Performing Lease as of
the preceding Determination Date and specifying the Discounted Present Value
of such Lease as of such Determination Date (or, in the case of the first such
report, subsequent to the Cut-Off Date) and the aggregate Discounted Present
Value of all such Non-Performing Leases, (v) indicating the aggregate amount
recovered by Servicer subsequent to the preceding Payment Date (or, in the
case of the first Payment Date, subsequent to the Cut-Off Date) and on or
prior to such Payment Date with respect to Lease Payments made on Leases
referred to in clauses (i) and (ii) and Non-Performing Lease Payments
previously made by Transferor and Servicer (and the specific amounts so
recovered with respect to any Non-Performing Lease) and (vi) indicating the
Residual Realizations, the Available Residual Amount and the Utilized Residual
Amount as of the related Determination Date. Each such report shall also
describe generally what action or actions Servicer is then taking or proposes
to take to recover from the appropriate Lessees any amounts previously paid by
Servicer to Indenture Trustee pursuant to Section 4.1.
(b) On the Business Day following the Determination Date, Servicer
shall deliver to Indenture Trustee a certificate signed by an officer of
Servicer (a "Servicing Report") stating the date and in the form of Exhibit C.
(c) The Servicing Report shall include, among other items, the total
amount of all Lease Payments, Casualty Payments, Termination Payments,
Non-Performing Lease Payments and Other Lease Payments received by Servicer
and deposited in the Collection Account prior to such Determination Date and
on or subsequent to the Determination Date preceding such Determination Date
(or, in the case of the first Determination Date, on or subsequent to the
Cut-Off Date). Such report shall indicate the amount of all Lease Payments
received by Servicer and deposited in the Collection Account which are for any
Due Period other than the Due Period for such Determination Date and shall
identify each
11
Lease with respect to which a Casualty Payment, Termination Payment or
Non-Performing Lease Payment was made during such time period. Such report
shall also indicate (i) the aggregate amount paid by Servicer on or subsequent
to the most recent Determination Date with respect to Non-Performing Leases
pursuant to Section 4.1, and (ii) the aggregate amount reimbursed to Servicer
prior to the most recent Determination Date and on or subsequent to the
Determination Date preceding such Determination Date (or, in the case of the
first Determination Date, on or subsequent to the Cut-Off Date) for actual
cash payments made by Servicer with respect to Non-Performing Leases pursuant
to Section 4.1. Servicer hereby represents and warrants that such calculations
will be correct and accurate, and Servicer shall be fully responsible for, and
shall reimburse and indemnify each Indemnified Party for, any loss resulting
from such Indemnified Party's reliance on any such calculations which are not
correct.
(d) If Servicer intends to withdraw any funds from the Collection
Account in accordance with Section 6.2(b) of this Agreement after the Payment
Date relating to the Determination Date for which a Servicing Report is
submitted, Servicer shall submit with such report a certificate (i) setting
forth the amounts to be withdrawn (on an item-by-item basis), (ii) stating
that none of such amounts are all or part of any Lease Payment, Non-Performing
Lease Payment, Casualty Payment or Termination Payment, and (iii) identifying
the lease or leases to which such amounts relate.
SECTION 4.9. Annual Independent Public Accountant's Report. Servicer
shall cause a firm of independent public accountants (who may also render
other services to Servicer or to Transferor) to deliver to Indenture Trustee
and Trustee, with a copy to each Rating Agency, within 135 days following the
end of each fiscal year of Servicer, beginning with Servicer's fiscal year
ending December 31, 1999, a written statement to the effect that such firm has
(a) obtained from Servicer a copy of the monthly status report pursuant to
Section 4.8 for a single month during the previous calendar year; (b) compared
the information contained in such monthly status report and in the monthly
summaries prepared by Servicer in support of such monthly status report to the
computer printouts and accounts prepared by Servicer and supporting such
reports; and (c) selected, at random, at least twenty-five Leases included in
the Trust Estate and compared the activity in the files maintained by Servicer
for such Leases to the activity as reported for those Leases to the monthly
summaries prepared by Servicer and supporting the monthly status report, and
that, on the basis of such examination and comparison, such firm is of the
opinion that Servicer has prepared such monthly status report and summaries in
agreement with the computer printouts, accounts and individual Lease files,
except in each case for (x) such exceptions as such firm shall believe to be
immaterial and (y) such other exceptions as shall be set forth in such
statement.
12
SECTION 4.10. Access to Certain Documentation and Information
Regarding Leases. Servicer shall provide to Trustee and Indenture Trustee
access to the Lease Files in such cases where Trustee or Indenture Trustee
shall be required by applicable statutes or regulations to review such
documentation. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of Servicer. Nothing in this Section shall affect the obligation of
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Lessees, and the failure of Servicer to provide access to
information as a result of such obligation shall not constitute a breach of
this Section.
SECTION 4.11. Appointment of Subservicer. Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, that the Rating Agency Condition shall have been
satisfied in connection therewith; and provided further, that Servicer shall
remain obligated and be liable to Issuer, Trustee, Indenture Trustee
Certificateholders and Noteholders for the servicing and administering of the
Leases in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subservicer and
to the same extent and under the same terms and conditions as if Servicer
alone were servicing and administering the Leases. The fees and expenses of
the subservicer shall be as agreed between Servicer and its subservicer from
time to time and none of Issuer, Trustee, Indenture Trustee,
Certificateholders or Noteholders shall have any responsibility therefor.
ARTICLE V
Servicer Advances and Transferor's Obligations
SECTION 5.1. Servicer Advances. On each Determination Date, Servicer
shall be required to advance and remit to Indenture Trustee, in such manner as
will ensure that Indenture Trustee will have immediately available funds on
account thereof by 11:00 a.m. New York City time on the second Business Day
prior to the next succeeding Payment Date, an amount (a "Servicer Advance")
equal to any Lease Payment due during the prior Due Period but unpaid on or
prior to the Record Date for such Due Period with respect to any Lease;
provided that Servicer shall not be required to make any Servicer Advance if
it determines that such Servicer Advance may not be recoverable by it from
recoveries on the applicable Leases. In consideration of each Servicer
Advance, Servicer will be entitled to retain any late payment fees and
proceeds from the sale or re-lease of the Equipment recovered from Lessee with
respect to any Lease Payment covered by a Servicer Advance. In addition,
Servicer will be reimbursed for Servicer Advances from funds in the Collection
Account in accordance with Section 6.3
13
on the second Payment Date following the Determination Date on which Servicer
made such Servicer Advance.
SECTION 5.2. Transferor Repurchases; Other Payments. (a) If (i) any
of the representations or warranties made by Transferor in Section 3.1 or 7.1
of this Agreement or ILC's representations and warranties made pursuant to
Section 3.4 of the Purchase Agreement with respect to any of the Leases or the
Equipment subject thereto proves at any time to have been inaccurate in any
material respect as of the Closing Date or related transfer date, as the case
may be, (ii) any adjustment or modification is made to any Lease pursuant to
the second sentence of Section 4.4 or (iii) any Lease shall be terminated in
whole or in part by a Lessee, or any amounts due with respect to any Lease
shall be reduced or impaired, as a result of any action or inaction by
Transferor or any claim by any Lessee against Transferor and, in the case of
clauses (i) and (iii), the event or condition causing such inaccuracy,
termination, reduction, impairment or claim shall not have been cured or
corrected within 30 days after the earlier of the date on which Transferor is
given notice thereof by Issuer or Indenture Trustee or the date on which
Transferor otherwise first has notice thereof, then Transferor will repurchase
such Lease and the Equipment subject thereto by paying to Indenture Trustee,
not later than the third Business Day after the Determination Date (A) next
following the expiration of such 30-day period with respect to the events
referenced in clause (i) or (iii), and (B) next following the date of such
event with respect to events referenced in clause (ii), an amount equal to the
Lease Repurchase Amount, and simultaneously with such repurchase, Transferor
shall reimburse Servicer for all Servicer Advances made by Servicer pursuant
to Section 5.1 with respect to such Lease; provided, that the obligation of
Transferor to repurchase any Lease solely as a result of a breach of ILC's
representations and warranties pursuant to Section 3.4 of the Purchase
Agreement is subject to the receipt by Transferor of the Lease Repurchase
Amount from ILC; provided further, that if Transferor is required to
repurchase any Lease under clause (i) or (ii), Transferor may instead
substitute a Substitute Lease if such substitution is permitted under Section
5.4. Without limiting the generality of the foregoing, it is agreed and
understood that for purposes of this Section 5.2, any inaccuracy in any
representation or warranty with respect to (i) the priority of the Lien of the
Indenture with respect to any Lease or (ii) the amount (if less than
represented) of the Lease Payments, Casualty Payments or Termination Payment
under any Lease shall be deemed to be material.
(b) By the Closing Date, Transferor agrees to obtain and provide to
Indenture Trustee UCC searches against it and ILC from the central and county
filing offices in Ohio confirming the absence of any UCC filings against
either Transferor or ILC with respect to the Leases (including the right to
receive all payments due or to become due thereunder) and the Equipment, other
than those naming Transferor as the purchaser of the Leases or Indenture
Trustee as secured
14
party. If any searches delivered pursuant to this Section 5.2(b) disclose UCC
filings (which are not in the process of being released pursuant to releases
delivered on the Closing Date) against ILC or Transferor with respect to
Leases of Equipment the Discounted Present Value of which (i) is greater than
2% but less than 5% of all the Leases, then Transferor shall cause searches to
be made in additional states within 30 days following such disclosure so that
the Discounted Present Value of Leases of Equipment in states where searches
have been performed exceeds 75% of the aggregate Discounted Present Value of
all Leases and 75% of the Booked Residual Value of Equipment or (ii) is equal
to or greater than 5% of all the Leases then Transferor shall cause searches
to be made in additional states within 30 days following such disclosure so
that the Discounted Present Value of Leases of Equipment in states where such
searches have been performed equals 100% of the aggregate Discounted Present
Value of all Leases. Without limiting the provisions of Section 5.2(a) or this
Section 5.2(b), if Transferor fails to provide any such searches required by
the preceding sentences of this Section 5.2(b) within the required time period
or any search reveals the existence of any conflicting Liens (which are not
removed within 30 days of receipt of such search), Transferor shall be
required to repurchase not later than the third Business Day after the
Determination Date following the expiration of the time period during which
such search was to be obtained or such Lien released, as the case may be, any
Lease or Equipment in any such state for which such searches are not provided
or with respect to which conflicting Liens are found to exist at the Lease
Repurchase Amount for such Lease.
(c) Transferor's obligations under this Section 5.2 are the full
recourse obligations of Transferor and shall in no way be limited or
discharged by the application of any funds constituting part of the Trust
Estate.
(d) With respect to all Leases repurchased by Transferor pursuant to
this Agreement, Issuer shall transfer, assign, set over and otherwise convey
to Transferor, without recourse, representation or warranty, all of Issuer's
right, title and interest in, to and under such Leases, and all security and
documents relating thereto.
SECTION 5.3. Payment Advices. Each payment by Transferor or Servicer
to Indenture Trustee pursuant to any of the provisions of this Agreement shall
be accompanied by written advice containing sufficient information to identify
the Lease and/or Equipment to which such payment relates, the Section of this
Agreement pursuant to which such payment is made, and the proper application
pursuant to the provisions of the Indenture of the amounts being paid.
SECTION 5.4. Substitution. (a) Subject to the satisfaction of the
requirements set forth in paragraph (b) and in lieu of repurchasing any Lease if
required pursuant to clause (i) or (ii) of Section 5.2, Transferor will have the
15
right (but not the obligation) at any time to substitute one or more Eligible
Leases and the Equipment subject thereto (each, a "Substitute Lease") for such
Lease (for purposes of this Section 5.4, a "Predecessor Lease") and the
Equipment subject thereto if:
(i) such Predecessor Lease became a Warranty Lease or was
adjusted pursuant to the second sentence of Section 4.4 during the
immediately preceding Due Period; and
(ii) the aggregate Discounted Present Value of the
Predecessor Leases shall not exceed 10% of the Discounted Present
Value of the Leases on the Cut-off Date.
(b) Each transfer of Substitute Leases will be subject to the
satisfaction of the following conditions precedent:
(i) after giving effect to such substitutions, the aggregate
Booked Residual Value of such Leases must be not less than 90% of the
Booked Residual Value of the Leases substituted since the Closing
Date;
(ii) either the final payment on such Substitute Lease must
be on or prior to [final scheduled maturity month/year] or, if the
final payment on such Lease is due subsequent to [final scheduled
maturity month/year], only scheduled payments due on or prior to such
date may be included in the Discounted Present Value of such Lease
for the purpose of making any calculation under this Agreement and
the other Basic Documents;
(iii) after giving effect to such substitutions, the
aggregate amount of Lease Payments through the term of the Leases
(including the Substitute Leases) will not be more than 5% less than
the aggregate scheduled Lease Payments of the Leases prior to such
substitution; and
(iv) after giving effect to such substitutions, the
Discounted Present Value of the Performing Leases must not be less
than the Discounted Present Value of the Performing Leases prior to
such substitution.
(c) Each substitution pursuant to this Section 5.4 shall include the
right to receive all amounts not collected under each Substitute Lease prior
to being substituted and any security deposits paid by the related Lessee to
Transferor in connection therewith (other than any prepayments of rent
required pursuant to the terms thereof at or before the commencement of such
Lease), all Payaheads relating to payments on such Substitute Leases due or
becoming due after the
16
effective date of such substitution and all other related assets referred to
in Section 2.1.
SECTION 5.5. Procedure for Substitution. (a) By 11:00 a.m. on the
third Business Day following each Determination Date, Transferor shall give
written notice to Servicer of any substitution of Substitute Leases for
Predecessor Leases. By 11:00 a.m. on the fourth Business Day following each
Payment Date, Transferor shall deliver to Servicer and Indenture Trustee and,
to the extent not included in the Monthly Servicer Report, Indenture Trustee
shall promptly deliver to each Rating Agency (i) a supplement to Schedule 1
setting forth the information shown thereon for each such Substitute Lease,
(ii) an Officer's Certificate (A) certifying that each such Substitute Lease
is an Eligible Lease, (B) specifying each Predecessor Lease for which a
substitution has been made and the amount of each periodic Lease Payment and
the Booked Residual Value under each such Predecessor Lease and the amount of
each periodic Lease Payment and the Booked Residual Value under each
Substitute Lease being transferred thereby and (C) that all conditions
precedent to such substitution have been satisfied and (iii) such additional
information concerning such Substitute Leases or Predecessor Leases as may be
needed for Servicer to prepare its monthly reports pursuant to Section 4.8 and
to otherwise carry out its duties as Servicer hereunder.
(b) Subject to the provisions of Section 5.6, the delivery of any
Officer's Certificate and supplement to Schedule 1 pursuant to Section 5.4(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Due Period (i) Transferor assigned to Issuer pursuant to
Section 2.1 all of Transferor's right title and interest in and to the
Substitute Leases identified in such supplement and the related rights
described in Section 2.1, (ii) Transferor transferred to Issuer, all of
Transferor's right, title and interest in and to the Equipment subject to such
Substitute Leases (to the extent of Transferor's interest in such Equipment,
including Transferor's security interest in any Equipment which is not owned
by Transferor), and (iii) Issuer assigned and transferred to Transferor,
without representation or warranty, all of Issuer's right, title and interest
in and to the Predecessor Leases identified in such Officer's Certificate and
the Equipment subject thereto (to the extent of Issuer's interest in such
Equipment, including Issuer's security interest in any Equipment which is not
owned by Issuer). Transferor shall promptly deliver to Indenture Trustee (or a
custodian on its behalf) the original executed counterpart of each Substitute
Lease assigned to Issuer in accordance with Section 5.4 and Issuer shall
promptly request Indenture Trustee to deliver to Transferor the original
executed counterpart of each Predecessor Lease for which substitution has been
made pursuant to Section 5.4.
SECTION 5.6. Objection and Repurchase. If any holder of the Notes or
the Certificates objects to any substitution of Leases within ten days of
receipt of
17
Servicer's monthly report providing notice thereof pursuant to Section 4.8, on
the grounds either that any Substitute Lease is not an Eligible Lease within
the meaning of the definition thereof or that such substitution is otherwise
not permitted under the provisions of Section 5.4, Transferor shall be
entitled to present such additional information as it deems appropriate in an
effort to demonstrate that such Lease is an Eligible Lease and that such
substitution is permitted under the provisions of Section 5.4. Following such
presentation, the substitution shall remain effective if each Person
originally objecting to the substitution withdraws his objection. If the
conditions specified in the preceding sentence are not satisfied, or if at any
time it is established that any lease was not, at the time of substitution, an
Eligible Lease, then Transferor shall be required to repurchase such Lease in
accordance with the provisions of Section 5.2.
SECTION 5.7. Transferor's and Servicer's Subsequent Obligations. Upon
any substitution of Leases in accordance with the provisions of this Article
V, Transferor's and Servicer's obligations hereunder with respect to the
related Predecessor Lease shall cease, but Transferor and Servicer shall each
thereafter have the same obligations with respect to the Substitute Lease
substituted as it has with respect to all other Leases subject to the terms
hereof.
ARTICLE VI
Distributions: Trust Accounts;
Statements to Certificateholders and Noteholders
SECTION 6.1. Establishment of Trust Accounts. (a)(i) Servicer, for
the benefit of Noteholders and Certificateholders, shall establish
and maintain in the name of Indenture Trustee an Eligible Account
(the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of
Noteholders and Certificateholders.
(ii) Servicer, for the benefit of Noteholders, shall
establish and maintain in the name of Indenture Trustee an Eligible
Account (the "Note Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of Noteholders.
(iii) Servicer, for the benefit of Noteholders and
Certificateholders, shall establish and maintain in the name of
Indenture Trustee an Eligible Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of Noteholders.
(iv) Servicer, for the benefit of Noteholders and
Certificateholders, shall establish and maintain in the name of
Indenture Trustee an Eligible
18
Account (the "Residual Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
Noteholders and Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account, the Reserve Account and the Residual Account (collectively, the
"Trust Accounts") shall be invested or reinvested by Indenture Trustee in
Eligible Investments selected by and as directed in writing by Servicer (which
written direction may be in the form of standing instructions); provided, it
is understood and agreed that Indenture Trustee shall not be liable for the
selection of, or any loss arising from such investment in, Eligible
Investments. All such Eligible Investments (other than Investment Earnings
attributable to security deposits of Lessees on deposit in the Collection
Account ("Security Deposit Earnings")) shall be held by Indenture Trustee for
the benefit of Noteholders and Certificateholders; provided, that on each
Transfer Date, all Investment Earnings on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Available Funds for the related Due Period and all Security
Deposit Earnings shall be paid to ILC. Funds on deposit in the Trust Accounts
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Transfer Date preceding the
following Payment Date. Funds deposited in a Trust Account on the Transfer
Date that precedes a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
No investment of any amount held in any Trust Account shall mature
later than the Business Day immediately preceding the Payment Date which is
scheduled to occur immediately following the date of investment. All income or
other gains (net of losses) from the investment of moneys deposited in the
Trust Accounts shall be deposited by Indenture Trustee in such account
immediately upon receipt.
(c)(i) Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust
Estate. The Trust Accounts shall be under the sole dominion and
control of Indenture Trustee for the benefit of Noteholders and
Certificateholders. If, at any time, any of the Trust Accounts ceases
to be an Eligible Account, Indenture Trustee (or Servicer on its
behalf) shall within 10 Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent)
establish a new Trust Account as an Eligible Account and shall
transfer any cash and/or any investments held in the no-longer
Eligible Account to such new Trust Account.
19
(ii) With respect to the Trust Account Property, Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in Eligible Accounts,
subject to the last sentence of Section 6.1(c)(i); and each
such Eligible Account shall be subject to the exclusive
custody and control of Indenture Trustee, and Indenture
Trustee shall have sole signature authority with respect
thereto;
(B) any Trust Account Property that constitutes a
Certificated Security shall be delivered to Indenture
Trustee in accordance with paragraph (a) of the definition
of "Delivery" and shall be held, pending maturity or
disposition, solely by Indenture Trustee;
(C) any such Trust Account Property that
constitutes an Uncertificated Security (including any
investments in money market mutual funds, but excluding any
Federal Book Entry Security) shall be delivered to Indenture
Trustee in accordance with paragraph (a) of the definition
of "Delivery" and shall be maintained, pending maturity or
disposition, through continued registration of Indenture
Trustee's (or its nominee's) ownership of such security; and
(D) with respect to any Trust Account Property that
constitutes a Federal Book Entry Security, Indenture Trustee
shall maintain and obtain Control over such property.
(iii) Servicer shall have the power, revocable by Indenture
Trustee or by Trustee, with the consent of Indenture Trustee, to
instruct Indenture Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting Servicer or Trustee to
carry out its respective duties hereunder or permitting Indenture
Trustee to carry out its duties under the Indenture.
(d) All Trust Accounts will initially be established at Indenture
Trustee.
SECTION 6.2. Collections. (a) On or before the Closing Date, Servicer
shall designate an address for the receipt directly from Lessees of all Lease
Payments, Casualty Payments and Termination Payments on or in respect of each
Lease. Servicer shall, on each Required Deposit Date, deposit any payment in
the Collection Account. All Lease Payments, Casualty Payments, Termination
Payments and other payments relating to a Lease received at such designated
address and so deposited in the Collection Account shall constitute part of
the Trust Estate. Any Other Lease Payments from time to time received at such
designated address or
20
otherwise received by Servicer or deposited in the Collection Account shall
not constitute part of Trust Estate.
(b) Indenture Trustee shall from time to time, in accordance with
instructions of Servicer withdraw from the Collection Account and pay as
instructed by Servicer any amounts in the Collection Account which Servicer
advises Indenture Trustee are Other Lease Payments or otherwise not part of
the Trust Estate. Prior to such payment, Indenture Trustee shall have rights
to and an interest in such amounts to the extent (but only to the extent) it
is determined that such amounts actually constitute Transaction Payment
Amounts.
(c) Not later than the Required Deposit Date, Servicer shall deposit
the following funds, as received, into the Collection Account:
(i) Lease Payments (net of any Third Party Amounts);
(ii) Residual Realizations up to the Residual Amount Cap;
(iii) recoveries from Non-Performing Leases (net of amounts
retained by Servicer in accordance with the Pooling and Servicing
Agreement);
(iv) proceeds from repurchases by Transferor or ILC of
Leases if Transferor or ILC has not substituted Substitute Leases for
such Leases;
(v) proceeds from investment of funds in the Trust Accounts
(other than Security Deposit Earnings);
(vi) Casualty Payments;
(vii) Servicer Advances;
(viii) Termination Payments; and
(ix) payments from Servicer to effect a redemption pursuant
to Section 2.1(b) of the Indenture.
SECTION 6.3. Distributions. (a) On each Determination Date, Servicer
shall calculate all amounts required to determine the amounts to be deposited in
the Note Distribution Account, the Certificate Distribution Account, the Reserve
Account and the Residual Account.
(b) On each Payment Date other than a Payment Date referred to in
paragraph (c), Servicer shall instruct Indenture Trustee (based on the
information contained in the Servicer's Report related to such Payment Date
delivered pursuant
21
to Section 4.8(b)) to make the following deposits and distributions for
receipt by Servicer or deposit into the applicable Trust Account or
Certificate Distribution Account, as applicable, by 10:00 a.m. (New York
time), to the extent of the Available Funds on deposit in the Collection
Account, in the following order of priority:
(i) to Servicer, the Servicing Fee and all unpaid Servicing
Fees owed to such Servicer from prior Due Periods;
(ii) to Servicer, to reimburse unreimbursed Servicer
Advances in respect of a prior Payment Date;
(iii) to the Note Distribution Account, concurrently: (A) to
make Interest Payments on the Class A-1 Notes; and (B) to make
Interest Payments on the Class A-2 Notes;
(iv) to the Note Distribution Account, to make Interest
Payments on the Class B Notes;
(v) to the Certificate Distribution Account, to make
Interest Payments on the Certificates;
(vi) to the Note Distribution Account, to make the Class A
Principal Payment (i) to the Class A-1 Noteholders only, until the
Outstanding Principal Amount of the Class A-1 Notes is reduced to
zero, then (ii) to the Class A-2 Noteholders only, until the
Outstanding Principal Amount of the Class A-2 Notes is reduced to
zero;
(vii) to the Note Distribution Account, to pay the Class B
Principal Payment to the Class B Noteholders;
(viii) to the Certificate Distribution Account, to pay the
Certificate Principal Payment to Certificateholders;
(ix) to the Note Distribution Account, to pay the Additional
Principal, if any, as an additional reduction of principal, first to
the Class A Noteholders receiving the Class A Principal Payment as
provided in clause (vi) until the Outstanding Principal Amount of
the Class A Notes has been reduced to zero, second to the Class B
Noteholders as an additional reduction of principal until the
Outstanding Principal Amount of the Class B Notes has been reduced to
zero and, thereafter to the Certificate Distribution Account, until
the Certificate Balance been reduced to zero;
22
(x) to make a deposit into the Reserve Account in an amount
equal to the excess of the Required Reserve Amount over the Available
Reserve Amount;
(xi) during such time as a Residual Event has occurred and
is continuing, to make a deposit into the Residual Account in an
amount equal to the balance of the remaining Residual Realizations on
deposit in the Collection Account and included in Available Funds up
to the Residual Amount Cap after giving effect to the allocations in
clauses (i) through (x) above on such Payment Date; and
(xii) to Transferor, the balance, if any.
Notwithstanding the foregoing, Indenture Trustee shall retain in the
Collection Account an amount equal to all Payaheads (except as contemplated by
Section 6.6), and all Casualty Payments and Termination Payments received by
Indenture Trustee after the Determination Date for such Payment Date and shall
not distribute any such amounts on such Payment Date. If at any time any
amount or portion thereof previously distributed pursuant to this Section
5.5(a) shall have been recovered, or shall be subject to recovery, in any
proceeding with respect to Issuer or otherwise, then for purposes of
determining future distributions pursuant to this Section 5.5(a) such amount
or portion thereof shall be deemed to have not been previously so distributed.
(c) On any Payment Date on and after the occurrence and continuation
of an Event of Default and acceleration of the Notes, Servicer shall instruct
Indenture Trustee (based on the information contained in the Servicer's Report
related to such Payment Date delivered pursuant to Section 4.8) to make the
following deposits and distributions for receipt by Servicer or other
applicable Persons or deposit into the Trust Accounts or Certificate
Distribution Account, as applicable, by 10:00 a.m. (New York time), to the
extent of the Available Funds on deposit in the Collection Account, in the
following order of priority:
(i) to the appropriate Person, for the payment of all costs
and expenses of collection incurred by Indenture Trustee and the
Noteholders (including the reasonable fees and expenses of any
counsel to Indenture Trustee and the Noteholders);
(ii) to Servicer, if the person then acting as Servicer
under the Pooling and Servicing Agreement is not ILC or an Affiliate
of ILC, for the payment of all Servicer's Fees then due to such
person;
(iii) to the Note Distribution Account or Certificate
Distribution Account, as applicable; first, pro-rata to the payment
of all accrued and
23
unpaid interest on the Outstanding Class A-1 Principal Amount,
Outstanding Class A-2 Principal Amount, respectively, to the date of
payment thereof, including (to the extent permitted by applicable
law) interest on any overdue installment of interest and principal
from the maturity of such installment to the date of payment thereof
at the rate per annum equal to the Class A-1 Note Interest Rate,
Class A-2 Note Interest Rate, respectively, second, to the payment of
all accrued and unpaid interest on the Outstanding Class B Principal
Amount to the date of payment thereof, including (to the extent
permitted by applicable law) interest on any overdue installment of
interest and principal from the maturity of such installment to the
date of payment thereof at the rate per annum equal to the Class B
Note Interest Rate, third, to the payment of all accrued and unpaid
interest on the Certificate Balance to the date of payment thereof,
including (to the extent permitted by applicable law) interest on any
overdue installment of interest and principal from the maturity of
such installment to the date of payment thereof at the rate per annum
equal to the Certificate Rate, fourth, to the payment of the
Outstanding Class A-1 Principal Amount, fifth, to the payment of the
Outstanding Class A-2 Principal Amount, sixth, to the payment of the
Outstanding Class B Principal Amount and seventh, to the payment of
the Certificate Balance; provided, that the Noteholders may allocate
such payments for interest, principal and premium at their own
discretion, except that no such allocation shall affect the
allocation of such amounts or future payments received by any other
Noteholder;
(iv) to Indenture Trustee, for the payment of amounts then
due Indenture Trustee hereunder and the Trustee under the Trust
Agreement;
(v) to Servicer, if the person then acting as Servicer is
ILC or an Affiliate of ILC, to the payment of all Servicer's Fees
then due to such Person; and
(vi) to the payment of the remainder, if any, to Transferor
or any other Person legally entitled thereto.
(d) The total amount of Residual Realizations which are required to
be deposited into the Collection Account on any day, is an amount up to the
Available Residual Amount on such date.
SECTION 6.4. The Reserve Account and the Residual Account. (a) On
each Payment Date, Servicer shall instruct Indenture Trustee to transfer (i)
to the Reserve Account from the Collection Account such amounts as shall be
required by Section 6.3(b)(x) and (ii) to the Residual Account from the
Collection Account such amounts as shall be required by Section 6.3(b)(xi).
24
(b) If by 12:00 noon, New York City time, on the third Business Day
preceding any Payment Date, the amount of collected funds on deposit in the
Collection Account available for distribution under Section 6.3 is
insufficient to permit on such Payment Date all distributions required by
Sections 6.3(b)(i) through 6.3(b)(ix) or Section 6.3(c)(iii) (such payments,
the "Required Payments" and such shortfall, an "Available Funds Shortfall"),
then, to the extent of the Available Reserve Amount on deposit in the Reserve
Account, Servicer shall instruct Indenture Trustee to transfer, not later than
the end of such Business Day, from the Reserve Account to the Collection
Account such amount as shall be necessary to make on such Payment Date all
Required Payments. In addition, in the event that the Available Funds
Shortfall is greater than the Available Reserve Amount, then, Indenture
Trustee shall transfer, not later than the end of such Business Day, from the
Residual Account to the Collection Account, an amount equal to the lesser of
(i) the remaining Available Funds Shortfall and (ii) the amount, if any, on
deposit in the Residual Account and available therefore.
(c) If after giving effect to all the disbursements required to be
made on any Payment Date, the Available Reserve Amount exceeds the Required
Reserve Amount, Servicer shall instruct Indenture Trustee to transfer, not
later than the end of business on such Payment Date, an amount equal to such
excess to Transferor.
(d) If there are funds on deposit in the Residual Account, Servicer
shall instruct Indenture Trustee to transfer, not later than the close of
Business on such Payment Date after making required withdrawals, if any, on
such Payment Date pursuant to Section 6.3(b) or (c), an amount equal to the
amount on deposit in the Residual Account to the Reserve Account to the extent
that the amount on deposit in the Reserve Account is less than the Required
Reserve Amount and thereafter, to Transferor. Funds on deposit in the Residual
Account shall only be available for allocation pursuant to Section 6.3(b) or
(c) during such time as a Residual Event has occurred and is continuing.
(e) Upon termination of this Indenture, any balance remaining in the
Reserve Account and the Residual Account, after all obligations to Noteholders
and Certificateholders have been fully satisfied, shall be paid to reimburse
Indenture Trustee for any amounts owing to it arising from the performance of
its obligations under the Indenture and, then, to Transferor.
SECTION 6.5. Payaheads. Payaheads received with respect to any Lease
shall be retained in the Collection Account until: (i) with respect to each
Lease for which the payments made by or on behalf of the Lessee for the
related Due Period are less than the scheduled payment for the related Due
Period, the amount of prior Payaheads, if any, made with respect to such Lease
which, when added to the amount of such payments, is equal to the amount of
such scheduled payment, shall be treated as a part of such scheduled payment;
and (ii) with respect to each Lease for which
25
prepayments insufficient to prepay the Lease in full have been made by or on
behalf of the Lessee for the related Due Period, the amount of prior
Payaheads, if any, made with respect to such Lease which, when added to the
amount of such prepayments, is equal to an amount sufficient to prepay such
Lease in full, shall be treated as part of the Termination Payment for such
Lease; and (iii) the amount of all Payaheads, if any, made with respect to any
Lease repurchased by Transferor shall be returned to Transferor after such
repurchase.
SECTION 6.6. Net Deposits. As an administrative convenience, unless
Servicer is required to remit collections daily, Servicer will be permitted to
make the deposit of collections net of distributions, if any, to be made to
Servicer with respect to any Due Period. Servicer, however, will account to
Trustee, Indenture Trustee, Noteholders and Certificateholders as if all
deposits, distributions and transfers were made individually.
ARTICLE VII
Transferor
SECTION 7.1. Representations of Transferor. Transferor makes the
following representations on which Issuer is deemed to have relied in
acquiring the Leases. The representations speak as of the execution and
delivery of this Agreement and shall survive the transfer of the Leases to
Issuer and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Transferor is duly
organized and validly existing as a corporation in good standing
under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted (except where the failure to have such licenses and permits
would not have a material adverse effect on the Trust Estate or the
business or condition (financial or otherwise) of Transferor or
impair the enforceability of any Lease), and had at all relevant
times, and has, the corporate power, authority and legal right to
acquire, own and transfer the Leases.
(b) Due Qualification. Transferor is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
shall require such qualifications (except where the failure to have
such licenses and permits would not have a material adverse effect on
the Trust Estate or the business or condition
26
(financial or otherwise) of Transferor or impair the enforceability of
any Lease).
(c) Power and Authority. Transferor has the power and
authority to execute and deliver this Agreement and to carry out its
terms; Transferor has full power and authority to transfer and assign
the property to be transferred and assigned to and deposited with
Issuer and has duly authorized such transfer and assignment to Issuer
by all necessary corporate action; and the execution, delivery and
performance of this Agreement have been duly authorized by Transferor
by all necessary corporate action.
(d) Binding Obligation. This Agreement and each other Basic
Document to which Transferor is a party constitute a legal, valid and
binding obligation of Transferor enforceable in accordance with their
terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which
Transferor is a party and the fulfillment of the terms hereof and
thereof do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or
by-laws of Transferor, or any indenture, agreement or other
instrument to which Transferor is a party or by which it shall be
bound; or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than the Liens contemplated by
Basic Documents); or violate any law or any order, rule or regulation
applicable to Transferor of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Transferor or its
properties.
(f) No Proceedings. There are no proceedings or
investigations pending or, to Transferor's best knowledge (after due
inquiry), threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Transferor or its properties: (i) asserting the
invalidity of this Agreement, the Indenture or any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any
of the transactions contemplated by this Agreement, the Indenture or
any of the other Basic Documents, (iii) seeking any determination or
ruling that involve the possibility of materially and adversely
affecting the performance by Transferor of its obligations under, or
the validity or enforceability of, this Agreement, the Indenture, any
of the other Basic Documents, the Notes or the Certificates or (iv)
that might adversely affect the Federal or state income tax
attributes of the Notes or the Certificates.
27
SECTION 7.2. Corporate Existence. (a) During the term of this
Agreement, Transferor will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, Transferor shall observe the
applicable legal requirements for the recognition of Transferor as a legal
entity separate and apart from ILC and its other Affiliates, including as
follows:
(i) Transferor shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement and
similar arrangements relating to other securitizations, Transferor
shall not commingle its assets and funds with those of its
Affiliates;
(iii) Transferor shall hold such appropriate meetings or
obtain such appropriate consents of its Board of Directors as are
necessary to authorize all Transferor's corporate actions required by
law to be authorized by the Board of Directors, shall keep minutes of
such meetings and of meetings of its stockholder(s) and observe all
other customary corporate formalities (and any successor Transferor
not a corporation shall observe similar procedures in accordance with
its governing documents and applicable law);
(iv) Transferor shall at all times hold itself out to the
public under Transferor's own name as a legal entity separate and
distinct from its Affiliates; and
(v) all transactions and dealings between Transferor and its
Affiliates will be conducted on an arm's-length basis.
SECTION 7.3. Liability of Transferor; Indemnities. (a) Transferor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by Transferor under this Agreement.
(b) Transferor shall indemnify, defend and hold harmless Issuer,
Trustee and Indenture Trustee (and their officers, directors, employees and
agents) from and against any taxes that may at any time be asserted against
any of them with respect to the transfer of the Leases to Issuer or the
issuance and original sale of the Certificates and the Notes, including any
sales, gross receipts, general corporation,
28
tangible personal property, privilege or license taxes (but, in the case of
Issuer, not including any taxes asserted with respect to ownership of the
Leases or Federal or other income taxes arising out of the transactions
contemplated by this Agreement) and costs and expenses in defending against
the same.
(c) Transferor shall indemnify, defend and hold harmless Issuer,
Trustee and Indenture Trustee (and their officers, directors, employees and
agents) from and against any loss, liability or expense (including costs of
defense and legal fees and expenses) incurred or suffered by reason of: (i)
Transferor's willful misfeasance, bad faith or negligence in the performance
of its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) Transferor's or Issuer's
violation of Federal or State securities laws in connection with the offering
and sale of the Notes and the Certificates.
Indemnification under this Section shall survive the resignation or
removal of Trustee or Indenture Trustee or the termination of this Agreement
and the Indenture and shall include reasonable fees and expenses of counsel
and expenses of litigation. If Transferor shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to Transferor, without interest.
SECTION 7.4. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor. Any Person: (a) into which Transferor may be
merged or consolidated, (b) that may result from any merger or consolidation
to which Transferor shall be a party or (c) that may succeed to the properties
and assets of Transferor substantially as a whole, which Person (in any of the
foregoing cases) executes an agreement of assumption to perform every
obligation of Transferor under this Agreement (or is deemed by law to have
assumed such obligations), shall be the successor to Transferor hereunder
without the execution or filing of any document or any further act by any of
the parties to this Agreement; provided, that: (i) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 7.1 shall have been breached and no Servicer Event of Default, and no
event that, after notice or lapse of time, or both, would become a Servicer
Event of Default shall have occurred and be continuing, (ii) Transferor shall
have delivered to Trustee and Indenture Trustee an Officers' Certificate and
an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this Section and that
all conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with, (iii) the Rating Agency Condition
shall have been satisfied with respect to such transaction and (iv) Transferor
shall have delivered to Trustee and Indenture Trustee an Opinion of Counsel
either: (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect
29
the interest of Trustee and Indenture Trustee, respectively, in the Leases and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c).
SECTION 7.5. Limitation on Liability of Transferor and Others.
Transferor and any director, officer, employee or agent of Transferor may rely
in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. Transferor shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 7.6. Transferor May Own Certificates or Notes. Transferor and
any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of the Notes with the same rights as it would have if it were
not Transferor or an Affiliate thereof, except as expressly provided herein or
in any other Basic Document.
ARTICLE VIII
Servicer
SECTION 8.1. Representations of Servicer. Servicer makes the
following representations on which Issuer is deemed to have relied in
acquiring the Leases. The representations speak as of the execution and
delivery of the Agreement and as of the Closing Date, in the case of the
Leases, and as of the applicable effective date of any substitution, in the
case of the Substitute Leases, and shall survive the transfer of the Leases to
Issuer and the pledge thereof to Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. Servicer is duly
organized and validly existing as a corporation in good standing
under the laws of the state of its incorporation, with the corporate
power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the power,
authority and legal right to acquire, own, sell and service the
Leases and to hold the Lease Files as custodian.
(b) Due Qualification. Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses
30
and approvals, in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing
of the Leases as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. Servicer has the corporate power
and authority to execute and deliver this Agreement and to carry out
its terms; and the execution, delivery and performance of this
Agreement have been duly authorized by Servicer by all necessary
corporate action.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of Servicer enforceable against Servicer
in accordance with its terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms
hereof shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
by-laws of Servicer, or any indenture, agreement or other instrument
to which Servicer is a party or by which it shall be bound; or result
in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement); or violate any law or, to the
best of Servicer's knowledge, any order, rule or regulation
applicable to Servicer of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Servicer or its properties.
(f) No Proceedings. There are no proceedings or
investigations pending, or, to Servicer's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Servicer or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or
the Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other
Basic Documents, (iii) seeking any determination or ruling that could
reasonably be expected to materially and adversely affect the
performance by Servicer of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other
Basic Documents, the Notes or the Certificates or (iv) relating to
Servicer and that might adversely affect the Federal or state income
tax attributes of the Notes or the Certificates.
31
(g) No Insolvent Lessees. As of the Initial Cutoff Date or,
in the case of the Subsequent Leases, as of the related Subsequent
Cutoff Date, no Lessee is shown on the Lease Files as the subject of
a bankruptcy proceeding.
SECTION 8.2. Indemnities of Servicer. Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by Servicer under this Agreement.
(a) Servicer shall defend, indemnify and hold harmless
Issuer, Trustee, Indenture Trustee, Noteholders, Certificateholders
and Transferor (and any of their officers, directors, employees and
agents) from and against any and all costs, expenses, losses,
damages, claims and liabilities, arising
out of or resulting from:
(i) the use, ownership or operation by Servicer or
any Affiliate thereof of any of the Equipment;
(ii) any taxes that may at any time be asserted
against any such Person with respect to the transactions
contemplated herein, including any sales, gross receipts,
general corporation, tangible personal property, privilege
or license taxes (but, in the case of Issuer, not including
any taxes asserted with respect to, and as of the date of,
the transfer of the Leases to Issuer or the issuance and
original sale of the Certificates, the Notes, or asserted
with respect to ownership of the Leases, or Federal or other
income taxes arising out of distributions on the
Certificates or the Notes) and costs and expenses in
defending against the same; and
(iii) the negligence, willful misfeasance or bad
faith of Servicer in the performance of its duties under
this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(b) Servicer shall indemnify, defend and hold harmless
Trustee and Indenture Trustee (and their respective officers,
directors, employees and agents) from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the
trusts and duties herein and, in the case of Trustee, in the Trust
Agreement contained, and, in the case of Indenture Trustee, in the
Indenture contained, except to the extent that such cost, expense,
loss, claim, damage or liability:
32
(i) shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of
Trustee or Indenture Trustee as applicable; or
(ii) shall arise from the breach by Trustee of any
of its representations or warranties set forth in Section
7.3 of the Trust Agreement.
(c) Servicer shall pay any and all taxes levied or assessed
upon all or any part of the Trust Estate.
(d) Servicer shall pay Indenture Trustee and Trustee from
time to time reasonable compensation for all services rendered by
Indenture Trustee under the Indenture or by Trustee under the Trust
Agreement (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express
trust).
(e) Servicer shall, except as otherwise expressly provided
in the Indenture or the Trust Agreement, reimburse either Indenture
Trustee or Trustee, respectively, upon its request for all reasonable
expenses, disbursements and advances incurred or made in accordance
with the Indenture or the Trust Agreement, respectively, (including
the reasonable compensation, expenses and disbursements of its agents
and either in-house counsel or outside counsel, but not both), except
any such expense, disbursement or advance as may be attributable to
Indenture Trustee's or Trustee's, respectively negligence, bad faith
or willful misfeasance.
For purposes of this Section, in the event of the termination of the
rights and obligations of Servicer pursuant to Section 9.1, or a resignation
by Servicer pursuant to this Agreement, Servicer shall be deemed to be
Servicer pending appointment of a successor Servicer pursuant to Section 9.2.
Indemnification under this Section shall survive the resignation or
removal of Trustee or Indenture Trustee or the termination of this Agreement,
the Trust Agreement and the Indenture and shall include reasonable fees and
expenses of counsel and expenses of litigation. If Servicer shall have made
any indemnity payments pursuant to this Section and the Person to or on behalf
of whom such payments are made thereafter collects any of such amounts from
others, such Person shall promptly repay such amounts to Servicer, without
interest.
SECTION 8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person: (a) into which Servicer may be merged or
consolidated, (b) that may result from any merger or consolidation to which
Servicer shall be a party, or (c) that may succeed to the properties and assets
of Servicer
33
substantially as a whole, which Person (in any of the foregoing circumstances)
executes an agreement of assumption to perform every obligation of Servicer
hereunder (or is deemed by law to have assumed such obligations), shall be the
successor to Servicer under this Agreement without further act on the part of
any of the parties to this Agreement; provided, that: (i) immediately after
giving effect to such transaction, no Servicer Event of Default, and no event
that, after notice or lapse of time, or both, would become a Servicer Event of
Default shall have occurred and be continuing, (ii) Servicer shall have
delivered to Trustee and Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agencies shall have
received at least ten days' prior written notice of such transaction and (iv)
Servicer shall have delivered to Trustee and Indenture Trustee an Opinion of
Counsel either: (A) stating that, in the opinion of such counsel, all
financing statements, continuation statements and amendments thereto have been
executed and filed that are necessary fully to preserve and protect the
interest of Trustee and Indenture Trustee, respectively, in the Leases and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c).
SECTION 8.4. Limitation on Liability of Servicer and Others. Neither
Servicer nor any of the directors, officers, employees or agents of Servicer
shall be under any liability to Issuer, Noteholders or Certificateholders,
except as provided under this Agreement, for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement with respect to any Lease (including any Non-Performing Lease) or
the Equipment subject thereto; provided, that this provision shall not protect
Servicer or any such Person against any breach of warranties, representations
or covenants made by Servicer herein or in any certificate delivered in
conjunction with the sale of the Notes or for any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of its duties under this Agreement. Servicer and any
director, officer, employee or agent of Servicer may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder.
SECTION 8.5. ILC Not to Resign as Servicer. Subject to Section 8.3,
ILC shall not resign from the obligations and duties imposed on it as Servicer
under this Agreement except upon determination that the performance of its
duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination shall be communicated to Trustee and
Indenture Trustee at the earliest
34
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to Trustee and Indenture Trustee concurrently with or promptly after
such notice. No such resignation shall become effective until Indenture
Trustee or a successor Servicer shall have assumed the responsibilities and
obligations of ILC in accordance with Section 9.2.
SECTION 8.6. Servicer to Act as Manager. In the event of the
resignation or removal of Manager and the failure of a successor Manager to
have been appointed and to have accepted such appointment as successor
Manager, Servicer shall become the successor Manager and shall be bound by the
terms of the Management Agreement.
ARTICLE IX
Default
SECTION 9.1. Servicer Events of Default. The following events and
conditions shall constitute a "Servicer Event of Default" hereunder:
(a) failure on the part of Servicer to deposit into the
Collection Account or other applicable account within three Business
Days following the receipt thereof any monies received by Servicer
(including any Lease Payments and any Non-Performing Lease Payments)
and required to be deposited hereunder;
(b) so long as ILC is Servicer hereunder, failure on the
part of ILC to pay to Indenture Trustee on the date when due in
accordance with the terms hereof, any payment required to be made by
Transferor pursuant to Section 5.1.
(c) failure on the part of either Servicer or (so long as
ILC is Servicer) ILC to observe or perform in any material respect
any other of their respective covenants or agreements in this
Agreement which failure continues unremedied for a period of 30 days
after the earlier of (A) the date it first becomes known to any
officer of Transferor or Servicer, as the case may be, and (B) the
date on which written notice thereof requiring the same to be
remedied shall have been given to Transferor or Servicer, as the case
may be, by Indenture Trustee or Trustee, or to Transferor or
Servicer, as the case may be, and Indenture Trustee by any Holder of
the Notes or the Certificates;
35
(i) if any representation or warranty made by
Transferor in this Agreement or in any certificate or other
writing delivered pursuant hereto or made by any successor
Servicer in connection with such successor Servicer's
assumption of the duties of Servicer shall prove to be
incorrect in any material respect as of the time when the
same shall have been made; provided, that the breach of any
representation or warranty made by Transferor or Servicer in
this Agreement will be deemed to be "material" only if it
affects Noteholders or the Certificateholders, the
enforceability of the Indenture or of the Notes or the
enforceability of the Trust Agreement or the Certificates;
and provided, further, that a material breach of any
representation or warranty made by Transferor in this
Agreement with respect to any of the Leases or the Equipment
subject thereto will not constitute a Servicer Event of
Default if Transferor repurchases such Lease and Equipment
in accordance with this Agreement.
(ii) the entry by a court having jurisdiction in
the premises of (A) a decree or order for relief in respect
of Servicer in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency,
reorganization, or other similar law or (B) a decree or
order adjudging Servicer bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization,
arrangement, adjustment, or composition of or in respect of
Servicer under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of Servicer
or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a
period of 60 consecutive days;
(iii) the commencement by Servicer of a voluntary
case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization, or other similar law
or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of
a decree or order for relief in respect of Servicer in an
involuntary case or proceeding under any applicable federal
or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by
it of a petition or answer or consent seeking reorganization
or relief under any applicable federal or state law, or the
consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian,
36
receiver, liquidator, assignee, trustee, sequestrator, or
similar official of Servicer or of any substantial part of
its property, or the making by it of an assignment for the
benefit of creditors, or the failure by Servicer to pay its
debts generally as they become due, or the taking of
corporate action by Servicer in furtherance of any such
action;
(iv) the failure of Servicer to make one or more
payments due with respect to aggregate recourse debt or
other obligations exceeding $1,000,000, or the occurrence of
any event or the existence of any condition, the effect of
which event or condition is to cause (or permit one or more
persons to cause) more than $1,000,000 of aggregate recourse
debt or other obligations of Servicer to become due before
its (or their) stated maturity or before its (or their)
regularly scheduled dates of payment so long as such
failure, event or condition shall be continuing and shall
not have been waived by the Person or Persons entitled to
performance; or
(v) a final judgment or judgments (or decrees or
orders) for the payment of money aggregating in excess of
$1,000,000 and any one of such judgments (or decrees or
orders) has remained unsatisfied and in effect for any
period of 60 consecutive days without a stay of execution.
SECTION 9.2. Termination. So long as a Servicer Event of Default
shall be continuing, Indenture Trustee shall, upon the instructions of the
Holders of Notes representing at least 66-2/3% of the Outstanding Principal
Amount of the Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66-2/3% of the Certificate Balance), by notice in writing
to Servicer terminate all of the rights and obligations of Servicer under this
Agreement. On the receipt by Servicer of such written notice, all authority
and power of Servicer under this Agreement to take any action with respect to
any Lease or Equipment shall cease and the same shall pass to and be vested in
Indenture Trustee pursuant to and under this Section and the Indenture; and,
Indenture Trustee is hereby authorized and empowered to execute and deliver,
on behalf of Servicer, as attorney-in-fact or otherwise, any and all other
acts or things necessary or appropriate to effect the purposes of such notice
of termination, whether to complete the transfer and assignment of any Lease
and the related Equipment, or otherwise.
SECTION 9.3. Trustee to Act; Appointment of Successor. On and after
the time Servicer receives a notice of termination pursuant to Section 9.2,
Indenture Trustee, subject to the terms of Section 5.2 of the Indenture, shall
be the successor in all respects to Servicer in its capacity as servicer of
the Leases under this Agreement and, to such extent, shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on
Servicer by the terms and provisions hereof and
37
shall be entitled to receive the Servicing Fee and other amounts payable
pursuant to Section 4.6; provided that Indenture Trustee shall in no way be
responsible or liable for any action or actions of Servicer before the time
Servicer receives such a notice of termination.
(a) Notwithstanding the above, Indenture Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act,
give notice of such fact to each Holder of the Notes and (i) appoint
an established institution satisfactory to the Holders of Notes
evidencing at least 66-2/3% of the Outstanding Principal Amount of the
Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66-2/3% of the Certificate Balance) as the
successor to Servicer hereunder to assume all of the rights and
obligations of Servicer hereunder, including Servicer's right
hereunder to receive the Servicing Fee and Supplemental Servicing Fee
or (ii) if no such institution satisfactory to the Holders of Notes
evidencing at least 66-2/3% of the Outstanding Principal Amount of the
Notes (or, if no Notes are Outstanding, Holders of Certificates
representing at least 66-2/3% of the Certificate Balance) is so
appointed within 60 days following the giving of such notice, appoint
a bank or other established institution, which has experience in
servicing lease contracts and equipment similar to the Leases and
Equipment and as to which the Rating Agency Condition has been
satisfied with respect to the appointment of such Person as the
successor to Servicer, or (iii) if no such institution is so
appointed, petition a court of competent jurisdiction to appoint an
institution meeting such criteria as Servicer hereunder. Pending
appointment of a successor to Servicer hereunder, Indenture Trustee
shall act in such capacity as provided in this Agreement. In
connection with such appointment and assumption, Indenture Trustee
shall cause such successor to Servicer to enter into a servicing
agreement substantially in the form of this Agreement except that
such agreement shall not include any of Transferor's representations,
warranties or obligations and Indenture Trustee may make arrangements
for the compensation of such successor out of payments on Leases as
it and such successor shall agree; provided, that no such
compensation shall be in excess of that provided for a successor to
Servicer in Section 4.6.
SECTION 9.4. Servicer to Cooperate. Servicer hereby agrees to
cooperate with Indenture Trustee or any successor to Servicer appointed in
accordance with Section 9.3, as applicable, in effecting the termination and
transfer of the responsibilities and rights of Servicer hereunder to Indenture
Trustee or any successor to Servicer, including the execution and delivery of
assignments of Financing Statements, and the transfer to Indenture Trustee or
the successor to Servicer for administration by it of all cash amounts which
shall at the time be held by Servicer or thereafter received with respect to
the Leases. Servicer hereby agrees to transfer to any successor to Servicer
its electronic records and all other records,
38
correspondence and documents relating to the Leases and Equipment in the
manner and at such times as the successor to Servicer shall reasonably
request. Servicer hereby designates Indenture Trustee and any successor to
Servicer its agent and attorney-in-fact to execute transfers of Financing
Statements (including any and all Financing Statements naming an individual
Lessee as debtor and Servicer as secured party) and any other filings or
instruments which may be necessary or advisable to effect such transfer of
Servicer's responsibilities and rights hereunder.
SECTION 9.5. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, Servicer pursuant to
this Article IX, Trustee shall give prompt written notice thereof to
Certificateholders and Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies.
SECTION 9.6. Waiver of Past Defaults. Holders of Notes evidencing at
least 66-2/3% of the Outstanding Principal Amount of the Notes (or the Holders
of Certificates evidencing not less than a majority of the Certificate
Balance, in the case of any default that does not adversely affect Indenture
Trustee or Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive in writing any default by Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto.
ARTICLE X
Termination
SECTION 10.1. Optional Purchase of All Leases. (a) As of any Payment
Date as of which the Discounted Present Value of the Performing Leases (after
giving effect to all Principal Payments on such Payment Date) is less than or
equal to 5% of the Discounted Present Value of Performing Leases as of the
Cut-Off Date, Servicer shall have the option to purchase all of the Trust
Estate, other than the Trust Accounts, if after giving effect to all payments
required to be made on such Payment Date, the Notes and Certificates shall
have been paid in full. To exercise such option, Servicer shall deposit,
pursuant to Section 6.2, into the Collection Account an amount equal to the
aggregate Lease Repurchase Amount for the Leases, and shall succeed to all
interests in, to and under the Trust Estate, other than the Trust Accounts.
39
(b) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes,
Certificateholders will succeed to the rights of Noteholders hereunder and
Trustee will succeed to the rights of, and assume the obligations of,
Indenture Trustee pursuant to this Agreement.
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment. The Agreement may be amended from time to
time by a written amendment duly executed and delivered by Transferor,
Servicer and Issuer, with the written consent of Indenture Trustee, but
without the consent of any of Noteholders or Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of Noteholders or Certificateholders; provided, that such
action shall not, as evidenced by an Opinion of Counsel delivered to Trustee
and Indenture Trustee, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by Transferor,
Servicer and Issuer, with the written consent of Indenture Trustee and Trustee,
but without the consent of any of Noteholders or Certificateholders, to: (x)
replace the Reserve Account with another form of credit enhancement as long as
such substitution will not result in a reduction or withdrawal of the rating
of any Class of the Notes or the Certificates or (y) add credit enhancement
for the benefit of any Class of the Notes or the Certificates.
This Agreement may also be amended from time to time by Transferor,
Servicer and Issuer, with the written consent of (a) Indenture Trustee, (b)
Holders of Notes evidencing not less than 66-2/3% of the Outstanding Principal
Amount of the Notes, and (c) the Holders of Certificates evidencing not less
than evidencing not less than 66-2/3% of the Certificate Balance, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the
rights of Noteholders or Certificateholders; provided, that no such amendment
shall: (a) increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on Leases or distributions that
shall be required to be made for the benefit of Noteholders or
Certificateholders or (b) reduce the aforesaid percentage of the Notes and the
Certificates that are required to consent to any such amendment, without the
consent of the holders of all the outstanding Notes and Certificates.
40
Promptly after the execution of any such amendment or consent (or, in
the case of the Rating Agencies, 10 days prior thereto), Trustee shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder, Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, Trustee
and Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to such
execution and delivery by Trustee and Indenture Trustee have been satisfied.
Trustee and Indenture Trustee may, but shall not be obligated to, enter into
any such amendment that affects Trustee's or Indenture Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
SECTION 11.2. Security for Obligations. As security for the full and
timely performance by Transferor of each of its obligations hereunder,
Transferor hereby pledges and grants to Issuer (as a precaution in the event
that, contrary to the intent of the parties to the transactions contemplated
hereby, it is contended that Transferor has any continuing interest in any
Lease or item of Equipment) a first priority Lien on and security interest in
all right, title and interest of Transferor now or hereafter acquired in and
to each Lease (including the right to receive all payments due or to become
due thereunder), each item of Equipment and each other Transferred Asset at
any time subject to this Agreement. The foregoing security interest is granted
upon and is subject to the same terms and provisions as are set forth in the
Indenture and shall continue in full force and effect until the same is
discharged in accordance with the terms therein, notwithstanding any waiver or
modification of any of the terms hereof or thereof or of any of the Notes,
whether with or without the consent of Transferor.
SECTION 11.3. Further Assurances; Financing Statements. Transferor
agrees that at any time and from time to time, at its expense, it shall
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable or that Issuer or
Indenture Trustee may request to perfect and protect the assignments and
ownership and security interests granted or purported to be granted herein or
therein with respect to the Leases and other Transferred Assets or to enable
Issuer or Indenture Trustee to exercise and enforce its rights and remedies
under this Agreement and the Indenture with respect to any Leases and other
Transferred Assets. Without limiting the generality of the foregoing,
Transferor shall execute and file such financing or continuation
41
statements, or amendments thereto, and such other instruments or notices as
may be necessary or desirable or that Issuer or Indenture Trustee may request
to protect and preserve the assignments and ownership and security interests
granted by this Agreement with respect to the Leases.
SECTION 11.4. Registration. Transferor shall, to the extent required
by applicable law, cause the Certificates and the Notes to be registered with
the Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act
within the time periods specified in such sections.
SECTION 11.5. Notices. All demands, notices, directions, instructions
and communications upon or to Transferor, Servicer, Issuer, Trustee, Indenture
Trustee or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested,
and shall be deemed to have been duly given upon receipt: (a) in the case of
Transferor, to Provident Lease Receivables Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention of: [Name] (telephone (▇▇▇) ▇▇▇-▇▇▇▇
and facsimile (513) [___-____]), (b) in the case of Servicer, to Information
Leasing Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
Attention: [Name] (telephone (513) [___-____] and facsimile (513) [___-____]),
(c) in the case of Issuer or Trustee, at the Corporate Trust Office, (d) in
the case of Indenture Trustee, at the Corporate Trust Office, (e) in the case
of each of the Rating Agencies, [_____________]; or, as to each of the
foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 11.6. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.8 and 8.3 and as provided
in the provisions of this Agreement concerning the resignation of Servicer,
this Agreement may not be assigned by Transferor or Servicer, without the
prior written consent of Issuer and Indenture Trustee (acting upon the
instructions of Holders of at least 66-2/3% of the Outstanding Principal Amount
of the Notes.
SECTION 11.7. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of Transferor, Servicer, Issuer, Trustee,
Certificateholders, Indenture Trustee and Noteholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.8. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any
42
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 11.9. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.10. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.12. Assignment to Indenture Trustee. Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by Issuer to Indenture Trustee pursuant to the Indenture for
the benefit of Noteholders of all right, title and interest of Issuer in, to
and under the Leases and/or the assignment of any or all of Issuer's rights
and obligations hereunder to Indenture Trustee.
SECTION 11.13. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, Servicer and Transferor shall not, prior to the
date that is one year and one day after the termination of this Agreement,
with respect to Issuer, acquiesce, petition or otherwise invoke or cause
Issuer to invoke the process of any court or governmental authority for the
purpose of commencing or sustaining a case against Issuer under any Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of Issuer or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of Issuer. The foregoing shall not
limit the right of Servicer and Transferor to file any claim in or otherwise
take any action with respect to any such insolvency proceeding that was
instituted against Issuer by any Person other than Servicer or Transferor.
(b) Notwithstanding any prior termination of this Agreement, Servicer
shall not, prior to the date that is one year and one day after the
termination of this Agreement, with respect to Transferor, acquiesce, petition
or otherwise invoke or cause Transferor to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against Transferor under any Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of Transferor or any
43
substantial part of its property, or ordering the winding up or liquidation of
the affairs of Transferor. The foregoing shall not limit the right of Servicer
to file any claim in or otherwise take any action with respect to any such
insolvency proceeding that was instituted against Transferor by any Person
other than Servicer.
SECTION 11.14. Limitation of Liability of Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [Name of Trustee], not in its individual
capacity but solely in its capacity as Trustee of Issuer, and in no event
shall [Name of Trustee], in its individual capacity or, except as expressly
provided in the Trust Agreement, any beneficial owner of Issuer have any
liability for the representations, warranties, covenants, agreements or other
obligations of Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of Issuer.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by [Name of Indenture Trustee], not in its
individual capacity but solely as Indenture Trustee, and in no event shall
[Name of Indenture Trustee] have any liability for the representations,
warranties, covenants, agreements or other obligations of Issuer hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of Issuer.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first
above written.
PROVIDENT EQUIPMENT LEASE TRUST 1998-A
By: [NAME OF TRUSTEE]
not in its individual capacity but solely
as Trustee of the Provident Equipment Lease
Trust 1998-A
By: _____________________________________
Name: _____________________________________
Title:_____________________________________
PROVIDENT LEASE RECEIVABLES
CORPORATION,
as Transferor
By: _____________________________________________
44
Name: _________________________________________
Title: ________________________________________
INFORMATION LEASING CORPORATION,
as Servicer
By: _____________________________________
Name: _____________________________________
Title:_____________________________________
Acknowledged and Accepted:
[NAME OF INDENTURE TRUSTEE]
not in its individual capacity
but solely as Indenture Trustee
By: ___________________________________
Name: ______________________________
Title: _____________________________
45