1
EXHIBIT 4.2
_________________________________________________________________
POOLING AND SERVICING AGREEMENT
_____________________________________
among
TRANS LEASING INTERNATIONAL, INC.,
as initial Servicer
TL LEASE FUNDING CORP. IV,
as Seller
and
TLFC IV EQUIPMENT LEASE TRUST 1996-1
_____________________________________
Dated as of
November 26, 1996
_________________________________________________________________
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
CONVEYANCE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 Conveyance of the Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.2 Marking of Lease Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Acceptance by Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.4 Representations and Warranties of the Seller. . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.5 Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6 Mandatory Purchase of Leases and Indemnification Upon Breach of Warranty . . . . . . . . . . . . 25
2.7 Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.8 Release of Lien on Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III
ADMINISTRATION AND SERVICING OF LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.1 Appointment and Acceptance; Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.2 Collection of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.3 Servicer Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.4 Realization Upon Defaulted Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.5 Maintenance of Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Representations and Warranties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.7 Covenants of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.8 Servicer Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.9 Payment of Certain Expenses by Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.10 Monthly Statement; Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.11 Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.12 Annual Independent Public Accountants' Servicing Statements . . . . . . . . . . . . . . . . . . 41
ARTICLE IV
RIGHTS OF HOLDERS; ACCOUNTS; ALLOCATION
AND APPLICATION OF THE TRUST ESTATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.1 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.2 Establishment of the Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.3 Establishment of Note Distribution Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.4 Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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4.5 Control; Replacement of Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.6 Identification of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.7 Deposit of Collections and Other Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.8 Payments on Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE V
OTHER MATTERS RELATING TO THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1 Substitution of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Merger or Consolidation of the Seller; Assumption of the Seller's Obligations . . . . . . . . . 48
5.3 Compliance with Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.4 Limitation of Liability of Seller and Others . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VI
OTHER MATTERS RELATING TO THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1 Liability of the Servicer and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.2 Indemnification by the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.3 Merger or Consolidation of Servicer; Assumption of Servicer's Obligations . . . . . . . . . . . 52
6.4 The Servicer Not to Resign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VII
SERVICER DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.1 Servicer Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.2 Indenture Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . 56
7.3 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.5 Lease Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.2 Notice of Final Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.3 Optional Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
9.2 Evidence of Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
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9.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.5 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.7 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.8 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.10 Binding Effect; Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.11 Merger and Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.13 Certificates and Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.14 Assignment to Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.15 No Petition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.16 Limitation of Liability of Indenture Trustee and Owner Trustee . . . . . . . . . . . . . . . . . 67
9.17 Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.18 Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
LIST OF EXHIBITS
Exhibit A List of Leases
Exhibit B Form of Monthly Statement
Exhibit C Identification of Accounts
Exhibit D Substitution Transfer Agreement
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POOLING AND SERVICING AGREEMENT
THIS POOLING AND SERVICING AGREEMENT, is made and entered
into as of November 26, 1996 (this "Agreement"), among Trans Leasing
International, Inc., a Delaware corporation ("Trans Leasing"), as Servicer, TL
Lease Funding Corp. IV, a Delaware corporation (the "Seller"), and the TLFC IV
Equipment Lease Trust 1996-1, a Delaware business trust (the "Issuer" or the
"Trust"). Other capitalized terms used in this Agreement are defined in
Section 1.1.
Trans Leasing in the ordinary course of its business
originates and acquires equipment leases in the United States;
Pursuant to the Contribution and Sale Agreement, Trans
Leasing has sold and contributed the Leases and interests in the related
Equipment, to the Seller upon the terms and conditions set forth therein;
Pursuant to this Agreement, the Seller will sell and convey
to the Issuer the Leases and the interests in the related Equipment it received
pursuant to the Contribution and Sale Agreement and certain of its rights under
the Contribution and Sale Agreement in exchange for the Notes and the Trust
Certificates;
The Issuer will pledge its rights in the Leases, related
Equipment and other property received from the Seller to the Indenture Trustee
to secure payments due under the Notes; and
Trans Leasing intends to continue administering and
servicing the Leases and the related Equipment in its capacity as Servicer
pursuant to this Agreement.
In consideration of the mutual agreements contained in this
Agreement, each party agrees as follows for the benefit of the other Parties
and the Holders.
ARTICLE I
DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the
following words and phrases have the following respective meanings:
"Administrator" means, Trans Leasing, as Administrator
under the Administration Agreement dated as of the date hereof among Trans
Leasing, as Administrator, and the Trust.
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"Affiliate" means, with respect to any Person, each Person
that controls, is controlled by or is under common control with such Person or
any Affiliate of such Person; provided, however, that in no event shall the
Trust be deemed to be an Affiliate of the Seller for purposes of this
Agreement. For the purpose of this definition, "control" of a Person shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of its management or policies, whether through the ownership of
voting securities, by contract or otherwise.
"Aggregate Discounted Lease Balance" means at any time of
determination, an amount equal to the sum of the Discounted Lease Balances of
the Leases.
"Aggregate Discounted Lease and Residual Balance" means at
any time of determination, an amount equal to the sum of the Discounted Lease
and Residual Balances of the Leases.
"Available Amount" means, for any Payment Date, all amounts
on deposit in the Collection Account on such Payment Date representing (i)
Collections received during the related Collection Period, (ii) Investment
Earnings and (iii) Servicer Advances.
"Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in Chicago, Illinois, Wilmington,
Delaware or New York, New York, are authorized or obligated by any law or
regulation to be closed.
"Casualty Loss" means, with respect to any item of
Equipment, the loss, theft, damage beyond repair or governmental condemnation
or seizure of such item of Equipment.
"Casualty Payment" means any payment under a Lease in
connection with a Casualty Loss.
"Certificateholders" means the holders of the Trust
Certificate.
"Class A Interest Arrearage" means, for any Payment Date,
any Class A Interest Payments or portions thereof that were due on preceding
Payment Dates, but remain unpaid as of such Payment Date.
"Class A Interest Payment Amount" means (i) for the initial
Payment Date, the product of (a) one-twelfth of the Class A Interest Rate and
(b) the Initial Class A Principal Balance and (ii) for any subsequent Payment
Date, (a) the product of one-
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twelfth of the Class A Interest Rate and (b) the Outstanding Class A Principal
Balance as of the related Determination Date.
"Class A Interest Rate" means 5.98% per annum.
"Class A Notes" means the Class A 5.98% Lease Backed Notes
in the aggregate principal amount of $127,848,986 issued by the Issuer pursuant
to the Indenture.
"Class A Percentage" means 90.43%.
"Class A Principal Arrearage" means, for any Payment Date,
any Class A Principal Payment Amounts or portions thereof that were due on
preceding Payment Dates, but remain unpaid as of such Payment Date.
"Class A Principal Payment Amount" means, for any Payment
Date, the sum of (i) the product of (A) the Class A Percentage and (B) the
excess of (1) the Aggregate Discounted Lease Balance of all Leases as of the
last day of the Collection Period immediately preceding the Collection Period
to which such Payment Date relates (or, in the case of the initial Payment
Date, as of the Cut-Off Date) over (2) the Aggregate Discounted Lease Balance
of all Leases as of the last day of the Collection Period to which such Payment
Date relates (in each case, calculated after giving effect to all Leases that
became Defaulted Leases, Early Termination Leases, Partial Early Termination
Leases or were the subject of a Warranty Event during such related Collection
Period and all substitutions of Substitute Leases therefor) and (ii) the Class
A Principal Arrearage for such Payment Date; provided, that on the Stated Final
Maturity Date, on the Redemption Date and on each Payment Date from and after
the date on which the Indenture Trustee or the Holders of the Notes shall have
declared the Notes to be immediately due and payable following the occurrence
of an Event of Default pursuant to the Indenture (unless such declaration has
been rescinded and annulled), the Class A Principal Payment Amount shall equal
the Outstanding Class A Principal Balance; and provided further, that the Class
A Principal Payment Amount shall never exceed the Outstanding Class A Principal
Balance.
"Class B Interest Arrearage" means, for any Payment Date,
any Class B Interest Payment Amounts or portions thereof that were due on
preceding Payment Dates, but remain unpaid as of such Payment Date.
"Class B Interest Payment Amount" means (i) for the initial
Payment Date, the product of (a) one-twelfth of the Class B Interest Rate and
(b) the Initial Class B Principal Balance and (ii) for any subsequent Payment
Date, the product of (a) one-
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twelfth of the Class B Interest Rate and (b) the Outstanding Class B Principal
Balance as of the related Determination Date.
"Class B Interest Rate" means 6.64% per annum.
"Class B Notes" means the Class B 6.64% Lease Backed Notes
in the aggregate principal amount of $13,536,951 issued by the Issuer pursuant
to the Indenture.
"Class B Percentage" means 9.57%.
"Class B Principal Arrearage" means, for any Payment Date,
any Class B Principal Payment Amounts or portions thereof that were due on
preceding Payment Dates, but remain unpaid as of such Payment Date.
"Class B Principal Payment Amount" means, for any Payment
Date, the sum of (i) the product of (A) the Class B Percentage and (B) the
excess of (1) the Aggregate Discounted Lease Balance of all Leases as of the
last day of the Collection Period immediately preceding the Collection Period
to which such Payment Date relates (or, in the case of the initial Payment
Date, as of the Cut-Off Date) over (2) the Aggregate Discounted Lease Balance
of all Leases as of the last day of the Collection Period to which such Payment
Date relates (in each case, calculated after giving effect to all Leases that
became Defaulted Leases, Early Termination Leases, Partial Early Termination
Leases or were the subject of a Warranty Event during such related Collection
Period and all substitutions of Substitute Leases therefor) and (ii) the Class
B Principal Arrearage for such Payment Date; provided, that, on the Stated
Final Maturity Date, on the Redemption Date and on each Payment Date from and
after the date on which the Indenture Trustee or the Holders of the Notes shall
have declared the Notes to be immediately due and payable following the
occurrence of an Event of Default pursuant to the Indenture (unless such
declaration has been rescinded and annulled), the Class B Principal Payment
Amount shall equal the Outstanding Class B Principal Balance; and provided,
further, that the Class B Principal Payment Amount shall never exceed the
Outstanding Class B Principal Balance.
"Closing Date" means November 26, 1996.
"Collection Account" means the collection account
established pursuant to Section 4.2.
"Collection Period" means, with respect to any Payment
Date, the immediately preceding calendar month.
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"Collections" means all payments received on or with
respect to the Leases or the related Equipment, including, without limitation,
Scheduled Lease Payments, Liquidation Proceeds, Warranty Purchase Prices,
Insurance Proceeds, Early Termination Lease Proceeds, Partial Early Termination
Lease Proceeds and Expired Lease Proceeds, all as related to amounts
attributable to the Equipment and the Leases, but excluding any Excluded
Amounts.
"Contribution and Sale Agreement" means the Amended and
Restated Contribution and Sale Agreement dated as of the date hereof between
the Originator and the Seller, together with all amendments, restatements,
supplements and modifications thereof or thereto.
"Corporate Office" means, at any time, the office of the
Indenture Trustee from which its corporate trust business is principally
administered, which office at the date of this Agreement is located at ▇▇▇ ▇&▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Credit Agreement" means the Revolving Credit and Term Loan
and Security Agreement between Seller and First Union Nation Bank of North
Carolina, dated as of November 28, 1995, as amended, together with all
amendments, restatements, supplements and modifications thereof or thereto.
"Cut-Off Date" means, with respect to each Original Lease,
the Initial Cut-Off Date, and with respect to each Substitute Lease, the
related Substitution Cut-Off Date.
"Defaulted Lease" means a Lease as to which (i) the
Servicer has determined in its sole discretion, in accordance with its
customary servicing procedures, that such Lease is not collectible, or (ii) all
or part of a Scheduled Lease Payment thereunder (other than a Skipped Payment)
is more than 180 days delinquent.
"Determination Date" means, with respect to a Collection
Period and the related Payment Date, the close of business on the last Business
Day of such Collection Period.
"Discount Rate" means 7.043191% per annum.
"Discounted Equipment Residual Value" means, with respect
to any Equipment, at any time of determination, the present value of the
Equipment Residual Value of such Equipment, calculated monthly at the Discount
Rate in the manner described below.
In connection with all calculations required to be made
with respect to the determination of Discounted Equipment Residual
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Values, for any date of determination, the "Discounted Equipment Residual
Value" for such Equipment shall be calculated assuming:
(i) the Equipment Residual Value is received on
the last day of the Collection Period
following the Collection Period in which
the related Lease expires in accordance
with its terms;
(ii) amounts are discounted on a monthly basis
using a 30-day month and a 360-day year;
(iii) amounts are discounted to the last day of
the Collection Period in which the date of
determination falls.
"Discounted Lease and Residual Balance" means, with respect
to any Lease, at any time of determination, the sum of (i) the Discounted Lease
Balance plus (ii) the Discounted Equipment Residual Value for all related
Equipment; provided, however, that the Discounted Lease and Residual Balance of
any Defaulted Lease, Early Termination Lease, Expired Lease or Lease purchased
by the Originator or the Seller, or replaced with a Substitute Lease, shall be
equal to zero.
"Discounted Lease Balance" means, with respect to any
Lease, at any time of determination, the sum of (i) the present value of all of
the remaining Scheduled Lease Payments becoming due under such Lease after such
date of determination and unpaid as of such date of determination, calculated
monthly at the Discount Rate in the manner described below, and (ii) the
aggregate amount of all Scheduled Lease Payments (due after the Cut-Off Date)
then due and payable under such Lease which have not been received by the
Servicer (other than Scheduled Lease Payments to the extent there has been a
Servicer Advance with respect thereto); provided, however, that the Discounted
Lease Balance of any Defaulted Lease, Early Termination Lease, Expired Lease or
Lease purchased by the Originator or the Seller, or replaced with a Substitute
Lease, shall be equal to zero.
In connection with all calculations required to be made
pursuant to this Agreement with respect to the determination of Discounted
Lease Balances, for any date of determination, the Discounted Lease Balance for
each Lease shall be calculated assuming:
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(i) all payments due in any Collection Period
are due on the last day of such Collection
Period;
(ii) payments are discounted on a monthly basis
using a 30 day month and a 360 day year;
(iii) payments are discounted to the last day of
the Collection Period in which the date of
determination falls.
"Early Termination Lease" means any Lease that has
terminated in full prior to its scheduled expiration date (including because of
a Casualty Loss), other than a Defaulted Lease.
"Early Termination Lease Proceeds" means any and all cash
proceeds or rents realized from the sale or re-lease of Equipment under an
Early Termination Lease (net of Liquidation Expenses).
"Eligible Deposit Account" means either (i) a segregated
account with an Eligible Institution or (ii) a segregated trust account with
the corporate trust department of a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution have a
credit rating from each of the Rating Agencies in a rating category which
signifies investment grade or is otherwise acceptable to each of the Rating
Agencies.
"Eligible Institution" means either (a) the corporate trust
department of the Indenture Trustee or the Owner Trustee or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), which (i) has either (A)(1) a long-term unsecured debt rating
acceptable to the Rating Agencies or (2) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating Agencies, (B) the parent
corporation of which has either (1) a long-term unsecured debt rating
acceptable to the Rating Agencies or (2) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating Agencies or (C) is
otherwise acceptable to the Rating Agencies (it being understood that this
clause (i) shall be satisfied as long as one such rating or corporate trust
department is acceptable to each Rating Agency and no single sub-clause need
be satisfied with respect to all Rating Agencies) and
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(ii) whose deposits are insured by the FDIC.
"Eligible Investments" means any of the following, in each
case as determined at the time of the investment or contractual commitment to
invest therein:
(a) investments in commercial paper maturing in 270 days
or less from the date of issuance which is accorded the highest rating by each
of the Rating Agencies;
(b) investments in direct obligations of the United
States of America, or any agency thereof, or obligations guaranteed by the full
faith and credit of the United States of America, provided that all such
obligations mature in twelve months or less from the date of acquisition
thereof;
(c) investments in certificates of deposit maturing
within one year from the date of origin, rated A-1+ by S&P and P-1 by Moody's
(or, in each case, a comparable rating) by the Rating Agencies, issued by a
bank or trust company organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits aggregating at
least $100,000,000;
(d) investments in debt obligations of corporations
organized and existing under the laws of the United States, any state or the
District of Columbia maturing in 12 months or less from the date of acquisition
thereof, and rated AAA by S&P and Aaa by Moody's (or, in each case, a
comparable rating) by the Rating Agencies; and
(e) investments in money market funds registered under
the Investment Company Act of 1940 (as amended), whose shares are registered
under the Securities Act of 1933 (as amended), and having a rating of AAAm-G or
AAA-m by S&P and Aaa by Moody's (or, in each case, comparable ratings) and any
other investment with respect to which the Rating Agency Condition has been
satisfied which, in either case, as a result of the ownership thereof, would
not cause the Trust to be required to register as an "investment company" under
the Investment Company Act of 1940, as amended.
"Equipment" means the assets leased to a Lessee pursuant to
a Lease and/or, unless the context otherwise requires, a security interest in
such assets.
"Equipment Residual Value" means for any Equipment the
anticipated residual value of such Equipment upon the expiration of
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13
the related Lease in accordance with its terms (as such residual value is
estimated by Trans Leasing on or about the date on which such Lease was
originated or acquired by Trans Leasing in accordance with its normal valuation
procedures and not including any administrative costs incurred in the
realization of such residual value), but not in excess of any purchase option
price with respect thereto.
"Excluded Amounts" means any payments received from or on
behalf of a Lessee in connection with any Late Fees, any taxes, fees or other
charges imposed by any Governmental Authority, any insurance premiums or fees,
any indemnity payments made by a Lessee for the benefit of the Lessor under the
related Lease or any payments collected from a Lessee relating to servicing
and/or maintenance payments pursuant to the related Lease or maintenance
agreement, as applicable.
"Expired Lease" means any Lease that has terminated on its
scheduled expiration date.
"Expired Lease Proceeds" means any and all cash proceeds or
rents realized from the sale or re-lease of Equipment under an Expired Lease
(net of Liquidation Expenses) and, with respect to a Lease for a motor vehicle,
payments received from the Lessee as a result of excessive wear and tear on or
damage to such motor vehicle or driving such motor vehicle in excess of the
maximum mileage set forth in such Lease.
"FDIC" means the Federal Deposit Insurance Corporation, or
its successors and assigns.
"Filing Locations" means the states of Arizona, California,
Delaware, Florida, Georgia, Illinois, Maryland, Michigan, New Jersey, New York,
North Carolina, Ohio, Pennsylvania, Texas and Virginia.
"Governmental Authority" means (a) any federal, state,
county, municipal or foreign government, or political subdivision thereof, (b)
any governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body, (c) any court or
administrative tribunal or (d) with respect to any Person, any arbitration
tribunal or other non-governmental authority to the jurisdiction of which such
Person has consented.
"Holder" means, with respect to any Note, the Person in
whose name a Note is registered on the Note Register and, with respect to the
Trust Certificate, the Certificateholders.
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14
"Indenture" means that certain Indenture, dated as of the
date hereof, among the Issuer and the Indenture Trustee, together with all
amendments, restatements, supplements and modifications thereof or thereto.
"Indenture Trustee" means initially, Manufacturers and
Traders Trust Company or its successor in interest, and thereafter any
successor indenture trustee appointed pursuant to the Indenture, in each case
in its capacity as the Indenture Trustee pursuant to the Indenture.
"Indenture Trust Estate" has the meaning set forth in the
Indenture.
"Initial Class A Principal Balance" means $127,848,986.
"Initial Class B Principal Balance" means $13,536,951.
"Initial Cut-Off Date" means October 31, 1996.
"Insurance Policy" means, with respect to any Lease, an
insurance policy covering physical damage to or loss of the related Equipment.
"Insurance Proceeds" means, depending on the context, any
amounts payable or any payments made, to the Servicer under any Insurance
Policy.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and any successor thereto, in each case
including all regulations promulgated thereunder.
"Investment Earnings" means the investment earnings net of
losses and investment expenses on amounts in the Collection Account.
"Late Fees" means any amounts assessed by the Servicer and
paid by, or on behalf of, a Lessee in excess of the Scheduled Lease Payment due
to the delinquency of a Lease payment on a Lease.
"Lease" means each agreement, including, as applicable,
schedules, subschedules, summary schedules, supplements and amendments to a
master lease, pursuant to which (immediately prior to the acquisition thereof
by the Seller) Trans Leasing, as lessor, leases specified assets to a Lessee at
a specified monthly or quarterly rental, and which is identified in the List of
Leases, including all Original Leases and Substitute Leases; provided, that,
from and after the date on which a Lease is purchased by Trans Leasing pursuant
to Section 3.03 of the Contribution and Sale
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15
Agreement, a Lease is repurchased by the Seller pursuant to Section 2.6 hereof,
a Lease is replaced with a Substitute Lease pursuant to Section 5.1 hereof or
all Liquidation Proceeds or other proceeds from the disposition of the related
Equipment upon the expiration or termination of a Lease have been deposited in
the Collection Account, such Lease will no longer be a Lease for purposes of
this Agreement.
"Lease File" means, with respect to each Lease, the Lease
and all other documents relating to such Lease held by the Servicer pursuant to
this Agreement.
"Lease Management System" means the computerized electronic
lease management system maintained by the Originator for all Leases and other
agreements similar to the Leases.
"Lease Number" means, with respect to each Lease, the
identifying number assigned to such Lease by the Originator.
"Lessee" means, with respect to any Lease, the Person or
Persons obligated to make payments with respect to such Lease, including any
guarantor thereof.
"Lien" means any mortgage, pledge, hypothecation,
assignment for security, security interest, encumbrance, ▇▇▇▇, ▇▇▇▇ or charge
of any kind, whether voluntarily incurred or arising by operation of law or
otherwise, affecting any Property, including any agreement to grant any of the
foregoing, any conditional sale or other title retention agreement, any lease
in the nature of a security interest, and the filing of or agreement to file or
deliver any financing statement (other than a precautionary financing statement
with respect to a lease that is not in the nature of a security interest and,
until five (5) Business Days after the Closing Date, financing statements filed
in connection with the Credit Agreement (as defined in the Contribution and
Sale Agreement), other than those filed in Delaware, Illinois and New York)
under the UCC or comparable law of any jurisdiction.
"Liquidation Expenses" means, with respect to any Lease and
the related Equipment, the aggregate amount of all out-of-pocket expenses
incurred by the Servicer (including any subservicer) in accordance with the
Servicer's customary procedures in connection with the repossession,
refurbishing and disposition of any such Equipment upon or after the expiration
or other termination of such Lease (or a portion thereof) and other
out-of-pocket costs related to the liquidation of any such Equipment, including
the attempted collection of any amount owing pursuant to such Lease.
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16
"Liquidation Proceeds" means, with respect to a Defaulted
Lease, proceeds from the sale or other disposition of the Equipment, proceeds
of the related Insurance Policy and any other recoveries with respect to such
Defaulted Lease and the related Equipment, net of Liquidation Expenses and
amounts so received that are required to be refunded to the Lessee on such
Lease.
"List of Leases" means a list, prepared as of the Cut-Off
Date, of the Original Leases delivered to the Issuer by the Seller and
certified by a Responsible Officer of the Seller which includes a true and
complete list as of the Cut-Off Date, of all Leases identified by Lease Number,
original Equipment cost, Discounted Lease Balance and Discounted Lease and
Residual Balance as of the Cut-Off Date, effective date and the original Lease
term, in the form attached hereto as Exhibit A, and which shall have attached
to it a list (in printed, microfiche or computer tape form) showing the
Scheduled Lease Payments for each Original Lease as of the Cut-Off Date. The
List of Leases shall be deemed supplemented and amended to incorporate therein
the amendments delivered in connection with the Substitute Leases pursuant to
Section 5.1 hereof and the deletion of Leases that are repurchased by Trans
Leasing pursuant to Section 3.03 of the Contribution and Sale Agreement,
repurchased by the Seller under Section 2.6 hereof or replaced with a
Substitute Lease pursuant to Section 5.1 hereof or with respect to which all
Liquidation Proceeds or other proceeds from the disposition of the related
Equipment upon expiration or termination thereof have been deposited in the
Collection Account.
"Minimum Required Subordination Amount" means $5,640,396.
"Monthly Statement" has the meaning set forth in Section
3.10(a).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, a division of
Dun & Bradstreet Corporation, and its successors and assigns.
"Note" means a Class A Note or a Class B Note; "Notes"
means the Class A Notes and the Class B Notes.
"Note Distribution Account" means the note distribution
account established pursuant to Section 4.3.
"Noteholder" means the Holder of any Note.
"Officer's Certificate" of any Person means a certificate
signed by any Responsible Officer of such Person.
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17
"Opinion of Counsel" means a written opinion of legal
counsel (other than in-house legal counsel), who may be counsel to Trans
Leasing.
"Original Lease" means a Lease that is included in the
Trust Estate on the Closing Date.
"Originator" means Trans Leasing, in its capacity as the
transferor of Leases, Equipment and other assets pursuant to the Contribution
and Sale Agreement.
"Outstanding Class A Principal Balance" means, at any time,
an amount equal to the Initial Class A Principal Balance, reduced by the
aggregate of all amounts with respect to Class A Principal Payment Amounts or
otherwise with respect to principal on the Class A Notes deposited in the Note
Distribution Account for payment to Holders of Class A Notes prior to such
time.
"Outstanding Class B Principal Balance" means, at any time,
an amount equal to the Initial Class B Principal Balance, reduced by the
aggregate of all amounts with respect to Class B Principal Payment Amounts or
otherwise with respect to principal on the Class B Notes deposited in the Note
Distribution Account for payment to Holders of Class B Notes prior to such
time.
"Owner Trustee" has the meaning given to such term in the
Trust Agreement.
"Partial Early Termination Lease" means any Lease a portion
of which relating to particular Equipment has been terminated (including
because of a Casualty Loss) prior to its scheduled expiration date.
"Partial Early Termination Lease Proceeds" means any and
all cash proceeds or rents realized from the sale or re-Lease of Equipment
related to the terminated portion of a Partial Early Termination Lease (net of
Liquidation Expenses).
"Parties" means the signatories hereto.
"Payment Date" means the 20th day of each calendar month
(or, if such day is not a Business Day, the next succeeding Business Day),
commencing with December 20, 1996.
"Permitted Liens" means:
(a) Liens granted in favor of the Issuer hereunder or in
favor of the Indenture Trustee under the Indenture;
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(b) Liens constituting the rights of Lessees under the
Leases; and
(c) Liens relating to municipal or other local taxes and
other governmental charges if such taxes or governmental charges are not at the
time due and payable or if the Issuer or the Servicer is then contesting the
validity of any such taxes or charges in good faith by appropriate proceedings
and there has been set aside on the appropriate entity's books any reserve
which is required under generally accepted accounting principles with respect
to such taxes or charges.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock
company, estate, entity or Governmental Authority.
"Proceeds" means proceeds, as that term is defined in the
UCC.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, whether tangible or intangible.
"Purchase Option" has the meaning set forth in Section
8.3(a).
"Rating Agency" means each of S&P, Moody's and each such
other nationally recognized statistical rating organization or other comparable
Person requested by the Seller to rate the Notes (notice of any such request
shall be given by the Seller to the Indenture Trustee, the Owner Trustee and
the Servicer) that, in any such case, is then rating the Notes at the request
of the Seller. Any reference herein to a specific rating of a Rating Agency
shall apply to (i) if S&P or Moody's (or its successor) alters its rating
system, the rating designated as the equivalent thereof by S&P or Moody's (or
such successor), respectively, or (ii) if a Rating Agency (including S&P and
▇▇▇▇▇'▇) is no longer a Rating Agency, the equivalent rating of each Person who
is then a Rating Agency.
"Rating Agency Condition" means, with respect to any action
and so long as the Class A Notes are outstanding, that each Rating Agency (if
then rating the Class A Notes) has been given notice of such action and has
notified the Servicer and the Issuer that such action will not result in a
reduction or withdrawal of its then current rating of the Class A Notes, and,
with respect to any action and so long as the Class B Notes are outstanding,
that each Rating Agency (if then rating the Class B Notes at the request
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of the Seller) has been given notice of such action and has notified the
Servicer and the Issuer that such action will not result in a reduction or
withdrawal of its then current rating of the Class B Notes.
"Receivable" means a Lease together with an interest in the
related Equipment.
"Record Date" means, for any Payment Date, the last day of
the immediately preceding calendar month.
"Redemption Date" has the meaning given to such term in the
Indenture.
"Repurchased Lease" means, at any time, any Lease which has
been purchased by Trans Leasing pursuant to the Contribution and Sale Agreement
or by the Seller pursuant to this Agreement, in either case, as a result of a
Warranty Event.
"Responsible Officer" of any Person means any of the
President, Executive Vice President, Vice President, Assistant Vice President,
Chief Financial Officer, Treasurer, Corporate Controller or Trust Officer of
such Person.
"Restricting Event" shall be deemed to exist on any Payment
Date on which any of the following conditions has occurred and is continuing:
(i) a Servicer Default exists hereunder, (ii) the average of the sum of the
Discounted Lease Balances of Leases that are more than 90 days delinquent as of
the six (6) preceding Determination Dates exceeds two percent (2%) of the
average of the Aggregate Discounted Lease Balances as of such six (6) preceding
Determination Dates, as reflected on the most recent Monthly Statement, or
(iii) two (2) times the sum of the Discounted Lease Balances of Leases that
became Defaulted Leases in the six (6) preceding Collection Periods exceeds
five percent (5%) of the average of the Aggregate Discounted Lease Balances as
of the Determination Dates related to such six (6) preceding Collection
Periods, as reflected on the most recent Monthly Statement.
"S&P" means Standard & Poor's Ratings Services, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. and its successors and assigns.
"Scheduled Lease Payment" means, with respect to any Lease,
the monthly or quarterly rent payment to be made by the related Lessee under
the terms of such Lease after the Cut-Off Date or, with respect to any
Substitute Lease, after the applicable Substitution Cut-Off Date, in each case
after giving effect to any adjustments as a result of a portion of such Lease
being terminated
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20
prior to its scheduled expiration date (it being understood that Scheduled
Lease Payments do not include any Excluded Amounts).
"SEC" means the Securities and Exchange Commission or any
successor thereto.
"Servicer" means initially Trans Leasing and thereafter any
Person appointed as a Successor Servicer pursuant to this Agreement, in each
case, in such Person's capacity as the Servicer pursuant to this Agreement.
"Servicer Advance" means an advance of Scheduled Lease
Payments made by the Servicer pursuant to Section 3.3.
"Servicer Default" has the meaning set forth in Section
7.1(a).
"Servicer's Account" shall mean the account specified in
Exhibit C hereto, or such other account as may be specified from time to time
by the Servicer in writing.
"Servicing Fee" means, for any Payment Date, an amount
equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b) the
Aggregate Discounted Lease Balance on the related Determination Date.
"Servicing Fee Arrearage" means, for any Payment Date, any
Servicing Fee for a prior Payment Date remaining unpaid as of such Payment
Date.
"Servicing Fee Rate" means 1.0% per annum.
"Skipped Payment" has the meaning set forth in Section
3.2(a).
"Specified Portfolio Characteristics" means the criteria
set forth in the specified Portfolio Characteristics Schedule attached to the
Contribution and Sale Agreement.
"Stated Final Maturity Date" means the Payment Date in
November 2002.
"Subordination Amount" means, for any Payment Date, (A) the
Aggregate Discounted Lease Balance as of the related Determination Date plus
(B) the Available Amount for such Payment Date minus (C) the Outstanding Class
A Principal Balance on such Payment Date (all calculated after giving effect to
all payments and transfers made or to be made on such Payment Date pursuant to
clauses (a)
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through (i) of Section 4.8 hereof (but without giving effect to the provisos in
such clause (i)).
"Substitute Lease" means a Lease that is added to the Trust
Estate pursuant to Section 5.1(a).
"Substitution Transfer Agreement" means an Assignment for
Substitute Leases and related Equipment in the form of Exhibit D to this
Agreement pursuant to which Substitute Leases are transferred to the Issuer by
the Seller.
"Substitution Cut-Off Date" means, with respect to a
Substitute Lease, the close of business on the last day of the month preceding
the related Substitution Date.
"Substitution Date" means the date on which a Substitute
Lease is added to the Trust Estate pursuant to Section 5.1 hereof.
"Successor Servicer" means any Person appointed as a
successor to the Servicer pursuant to Section 6.4 or 7.2.
"Tax" means, with respect to any Person, each tax,
assessment or other governmental charge or levy imposed upon such Person, its
income, or any of its properties, franchises or assets.
"Taxing Authority" means any Governmental Entity which
imposes or collects any Tax.
"Termination Date" means the earliest to occur of (a) the
November 2002 Payment Date, (b) the day after the date on which the Outstanding
Class A Principal Balance and the Outstanding Class B Principal Balance are
first reduced to zero and (c) the Payment Date related to the first Collection
Period in which all Leases are expired or all Leases and Equipment have
otherwise been liquidated (including as described in Section 9.2 of the Trust
Agreement).
"Termination Notice" has the meaning set forth in Section
7.1(b).
"Transaction Year" means the twelve-month period ending on
June 30 of each year; provided that the initial Transaction Year will be the
period commencing on the Closing Date and ending on June 30, 1997.
"Trust Accounts" means the Collection Account and the Note
Distribution Account.
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"Trust Agreement" means that certain Trust Agreement, dated
as of the date hereof, between the Seller and the Owner Trustee together with
all amendments, restatements, supplements and modifications thereof or thereto.
"Trust Certificate" means the Trust Certificate (as defined
in the Trust Agreement).
"Trust Estate" means the property transferred by the Seller
to the Issuer pursuant to Section 2.1(a) and any other property acquired by the
Issuer from time to time.
"UCC" means the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of Illinois provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the Lien of the Trust or the Indenture
Trustee in and to the Trust Estate is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of Illinois the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
"Underwriting Agreement" means that certain Underwriting
Agreement, dated as of November 20, 1996, among the Seller, Trans Leasing and
First Union Capital Markets Corp.
"Unreimbursed Servicer Advances" means, at any time, the
amount of all previous Servicer Advances (or portions thereof) as to which the
Servicer has not been reimbursed as of such time pursuant to Section 4.7(c) or
4.8 and which the Servicer has determined in its sole discretion will not be
recoverable from Scheduled Lease Payments with respect to the related Leases.
"Warranty Event" means, with respect to any Lease, that
either (a) the Originator is obligated to repurchase such Lease pursuant to the
Contribution and Sale Agreement or (b) the Seller is obligated to repurchase
such Lease pursuant to this Agreement.
"Warranty Purchase Price" means, with respect to a Lease
and date of determination, an amount equal to the Discounted Lease and Residual
Balance as of the preceding Determination Date, plus one month's interest
thereon at the Discount Rate, plus the amount of any unreimbursed Servicer
Advances with respect to such Lease but in no event greater than the Discounted
Lease and Residual Balance of such Lease as of the Cut-Off Date or the
Substitution Cut-Off Date, as applicable.
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"1995-1 Notes" means all notes issued by the TLFC IV
Equipment Lease Trust 1995-1 pursuant to the Indenture between TLFC IV
Equipment Lease Trust 1995-1 and Manufacturers and Traders Trust Company, as
Indenture Trustee, dated October 6, 1995, together with all amendments,
supplements and modifications thereof and thereto.
1.2 Other Definitional Provisions.
(a) Terms used in Related Documents. Each term defined
in this Agreement will have the meaning assigned to such term in this Agreement
when used in any certificate or other document made or delivered pursuant to
this Agreement, unless such term is otherwise defined therein.
(b) Accounting Terms. As used in this Agreement,
accounting terms which are not defined in Section 1.1 have the respective
meanings given to them under generally accepted accounting principles, as in
effect on the date of this Agreement. To the extent that the definitions of
accounting terms in this Agreement are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions contained
in this Agreement will control.
(c) "Hereof," etc. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement will refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references contained in this
Agreement are references to Sections, Schedules and Exhibits in or to this
Agreement, unless otherwise specified.
(d) Reference to Payment Date. With respect to any
Payment Date, the "related Determination Date," the "related Record Date," and
the "related Collection Period," will mean the Determination Date, Record Date,
and Collection Period, respectively, immediately preceding such Payment Date,
and the relationships among Determination Dates, Record Dates, and Collection
Periods will be correlative to the foregoing relationships.
(e) Number and Gender. Each defined term used in this
Agreement has a comparable meaning when used in its plural or singular form.
Each gender-specific term used in this Agreement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form.
(f) Including. Whenever the term "including" (whether or
not that term is followed by the phrase "but not limited to" or "without
limitation" or words of similar effect) is used in this Agreement in connection
with a listing of items within
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24
a particular classification, that listing will be interpreted to be illustrative
only and will not be interpreted as a limitation on, or exclusive listing of,
the items within that classification.
(g) "Receipt" of Funds. For purposes of this Agreement,
funds constituting Collections will be deemed to be "received" by the Servicer
when such funds have been deposited in a lock-box account maintained by the
Servicer or on its behalf (or, if earlier, when such funds come into the
Servicer's actual possession).
ARTICLE II
CONVEYANCE OF ASSETS
2.1 Conveyance of the Assets.
(a) Conveyance. In consideration of the Issuer's
delivery of the Notes and the Trust Certificate to, or upon the order of the
Seller, the Seller does hereby enter into this Agreement and agree to fulfill
all of its obligations hereunder and hereby sells, transfers, assigns and
otherwise conveys to the Issuer, without recourse, all right, title and
interest of the Seller in, to and under, the following property, whether now
existing or hereafter arising:
(i) the Leases and all monies due or to become
due thereunder after the Initial Cut-Off Date and all Collections;
(ii) its interests in the related Equipment (other
than any licensed products that may accompany any of the Equipment);
(iii) the related Lease Files;
(iv) the Contribution and Sale Agreement,
including, but not limited to the obligation of Trans Leasing to
repurchase Leases under certain circumstances as specified therein but
excluding the rights of indemnification from Trans Leasing to Seller
under Section 3.04 thereof and rights of the Seller to purchase
additional Receivables thereunder;
(v) the Insurance Policies and any Insurance
Proceeds related to the Leases; and
(vi) all income or proceeds of the foregoing or
relating thereto.
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The foregoing sale, transfer, assignment and conveyance
does not constitute, and is not intended to result in, an assumption by the
Issuer, the Owner Trustee, the Indenture Trustee or any Holder of any
obligation of the Originator, the Seller or any other Person in connection with
the Leases or under any agreement or instrument relating to the Leases.
It is the intention of the Seller and the Issuer that the
transfer and assignment contemplated by this Agreement shall constitute a sale
of the Leases and its interests in the related Equipment from the Seller to the
Issuer (except and to the extent where applicable law in any jurisdiction
requires title to be vested in a trustee, in which case, to the Owner Trustee)
and the beneficial interest in and title to the Leases and the related
Equipment shall not be a part of the Seller's estate in the event of the filing
of a bankruptcy petition by or against the Seller under any bankruptcy law.
Notwithstanding the foregoing, in the event a court of competent jurisdiction
determines that the transfer and assignment contemplated by this Agreement did
not constitute such a sale or that such beneficial interest is a part of the
Seller's estate, then the Seller shall be deemed to have granted to the Issuer
a first priority perfected security interest in all of the Seller's right,
title and interest in, to and under the Leases and its interests in the related
Equipment, and the Seller hereby grants such security interest. For purposes
of such grant, this Agreement shall constitute a security agreement under the
UCC.
(b) Recording and Filings. In connection with the
transfer of the Trust Estate to the Issuer, the Servicer agrees to record and
file, on behalf of the Seller and at the Servicer's expense, financing
statements and continuation statements with respect to the Trust Estate meeting
the requirements of the UCC in such manner and in such jurisdictions as are
necessary to perfect and maintain the perfection of the transfer of the Trust
Estate to the Issuer. Notwithstanding the foregoing, the Parties acknowledge
and agree that (i) financing statements will not be recorded or filed with
respect to the Equipment other than in the Filing Locations, (ii) the Lease
Files will not be physically delivered to the Owner Trustee or the Indenture
Trustee but instead will be held by the Servicer as custodian for the Owner
Trustee or the Indenture Trustee in accordance with the provisions hereof,
(iii) the financing statements to be filed in the Filing Locations other than
the States of Delaware, Illinois and New York will not be filed until after the
Closing Date (and the Servicer, on behalf of the Seller and at the Servicer's
expense, agrees to make such filings within 5 Business Days after the Closing
Date), and (iv) Trans Leasing will not be required to cause the certificate of
title or other title document to any Equipment consisting of motor vehicles
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to be transferred to the Seller or transferred from the Seller to the Owner
Trust pursuant to this Agreement or the security interest of the Indenture
Trustee granted pursuant to the Indenture marked on such certificate of title
or other title document.
2.2 Marking of Lease Management System. The Servicer
will ▇▇▇▇ the Lease Management System, on behalf of the Seller at the
Servicer's expense, on or prior to the Closing Date in a manner which indicates
that the Leases and related Equipment have been transferred to the Issuer and
pledged to the Indenture Trustee for the benefit of the Holders.
2.3 Acceptance by Issuer. The Owner Trustee on behalf of
the Issuer does hereby accept all consideration conveyed by the Seller pursuant
to Section 2.1(a) and declares that the Issuer shall hold such consideration
upon the trust set forth in the Trust Agreement for the benefit of the
Certificateholders, subject to the terms and conditions of the Indenture and
this Agreement.
2.4 Representations and Warranties of the Seller. The
Seller hereby makes the following representations and warranties which, unless
otherwise indicated, speak as of the Closing Date.
(a) Representations and Warranties with respect to the
Assets. As to the Assets:
(i) no Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person (except pursuant to
the Credit Agreement and pursuant hereto), and immediately prior to
the sale and assignment of such Receivable to the Issuer hereunder,
the Seller is the sole owner of, and holder of title to, the Leases
and the Equipment (or a security interest therein) free and clear of
any Liens (except for Permitted Liens), and immediately following the
transfer by the Seller to the Issuer of the Receivables, the
Receivables will be free and clear of all Liens (except for Permitted
Liens); and
(ii) except as described in the provisos contained
in Section 2.1(b), all filings necessary to evidence the sale and
assignment of the Receivables to the Issuer hereunder have been made
in all appropriate jurisdictions.
(b) Representations and Warranties as to the Seller. As
to the Seller:
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(i) Organization and Good Standing. The Seller
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with all requisite corporate
power and authority to own its properties and to conduct its business
as presently conducted;
(ii) Due Qualification. The Seller is qualified
to do business as a foreign corporation, is in good standing, and has
obtained all licenses and approvals required under the laws of, all
states in which the ownership of its property or the conduct of its
business requires such qualification, standing, license or approval,
except to the extent that the failure to so qualify, maintain such
standing or be so licensed or approved, would not, in the aggregate,
materially and adversely affect the ability of the Seller to perform
its obligations under this Agreement and the Contribution and Sale
Agreement;
(iii) Power and Authority. The Seller has the
corporate power and authority to execute and deliver this Agreement
and the Contribution and Sale Agreement and to carry out the terms
hereof and thereof, and the Seller has duly authorized the execution,
delivery and performance of this Agreement and the Contribution and
Sale Agreement by all requisite corporate action;
(iv) Valid Transfer and Sale; Binding Obligations.
The sale of the Leases and related Equipment described in Section
2.1(a) constitutes, and each sale of any Substitute Leases and related
Equipment will constitute, a legal and valid sale, assignment,
transfer and conveyance to the Issuer of all right, title, and
interest of the Seller in, to and under such Leases and the related
Equipment, or the Issuer has (or will have with respect to Substitute
Leases and the related Equipment) a first priority perfected security
interest in all of the Seller's right, title and interests in, to and
under such Leases and the related Equipment (subject to the matters
set forth in the provisos contained in Section 2.1(b)); such Leases
and the related Equipment will be held by the Issuer free and clear of
any Lien of any Person claiming through or under the Seller, except
for Permitted Liens; and each of this Agreement and the Contribution
and Sale Agreement constitutes a legal, valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect affecting the enforcement of
creditors' rights generally and (ii) general
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principles of equity (whether considered in a suit at law or in
equity);
(v) No Violation. The consummation of the
transactions contemplated by, and the performance of the terms of,
this Agreement and the Contribution and Sale Agreement by the Seller
(with or without the giving of any notice or the lapse of time) will
not (after giving effect to all consents and waivers received on or
prior to the date hereof) (i) conflict with, result in any breach of
any of the terms or provisions of or constitute a default under the
certificate of incorporation or by-laws of the Seller or any material
term of any material indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound; (ii) result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument (other than
this Agreement and the Contribution and Sale Agreement); or (iii)
violate any law or regulation applicable to the Seller or any of its
properties in any manner; which conflict, breach, default, Lien or
violation would have a material and adverse effect on the ability of
the Seller to comply with this Agreement or the Contribution and Sale
Agreement;
(vi) No Consent. No consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any Governmental Authority having jurisdiction over
the Seller or any of its properties or assets is required to be
obtained by or with respect to the Seller in connection with the
execution, delivery and performance by the Seller of this Agreement
and the Contribution and Sale Agreement and the consummation of the
transactions contemplated herein and therein;
(vii) No Proceedings. There are no proceedings or
investigations pending or, to the best of the Seller's knowledge,
threatened before any Governmental Authority (A) asserting the
invalidity of this Agreement or the Contribution and Sale Agreement,
(B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or the Contribution and Sale Agreement,
or (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or the
Contribution and Sale Agreement;
(viii) Insolvency. The Seller is not insolvent and
will not be rendered insolvent by the consummation of the
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transactions contemplated by this Agreement and the Contribution and
Sale Agreement and has an adequate amount of capital to conduct its
business in the ordinary course and to carry out its obligations under
this Agreement and the Contribution and Sale Agreement;
(ix) Places of Business and Offices. The Seller's
sole places of business and offices are located in Northbrook,
Illinois, and Wilmington, Delaware; and
(x) Ability to Perform. As of the date hereof,
the Seller does not believe, nor does it have any reasonable cause to
believe, that it cannot perform each and every covenant contained in
this Agreement and the Contribution and Sale Agreement.
2.5 Notice of Breach. The representations and warranties
set forth in Section 2.4 will survive the transfer of the Leases to the Issuer.
Upon discovery by the Seller, the Servicer, the Issuer or the Indenture Trustee
of a breach of any of the representations and warranties set forth in Section
2.4, the Person discovering such breach will give prompt written notice to each
of the other Parties and the Rating Agencies; provided that no failure to give
such notice (or to give such notice in a prompt manner) will constitute a
waiver of such breach. Each Party will cooperate with the other Parties in
attempting to cure any such breach.
2.6 Mandatory Purchase of Leases and Indemnification Upon
Breach of Warranty.
(a) Representations and Warranties as to the Leases.
Pursuant to Section 2.1(a), the Seller assigned to the Issuer all of its
rights, title and interest in, to and under the Contribution and Sale
Agreement, including the representations and warranties of the Originator made
to the Seller pursuant to Section 3.01(a) of the Contribution and Sale
Agreement, but excluding the rights of indemnification from the Originator to
Seller under Section 3.04 thereof and rights of the Seller to purchase
additional Receivables thereunder. The Seller hereby represents and warrants
to the Issuer that the Seller has taken no action which would cause such
representations and warranties of the Originator to be false in any material
respect as of the Closing Date. The Seller further acknowledges that the
Issuer relies on the representations and warranties of the Seller under this
Agreement and the Originator under the Contribution and Sale Agreement in
accepting the Leases in trust and executing and delivering the Notes and the
Trust Certificate. The foregoing representation and warranty speaks as of the
Closing Date (unless
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otherwise specified in the Contribution and Sale Agreement), but shall survive
the sale, transfer and assignment of the Leases to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(b) Purchase of Leases and Equipment by Seller. In the
event that the Indenture Trustee or the Servicer discovers or by written notice
is informed at any time that a representation or warranty of the Seller set
forth in Section 2.6(a) is untrue in any respect, such Party shall give written
notice to the other Parties and the Seller. The Seller hereby agrees to
purchase each Lease materially and adversely affected by such untruth (to the
extent that such Lease constitutes a part of the Trust Estate) together with
all related Equipment on or prior to the thirtieth day after such notice (or
such later date as the Seller and the Indenture Trustee may agree), and the
Seller will purchase each such Lease and the related Equipment, for the
Warranty Purchase Price, on or prior to such thirtieth (or later) day; provided
that the Seller will not be required to purchase any such Lease or the related
Equipment if, prior to such thirtieth (or later) day, either (i)(A) such
untruth has been cured with respect to such Lease in all material respects and
(B) the Seller delivers to the Indenture Trustee a certificate of a Responsible
Officer to that effect or (ii) such Lease is replaced with a Substitute Lease
under Section 5.1 hereof or purchased by the Originator under Section 2.6(c)
hereof. In consideration for the purchase of any such Lease and the related
Equipment, the Seller will remit the Warranty Purchase Price therefor to the
Servicer for deposit into the Collection Account. It is understood and agreed
that in the event that any representation or warranty of the Seller set forth
in Section 2.6(a) is untrue, the purchase of any affected Lease and the related
Equipment as provided in this Section 2.6(b) will constitute the only remedies
available to the Indenture Trustee, the Owner Trustee and the Holders in
respect of such untruth.
(c) Breach by Originator. In the event that the
Indenture Trustee or the Servicer discovers or by written notice is informed
that any representation or warranty of the Originator set forth in Section
3.01(a) of the Contribution and Sale Agreement is untrue in any respect, such
Party shall give written notice to the other Parties, and the Servicer and the
Indenture Trustee will enforce the obligation of the Originator pursuant to
Section 3.03 of the Contribution and Sale Agreement to purchase each Lease
materially and adversely affected by such untruth (to the extent that such
Lease constitutes a part of the Trust Estate), together with all related
Equipment on or prior to the thirtieth day after such notice (or such later
date as the Originator and the Indenture Trustee may agree); provided that the
Originator will not be required to purchase any such Lease or related Equipment
if, prior
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to such thirtieth (or later) day, either (i) the Servicer delivers to the
Indenture Trustee an Officer's Certificate which states that such untruth has
been cured with respect to such Lease and the related Equipment in all material
respects or (ii) such Lease is replaced with a Substitute Lease under Section
5.1 hereof or purchased by the Seller under Section 2.6(b) hereof. In
consideration of the purchase of a Lease and related Equipment pursuant to this
Section 2.6(c) by the Originator, the Originator will remit the Warranty
Purchase Price therefor to the Servicer for deposit into the Collection
Account. The Parties understand and agree that in the event that any
representation or warranty set forth in Section 3.01(a) of the Contribution and
Sale Agreement is untrue, the purchase of any affected Lease and the related
Equipment pursuant to this Section 2.6(c) of this Agreement will constitute the
sole remedy available to the Indenture Trustee, the Owner Trustee and the
Holders in respect of such untruth.
2.7 Covenants of the Seller. The Seller covenants that:
(a) Security Interests. Except for the conveyances in
accordance with this Agreement and the Indenture and except for rights and
claims relating to the interest of the Certificateholders, the Seller will not
sell, pledge, assign or transfer to any other Person or grant, create, incur,
assume or suffer to exist any Lien on the Trust Estate (or any interest
therein), and the Seller will defend all right, title and interest of the
Issuer and the Indenture Trustee in, to and under the Trust Estate against all
claims of third parties claiming through or under the Seller; provided that
nothing in this Section 2.7(a) will prevent or be deemed to prohibit the Seller
from allowing to exist upon the Trust Estate any Permitted Liens.
(b) Delivery of Collections. The Seller agrees to pay to
the Servicer for deposit into the Collection Account all amounts (if any)
received by the Seller in respect of the Trust Estate as soon as practicable
after receipt thereof by the Seller but, in no event later than two Business
Days following the date thereof.
(c) Obligations with Respect to Leases. The Seller will
duly fulfill all obligations (if any) on its part to be fulfilled under or in
connection with each Lease and will do nothing to impair the rights of the
Issuer, the Owner Trustee, the Indenture Trustee or the Holders in the Trust
Estate.
(d) Compliance with Law. The Seller will comply, in all
material respects, with all laws and regulations of any Governmental Authority
(including the observance of corporate
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formalities) applicable to the Seller or the Trust Estate; provided that the
Seller may contest any such laws or regulations in any reasonable manner which
will not materially and adversely affect (i) the value of (or the rights of the
Issuer, the Owner Trustee, the Indenture Trustee or the Holders with respect
to) the Trust Estate, or the performance by the Seller of its obligations under
this Agreement or the Contribution and Sale Agreement or (ii) the validity or
enforceability of this Agreement or the Contribution and Sale Agreement.
(e) Preservation of Security Interest. The Seller will
execute and file such financing and continuation statements and any other
documents which are reasonably requested by the Servicer or the Indenture
Trustee to be filed or which may be required to be filed by any laws and
regulations of any Governmental Authority to preserve and protect fully the
interest of the Issuer, the Indenture Trustee and the Holders in, to and under
the Trust Estate; provided that (i) the Seller will not be required to file
financing or continuation statements with respect to the Equipment in any
jurisdiction other than in the Filing Locations, (ii) the Lease Files for the
Leases will not be physically delivered to the Owner Trustee or the Indenture
Trustee but will remain in the possession of Trans Leasing, in its capacity as
the Servicer, or any Successor Servicer and (iii) the Seller will not be
required to cause the certificate of title or other title document to any
Equipment consisting of motor vehicles to be transferred to the Owner Trustee
or the security interest of the Indenture Trustee granted pursuant to the
Indenture to be marked on such certificate of title or other title document.
Upon the appointment of a subservicer other than Nuvotron, Inc. or any other
Affiliate of the Servicer, the Servicer shall give written notice thereof to
the Rating Agencies.
(f) Maintenance of Office, etc. Unless the Seller
provides not less than thirty days prior written notice to the Servicer and the
Issuer and files such financing statements and amendments to financing
statements as the Servicer or the Indenture Trustee may reasonably require, the
Seller will not (i) change the location of its principal executive office or
(ii) change its name, identity or corporate structure in any manner which would
make any financing statement or continuation statement filed by or on behalf of
the Seller in accordance with this Agreement seriously misleading within the
meaning of Article 9-402(7) of the UCC.
(g) Further Assurances. Except as provided in the final
sentence of Section 2.1(b), the Seller from time to time will make, execute or
endorse, acknowledge and file or deliver to the Indenture Trustee and the
Servicer, as appropriate, such schedules, confirmatory assignments,
conveyances, transfer endorsements,
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powers of attorney, certificates, reports and other assurances or instruments,
and take such further steps relating to the Trust Estate, as the Indenture
Trustee or the Servicer may request and reasonably require.
(h) Notice of Liens. The Seller will notify the Servicer
and the Indenture Trustee of any Lien on any of the Trust Estate (other than
Permitted Liens) promptly after the Seller becomes aware of such Lien.
(i) Amendments to Certificate of Incorporation. The
Seller shall not amend its certificate of incorporation unless the Rating
Agency Condition with respect to such amendment has been satisfied.
(j) Corporate Existence. The Seller will keep in full
effect its existence and good standing as a corporation under the laws of the
State of Delaware, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is required by applicable law, except to the extent that the
failure to so qualify would not, in the aggregate, materially and adversely
affect (i) the Seller, (ii) the value of (or the rights of the Issuer, the
Owner Trustee, the Indenture Trustee or the Holders with respect to) the Trust
Estate, or (iii) the ability of the Seller to comply with this Agreement or the
Contribution and Sale Agreement.
(k) Independent Directors. The Seller will not permit an
Independent Director (as defined in the certificate of incorporation of the
Seller) to be any person who (i) owns more than 1% of the outstanding shares of
Trans Leasing, (ii) provides personal services to Trans Leasing or any of its
subsidiaries or affiliates or (iii) is affiliated with a tax-exempt entity that
receives contributions from Trans Leasing or any of its subsidiaries or
affiliates.
(l) Indebtedness. Except for the Notes and the 1995-1
Notes, the Seller shall not issue or, if issued by any trust formed by the
Seller, sell, any notes, debentures, trust certificates or other instruments
representing indebtedness or enter into any agreements for borrowed money
unless the indebtedness represented thereby or outstanding thereunder (i) (A)
will be rated by the Rating Agencies not lower than the highest rating on the
Notes (prior to giving effect to the incurrence of such indebtedness), (B) is
fully subordinated to the Notes and the documentation pursuant to which such
indebtedness is incurred provides that such indebtedness does not constitute a
claim against the Seller or any of its assets (other than the assets pledged
to secure such indebtedness) in the event that such pledged assets are
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insufficient to satisfy such indebtedness or (C) is nonrecourse to the Seller
and its assets (other than the assets pledged to secure such indebtedness) and
the documentation pursuant to which such indebtedness is incurred provides that
such indebtedness does not constitute a claim against the Seller or any of its
assets (other than the assets pledged to secure such indebtedness) in the event
that such pledged assets are insufficient to satisfy such indebtedness and (ii)
the holder of such indebtedness covenants and agrees in the documentation
pursuant to which such indebtedness is incurred not to, prior to the date which
is one year and one day after the final distribution with respect to (i) the
Notes, (ii) the 1995-1 Notes, and (iii) any other indebtedness of the Issuer,
the Seller or of any other trust formed by the Seller permitted under this
Section 2.7(l), acquiesce, petition or otherwise involve or cause the Seller to
invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the seller under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequester or other similar official of the Seller
or any substantial part of its Property, or ordering the winding up or
liquidation of the affairs of the Seller.
2.8 Release of Lien on Equipment. At the same time as
(i) any Lease becomes an Expired Lease and the Equipment related to such Lease
is sold or otherwise disposed of, (ii) any Lease becomes an Early Termination
Lease and the Equipment related to such Early Termination Lease is sold or
otherwise disposed of, (iii) any Lease becomes a Partial Early Termination
Lease and the Equipment related to the portion of such Lease that was
terminated is sold or otherwise disposed of, (iv) the Servicer substitutes or
replaces any unit of Equipment as contemplated in Section 3.1(c) or (v) any
Lease and related Equipment is substituted as contemplated in Section 5.1, the
Issuer will to the extent requested by the Servicer release its interest in the
Equipment relating to such Expired Lease or Early Termination Lease, the
Equipment relating to the terminated portion of such Partial Early Termination
Lease or such substituted or replaced Equipment or Lease and related Equipment,
as the case may be; provided that such release will not constitute a release of
the Issuer's interest in the proceeds of such sale or other disposition (other
than with respect to Equipment or Lease and related Equipment that is replaced
pursuant to Section 3.1(c) or 5.1, as the case may be). In connection with any
sale of such Equipment, the Issuer and the Seller will execute and deliver to
the Servicer any assignments, bills of sale, termination statements and any
other releases and instruments as the Servicer may request in order to effect
such release and transfer; provided that the Issuer and the Seller will make no
express representation or warranty with respect to any such Equipment in
connection with such sale or transfer and assignment
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other than with respect to its interest in such Equipment or the absence of any
such interest. Nothing in this Section 2.8 shall diminish the Servicer's
obligations pursuant to Section 3.1(d) with respect to the proceeds of any such
sale.
ARTICLE III
ADMINISTRATION AND SERVICING OF LEASES
3.1 Appointment and Acceptance; Duties.
(a) Appointment of Initial Servicer. Trans Leasing is
hereby appointed as Servicer pursuant to this Agreement. Trans Leasing accepts
the appointment and agrees to act as the Servicer pursuant to this Agreement.
(b) General Duties. The Servicer will service,
administer and enforce the Leases on behalf of the Issuer and will have full
power and authority to do any and all things in connection with such servicing
and administration which it deems necessary or desirable. The Servicer will
manage, service, administer and make collections on the Leases with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to all comparable equipment leases that it services for itself or
others. The Servicer's duties will include collection and posting of all
payments, responding to inquiries of Lessees regarding the Leases,
investigating delinquencies, accounting for collections, furnishing monthly and
annual statements with respect to collections and payments in accordance with
Section 3.10, making Servicer Advances as provided in Section 3.3 in its
discretion, enforcing the rights of the Issuer under the Contribution and Sale
Agreement and using its best efforts to maintain the perfected first priority
security interest of the Indenture Trustee in the Leases and the related
Equipment (subject to the matters set forth in the provisos contained in
Section 2.1(b)). The Servicer will follow its customary standards, policies,
and procedures and will have full power and authority, acting alone, to do any
and all things in connection with such managing, servicing, administration, and
collection that it deems necessary or desirable. If the Servicer commences a
legal proceeding to enforce a Defaulted Lease pursuant to Section 3.4 or
commences or participates in a legal proceeding (including a bankruptcy
proceeding) relating to or involving a Lease, the Issuer will be deemed to have
automatically assigned such Lease to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer
is authorized and empowered by the Issuer, pursuant to this Section 3.1(b), to
execute and deliver, on behalf of itself, the Holders, the Issuer
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and the Indenture Trustee, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other notices,
demands, claims, complaints, responses, affidavits or other documents or
instruments in connection with any such proceedings. If in any enforcement
suit or legal proceeding it is held that the Servicer may not enforce a Lease
on the ground that it is not a real party in interest or a holder entitled to
enforce the Lease, then the Issuer will, at the Servicer's expense and
direction, take steps to enforce the Lease, including bringing suit in its
name.
(c) Consent to Assignment or Replacement. At the request
of a Lessee, the Servicer may in its sole discretion consent to the assignment
of the related Lease or the sublease of a unit of the related Equipment, so
long as such Lessee remains liable for all of its obligations under such Lease.
Upon the request of any Lessee, subject to the limitations in Section 5.1(e),
the Servicer may, in its sole discretion, provide for the substitution or
replacement of any unit of Equipment for a substantially similar unit of
equipment.
(d) Disposition Upon Termination of Lease. Upon the
expiration or termination of a Lease (or a portion thereof) the Servicer will
use commercially reasonable efforts to dispose of any related Equipment.
Without limiting the generality of the foregoing, the Servicer may dispose of
any such Equipment by selling such Equipment to Trans Leasing for a purchase
price equal to the fair market value thereof. The Servicer will deposit any
and all proceeds realized from the sale or other disposition of Equipment in
accordance with Section 4.7.
(e) Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers (including Nuvotron, Inc. or any other
Affiliate of any Servicer) to perform all or a portion of the servicing
functions on behalf of the Servicer; provided that the Servicer will remain
obligated and be liable to the Issuer and the Holders for servicing and
administering the Leases in accordance with the provisions of this Agreement
without diminution of such obligation and liability by virtue of the
appointment of such subservicer, to the same extent and under the same terms
and conditions as if the Servicer alone were servicing and administering the
Leases. The fees and expenses of the subservicer (if any) will be as agreed
between the Servicer and its subservicer and neither the Issuer, the Owner
Trustee, the Indenture Trustee nor the Holders will have any responsibility
therefor. All actions of a subservicer taken pursuant to such a subservicer
agreement will be taken as an agent of the Servicer with the same force and
effect as though performed by the Servicer.
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(f) Further Assurances. The Issuer will furnish the
Servicer, and the Servicer will furnish any subservicer, with any powers of
attorney and other documents necessary or appropriate to enable the Servicer or
a subservicer, as applicable, to carry out its servicing and administrative
duties under this Agreement.
(g) Notice to Lessees. The Servicer will not be required
to notify any Lessee that such Lessee's Lease or related Equipment has been
sold, transferred, assigned or conveyed to the Seller pursuant to the
Contribution and Sale Agreement or to the Issuer pursuant to this Agreement or
pledged to the Indenture Trustee pursuant to the Indenture; provided that, in
the event that any Servicer resigns or is replaced, then if the place for
payment pursuant to any Lease is changed, the Successor Servicer shall prior to
such change give each related Lessee prompt written notice of the appointment
of the Successor Servicer and the place to which such Lessee should make
payments pursuant to each such Lease, and the Servicer that resigned or has
otherwise been replaced shall promptly transfer to the Successor Servicer any
payments it receives after such resignation or replacement.
3.2 Collection of Payments.
(a) Collection Efforts. The Servicer will make
reasonable efforts to collect all payments called for under the terms and
provisions of the Leases as and when the same become due and will follow those
collection procedures which it follows with respect to all comparable equipment
leases that it services for itself or others. The Servicer may not grant
extensions, rebates, or adjustments on a Lease which will, for purposes of this
Agreement, extend the original due dates of any Scheduled Lease Payment, reduce
the number of Scheduled Lease Payments, or reduce the amount of any Scheduled
Lease Payment; provided, however, that the Servicer may permit Leases to become
Partial Early Termination Leases as described in (b) below, and provided,
further, that to the extent consistent with the Servicer's past practices, the
Servicer may, on only one occasion with respect to any Lease, permit a
deferment of not more than three consecutive Scheduled Lease Payments
(collectively, a "Skipped Payment") under such Lease to the end of the term of
such Lease so long as (i) the sum of the Discounted Lease Balances of all
Leases with respect to which there has been a Skipped Payment since the Initial
Cut-Off Date as of a Determination Date does not exceed 5% of the Aggregate
Discounted Lease Balance as of the Initial Cut-Off Date and (ii) such Skipped
Payment is deferred to no later than the last day of the Collection Period
related to the Payment Date that is the Stated Final Maturity Date. No Skipped
Payment shall be considered delinquent for purposes of this Agreement and no
Servicer Advance will be required with respect thereto. The Servicer may in
its discretion
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waive any late payment charge or any other fees that may be collected in the
ordinary course of servicing any Lease.
(b) Early Termination Leases and Partial Early
Termination Leases. The Servicer may, in its sole discretion, permit a Lease
to become an Early Termination Lease or a Partial Early Termination Lease
(which shall not include a Lease that becomes an Early Termination Lease or a
Partial Early Termination Lease due to a Casualty Loss), so long as, unless
another Lease is substituted for such Lease or the terminated portion thereof
as described in Section 5.1 herein, (i) the Servicer deposits in the Collection
Account, not later than the second Business Day after receipt thereof by the
Servicer, the sum of (A) (1) in the case of an Early Termination Lease, the
Discounted Lease Balance of such Lease as of the Determination Date related to
the Collection Period in which such Lease became an Early Termination Lease or
(2) in the case of a Partial Early Termination Lease, the reduction in the
Discounted Lease Balance of such Lease as of the Determination Date related to
the Collection Period in which such Lease became a Partial Early Termination
Lease, (B) one month's interest on the amount described in clause (A) at the
Discount Rate and (C) the amount of any unreimbursed Servicer Advances with
respect to such Lease and (ii) at the time the Servicer permits a Lease to
become an Early Termination Lease or a Partial Early Termination Lease, the sum
of (x) the aggregate of the Discounted Lease Balance of each Early Termination
Lease (other than any Early Termination Lease that became an Early Termination
Lease due to a Casualty Loss or for which a substitution has been made pursuant
to Section 5.1) as of the Determination Date related to the Collection Period
in which such Lease became an Early Termination Lease plus (y) the aggregate of
the reduction in the Discounted Lease Balance of each Partial Early Termination
Lease (other than any Partial Early Termination Lease that became a Partial
Early Terminated Lease due to a Casualty Loss or for which a substitution has
been made pursuant to Section 5.1) as of the Determination Date related to the
Collection Period in which such Lease became a Partial Early Termination Lease
does not exceed 3% of the Aggregate Discounted Lease and Residual Balance as of
the Initial Cut-Off Date.
(c) Acceleration. The Servicer, in its sole discretion,
may accelerate (or elect not to accelerate) the maturity of all or any
Scheduled Lease Payments under any Lease under which a default under the terms
thereof has occurred and is continuing (after the lapse of any applicable grace
period); provided that the Servicer is required to accelerate the Scheduled
Lease Payments due under any Lease (and take other action in accordance with
the Servicer's past practice, including repossessing or otherwise converting
the related Equipment, to realize upon the value of such Lease and the related
Equipment) to
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the fullest extent permitted by the terms of such Lease promptly after such
Lease becomes a Defaulted Lease.
(d) Taxes and Other Amounts. To the extent provided for
in any Lease, the Servicer will make reasonable efforts to collect all payments
with respect to amounts due for taxes, assessments and insurance premiums
relating to the Leases or the related Equipment and remit such amounts to the
appropriate Governmental Entity or insurer on or prior to the date such
payments are due.
3.3 Servicer Advances. For each Collection Period, if
the Servicer determines that any Scheduled Lease Payment (or portion thereof)
which was due and payable pursuant to a Lease during such Collection Period was
not received prior to the end of such Collection Period, the Servicer shall
make a Servicer Advance in an amount up to the amount of such delinquent
Scheduled Lease Payment (or portion thereof), to the extent that in its sole
discretion it determines that it can recoup such amount from subsequent
collections under the related Lease. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 10:00 a.m. (Chicago time)
on the related Payment Date, in immediately available funds. The Servicer will
be entitled to be reimbursed for Servicer Advances pursuant to Sections 4.7(c)
and 4.8(a).
3.4 Realization Upon Defaulted Leases. The Servicer will
use its best efforts consistent with its customary and usual practices and
procedures in its servicing of equipment leases to repossess or otherwise
comparably convert the ownership of any Equipment relating to a Defaulted Lease
and will act as sales and processing agent for Equipment which it repossesses.
The Servicer will follow such other practices and procedures as it deems
necessary or advisable and as are customary and usual in its servicing of
equipment leases and other actions by the Servicer in order to realize upon
such Equipment, which practices and procedures may include reasonable efforts
to enforce all obligations of Lessees and repossessing and selling such
Equipment at public or private sale in circumstances other than those described
in the preceding sentence. Without limiting the generality of the foregoing,
the Servicer may sell any such Equipment to Trans Leasing for a purchase price
equal to the fair market value thereof. In any case in which any such
Equipment has suffered damage, the Servicer will not expend funds in connection
with any repair or towards the repossession of such Equipment unless it
determines in its discretion that such repair and/or repossession will increase
the Liquidation Proceeds by an amount greater than the amount of such expenses.
The Servicer will remit to the Collection Account the Liquidation Proceeds
received in connection
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with the sale or disposition of Equipment relating to a Defaulted Lease in
accordance with Section 4.7(b).
3.5 Maintenance of Insurance Policies. The Servicer will
use its best efforts to ensure that each Lessee maintains an Insurance Policy
with respect to the related Equipment in an amount at least equal to the sum of
the Discounted Lease and Residual Balance of the related Lease; provided that
the Servicer, in accordance with its customary servicing procedures, may allow
Lessees to self-insure. Additionally, the Servicer will require that each
Lessee maintain property damage liability insurance during the term of each
Lease in amounts and against risks customarily insured against by the Lessee on
equipment owned by it. If a Lessee fails to maintain property damage
insurance, the Servicer may purchase and maintain such insurance on behalf of,
and at the expense of, the Lessee. In connection with its activities as
Servicer of the Leases, the Servicer agrees to present, on behalf of itself,
the Issuer and the Holders, claims to the insurer under each Insurance Policy
and any such liability policy and to settle, adjust and compromise such claims,
in each case, consistent with the terms of each Lease.
3.6 Representations and Warranties of Servicer. The
Servicer represents and warrants to the Issuer (for the benefit of all Persons
who are or may become Holders) that, as of the Closing Date, insofar as any of
the following affects the Servicer's ability to perform its obligations
pursuant to this Agreement in any material respect:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, with all requisite corporate power and authority
to own its properties and to conduct its business as presently conducted and to
enter into and perform its obligations pursuant to this Agreement.
(b) Due Qualification. The Servicer is qualified to do
business as a foreign corporation, is in good standing, and has obtained all
licenses and approvals as required under the laws of, all states in which the
ownership or lease of its property, the performance of its obligations pursuant
to this Agreement or the other conduct of its business requires such
qualification, standing, license or approval, except to the extent that the
failure to so qualify, maintain such standing or be so licensed or approved
would not, in the aggregate, materially and adversely affect the ability of the
Servicer to comply with this Agreement.
(c) Power and Authority. The Servicer has the corporate
power and authority to execute and deliver this Agreement
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and to carry out its terms. The Servicer has duly authorized the execution,
delivery and performance of this Agreement by all requisite corporate action.
(d) No Violation. The consummation of the transactions
contemplated by, and the fulfillment of the terms of, this Agreement by the
Servicer (with or without notice or lapse of time) will not (i) conflict with,
result in any breach of any of the terms or provisions of or constitute a
default under the certificate of incorporation or by-laws of the Servicer or
any material term of any material indenture, agreement, mortgage, deed of trust
or other instrument to which the Servicer is a party or by which it is bound,
(ii) result in the creation or imposition of any Lien upon any of its
Properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, or (iii) violate any law, regulation, order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority applicable to the Servicer or any of its Properties.
(e) No Consent. No consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over the Servicer or any of its
Properties or assets is required to be obtained by or with respect to the
Servicer in connection with the execution, delivery and performance by the
Servicer of this Agreement and the consummation of the transactions
contemplated herein.
(f) Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer, enforceable against the
Servicer in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (whether
considered in a suit at law or in equity).
(g) No Proceedings. To the best of the Servicer's
knowledge, there are no proceedings or investigations pending or threatened
against the Servicer before any Governmental Authority (i) asserting the
invalidity of this Agreement, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might (in the reasonable judgment of the Servicer)
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement.
(h) Location of Lease Files. The Lease Files for all
Leases are located at the Servicer's office at 3000 Dundee
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▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and the Lease Files have not been located at any
other address during the four-month period prior to the date hereof. No Person
other than the Seller, the Issuer, the Indenture Trustee and the Servicer has
possession of, or any Lien upon, any Lease Files.
3.7 Covenants of Servicer. The Servicer covenants that:
(a) Lease Files. The Servicer will, at its own cost and
expense, maintain all Lease Files, as custodian for the Issuer and the
Indenture Trustee and for the benefit of the Noteholders. Without limiting the
generality of the preceding sentence, the Servicer (i) will not dispose of any
documents constituting the Lease Files in any manner which is inconsistent with
the performance of its obligations as the Servicer pursuant to this Agreement
and will not dispose of any Original Lease except as contemplated by this
Agreement, (ii) will maintain the Lease Files in a manner which, with the
assistance of the information set forth in the List of Leases, will permit the
Lease Files to be identified and segregated from other documents in the
Servicer's possession which relate to leases or other contracts or property
which are not Leases or Equipment and (iii) will not permit any Person other
than the Issuer, the Indenture Trustee and the Servicer to maintain possession
of, or any Lien upon, any Lease Files (other than any Lease Files which relate
solely to an Early Termination Lease, an Expired Lease or a Repurchased Lease
and/or the related Equipment).
(b) Compliance with Law. The Servicer will comply, in
all material respects, with all laws and regulations of any Governmental
Authority applicable to the Servicer or the Leases and related Equipment and
Lease Files or any part thereof; provided that the Servicer may contest any
such law or regulation in any reasonable manner which will not materially and
adversely affect the value of (or the rights of the Issuer or the Indenture
Trustee on behalf of the Holders, with respect to) the Trust Estate.
(c) Preservation of Security Interest. The Servicer will
execute and file such financing and continuation statements and any other
documents reasonably requested by the Issuer or the Indenture Trustee to be
filed or which may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the interest of the Issuer and the
Indenture Trustee in, to and under the Trust Estate; provided that the Servicer
will not be required (i) to file any financing or continuation statements with
respect to the Equipment in any jurisdiction other than in the Filing
Locations, (ii) except as provided in Article VII, to deliver physical
possession of the Lease Files to the Indenture Trustee (and may permit the
Lease
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Files to remain in the possession of Trans Leasing, in its capacity as the
Servicer, or any Successor Servicer) or (iii) the Servicer will not be required
to cause the certificate of title or other title document to any Equipment
consisting of motor vehicles to be transferred to the Seller or transferred to
the Owner Trustee or the security interest of the Indenture Trustee granted
pursuant to the Indenture marked on such certificate of title or other title
document.
(d) Obligations with Respect to Leases. The Servicer
will duly fulfill and comply with, in all material respects, all obligations on
the part of the "lessor" to be fulfilled or complied with under or in
connection with each Lease and will do nothing to impair the rights of the
Issuer, the Indenture Trustee and the Holders in, to and under the Trust
Estate. The Servicer will perform such obligations under the Leases and will
not change or modify the Leases, except as otherwise provided herein and except
insofar as any such failure to perform, change or modification would not
materially and adversely affect the value of (or the rights of the Indenture
Trustee, on behalf of the Holders, with respect to) the Leases or the
Equipment.
(e) Location of Lease Files. The Servicer will not
change the location of any material portion of the Lease Files (other than any
Lease Files which relate solely to an Early-Termination Lease, an Expired Lease
or a Repurchased Lease and/or related Equipment) unless the Servicer gives the
Issuer, the Indenture Trustee and the Owner Trustee notice of such change not
less than ten days prior to such change; provided that at all times the Lease
Files shall remain under the care, custody and control of the Servicer.
(f) No Bankruptcy Petition. Notwithstanding any prior
termination of this Agreement, the Servicer shall not, prior to the date which
is one year and one day after the final distribution with respect to (i) the
Class A Notes and the Class B Notes, (ii) the 1995-1 Notes, and (iii) any other
indebtedness of the Issuer, the Seller or of any other trust formed by the
Seller permitted under Section 2.7(l) of this Agreement, acquiesce, petition or
otherwise invoke or cause the Issuer or the Seller to invoke the process of any
court or government authority for the purpose of commencing or sustaining a
case against the Issuer or the Seller under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or the
Seller or any substantial part of its property or ordering the winding up or
liquidation of the affairs of the Issuer or the Seller.
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3.8 Servicer Compensation. The Servicer will be entitled
to receive the Servicing Fee to the extent provided in Section 4.8. As
additional compensation for its services and duties hereunder (including paying
the fees and expenses described in Section 3.9 below), the Servicer will also
be entitled to retain all Excluded Amounts collected with respect to the
Receivables.
3.9 Payment of Certain Expenses by Servicer. The
Servicer shall pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of
independent accountants, the Owner Trustee (in accordance with Section 7.1 of
the Trust Agreement) and the Indenture Trustee, the fee of the Administrator,
taxes imposed on the Servicer, expenses incurred in connection with payments
and reports pursuant to this Agreement, and all other fees and expenses not
expressly stated under this Agreement for the account of the Issuer, but
excluding Liquidation Expenses. The Servicer shall pay all reasonable fees and
expenses owing to the Indenture Trustee in connection with the maintenance of
the Trust Accounts.
3.10 Monthly Statement; Annual Report.
(a) Monthly Statement. With respect to each Payment Date
and the related Collection Period, the Servicer will provide to the Owner
Trustee, the Indenture Trustee, the Certificateholders, the Rating Agencies and
each Noteholder, not less than two Business Days prior to such Payment Date, a
monthly statement (a "Monthly Statement"), signed by a Responsible Officer of
the Servicer and substantially in the form of Exhibit B.
(b) Annual Statement. The Servicer will provide to the
Owner Trustee, the Indenture Trustee, the Certificateholders, the Rating
Agencies and each Noteholder, on or prior to October 31 of each year,
commencing October 31, 1997, a cumulative summary of the information required
to be included in the Monthly Statements for the Collection Periods ending
during the immediately preceding Transaction Year.
3.11 Annual Statement as to Compliance. The Servicer will
provide to the Owner Trustee and the Indenture Trustee on or prior to October
31 of each year, commencing October 31, 1997, a certificate signed by a
Responsible Officer of the Servicer stating that (a) a review of the activities
of the Servicer, and the Servicer's performance pursuant to this Agreement, for
the period ending on the last day of the immediately preceding Transaction Year
has been made under such Person's supervision and (b) to the best of such
Person's knowledge, based on such review, the Servicer has performed or has
caused to be performed in all material respects all of its obligations under
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45
this Agreement throughout such Transaction Year and no Servicer Default has
occurred and is continuing (or, if a Servicer Default has so occurred and is
continuing, specifying each such event, the nature and status thereof and the
steps necessary to remedy such event, and, if a Servicer Default occurred
during such Transaction Year and no notice thereof has been given to the
Indenture Trustee and the Owner Trustee, specifying such Servicer Default and
the steps taken to remedy such event).
3.12 Annual Independent Public Accountants' Servicing
Statements. The Servicer will cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer) to furnish to each Holder of a Class B Note, the Owner Trustee and
the Indenture Trustee on or prior to October 31 of each year, commencing
October 31, 1997, a statement relating to the previous Transaction Year to the
effect that (a) such firm has reviewed certain documents and records relating
to the servicing of the Leases, and (b) based on such examination, such firm is
of the opinion that the Monthly Statements for such Transaction Year were
prepared in compliance with this Agreement, except for such exceptions as it
believes to be immaterial and such other exceptions as will be set forth in
such firm's report.
ARTICLE IV
RIGHTS OF HOLDERS; ACCOUNTS; ALLOCATION
AND APPLICATION OF THE TRUST ESTATE
4.1 Rights of Holders. The Notes and the Trust
Certificate represent the right to receive payments in respect of the Trust
Estate and other amounts at the times and in the amounts specified in this
Article IV and Article VIII to be paid to the respective Holders thereof;
provided that the right to such payments shall not exceed (i) for the Holders
of the Class A Notes, in the aggregate, the Outstanding Class A Principal
Balance plus accrued interest thereon calculated at the Class A Interest Rate
in accordance with the provisions of the Indenture and this Agreement and (ii)
for the Holders of the Class B Notes, in the aggregate, the Outstanding Class B
Principal Balance plus accrued interest thereon calculated at the Class B
Interest Rate in accordance with the provisions of the Indenture and this
Agreement. The Noteholders' recourse under the Indenture and the Notes and the
Certificateholders' recourse under this Agreement and the Trust Agreement for
amounts payable on or with respect to the Notes and the Trust Certificates
shall be limited to and payable only out of the Trust Estate.
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4.2 Establishment of the Collection Account. The
Servicer, on behalf of the Issuer and the Indenture Trustee (for the benefit of
the Holders), will establish and maintain or cause to be so established and
maintained, in the name of the Indenture Trustee, an Eligible Deposit Account
(the "Collection Account") bearing designations clearly indicating that the
funds deposited in such account are held in trust for the benefit of the
Holders. The Collection Account will be established and maintained with the
Indenture Trustee.
4.3 Establishment of Note Distribution Account. The
Servicer, on behalf of the Issuer and the Indenture Trustee (for the benefit of
the Noteholders), will establish and maintain or cause to be established and
maintained, in the name of the Indenture Trustee, an Eligible Deposit Account
(the "Note Distribution Account") bearing a designation clearly indicating that
the funds deposited in such account are held in trust for the benefit of the
Noteholders. The Note Distribution Account will be established and maintained
with the Indenture Trustee.
4.4 Investment of Accounts. Funds on deposit in each
Trust Account will be invested in Eligible Investments; provided that all
related funds will be available for withdrawal without loss of principal or
interest on the succeeding Payment Date (except with respect to the Collections
received by the Servicer after the end of the immediately preceding Collection
Period, the proceeds of investments of which need not be available until the
next succeeding Payment Date). Subject to the restrictions set forth below,
the Servicer will have the authority to instruct the Indenture Trustee in
writing with respect to the investment of funds on deposit in the Trust
Accounts. Receipt of such written instructions by the Indenture Trustee will
be a condition precedent to any investment pursuant to this Section 4.4. Such
instructions will relate to specified investments which constitute Eligible
Investments. None of the Issuer, the Indenture Trustee, the Owner Trustee or
the Servicer will be liable for any loss incurred in connection with any
investment made pursuant to this Section 4.4 except with respect to any
investment issued or guaranteed by the Indenture Trustee or the Owner Trustee
in its individual capacity. The Indenture Trustee may make any investments
pursuant to this Section 4.4 through its own investment department, in
accordance with any such instructions received from the Servicer. Investment
Earnings available to be withdrawn from the Collection Account on each Payment
Date will be included in the Available Amount for such Payment Date. All
Eligible Investments which have a specified maturity date will be held to
maturity. The Indenture Trustee will maintain (for the benefit of the Holders,
the Issuer and the Servicer) possession of all negotiable instru-
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ments or securities evidencing the Eligible Investments from the time of
purchase thereof until the time of sale or maturity.
4.5 Control; Replacement of Trust Accounts. The
Indenture Trustee (for the benefit of the Holders) will possess all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof. The Trust Accounts will be under the
sole dominion and control of the Indenture Trustee (for the benefit of the
Holders). If, at any time, the institution holding a Trust Account ceases to
be an Eligible Institution or a Trust Account otherwise ceases to be an
Eligible Deposit Account, the Servicer will, not later than the thirtieth
Business Day after such cessation, establish a new account that is an Eligible
Deposit Account with respect to such Trust Account and transfer or cause to be
transferred any cash and/or investments in the existing Trust Account to such
new account. From the date such new account is established, it will constitute
the "Collection Account" or "Note Distribution Account" as the case may be,
pursuant to this Agreement.
4.6 Identification of Accounts. Exhibit C identifies
each of the Trust Accounts by its account number, account designation and the
name of the institution with which it has been established. The Servicer or
the Indenture Trustee may amend or modify Exhibit C from time to time as may be
necessary to reflect any changes in such information.
4.7 Deposit of Collections and Other Amounts.
(a) Initial Deposit. Not later than the second Business
Day after the Closing Date, the Servicer will deposit (in immediately available
funds) into the Collection Account all Collections received after the Initial
Cut-Off Date and through and including the Closing Date.
(b) Subsequent Deposits. From time to time after the
Closing Date, the Servicer will deposit (in immediately available funds) all
Collections in the Collection Account, as promptly as possible after the date
upon which such Collections or payments are received (but in no event later
than the second Business Day after such date).
(c) Amounts Exempt from Deposit. Notwithstanding
Sections 4.7(a) and 4.7(b), the following Collections (or portions thereof) are
not required to be deposited into the Collection Account and, if any such
amounts are deposited into the Collection Account, such amounts may be
withdrawn and paid to the Servicer:
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(i) Collections (including the portion of the
Warranty Purchase Price attributable to unreimbursed Servicer
Advances) on any Leases on which (and to the extent that) the Servicer
has previously made a Servicer Advance which has not been reimbursed
pursuant to this Section 4.7(c)(i) or Section 4.8(a), which amounts
the Servicer may retain (as a reimbursement of such Servicer Advance);
and
(ii) Collections (other than the Repurchase Price)
on any Repurchased Lease or any Lease for which a Lease has been
substituted as described in Section 5.1 hereof, which amounts the
Servicer may retain to the extent necessary to reimburse the Servicer
for any related Servicer Advance which has not been reimbursed
pursuant to this Section 4.7(c) or Section 4.8(a), and the remainder
of which amounts the Servicer will pay to the Originator or the
Seller, as the case may be.
4.8 Payments on Payment Dates. On each Payment Date
(based on information contained in (and in sole reliance on) the related
Monthly Statement delivered pursuant to Section 3.10(a)), the Indenture Trustee
will cause the following payments and transfers to be made from the Available
Amount for such Payment Date (in each case, such payment or transfer to be made
only to the extent of the Available Amount remaining after all prior payments
and transfers for such Payment Date have been made), in the following order of
priority:
(a) to the Servicer by wire transfer to the Servicer
Account, the amount of any Unreimbursed Servicer Advance;
(b) to the Servicer by wire transfer to the Servicer
Account, any Servicing Fee Arrearage for such Payment Date;
(c) to the Servicer by wire transfer to the Servicer
Account, the Servicing Fee for such Payment Date;
(d) to the Holders of the Class A Notes by deposit to the
Note Distribution Account, any Class A Interest Arrearage for such Payment
Date;
(e) to the Holders of the Class A Notes by deposit to the
Note Distribution Account, the Class A Interest Payment Amount for such Payment
Date;
(f) to the Holders of the Class B Notes by deposit to the
Note Distribution Account, any Class B Interest Arrearage for such Payment
Date;
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(g) to the Holders of the Class B Notes by deposit to the
Note Distribution Account, the Class B Interest Payment Amount for such Payment
Date;
(h) to the Holders of the Class A Notes by deposit to
the Note Distribution Account, the Class A Principal Payment Amount for such
Payment Date;
(i) to the Holders of the Class B Notes by deposit to the
Note Distribution Account, the Class B Principal Payment Amount for such
Payment Date; provided that if the Outstanding Class A Principal Balance on
such Payment Date (after giving effect to the payments to the Holders of the
Class A Notes of the amount described in (h) above) exceeds zero and the
Subordination Amount would be less than the Minimum Required Subordination
Amount (such difference, the "Subordination Shortfall"), an amount equal to the
least of (x) the Subordination Shortfall, (y) such Outstanding Class A
Principal Balance and (z) the Class B Principal Payment Amount for such Payment
Date shall be paid to the Holders of the Class A Notes rather than to the
Holders of the Class B Notes; and provided, further, that if a Restricting
Event exists on such Payment Date and the Outstanding Class A Principal Balance
on such Payment Date (after giving effect to the payments to the Holders of the
Class A Notes described in clause (h) above and in this clause (i) on such
Payment Date) exceeds zero, the amount otherwise required to be paid to the
Holders of the Class B Notes under this clause (i) (including any amounts
otherwise payable to the Holders of the Class B Notes as described in clause
(j)) up to the amount of such Outstanding Class A Principal Balance shall be
paid to the Holders of the Class A Notes rather than to the Holders of the
Class B Notes;
(j) if a Restricting Event exists on such Payment Date
and the Outstanding Class B Principal Balance on such Payment Date (after
giving effect to the payment to the Holders of the Class B Notes of the amount
described in (i) above on such Payment Date) exceeds zero, the remaining
Available Amount to Holders of the Class B Notes up to the amount of such
Outstanding Class B Principal Balance; and
(k) to the Certificateholders (pro rata according to the
outstanding balance of the Trust Certificates), any remaining Available Amount
(such amount to be paid as described on Exhibit C).
Payments to the Noteholders will be made from the Note Distribution Account as
provided in the Indenture. Prior to the Stated Final Maturity Date, no
principal amount shall be considered due and payable under this Section 4.8
(including for purposes of Section
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5.1 of the Indenture) unless funds are available in the Collection Account for
the payment therefor and are not paid as provided above.
ARTICLE V
OTHER MATTERS RELATING
TO THE SELLER
5.1 Substitution of Leases and Equipment.
(a) Subject to the provisions of Section 5.1(b) through
(d) hereof, the Seller, upon notice from the Servicer, may substitute a Lease
and the related Equipment for and replace (i) a Lease (and the related
Equipment) that has become a Defaulted Lease or an Early Termination Lease,
(ii) that portion of a Partial Early Termination Lease (and the related
Equipment) that has been terminated prior to the scheduled expiration date of
such Lease or (iii) a Lease (and the related Equipment) that is the subject of
a Warranty Event.
(b) Each Substitute Lease shall be a Lease, with respect
to which all of the representations and warranties set forth in subsections (i)
through (xix) of Section 3.01(a) of the Contribution and Sale Agreement were
true as of the related Substitution Cut-Off Date. The substitutions pursuant
to Section 5.1(a) hereof, made as of any Substitution Date, considered as a
whole, shall not cause any of the Specified Portfolio Characteristics to be
untrue as of the related Substitution Cut-Off Date, or if any of the Specified
Portfolio Characteristics is untrue as of immediately prior to such
Substitution Cut-Off Date, increase the amount by which any Specified Portfolio
Characteristic is untrue.
(c) Prior to any substitution pursuant to Section 5.1(a)
hereof, the Issuer shall have received a Substitution Transfer Agreement
providing for the unconditional sale and transfer of the Substitute Leases and
related Equipment by the Seller to the Issuer and an amended List of Leases
reflecting the substitution.
(d) The Servicer shall not permit any substitution under
Section 5.1(a) hereof on any Substitution Date if:
(i) on a cumulative basis from the Closing Date,
the sum of the Discounted Lease Balances (as of the related
Substitution Cut-Off Date) of Leases substituted for
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Defaulted Leases would exceed six percent (6%) of the Aggregate
Discounted Lease Balance as of the Cut-off Date;
(ii) on a cumulative basis from the Closing
Date, the sum of the Discounted Lease Balances (as of the
related Substitution Cut-Off Date) of Leases substituted for Leases
that are the subject of a Warranty Event would exceed five percent
(5%) of the Aggregate Discounted Lease Balance as of the Cut-off Date;
(iii) on a cumulative basis from the Closing
Date, the sum of the Discounted Lease Balances (as of the
related Substitution Cut-Off Date) of Leases substituted for Leases
(or portions thereof) would exceed ten percent (10%) of the Aggregate
Discounted Lease Balance as of the Cut-off Date;
(iv) as of the related Substitution Cut-Off
Date, the Substitute Leases and the related Equipment being
substituted on such date have an Aggregate Discounted Lease Balance
and Aggregate Discounted Lease and Residual Balance less than the
Aggregate Discounted Lease Balance and Aggregate Discounted Lease and
Residual Balance of all the Leases (or portions thereof),
respectively, being replaced;10
(v) as a result of all substitutions to be made
on such Substitution Date, the sum of the Scheduled Lease Payments on
all Leases due in any Collection Period prior to the August 2000
Collection Period would be less than the sum of all Scheduled Lease
Payments on the Leases subject to this Agreement on the Closing Date
becoming due during such Collection Period (a "Payment Deficiency"),
or increase the amount of any Payment Deficiency; and
(vi) unless such substitution is with respect to a
Lease that has become a Defaulted Lease, if either:
(A) a Restricting Event has occurred and
is continuing; or
(B) the amount calculated as (1) the
Aggregate Discounted Lease Balance as of the Determination
Date immediately preceding such Substitution Date minus (2)
the outstanding principal balance of the Class A Notes on
such Substitution Date is less than the greater of (1) the
Minimum Required Subordination Amount and (2) 15% of the
Aggregate Discounted Lease Balance on the Determination
Date immediately preceding such Substitution Date.
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(e) The Seller shall also have the right to substitute
Equipment under any Lease for comparable Equipment so long as there is no
change in the amount, number or timing of the Scheduled Lease Payments with
respect to such Lease and as of the related date of substitution the Discounted
Equipment Residual Value of the substitute Equipment is not less than the
Discounted Equipment Residual Value of the original Equipment and provided
that, with respect to the substitute Equipment, the representations and
warranties set forth in subsections (i), (vii) and (ix) of Section 3.01(a) of
the Contribution and Sale Agreement and Section 2.4(a)(i) of this Agreement are
true as of the date of such substitution and the Seller shall have sold and
transferred to the Issuer all of the Seller's rights, title and interest in, to
and under such Equipment pursuant to a Substitution Transfer Agreement.
(f) Upon the replacement of a Lease and/or the Equipment
with a Substitute Lease and/or Equipment as described above, the interest of
the Owner Trustee and the Indenture Trustee in such replaced Lease and/or
Equipment and all proceeds thereon shall be terminated and such replaced Lease
and/or Equipment shall be released to the Seller.
5.2 Merger or Consolidation of the Seller; Assumption of
the Seller's Obligations.
(a) General Prohibition. The Seller will not consolidate
with, merge into, convey or transfer a substantial part of its Properties to
any Person (other than the sale, transfer, assignment and conveyances described
in this Agreement), unless (i) the Person formed by such consolidation or
merger or which acquires by conveyance or transfer a substantial part of the
properties and assets of the Seller will be organized and existing under the
laws of the United States of America or any state thereof or the District of
Columbia, and is a special purpose corporation, (ii) such action would not
result in a withdrawal or reduction of any rating then in effect of the Class A
Notes or of the Class B Notes from a Rating Agency, so long as in each case
such class of Notes is outstanding (as confirmed by the Rating Agencies in
writing), (iii) the Person expressly assumes (by an agreement executed and
delivered to the Issuer, which supplements this Agreement and is in a form
satisfactory to the Issuer) the performance of every covenant and obligation of
the Seller pursuant to this Agreement, as applicable, and (iv) the Seller has
delivered to the Issuer and the Indenture Trustee an Officer's Certificate of
the Seller and an Opinion of Counsel each to the effect that such
consolidation, merger, conveyance or transfer and such supplemental agreements
comply with this Section 5.4 and that all conditions precedent relating to such
transaction pursuant to this Agreement have been met. Notwithstanding the
preceding sentence, to the extent that
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any right, covenant or obligation of the Seller is inapplicable to the
successor entity, such successor entity will be subject to such covenant,
obligation, or benefit from such right, as would apply, to the extent
practicable, to such successor entity.
(b) Assignability of Obligations. The obligations of the
Seller pursuant to this Agreement are not assignable, and no Person will
succeed to the obligations of the Seller pursuant to this Agreement, except in
each case in accordance with the provisions of this Section 5.2.
5.3 Compliance with Certificate of Incorporation. The
Seller will comply with the provisions of its Certificate of Incorporation and
will not amend its Certificate of Incorporation, except as provided therein.
5.4 Limitation of Liability of Seller and Others. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on any document of any kind submitted by any Person respecting any
matters arising under this Agreement as being prima facie properly executed.
The Seller will not be under any obligation to appear in, prosecute, or defend
any legal action in any way relating to the Receivables that is not incidental
to its obligations as the seller of the Receivables under this Agreement and
that in its opinion may cause it to incur any expense or liability.
ARTICLE VI
OTHER MATTERS RELATING
TO THE SERVICER
6.1 Liability of the Servicer and Others.
(a) The Servicer will be liable in accordance with this
Agreement only to the extent of the obligations specifically undertaken by the
Servicer in such capacity. Except as provided in Section 6.2, the Servicer or
any of its respective directors, officers, employees or agents will not be
under any liability to the Seller, the Issuer, the Owner Trustee, the Indenture
Trustee, the Holders or any other Person for any action taken or for refraining
from the taking of any action in its capacity as Servicer pursuant to this
Agreement whether arising from express or implied duties under this Agreement;
provided, that this provision will not protect the Servicer against any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The
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Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any other Person respecting any matters
arising hereunder. The Servicer will not be under any obligation to appear in,
prosecute or defend any legal action which is not related to its duties to
service the Leases in accordance with this Agreement which in its reasonable
opinion may involve it in any expense or liability. No director, officer,
employee or agent of the Servicer will be under any liability to the Owner
Trustee, the Indenture Trustee, the Holders, the Issuer, the Seller or any
other Person pursuant to this Agreement or pursuant to any document delivered
hereunder. It is expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Agreement and the issuance of the Notes and the Trust Certificate.
(b) The Servicer and any director or officer or employee
or agent of the Servicer shall be reimbursed by the Indenture Trustee or the
Owner Trustee, as applicable, for any actual and direct (and not consequential)
contractual damages, liability or expense (including, without limitation, any
obligation of the Servicer to the Indenture Trustee or the Owner Trustee, as
applicable, pursuant to subsection 6.2(c)(x) or (y)) incurred by reason of such
trustee's willful misfeasance, bad faith or gross negligence (except errors in
judgment) in the performance of such trustee's duties under this Agreement, the
Indenture or the Trust Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(c) Except as provided in this Agreement, the Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action that is not incidental to its duties to service the Leases in accordance
with this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties to this Agreement and the interests of the
Noteholders and the Certificateholders under this Agreement and the interests
of the Noteholders under the Indenture and the interests of the
Certificateholders under the Trust Agreement. In such event, the legal
expenses and costs for such action and any liability resulting therefrom shall
be expenses, costs for such action and liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and the Servicer shall be entitled
to be reimbursed therefor from any amounts recovered in such action.
(d) The Indenture Trustee shall distribute out of the
Collection Account on a Payment Date any amounts permitted for reimbursement
pursuant to subsection 6.1(c) not therefor reimbursed
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prior to making the other payments and transfers to be made under Section 4.8
on such Payment Date.
6.2 Indemnification by the Servicer.
(a) The Servicer shall indemnify, defend and hold
harmless the Indenture Trustee, the Owner Trustee (in its individual capacity
and as trustee of the Issuer) and the Issuer (and their respective directors,
officers, stockholders, agents and servants) and the Noteholders from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, tangible personal property, privilege or
license taxes (but not including any taxes asserted with respect to any fees or
other compensation payable to any such Person or payments on the Notes and,
with respect to the Issuer, not including any taxes asserted with respect to,
and as of the date of, the sale of any Leases to the Issuer hereunder or the
issuance and original sale of the Notes or the Trust Certificate, or asserted
with respect to ownership or sale of any Leases or federal or other income
taxes arising out of distributions or receipt of payment on the Notes or the
Trust Certificate, and costs and expenses in defending against the same.
(b) The Servicer shall indemnify, defend and hold
harmless the Indenture Trustee, the Owner Trustee (in its individual capacity
and as trustee of the Issuer) and the Issuer (and their respective directors,
officers, stockholders, agents and servants) and the Holders from and against
any and all costs, expenses, losses, claims, actions, suits, damages and
liabilities to the extent that such cost, expense, loss, claim, action, suit,
damage or liability arose out of, or was imposed upon the Indenture Trustee,
the Owner Trustee(in its individual capacity and as trustee of the Issuer), the
Issuer or the Holders through the negligence, willful misfeasance or bad faith
of the Servicer in the performance of its duties under this Agreement, the
Indenture or the Trust Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement, the Indenture or the Trust
Agreement.
(c) The Servicer shall indemnify, defend and hold
harmless the Indenture Trustee and the Owner Trustee (in its individual
capacity and as trustee of the Issuer), and their respective directors,
officers, stockholders, agents and servants, from and against all costs,
expenses, losses, claims, actions, suits, damages and liabilities arising out
of or incurred in connection with (x) in the case of the Owner Trustee, the
Indenture Trustee's performance of its duties under the Indenture, (y) in the
case of the Indenture Trustee, the Owner Trustee's performance of
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its duties under the Trust Agreement or (z) the acceptance, administration or
performance by, or action or inaction of, the Indenture Trustee or the Owner
Trustee, as applicable, of the trusts and duties contained in this Agreement,
the Indenture (in the case of the Indenture Trustee), including the
administration of the Indenture Trust Estate, and the Trust Agreement (in case
of the Owner Trustee), including the administration of the Trust Estate, except
in each case to the extent that such cost, expense, loss, claim, damage or
liability: (A) is due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Person seeking to be indemnified, (B) to
the extent otherwise payable to the Indenture Trustee in its individual
capacity, arises from the Indenture Trustee's breach of any of its
representations or warranties in Section 6.13 of the Indenture, (C) to the
extent otherwise payable to the Owner Trustee, arises from the Owner Trustee's
breach of any of its representations or warranties set forth in Section 6.3 of
the Trust Agreement or (D) shall arise out of or be incurred in connection with
the performance by the Indenture Trustee of the duties of successor Servicer
hereunder.
(d) Indemnification under this Section 6.2 shall include
any reasonable judgment, award, settlement, reasonable attorneys' fees and
other reasonable costs or expenses incurred in connection with the defense of
any actual or threatened action, proceeding or claim. Any such indemnification
will not be payable from the assets of the Issuer. The provisions of this
Section 6.2 will run directly to and be enforceable by an injured party,
subject to the limitations set forth in this Section 6.2. The obligations of
the Servicer pursuant Section 3.9 and to this Section 6.2 will survive the
termination of this Agreement and of the Trust Agreement.
(e) If the Servicer has made any indemnity payments
pursuant to this Section 6.2 and the recipient thereafter collects any of such
amounts from others, the recipient shall promptly repay such amounts collected
to the Servicer, without interest.
6.3 Merger or Consolidation of Servicer; Assumption of
Servicer's Obligations. The Servicer will not consolidate with or merge into,
convey or transfer all or substantially all of its Properties to any Person
(which shall not include the contributions and sales pursuant to the
Contribution and Sale Agreement in the Servicer's capacity as the Originator)
unless (i) the Person formed by such consolidation, merger or which acquires by
conveyance or transfer all or substantially all of the Properties of the
Servicer is organized and existing under the laws of the United States of
America or any state thereof or the District of Columbia, (ii) such Person
expressly assumes (by an agreement, executed and delivered to the Issuer, which
supplements this Agreement and is in a form
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reasonably satisfactory to the Indenture Trustee) the performance of every
covenant and obligation of the Servicer pursuant to this Agreement, and (iii)
the Servicer has delivered to the Issuer and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel, each to the effect that such
consolidation, merger, conveyance or transfer and such supplemental agreements
comply with this Section 6.3 and that all conditions precedent relating to such
transaction pursuant to this Agreement have been met.
6.4 The Servicer Not to Resign. The Servicer will not
resign from the obligations and duties imposed on it pursuant to this Agreement
except (a) upon a determination that (i) the performance of its duties pursuant
to this Agreement is impermissible under applicable law and (ii) there is no
reasonable action which the Servicer could take to make the performance of its
duties pursuant to this Agreement permissible under applicable law. Any
determination pursuant to clause (i) above will be evidenced by an Opinion of
Counsel to such effect and any determination pursuant to clause (ii) above will
be evidenced by an Officer's Certificate, in each case delivered to the
Indenture Trustee. No Servicer resignation will become effective until the
Indenture Trustee or a Successor Servicer has assumed the responsibilities and
obligations of the Servicer in accordance with Section 7.2. If within 120 days
of the date of any determination described in this Section 6.4, the Indenture
Trustee is unable to appoint a Successor Servicer, the Indenture Trustee will
without further action be appointed a Successor Servicer. The provisions of
Section 7.1 with respect to the duties of the Servicer in effecting the
termination of its servicing responsibilities and the transfer of such
responsibilities to a Successor Servicer will apply to any resignation pursuant
to this Section 6.4.
ARTICLE VII
SERVICER DEFAULTS
7.1 Servicer Defaults.
(a) Definition. Any of the following events will
constitute a "Servicer Default" pursuant to this Agreement:
(i) any failure by the Servicer to make any
payment, transfer or deposit or deliver any Monthly Statement or
Annual Statement which continues beyond the second Business Day after
the date upon which such payment, transfer, or delivery is required to
be made pursuant to this Agreement;
(ii) any failure by the Servicer to observe or
perform in any material respect any other covenant or agree-
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ment of the Servicer pursuant to this Agreement, if such failure
materially and adversely affects the rights of the Noteholders and
continues unremedied for a period of thirty days after the earlier of
(a) the date on which written demand that such failure be remedied is
given to the Servicer by the Indenture Trustee, the Holders of Notes
evidencing, in the aggregate, more than 50% of the sum of the then
Outstanding Class A Principal Balance and the then Outstanding Class B
Principal Balance) or (b) the date on which a Responsible Officer of
the Servicer becomes aware of such failure;
(iii) any delegation of the Servicer's duties
pursuant to this Agreement, except as permitted pursuant to Section
9.6;
(iv) any representation, warranty or certification
made by the Servicer in this Agreement or in any certificate delivered
pursuant to this Agreement proves to have been incorrect in any
material respect when made and such incorrect statement has a material
and adverse effect on the rights of the Holders and continues to be
incorrect in any material respect for a period of thirty days after
the earlier of (a) the date on which written demand that such
incorrect statement be remedied is given to the Servicer by the
Indenture Trustee, Holders of Notes evidencing, in the aggregate, more
than 50% of the sum of the then Outstanding Class A Principal Balance
and the then Outstanding Class B Principal Balance or (b) the date on
which a Responsible Officer of the Servicer becomes aware of such
incorrect statement; or
(v) (A) the Servicer consents to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceeding of or relating to the Servicer or all or substantially all
of its Property, (B) a decree or order of a court or agency or
supervisory authority having proper jurisdiction for the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceeding, or for the winding-up or liquidation of the Servicer's
affairs, is entered against the Servicer and such decree or order
remains in force undischarged or unstayed for a period of 60 days, or
(C) the Servicer admits in writing its inability to pay, or fails to
pay, its debts generally as they become due, files a petition or
commences any case or proceeding to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, makes any assignment
for the benefit of its creditors or voluntarily suspends payment of
its obligations.
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(b) Consequences of Servicer Default. If any Servicer
Default occurs, then, so long as such Servicer Default is continuing, the
Indenture Trustee and the Holders of Notes evidencing, in the aggregate, more
than 50% of the sum of the then Outstanding Class A Principal Balance and the
then Outstanding Class B Principal Balance, by written notice (a "Termination
Notice") to the Servicer (and to the Indenture Trustee and the Owner Trustee),
may terminate all of the rights and obligations of the Servicer pursuant to
this Agreement and in, to and under the Trust Estate. After the Servicer
receives a Termination Notice, and on the date that a Successor Servicer is
appointed pursuant to Section 7.2, all authority and power of the Servicer
pursuant to this Agreement will pass to and be vested in the Successor
Servicer. The Indenture Trustee is hereby authorized and empowered (upon the
failure of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer as attorney-in-fact or otherwise, all documents and other instruments,
and to do and accomplish all other acts or things, which are necessary or
appropriate to effect the transfer of the servicing function pursuant to this
Agreement. The Servicer agrees to cooperate with the Indenture Trustee and
such Successor Servicer in effecting the termination of the Servicer's
responsibilities and rights pursuant to this Agreement. The Servicer will
promptly transfer the information contained in the Lease Management System
relating to the Leases to the Successor Servicer in such form as the Successor
Servicer may reasonably request, and will promptly transfer to the Successor
Servicer possession of the Lease Files and all other records, correspondence
and documents necessary for the continued servicing of the Leases in the manner
and at such times as the Successor Servicer will reasonably request. To the
extent that compliance with this Section 7.1(b) requires the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
reasonably deems to be confidential, the Servicer may require the Successor
Servicer to enter into such customary licensing and confidentiality agreements
as the Servicer reasonably deems necessary to protect its interests.
(c) Actions Beyond Servicer's Control. Notwithstanding
the foregoing, any delay in or failure of performance referred to in Section
7.1(a)(i) for a period not in excess of five Business Days or under Section
7.1(a)(ii), (iii) or (iv) for a period not in excess of sixty Business Days (in
each case, without giving effect to any grace period described in such Section)
will not constitute a Servicer Default if such delay or failure could not be
prevented by the exercise of reasonable diligence by the Servicer and such
delay or failure was caused by an act of God or the public enemy, acts of
declared or undeclared war, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes.
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The preceding sentence will not relieve the Servicer of the obligation to use
its best efforts to perform its obligations in a timely manner in accordance
with the terms of this Agreement, and the Servicer will provide the Indenture
Trustee, the Issuer, and the Noteholders with an Officer's Certificate giving
prompt notice of such failure or delay by it, together with a description of
its efforts to perform its obligations.
7.2 Indenture Trustee to Act; Appointment of Successor.
(a) Servicer's Continued Performance. On and after the
Servicer's receipt of a Termination Notice pursuant to Section 7.1(b), the
Servicer will continue to perform all servicing functions pursuant to this
Agreement until the date specified by the Indenture Trustee in such Termination
Notice or, if no such date is specified, until a date mutually agreed upon by
the Servicer and the Indenture Trustee.
(b) Appointment; Inability to Appoint. As promptly as
possible after delivery of a Termination Notice the Indenture Trustee, pursuant
to the Indenture, will appoint a successor to the Servicer. No Person shall
act as the Successor Servicer until such Person accepts its appointment by a
written assumption in a form reasonably acceptable to the Indenture Trustee.
The Indenture Trustee may obtain bids from potential Successor Servicers. If
no Successor Servicer has been appointed and accepted its appointment at the
time when the Servicer ceases to act as Servicer, the Indenture Trustee,
without further action, will automatically be appointed the Successor Servicer,
unless the Indenture Trustee is legally unable so to act, in which case the
Indenture Trustee will petition a court of competent jurisdiction to appoint
an established servicing entity having a net worth of not less than $25,000,000
and whose regular business includes the servicing of leases of equipment which
is of a type or types similar to the Equipment.
(c) Successor's Rights, Duties and Liabilities. Upon its
appointment, the Successor Servicer will be the successor with respect to
servicing functions pursuant to this Agreement and will be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions of this Agreement, and all references in
this Agreement to the Servicer will be deemed to refer to the Successor
Servicer.
(d) Compensation. In connection with such appointment
and assumption, the Indenture Trustee will be entitled to such compensation, or
may make such arrangements for the compensation of the Successor Servicer out
of collections, as it
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and such Successor Servicer agree; provided that no such compensation will be
in excess of the compensation permitted to be paid to the Servicer pursuant to
Section 3.8 of this Agreement.
(e) Cessation of Successor's Authority. All authority
and power granted to a Successor Servicer pursuant to this Agreement will
automatically cease and terminate upon termination of this Agreement pursuant
to Section 8.1 and will pass to and be vested in the Seller (or Person
designated by the Seller) and the Seller (or Person designated by the Seller)
are hereby authorized and empowered to execute and deliver, on behalf of such
Successor Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things, which are
necessary or appropriate to effect the purposes of such transfer of the
servicing function pursuant to this Agreement. The Successor Servicer agrees
to cooperate with the Seller (or Person designated by the Seller) in effecting
the termination of such Successor Servicer's responsibilities and rights. The
Successor Servicer will transfer its electronic records relating to the Leases
to the Seller (or Person designated by the Seller) in such electronic form as
the Seller (or Person designated by the Seller) may reasonably request and will
transfer all other records, correspondence and documents to the Seller (or
Person designated by the Seller) in the manner and at such times as the Seller
(or Person designated by the Seller) will reasonably request. To the extent
that compliance with this Section 7.2(e) requires the Successor Servicer to
disclose to the Seller (or Person designated by the Seller) information of any
kind which the Successor Servicer deems to be reasonably confidential, the
Successor Servicer may require the Seller (or Person designated by the Seller)
to enter into such customary licensing and confidentiality agreements as the
Successor Servicer reasonably deems necessary to protect the Successor
Servicer's interests.
7.3 Notification. Promptly upon the occurrence of any
Servicer Default (and, in any event, within two Business Days after the
Servicer becomes aware thereof), the Servicer will give the Indenture Trustee,
the Owner Trustee, the Rating Agencies and the Issuer written notice of such
Servicer Default, and the Indenture Trustee thereupon will give written notice
of such Servicer Default to each Noteholder. The Indenture Trustee promptly
will give written notice of any termination or appointment of a Successor
Servicer pursuant to this Article VII to each Noteholder and the Rating
Agencies.
7.4 Waiver of Past Defaults. The Holders of Notes
evidencing, in the aggregate, more than 50% of the sum of the then Outstanding
Class A Principal Balance and the then Outstanding Class B Principal Balance
may, on behalf of all Holders, waive any
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default by the Servicer or the Seller in the performance of their respective
obligations under this Agreement and the consequences of any such default,
other than a default in the failure to make any required deposits, transfers or
payments in accordance with Section 4.8. Upon any such waiver of a past
default, such default will cease to exist, and any default arising from or
relating to such default will be deemed to have been remedied and cured for all
purposes under this Agreement. No such waiver will extend to any subsequent or
other default or impair any right upon any such subsequent default except to
the extent expressly so waived.
7.5 Lease Schedule. The Servicer will maintain true,
correct and complete copies of the List of Leases and the Lease Schedule (as
defined in the Contribution and Sale Agreement). Each time the List of Leases
or the Lease Schedule is amended, the Servicer shall promptly forward to the
Indenture Trustee such List of Leases or Lease Schedule as so amended (or an
amendment to be attached to the previous List of Leases or Lease Schedule so
delivered to the Indenture Trustee). The Indenture Trustee shall maintain (and
make available to interested parties during normal business hours) at its
Corporate Office such List of Leases and Lease Schedule as so amended (or
previous List of Leases and Lease Schedule together with all amendments), which
shall constitute the List of Leases and the Lease Schedule referred to in the
UCC financing statements filed pursuant to the Contribution and Sale Agreement,
this Agreement or the Indenture, as applicable.
ARTICLE VIII
TERMINATION
8.1 Termination.
(a) If the Termination Date occurs as described in clause
(a) of the definition of Termination Date and at such time, after giving effect
to all payments to be made under Section 4.8 on such Termination Date, there is
any Class A Interest Arrearage or Class B Interest Arrearage or the Outstanding
Class A Principal Balance or Outstanding Class B Principal Balance is not zero,
then the Indenture Trustee will sell, dispose of or otherwise liquidate the
remaining Leases and Equipment (or, if applicable, a portion of the remaining
Leases and Equipment to the extent necessary to provide proceeds sufficient to
pay any such unpaid amounts (and any accrued interest on any Outstanding Class
A Principal Balance or Outstanding Class B Principal Balance at the Class A
Interest Rate or Class B Interest Rate, as the case may be)) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds of such
sale, disposition or liquidation will be treated as Collections, and deposited
into the Collection Account and paid
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and distributed in accordance with Section 4.8 on the next Payment Date.
(b) On the date after the Termination Date (or, if the
Termination Date occurs as described in clause (a) of the definitions of
Termination Date, on the day after the proceeds of the sale, disposition or
liquidation described in Section 8.1(a) are paid and distributed as described
in Section 8.1(a)), after the payment to the Indenture Trustee, the Owner
Trustee, the Servicer and the Noteholders of all amounts required to be paid
under this Agreement, the Indenture and the Trust Agreement, all amounts on
deposit in the Trust Accounts (other than, in the case of the Note Distribution
Account, amounts to be paid to the Noteholders) shall be paid to the
Certificateholders (as described on Exhibit C) and all other assets of the
Issuer shall be transferred to the Certificateholders, in each case pro rata
according to the outstanding balance of the Trust Certificates as a
distribution on the Trust Certificates.
(c) This Agreement and the respective obligations and
responsibilities of the Issuer, the Seller, the Servicer and the Indenture
Trustee created pursuant to this Agreement (other than the obligations of the
Indenture Trustee under this Article VIII) will terminate, except with respect
to the duties described in Section 6.2, upon the payment and transfer to the
Certificateholders described in Section 8.1(b).
8.2 Notice of Final Payment. As promptly as practicable
the Servicer, on behalf of the Issuer, will give written notice to the
Indenture Trustee and the Owner Trustee that the final payment of principal and
interest on the Class A Notes or the Class B Notes will be made on a Payment
Date. Such notice will be accompanied by an Officer's Certificate setting
forth the information which would be specified in a statement given pursuant to
Section 3.10(b) relating to the period during the then current Transaction Year
through the final Payment Date specified in such notice.
8.3 Optional Purchase.
(a) Requirements. The Servicer will have the option (but
not the obligation) (the "Purchase Option") to purchase all of the assets of
the Issuer (other than the Trust Accounts) on any Payment Date (i) if on such
Payment Date (after giving effect to the transfers and payments otherwise to be
made pursuant to Section 4.8 on such Payment Date) the sum of the Outstanding
Class A Principal Balance and the Outstanding Class B Principal Balance is or
would be less than 10% of the sum of the Initial Class A Principal Balance and
the Initial Class B Principal Balance and
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(ii) the Servicer Purchase Price (as defined in (b) below) together with the
other amounts on deposit or to be on deposit in the Note Distribution Account
on the Redemption Date equals or exceeds the amount required to pay in full the
principal amount of the Notes together with accrued interest thereon through
the Redemption Date at the Class A Interest Rate or the Class B Interest Rate,
as applicable.
(b) Exercise of Purchase Option. To exercise the
Purchase Option as of any Payment Date, the Servicer shall deposit in the
Collection Account on or prior to such Payment Date an amount (the "Servicer
Purchase Price") equal to the Aggregate Discounted Lease and Residual Balances
as of the related Determination Date plus the appraised value of any other
property (other than the Trust Accounts) held by the Trust (such value to be
mutually agreed upon (or determined by an appraiser mutually agreed upon) by
the Servicer, the Owner Trustee and the Indenture Trustee). Upon such deposit,
the Servicer shall succeed to all interests in and to the Trust (other than the
Trust Accounts). The amount so deposited shall be included in the Available
Amount on such Payment Date.
(c) Notice of Exercise. The Servicer shall timely
provide to the Issuer and the Indenture Trustee and the Owner Trustee notice of
the Servicer's election to exercise the Purchase Option.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Amendment.
(a) This Agreement may be amended by the Seller, the
Servicer and the Issuer with the consent of the Indenture Trustee and the Owner
Trustee, but without the consent of any of the Noteholders or the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provision in this Agreement that may be defective or inconsistent with any
other provision in this Agreement, (iii) to add or supplement any credit
enhancement for the benefit of the Noteholders (provided that if any such
addition shall affect any class of Noteholders differently than any other class
of Noteholders then such addition shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any class of
Noteholders), (iv) add to the covenants, restrictions or obligations of the
Seller, the Servicer, the Issuer, the Owner Trustee or the Indenture Trustee or
(v) add, change or eliminate any other provision of this
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65
Agreement in any manner that shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of the Noteholders.
(b) This Agreement may also be amended from time to time
by the Seller, the Servicer and the Issuer with the consent of the Indenture
Trustee and the Owner Trustee, and the consent of Noteholders whose Notes
evidence, in the aggregate, more than 50% of the sum of the then Outstanding
Class A Principal Balance and the then Outstanding Class B Principal Balance,
in each case as of the preceding Payment Date (which consent, shall be
conclusive and binding on such Person and on all future Noteholders and holders
of any Note issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Note) and the
consent of the Certificateholders 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 the
Certificateholders; provided, however, that no such amendment shall (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or payments that shall be
required to be made on any Note or the interest rate for any class of Notes, or
(ii) reduce the aforesaid percentage required to consent to any such amendment,
without the consent of all of the Noteholders.
(c) Prior to the execution of any such amendment or
consent, the Indenture Trustee shall furnish written notification of the
substance of such amendment or consent to the Rating Agencies.
(d) Promptly after the execution of any such amendment or
consent, the Indenture Trustee shall furnish written notification of the
substance of such amendment or consent or a true copy thereof to each
Noteholder and Certificateholder.
(e) It shall not be necessary for the consent of
Noteholders or the Certificateholders pursuant to subsection 9.1(b) to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Noteholders or the
Certificateholders provided for in this Agreement) and of evidencing the
authorization of the execution thereof by Noteholders and the
Certificateholders shall be subject to such reasonable requirements as the
Indenture Trustee may prescribe, including the establishment of record dates.
(f) Prior to the execution of any amendment to this
Agreement, the Indenture Trustee and the Owner Trustee shall be
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entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement. The
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Indenture Trustee's or the Owner Trustee's,
respectively, own rights, duties or immunities under this Agreement or
otherwise.
(g) Each of Trans Leasing and the Seller agrees that it
shall not amend or agree to any amendment of the Contribution and Sale
Agreement unless such amendment would be permissible under the terms of this
Section 9.1, as if this Section 9.1 were contained in the Contribution and Sale
Agreement.
9.2 Evidence of Filings. Subject to the provisos in
Section 2.1(b), the Servicer will cause this Agreement, all amendments to this
Agreement, and all financing statements and continuation statements and any
other necessary documents relating to the Indenture Trustee's right, title and
interest to the Trust Estate, to be promptly recorded, registered and filed
(and at all times to be kept recorded, registered and filed) all in such manner
and in such places as may be required by law to preserve and protect fully the
right, title and interest of the Indenture Trustee to all property comprising
the Trust Estate, all as provided in, and subject to, Sections 2.1(b) and
3.7(c). The Servicer will deliver to the Indenture Trustee a file-stamped copy
of, or filing receipt for, any document recorded, registered or filed as
provided in Section 2.1(b) or 3.7(c), promptly after such copy or receipt
becomes available. The Seller will cooperate fully with the Servicer in
connection with the performance of such Sections and will execute any and all
documents reasonably required to fulfill the intent of such Sections.
9.3 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
9.4 Notices. Except as otherwise provided in this
Agreement, any notice or other communication herein required or permitted to be
given shall be in writing and may be delivered in person, with receipt
acknowledged, or sent by United States mail, registered or certified, postage
prepaid and return receipt requested, or by Federal Express or other nationally
recognized overnight courier service, postage prepaid and confirmation of
receipt requested, and addressed as follows (or at such other address as may be
substituted by notice given as herein provided):
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If to the Seller:
TL Lease Funding Corp. IV
c/o The Corporation Trust Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy (which copy will not constitute
notice to Seller) to each of:
Trans Leasing International, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Sugar
If to the Issuer:
Bankers Trust (Delaware)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy (which copy will not constitute
notice to the Transferor) to each of:
Bankers Trust Company
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust & Agency Group -
Structured Finance
Trans Leasing International, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Sugar
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If to the Servicer:
Trans Leasing International, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
with a copy (which copy will not constitute
notice to the Servicer) to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. Sugar
If to the Indenture Trustee:
Manufacturers and Traders Trust Company
▇▇▇ ▇&▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Assistant Vice
President, Corporate Trust
Administration
If to the Owner Trustee:
Bankers Trust (Delaware)
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Bankers Trust Company
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust & Agency Group
- Structured Finance
If to S&P:
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset Backed Surveillance
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69
If to Moody's:
▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ABS Monitoring Dept.
Every notice, demand, request, consent, approval, declaration or other
communication hereunder shall be deemed to have been duly given or served on
the date on which the same shall have been personally delivered, with receipt
acknowledged, three (3) Business Days after the same shall have been deposited
in the United States mail or on the next succeeding Business Day if the same
has been sent by Federal Express or other nationally recognized overnight
courier service. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to the Persons
designated above to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.
9.5 Severability of Provisions. If any covenant,
agreement, provision or term of this Agreement is held invalid for any reason
whatsoever, then such covenant, agreement, provision or term will be deemed
severable from the remaining covenants, agreements, provisions and terms of
this Agreement and will in no way affect the validity or enforceability of the
other provisions of this Agreement or of the Notes or the Trust Certificate or
rights of the Noteholders or the Certificateholders.
9.6 Assignment. This Agreement may not be assigned by
the Servicer, except as provided in Sections 3.1(e), 6.3, 6.4 or 7.2, without
the prior consent of Holders of Notes evidencing not less than 50% of the sum
of the then Outstanding Class A Principal and the then Outstanding Class B
Principal Balance, and the Certificateholders.
9.7 Schedules and Exhibits. The Schedules and Exhibits
constitute a part of this Agreement and are incorporated into this Agreement
for all purposes.
9.8 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Seller, the Servicer,
the Indenture Trustee, the Owner Trustee or any Holder, of any right, remedy,
power or privilege under this Agreement, will operate as a waiver of such
right, remedy, power or privilege; nor will any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other
or further exercise of such right, remedy, power or privilege or the exercise
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70
of any other right, remedy, power or privilege. The rights, remedies, powers
and privileges provided under this Agreement are cumulative and not exhaustive
of any other rights, remedies, powers and privileges which may be provided by
law.
9.9 Counterparts. This Agreement may be executed in two
or more counterparts (and by different parties on separate counterparts), each
of which will be an original, but all of which together will constitute one and
the same instrument.
9.10 Binding Effect; Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding upon the Parties, the
Holders and their respective successors and permitted assigns. The Owner
Trustee is a third party beneficiary of this Agreement with respect to its
rights to indemnification under Section 6.2. Except as otherwise provided in
this Agreement, no other Person will have any right or obligation pursuant to
this Agreement.
9.11 Merger and Integration. Except as specifically
stated otherwise in this Agreement, this Agreement sets forth the entire
understanding of the Parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as
expressly provided in this Agreement.
9.12 Headings. The headings used in this Agreement are
for the purpose of reference only and will not otherwise affect the meaning or
interpretation of any provision of this Agreement.
9.13 Certificates and Opinions of Counsel. Any
certificate delivered by any Person in connection with this Agreement or the
transactions contemplated hereby may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless the Person delivering such
certificate knows, or in the exercise of reasonable care should know, that such
Opinion of Counsel is erroneous. Any Opinion of Counsel or certificate
delivered under this Agreement may be based, insofar as it relates to factual
matters, upon a certificate of, or representations by, a Responsible Officer or
Responsible Officers of the Servicer or the Originator, as the case may be,
stating that the information with respect to such factual matters is in the
possession of the Servicer or the Originator, as the case may be, unless the
Person delivering such Opinion of Counsel or certificate knows, or in the
exercise of reasonable care should know, that such certificate, opinion or
representations with respect to such matters are erroneous. Any exception or
qualification contained in any Opinion of Counsel delivered in connection with
this Agreement or the
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71
transactions contemplated hereby must be reasonably satisfactory to the
Indenture Trustee and the Owner Trustee. Any such Opinion of Counsel or
certificate may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an independent public
accountant or firm of accountants, unless such counsel or the Person delivering
such Opinion of Counsel or certificate knows, or in the exercise of reasonable
care should know, that the certificate, opinions or representations with
respect to the accounting matters are erroneous.
9.14 Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest
of the Issuer in, to and under the Receivables and/or the assignment of any or
all of the Issuer's rights and obligations hereunder to the Indenture Trustee.
9.15 No Petition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer, the Seller and the Owner Trustee
shall not, prior to the date which is one year and one day after the final
distribution with respect to (i) the Notes, (ii) the 1995-1 Notes, and (iii)
any other indebtedness of the Issuer, the Seller or any other Trust formed by
the Seller permitted under Section 2.7(l) of this Agreement, acquiesce,
petition or otherwise invoke or cause the Issuer or the Seller to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or the
Seller or any substantial part of its Property, or ordering the winding up or
liquidation of the affairs of the Issuer or the Seller.
9.16 Limitation of Liability of Indenture Trustee and
Owner Trustee.
(a) Notwithstanding anything contained herein to the
contrary, this Agreement has been acknowledged and accepted by Manufacturers
and Traders Trust Company not in its individual capacity but solely as
Indenture Trustee and in no event shall Manufacturers and Traders Trust Company
have any liability for the representations, warranties, covenants, agreements
or other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer. For all purposes of this
Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Indenture Trustee shall be
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72
subject to, and entitled to the benefits of, the terms and provisions of the
Indenture.
(b) Notwithstanding anything contained herein to the
contrary, this Agreement has been executed by Bankers Trust (Delaware) not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall Bankers Trust (Delaware) in its individual
capacity or, except as expressly provided in the Trust Agreement, as Owner
Trustee of the Issuer have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of the Trust Agreement.
9.17 Confidential Information. Each of the Issuer and the
Indenture Trustee hereby agrees that it shall neither use nor disclose to any
Person the names and addresses of the Lessees or the vendors of the Equipment,
except in connection with the enforcement of the Issuer's rights hereunder,
under the Indenture or under the Receivables or as required by law.
9.18 Available Information. So long as the Class B Notes
are outstanding and are "restricted securities" within the meaning of Rule 144
(a)(3) under the Securities Act, the Seller shall provide to any Holder of
Class B Notes and to any prospective purchase of Class B Notes designated by a
Holder of Class B Notes, upon request of such Holder or prospective purchaser,
the information required to be delivered pursuant to Rule 144A under the
Securities Act to permit compliance with Rule 144A under the Securities Act in
connection with transfers of the Class B Notes.
* * * *
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trust
have caused this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year written above.
TRANS LEASING INTERNATIONAL, INC.,
as Servicer
By:________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Finance
and Chief Financial Officer
TL LEASE FUNDING CORP. IV
By:________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President, Finance
and Secretary
TLFC IV EQUIPMENT LEASE TRUST 1996-1
By: BANKERS TRUST (DELAWARE)
not in its individual capacity
but solely as Owner Trustee of
the Trust
By:________________________________
Name:
Title:
Acknowledged and Accepted:
MANUFACTURERS AND TRADERS TRUST COMPANY,
not in its individual capacity but solely
as Indenture Trustee
By:________________________________
Name:
Title:
BANKERS TRUST (DELAWARE),
not in its individual capacity but solely
as Owner Trustee
By:________________________________
Name:
Title:
74
Exhibit A
LIST OF LEASES
See Attached
75
Exhibit B
FORM OF MONTHLY STATEMENT
See Attached
76
Exhibit C
COLLECTION ACCOUNT
------------------
No. 185258191
Designation: MANUFACTURERS AND TRADERS TRUST COMPANY, FOR
THE BENEFIT OF TL LEASE FUNDING CORP. IV
Where established: MANUFACTURERS AND TRADERS TRUST COMPANY
(ABA #▇▇▇▇▇▇▇▇▇)
SERVICER ACCOUNT
----------------
No. 7804563
Designation: TRANS LEASING INTERNATIONAL, INC.
Where established: BANK OF AMERICA ILLINOIS (ABA #▇▇▇▇▇▇▇▇▇)
NOTE DISTRIBUTION ACCOUNT
-------------------------
No. 185258100
Designation: MANUFACTURERS AND TRADERS TRUST COMPANY, FOR
THE BENEFIT OF TL LEASE FUNDING CORP. IV
Where established: MANUFACTURERS AND TRADERS TRUST COMPANY
(ABA #▇▇▇▇▇▇▇▇▇)
Payments to the
Certificateholders
shall be made by
deposit into
the Servicer Account
or as otherwise
directed by the
Certificateholders
77
Exhibit D
SUBSTITUTION TRANSFER AGREEMENT
See Attached