Exhibit 10.1
SALE AND SERVICING AGREEMENT
among
▇▇▇▇▇▇ EQUIPMENT ASSET RECEIVABLES TRUST 1999-1,
as Issuer,
▇▇▇▇▇▇ FUNDING CORPORATION II,
as Trust Depositor,
▇▇▇▇▇▇ FINANCIAL, INC.,
as Servicer and as an Originator,
▇▇▇▇▇▇ FINANCIAL LEASING, INC.,
as an Originator
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
Dated as of [ __________ ], 1999
TABLE OF CONTENTS
ARTICLE ONE
DEFINITIONS........................................................1
Section 1.01. Definitions......................................1
Section 1.02. Usage of Terms..................................23
Section 1.03. Section References..............................23
Section 1.04. Calculations....................................23
Section 1.05. Accounting Terms................................23
ARTICLE TWO
ESTABLISHMENT OF TRUST............................................24
Section 2.02. Conditions to Transfer of Trust Assets
to Trust......................................25
Section 2.03. Acceptance by Owner Trustee.....................27
Section 2.04. Conveyance of Substitute Contracts..............27
Section 2.05. Release of Released Amounts.....................28
Section 2.06. Delivery of Instruments.........................29
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES....................................30
Section 3.02. Representations and Warranties Regarding
Each Contract and as to Certain Contracts
in the Aggregate................................32
Section 3.03. Representations and Warranties Regarding
the Initial Contracts in the Aggregate..........32
Section 3.04. Representations and Warranties Regarding
the Contract Files..............................32
Section 3.05. Representations and Warranties Regarding
Concentrations of Initial Contracts.............33
Section 3.06. Representations and Warranties Regarding
the Trust Depositor.............................33
Section 3.07. Representations and Warranties Regarding
the Servicer....................................35
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.......36
Section 4.01. Custody of Contracts............................36
Section 4.02. Filing..........................................37
Section 4.03. Name Change or Relocation.......................37
Section 4.04. Chief Executive Office..........................37
Section 4.05. Costs and Expenses..............................37
Section 4.06 Sale Treatment..................................37
ARTICLE FIVE
SERVICING OF CONTRACTS............................................39
Section 5.01. Appointment and Acceptance; Responsibility for
Contract Administration.........................39
Section 5.02. General Duties..................................39
Section 5.03. Consent to Assignment or Replacement............39
Section 5.04. Disposition Upon Termination of Contract........39
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Section 5.05. Subservicers....................................40
Section 5.06. Further Assurance...............................40
Section 5.07. Notice to Obligors..............................40
Section 5.08. Collection Efforts; Modification of Contracts...40
Section 5.09. Prepaid Contract................................41
Section 5.10. Acceleration....................................41
Section 5.11. Taxes and Other Amounts.........................41
Section 5.12. [Reserved]......................................41
Section 5.13. Remittances.....................................41
Section 5.14. Servicer Advances...............................41
Section 5.15. Realization Upon Defaulted Contract.............41
Section 5.16. Maintenance of Insurance Policies...............42
Section 5.17. Other Servicer Covenants........................42
Section 5.18. Servicing Compensation..........................43
Section 5.19. Payment of Certain Expenses by Servicer.........43
Section 5.20. Records.........................................43
Section 5.21. Inspection......................................43
Section 5.22. Trustees to Cooperate in Releases...............43
ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR..................................44
Section 6.01. Corporate Existence.............................44
Section 6.02. Contracts Not to be Evidenced by Promissory
Notes. ........................................44
Section 6.03. Security Interests. ...........................44
Section 6.04. Delivery of Collections. ......................44
Section 6.05. Regulatory Filings. ...........................44
Section 6.06. Compliance With Law. ..........................44
Section 6.07. Activities. ...................................44
Section 6.08. Indebtedness. .................................44
Section 6.09. Guarantees. ...................................45
Section 6.10. Investments. ..................................45
Section 6.11. Merger; Sales. ................................45
Section 6.12. Distributions. ................................45
Section 6.13. Other Agreements. .............................45
Section 6.14. Separate Corporate Existence. .................45
Section 6.15. Location; Records. ............................46
Section 6.16. Liability of Trust Depositor; Indemnities.......46
Section 6.17. Bankruptcy Limitations..........................47
Section 6.18 Limitation on Liability of Trust Depositor
and Others......................................47
Section 6.19. Chief Executive Office..........................47
ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND............48
Section 7.01. Trust Accounts; Collections.....................48
Section 7.02. Reserve Fund Deposit. .........................48
Section 7.03. Trust Account Procedures. ......................48
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Section 7.04. Securityholder Distributions....................49
Section 7.05. Allocations and Distributions...................49
ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER................................55
Section 8.01. Servicer Default................................55
Section 8.02. Servicer Transfer...............................55
Section 8.03. Appointment of Successor Servicer;
Reconveyance; Successor Servicer to Act ........56
Section 8.04. Notification to Securityholders.................57
Section 8.05. Effect of Transfer..............................57
Section 8.06. Database File...................................57
Section 8.07. Successor Servicer Indemnification..............57
Section 8.08. Responsibilities of the Successor Servicer......57
Section 8.09. Rating Agency Condition For Servicer Transfer...58
ARTICLE NINE
REPORTS...........................................................59
Section 9.01. Monthly Reports.................................59
Section 9.02. Officer's Certificate...........................59
Section 9.03. Other Data......................................59
Section 9.04. Annual Report of Accountants....................59
Section 9.05. Annual Statement of Compliance from Servicer....59
Section 9.06. Annual Summary Statement........................60
ARTICLE TEN
TERMINATION.......................................................61
Section 10.01. Sale of Trust Assets..............................61
ARTICLE ELEVEN
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION................62
Section 11.01. Repurchases of, or Substitution For, Contracts
for Breach of Representations and Warranties....62
Section 11.02. Reassignment of Repurchased or Substituted
Contracts.......................................62
Section 11.03. Originators' and Trust Depositor's Repurchase
Option..........................................62
ARTICLE TWELVE
ORIGINATOR INDEMNITIES............................................63
Section 12.01. Originators' Indemnification....................63
Section 12.02. Liabilities to Obligors.........................63
Section 12.03. Tax Indemnification.............................63
Section 12.04. Adjustments.....................................64
Section 12.05. Operation of Indemnities........................64
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ARTICLE THIRTEEN
MISCELLANEOUS.....................................................65
Section 13.01. Amendment.........................................65
Section 13.02. Protection of Title to Trust......................65
Section 13.03. Governing Law.....................................66
Section 13.04. Notices...........................................66
Section 13.05. Severability of Provisions........................68
Section 13.06. Third Party Beneficiaries.........................68
Section 13.07. Counterparts......................................68
Section 13.08. Headings..........................................68
Section 13.09. No Bankruptcy Petition; Disclaimer. ..............68
Section 13.10. Jurisdiction. ....................................69
Section 13.11. Tax Characterization. ............................69
Section 13.12. Prohibited Transactions with Respect to the Trust.69
Section 13.13. Merger or Consolidation of Originators............69
Section 13.14. Assignment or Delegation by the Originators.......69
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EXHIBITS
Exhibits A Form of Assignment ...........................................A-1
Exhibit B Form of Closing Certificate of Trust Depositor ...............B-1
Exhibits C-1,
C-2 Form of Closing Certificate of Servicer/Originators...........C-1
Exhibit D Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion) .....D-1
Exhibit E Form of Opinion of Counsel for Trust Depositor regarding
the "true sale" nature of the transaction ....................E-1
Exhibit F Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation ............................................F-1
Exhibit G Form of Certificate Regarding Repurchased Contracts...........G-1
Exhibit H List of Contracts.............................................H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholders..I-1
Exhibit J [Reserved]....................................................J-1
Exhibit K [Form of Contract Stamp.......................................K-1
Exhibit L Form of Subsequent Transfer Agreement.........................L-1
Exhibit M Form of Subsequent Purchase Agreement.........................M-1
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This SALE AND SERVICING AGREEMENT, dated as of [_________], 1999, is
among ▇▇▇▇▇▇ Equipment Asset Receivables Trust 1999-1 (together with its
successors and assigns, the "Trust"), ▇▇▇▇▇▇ Funding Corporation II, (together
with its successor and assigns, the "Trust Depositor"), Norwest Bank Minnesota,
National Association (solely in its capacity as Indenture Trustee, together with
its successors and assigns, the "Indenture Trustee"), ▇▇▇▇▇▇ Financial, Inc.
(together with its successors and assigns, "HFI", in its capacity as Servicer,
together with its successor and assigns, the "Servicer" and in its capacity as
an originator) and ▇▇▇▇▇▇ Financial Leasing, Inc. (together with its successor
and assigns "▇▇▇▇▇▇ Leasing", and together with HFI, the "Originators", and
each, an "Originator").
WHEREAS, in the regular course of their business, the Originators
originate and purchase Contracts (as defined herein);
WHEREAS, the Trust Depositor acquired the Initial Contracts from the
Trust Depositor and may acquire from time to time thereafter certain Substitute
Contracts (such Initial Contracts and Substitute Contracts, together with
certain related property as more fully described herein, being the Contract
Assets as defined herein);
WHEREAS, it was a condition to the Trust Depositor's acquisition of the
Initial Contracts from the Originators that the Originators make certain
representations and warranties regarding the Contract Assets for the benefit of
the Trust Depositor as well as the Trust;
WHEREAS, on the Closing Date the Trust Depositor will fund the Trust by
selling, conveying and assigning all its right, title and interest in such
Contract Assets and certain other assets to the Trust;
WHEREAS, the Trust is willing to purchase and accept assignment of the
Trust Assets from the Trust Depositor pursuant to the terms hereof; and
WHEREAS, the Servicer is willing to service the Contracts for the
benefit and account of the Trust pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accountant's Report" has the meaning assigned such term in Section
9.04.
"Accrual Period" means the period from and including the most recent
Distribution Date to but excluding the following Distribution Date, provided,
that the initial Accrual Period following the Closing Date shall be the period
from and including the Closing Date to but excluding the first Distribution Date
following the Closing Date.
"ADCB" means, lease with respect to any date of determination thereof,
the sum of the Discounted Contract Balances of each Contract included in the
group of Contracts for which an ADCB determination is being made, as of the date
of such determination. For purposes of calculating such sum on any date other
than the last day of a Collection Period, the Discounted Contract Balance of a
Contract shall be as of the last day of the preceding Collection Period or, with
respect to any Substitute Contract transferred to the Trust after such last day,
the Discounted Contract Balance on the applicable Subsequent Cutoff Date for
such Contract.
"Addition Notice" means, with respect to any transfer of Substitute
Contracts to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Contracts from the applicable Originator),
a notice,
which shall be given at least 5 days prior to the related Subsequent Transfer
Date, identifying the Substitute Contracts to be transferred, the ADCB of such
Substitute Contracts and the related Substitution Event (with respect to an
identified Contract or Contracts then in the Contracts Pool) to which such
Substitute Contract relates, with such notice to be signed both by the Trust
Depositor, and the Originators jointly and severally (including the Originator
which owns such Substitute Contract which is to be transferred by such
Originator to the Trust Depositor and by the Trust Depositor to the Trust on the
related Subsequent Transfer Date).
"Additional Principal" means, with respect to a Distribution Date
(i) if the Class B Target Investor Principal Amount, Class C Target
Investor Principal Amount and Class D Target Investor Principal Amount
exceed the Class B Floor, Class C Floor and Class D Floor,
respectively, an amount of $0; or
(ii) if all of the conditions in clause Ii) are not satisfied, an amount
equal to the excess, if any, of
(A) the Monthly Principal Amount
(B) the sum of the Class A Principal Payment Amount, Class B
Principal Payment Amount, Class C
Principal Payment Amount and Class D Principal Payment Amount
for such Distribution Date.
"Affiliate" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Aggregate Principal Amount" means, with respect to any group of Notes
or the Certificate, at any date of determination, the sum of the Principal
Amounts of such Notes or the Certificate on such date of determination.
"Applicable Security" means, with respect to a Vendor Loan, any (i)
Secondary Contract securing such Vendor Loan and (ii) Equipment securing such
Vendor Loan or a related Secondary Contract.
"Assignment" means each Assignment, substantially in the form of
Exhibit A relating to an assignment, transfer and conveyance of Contracts and
related property by the Trust Depositor to the Trust.
"Available Amounts" means, as of any Distribution Date, the sum of (i)
all amounts on deposit in the Collection Account as of the immediately preceding
Determination Date on account of Scheduled Payments due on or before, and
Prepayments received on or before, the last day of the Collection Period
immediately preceding such Distribution Date (other than Excluded Amounts), (ii)
Recoveries on account of previously Defaulted Contracts received as of the
immediately preceding Determination Date; (iii) Investment Earnings credited to
the Collection Account or the Reserve Fund, (iv) Late Charges received on or
before the last day of such Collection Period (provided such late charges were
included in the Contract's terms as of the applicable Cutoff Date), and (v)
proceeds of any of the foregoing.
"Business Day" means any day which is neither a Saturday or a Sunday,
nor another day on which banking institutions in the city of Chicago, Illinois,
Wilmington, Delaware or New York, New York are authorized or obligated by law,
executive order, or governmental decree to be closed.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del Code 3801 et seq., as the same may be amended from time to time.
"Calculation Date" means the first day of each calendar month.
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"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.
"Certificate Register" has the meaning specified in the Trust
Agreement.
"Certificateholder" means the holder of the Certificate.
"Certificate" means the $[_____________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class E Certificate, Series
1999-1 representing a beneficial equity interest in the Trust and issued
pursuant to the Trust Agreement.
"Class" means any of the group of Notes or the Certificate identified
herein as, as applicable, the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, or the Certificate.
"Class A Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes.
"Class A Principal Payment Amount" means, with respect to a
Distribution Date, (i) while the Principal Amount of the Class A-1 Notes is
greater than zero, the lesser of (a) the amount necessary to reduce the
Principal Amount of the Class A-1 Notes to zero and (b) the Monthly Principal
Amount; (ii) if such Distribution Date is the Class A-1 Maturity Date, the
Principal Amount of the Class A-1 Notes; (iii) if the Principal Amount of the
Class A-1 Notes is zero, the amount necessary to reduce the aggregate Principal
Amount of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to the Class
A Target Investor Principal Amount; (iv) if the Principal Amount of the
Class A-1 Notes and Class A-2 Notes is zero, the amount necessary to reduce the
aggregate Principal Amount of the Class A-3 Notes and Class A-4 Notes to the
Class A Target Investor Principal Amount; and (v) if the Principal Amount
of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class A-4 Notes to the Class A
Target Investor Principal Amount.
"Class A-1 Interest Rate" means [______]% per annum (calculated on the
basis of a year of 360 days and actual days elapsed).
"Class A-1 Maturity Date" means the [_____________], 2000 Distribution
Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"Class A-1 Notes" means the $[___________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust, Class A-1 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class A-2 Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class A-2 Maturity Date" means the [____________] Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
3
"Class A-2 Notes" means the $[___________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class A-2 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class A-3 Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class A-3 Maturity Date" means the [____________] Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Notes" means the $[___________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class A-3 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class A-4 Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class A-4 Maturity Date" means the [____________] Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Class A-4 Notes" means the $[___________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class A-4 Receivable-Backed
Notes, Series 1999-1, issued pursuant to the Indenture.
"Class B Floor" means, with respect to a Distribution Date,
(i) [ ]% of the initial ADCB plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (a) the aggregate Principal Amount of the Class C Notes and
Class D Notes as of the immediately preceding Distribution Date after
giving effect to all principal payments made on such date and (b) the
Overcollateralization Balance as of the immediately preceding
Distribution Date.
"Class B Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class B Maturity Date" means the [___________] Distribution Date.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Class B Notes" means the $[____________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class B Receivable-Backed Notes,
Series 1999-1, issued pursuant to the Indenture.
"Class B Percentage" means [ ]%.
"Class B Principal Payment Amount" means, with respect to a
Distribution Date,
(i) if the Principal Amount of the Class A-1 Notes is greater than zero,
zero; and
(ii) if the Principal Amount of the Class A-1 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class B Notes to the
greater of (a) the Class B Target Investor Principal Amount or (b) the
Class B Floor.
"Class B Target Investor Principal Amount" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class B Percentage
and (ii) the ADCB as of the last day of the related Collection Period.
"Class C Floor" means, with respect to a Distribution Date,
4
(i) [ ]% of the initial ADCB plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (a) the Principal Amount of the Class D Notes as of
the immediately preceding Distribution Date after giving
effect to all principal payments made on such date and (b) the
Overcollateralization Balance as of the immediately preceding
Distribution Date;
provided, however, that if the Principal Amount of the Class B Notes as of such
Distribution Date is less than or equal to the Class B Floor on such date, the
Class C Floor will be an amount equal to the Principal Amount of the Class C
Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments on such date.
"Class C Interest Rate" means [_______]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class C Maturity Date" means the [_________] Distribution Date.
"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Notes" means the $[_____________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class C Receivable-Backed Notes,
Series 1999-1, issued pursuant to the Indenture.
"Class C Percentage" means [ ]%.
"Class C Principal Payment Amount" means, with respect to a
Distribution Date,
(i) if the Principal Amount of the Class A-1 Notes is greater than zero,
zero; and
(ii) if the Principal Amount of the Class A-1 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class C Notes to the
greater of (a) the Class C Target Investor Principal Amount or (b) the
Class C Floor.
"Class C Target Investor Principal Amount" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class C Percentage
and (ii) the ADCB as of the last day of the related Collection Period.
"Class D Floor" means, with respect to a Distribution Date,
(i) [ ]% of the initial ADCB plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the Overcollateralization Balance as of the immediately preceding
Distribution Date;
provided, however, that if the Principal Amount of the Class C Notes as of such
Distribution Date is less than or equal to the Class C Floor on such date, the
Class D Floor will be an amount equal to the Principal Amount of the Class D
Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments made on such date.
"Class D Interest Rate" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"Class D Maturity Date" means the [___________] Distribution Date.
"Class D Noteholder" means the Person in whose name a Class D Note is
registered in the Note Register.
"Class D Notes" means the $[__________] aggregate initial principal
amount ▇▇▇▇▇▇ Equipment Asset Receivables Trust Class D Receivable-Backed Notes,
Series 1999-1, issued pursuant to the Indenture.
"Class D Percentage" means [ ]%.
"Class D Principal Payment Amount" means, with respect to a
Distribution Date,
(i) if the Principal Amount of the Class A-1 Notes is greater than zero,
zero; and
5
(ii) if the Principal Amount of the Class A-1 Notes is zero, the amount
necessary to reduce the Principal Amount of the Class D Notes to the
greater of (a) the Class D Target Investor Principal Amount or (b) the
Class D Floor.
"Class D Target Investor Principal Amount" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class D Percentage
and (ii) the ADCB as of the last day of the related Collection Period.
"Closing Date" means April 15, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning given such term in the "granting clause"
of the Indenture.
"Collection Account" means the Trust Account so designated established
pursuant to Section 7.01.
"Collection Period" means a period beginning on the second day of a
calendar month and ending on and including, the first day of the next calendar
month, provided that the first Collection Period shall be the period beginning
on the Initial Cutoff Date and ending on and including the first day of the
calendar month immediately following the calendar month in which the Closing
Date occurs.
"Collections" means all payments received on or with respect to the
Contracts in the Contracts Pool or the related Equipment, including, without
limitation, Scheduled Payments, Prepayments, Recoveries, Late Charges and
Expired Lease Proceeds, all as related to amounts attributable to the Contracts
in the Contracts Pool or the related Equipment (including any such amounts
derived from Vendor recourse provisions), but excluding any Excluded Amounts.
"Commission" means the United States Securities and Exchange
Commission.
"Computer Disk" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the
Originators in selecting the Contracts conveyed to the Trust Depositor pursuant
to Section 2.01 (and any Subsequent Purchase Agreement conveyed to the Trust
Depositor pursuant to Section 2.04), and includes the master file and the
history file as well as servicing information with respect to the Contracts.
"Contract" means each End-User Contract and each Vendor Loan but,
unless otherwise specified herein, shall not refer to any Secondary Contract.
"Contract Assets" has the meaning assigned in Section 2.01 (and 2.04,
as applicable in the case of Substitute Contracts).
"Contract File" means, with respect to each Contract, the fully
executed original counterpart (for UCC purposes) of the contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Servicer keeps on file in accordance with its customary procedures, evidencing
ownership of such Equipment (if applicable) and all other documents originally
delivered to the applicable Originator or held by the Servicer with respect to
any Contract.
"Contracts Pool" as of any date means the Initial Contracts and the
Substitute Contracts (if any), other than any such Contracts which (i) have been
reconveyed by the Trust to the Trust Depositor, and concurrently by the Trust
Depositor to the applicable Originator, pursuant to Section 11.02 hereof, or
(ii) have been paid (or prepaid) in full.
"Corporate Trust Office" means, with respect to the Indenture Trustee
or Owner Trustee, as applicable, the office of the Indenture Trustee or Owner
Trustee at which at any particular time its corporate trust business shall be
6
principally administered, which offices at the date of the execution of this
Agreement are located at the addresses set forth in Section 13.04.
"Cumulative Loss Amount" means, with respect to a Distribution Date, an
amount equal to the excess, if any,
(i) the total of
(A) the Principal Amount of the Notes as of the immediately
preceding Distribution Date after giving effect to all
principal payments made on such date plus
(B) the Overcollateralization Balance as of the immediately
preceding Distribution Date minus
(C) the lesser of: (1) the Monthly Principal Amount and (2)
Available Amounts remaining after payment of amounts owing to
the Servicer, including Servicer Advances and Servicer Fees if
HFI is not the Servicer (excluding the Servicing Fee) and
after payment of interest on the Notes on such date; over
(ii) the ADCB as of the last day of the related Collection Period.
"CSA" means each conditional sales agreement, including, as applicable,
schedules, subschedules, supplements and amendments to a master conditional
sales agreement, pursuant to which specified assets were conditionally sold to
an Obligor at specified monthly, quarterly, semi-annual or annual payments.
"Cutoff Date" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date, as applicable to the
Contract or Contracts in question.
"Date of Processing" means, with respect to any transaction or
Collection, the date on which such transaction or Collection is first recorded
(and, in the case of a transaction or Collection related to a particular
Contract, identified as to such particular Contract) on the related Originator's
or Servicer's computer master file of Contracts (without regard to the effective
date of such recordation).
"DCR" means Duff & ▇▇▇▇▇▇ Credit Rating Co.
"Defaulted Contract" means a Contract in the Contracts Pool with
respect to which there has occurred one or more of the following: (i) all or
some portion of any Scheduled Payment under the Contract is more than 120 days
delinquent (or, with respect to a Contract for which there exists available
payment recourse to a Vendor to satisfy the amount in default, and which
recourse was not yet available (pursuant to the contractual terms thereof) or
had not yet been paid by the Vendor prior to the end of such 120 day period,
then at such time thereafter as the Vendor shall have failed to pay such
defaulted amount in accordance with the provisions of the Program Agreement,
Vendor Assignment or other agreement with the Vendor providing such recourse) or
such shorter period as the Originators may determine consistent with their
respective collection policy or (ii) the Servicer has determined in its sole
discretion, in accordance with its usual and customary practices (and taking
into account any available Vendor recourse), that such Contract is not
collectible.
"Determination Date" means, with respect to any Distribution Date, the
third Business Day prior to such Distribution Date.
"Discount Rate" means, at any date of determination, [_______]%, which
is equal to the sum of (1) the weighted average of the coupon rate of the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class B Notes, the Class C Notes, and the Class D Notes each weighed by (a) the
initial principal balance of each Class of Notes, as applicable, and (b) the
weighted average life of each Class of Notes under a 15% CPR and no loss
scenario, as applicable, and (2) the Servicing Fee Percentage.
"Discounted Contract Balance" means with respect to any Contract, (i)
as of the related Cutoff Date, the present value of all of the remaining
Scheduled Payments becoming due and not yet received under such Contract after
the applicable Cutoff Date discounted monthly at the Discount Rate, and (ii) as
of any other date of determination, the sum of (x) the present value of all of
the remaining Scheduled Payments becoming due under such Contract after such
date
7
of determination discounted monthly at the Discount Rate and (y) the aggregate
amount of all Scheduled Payments due and payable under such Contract after the
applicable Cutoff Date and prior to such date of determination (other than
Scheduled Payments related to Contracts that have become Defaulted Contracts or
Prepaid Contracts, and have not been replaced with a Substitute Contract as
provided in Section 2.04) that have not then been received by the Servicer.
The "Discounted Contract Balance" for each Contract shall be calculated
assuming:
(i) all payments due in any Collection period are due on the
last day of the Collection Period;
(ii) payments are discounted on a monthly basis using a 30
day month and a 360 day year; and
(iii) all security deposits and drawings under letters of
credit, if any, issued in support of a Contract are applied to
reduce Scheduled Payments in inverse order of the due date
thereof.
"Distribution Date" shall mean the thirteenth day of each calendar
month or, if such thirteenth day is not a Business Day, the next succeeding
Business Day, with the first such Distribution Date hereunder being May 13,
1999.
"Dollar" and "$" means lawful currency of the United States of America.
"Eligible Contract" means at any date of determination, each Contract
with respect to which each of the following is true (to the extent applicable to
such type of Contract):
(a) the information with respect to the Contract, any
Secondary Contract securing the obligations under such Contract, and
the Equipment, if any, subject to the Contract delivered under this
Agreement is true and correct in all material respects;
(b) immediately prior to the transfer of such Contract and any
related Equipment (or security interest therein) or Applicable Security
(or security interest therein) to the Trust Depositor, and immediately
prior to the Trust Depositor's concurrent transfer thereof to the
Trust, such Contract was owned by the applicable Originator (and by the
Trust Depositor following the transfer by the Originator) free and
clear of any adverse claim, other than with respect to any Residual
Investment;
(c) the Contract did not have a Scheduled Payment that was a
delinquent payment for more than 60 days, and the Contract is not a
Defaulted Contract;
(d) no provision of the Contract has been waived, altered or
modified in any respect, except by instruments or documents contained
in the Contract File (other than payment delinquencies permitted under
clause (c) above);
(e) the Contract is a valid and binding payment obligation of
the Obligor and is enforceable in accordance with its terms (except as
may be limited by applicable Insolvency Laws and the availability of
equitable remedies);
(f) the Contract is not and will not be subject to the rights
of rescission, setoff, counterclaim or defense and, to the Originator's
knowledge, no such rights have been asserted or threatened with respect
to the Contract;
(g) the Contract, at the time it was made, did not violate the
laws of the United States or any state, except for any such violations
which would not materially and adversely affect the collectibility of
the Contracts in the Contracts Pool taken as a whole;
8
(h) (i) the Contract and any related Equipment or interest
therein have not been sold, transferred, assigned or pledged by the
applicable Originator to any other Person (other than the financed sale
of the Equipment to the End-User effected through the End-User
Contract) and any Equipment related to such Contract is free and clear
of any liens and encumbrances of any third parties other than the
applicable Originator and Permitted Liens, and (ii) either (A) such
Contract is secured by a fully perfected lien of the first priority in
favor of the applicable Originator on the related Equipment, or, in the
case of any Vendor Loan, related Applicable Security or (B) in the case
of such a Contract secured by Title Registry Equipment, within 30
calendar days of the origination or acquisition of such Contract by the
applicable Originator all applicable federal registration or recording
procedures were initiated, and such Originator's interest will be so
noted or recorded within 180 days of such acquisition or origination;
(i) if the Contract constitutes an "instrument" or "chattel
paper" for purposes of the UCC, there is not more than one "secured
party's original" counterpart of the Contract;
(j) all filings necessary to evidence the conveyance or
transfer of the applicable Originator's ownership interest in the
Contract, and such Originator's corresponding interest in the related
Equipment or Applicable Security, as applicable, to the Trust Depositor
(as well as the concurrent conveyance of such property hereunder from
the Trust Depositor to the Trust), have been made in all appropriate
jurisdictions; provided, that (i) UCC financing statement filings with
respect to Equipment or Applicable Security which name such Originator
as secured party have not been amended to indicate either the Trust
Depositor or the Trust as an assignee (although separate UCC filings
were made against the Originator's interest in Applicable Security in
each jurisdiction where a related Vendor is located); and (ii) filings
or registrations with respect to Title Registry Equipment which name
such Originator as either owner or a lienholder have not been amended
to indicate either the Trust Depositor or the Trust as an assignee;
(k) the Obligor is not, to the Originator's knowledge, subject
to bankruptcy or other insolvency proceedings;
(l) the Contract is a U.S. dollar-denominated obligation and
the associated Equipment is located in the United States;
(m) the Contract does not require the prior written consent of
an Obligor or contain any other restriction on the transfer or
assignment of the Contract (other than a consent or waiver of such
restriction that has been obtained prior to the Closing Date, with
respect to an Initial Contract, or the Subsequent Transfer Date, with
respect to a Substitute Contract);
(n) either (x) the obligations of the related Obligor under
such Contract are irrevocable and unconditional and non-cancelable (or,
if prepayable by its terms, such Contract meets the criteria described
in clause (x) below) or (y) with respect to certain Leases with Lessees
that are governmental entities or municipalities, if such Lease is
canceled in accordance with its terms, either (1) the Vendor that
assigned such Lease to the applicable Originator is unconditionally
obligated to a repurchase such lease from such Originator for a
purchase price not less than the Discounted Contract Balance of such
Lease (as of the date of purchase) plus interest thereon at the
Discount Rate through the Distribution Date following such date of
repurchase, or (2) pursuant to this Agreement, the Originator that sold
such Lease to the Trust Depositor has indemnified the Trust Depositor
against such cancellation in an amount at least equal to the Discounted
Contract Balance of such Lease (as of the date or purchase) plus
interest thereon at the Discount Rate through the Distribution Date
following such cancellation, less any amounts paid by the Vendor
pursuant to clause (1);
(o) the Contract has an original maturity of not greater than
the term specified in this Agreement;
(p) no adverse selection procedure was used in selecting the
Contract for the Contracts Pool;
9
(q) the Obligor under the Contract is required to maintain
casualty insurance or to self-insure with respect to the related
Equipment in accordance with the Servicer's normal requirements;
(r) the Contract constitutes chattel paper, an account, an
instrument or a general intangible, in each case as defined under the
UCC;
(s) the Contract is not a "consumer lease" as defined in
Section 2A-103(1)(e) of the UCC, and if such Contract is a Lease, it is
a Lease intended for security within the meaning of Section 1-201(39)
of the UCC;
(t) if such Contract is a Lease, the Lessee thereunder has
represented to the related Vendor or applicable Originator that such
Lessee has accepted the related Equipment and has had a reasonable
opportunity to inspect and test such Equipment and the Vendor or
Originator has not been notified of any defects therein;
(u) the Contract is not subject to any guarantee by the
applicable Originator, nor has the Originator established any specific
credit reserve with respect to the related Obligor;
(v) if such Contract is a Lease, such Lease is a "triple net
lease" under which the Obligor is responsible for the maintenance of
the related Equipment in accordance with general industry standards
applicable to such item of Equipment;
(w) if such Contract is a Vendor Loan, such Vendor Loan is
secured by an Eligible Secondary Contract having an aggregate
Discounted Contract Balance for such Eligible Secondary Contract equal
to the outstanding principal amount of such Vendor Loan (assuming the
interest rate specified in such Vendor Loan is the "Discount Rate" for
purposes of calculating such Discounted Contract Balance); and
(x) no provision of such Contract provides for a Prepayment
Amount less than the amount calculated in accordance with the
definition of Prepayment Amount (unless otherwise indemnified by the
Vendor or the applicable Originator in an amount equal to the excess of
the "Prepayment Amount" as calculated in accordance with the definition
thereof over the amount otherwise payable upon a prepayment under such
Contract);
provided, that Contracts with respect to which any of the statements in clauses
(c), (o) or (x) above are not true shall also be "Eligible Contracts" if the
Trust Depositor shall have received confirmation from each Rating Agency that
such fact will not result in a Ratings Effect.
"Eligible Deposit Account" means either (a) a segregated account with a
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
Untied States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its short-term credit rating categories which signifies investment grade.
"Eligible Investments" with respect to any Distribution Date means
negotiable instruments or securities or other investments maturing on or before
such Distribution Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) which,
as of any date of determination, mature by their terms on or prior to the
Distribution Date immediately following such date of determination, and (c)
which evidence:
10
(i) direct obligations of, and obligations fully guaranteed as
to full and timely payment by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full
faith and credit of the United States of America);
(ii) demand deposits, time deposits or certificates of deposit
of depository institutions or trust companies incorporated under the
laws of the United States of America or any state thereof and subject
to supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at the time
of the Trust's investment or contractual commitment to invest therein,
the commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from each
Rating Agency in the Highest Required Investment Category granted by
such Rating Agency;
(iii) commercial paper, or other short term obligations, having,
at the time of the Trust's investment or contractual commitment to
invest therein, a rating in Highest Required Investment Category
granted by each Rating Agency;
(iv) demand deposits, time deposits or certificates of deposit
that are fully insured by the FDIC;
(v) notes that are payable on demand or bankers' acceptances
issued by any depository institution or trust company referred to in
(ii) above;
(vi) investments in money market funds having, at the time of
the Trust's investment or contractual commitment to invest therein, a
rating of the Highest Required Investment Category from each Rating
Agency or whose portfolio is limited to the investments described in
clause (i) of this definition;
(vii) time deposits (having maturities of not more than 90 days)
by an entity the commercial paper of which has, at the time of the
Trust's investment or contractual commitment to invest therein, a
rating of the Highest Required Investment Category granted by each
Rating Agency;
(viii) Eligible Repurchase Obligations; and
(ix) any negotiable instruments or securities or other
investments in which the investment by the Trust therein has been
approved in writing by the Rating Agency.
The Indenture Trustee may purchase or sell to itself or an Affiliate, as
principal or agent, the Eligible Investments described above.
"Eligible Repurchase Obligations" means repurchase obligations with
respect to any security that is a direct obligation of, or fully guaranteed by,
the United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (c)(ii) of the
definition of Eligible Investments.
"Eligible Secondary Contract" shall mean each Secondary Contract
(i) that satisfies all the criteria set forth in the
definition of "Eligible Contract" except clauses (b), (h) (with respect
to ownership by the applicable Originator of the Contract) and (w)
thereof, and except that the term "Obligor" shall mean "End-User" in
all such criteria;
11
(ii) with respect to which Secondary Contract and the proceeds
thereof the applicable Originator has a duly perfected first priority
lien; and
(iii) the transfer of the Originator's security interest with
respect to which has created a valid first priority Lien in such
Secondary Contract and the proceeds thereof in favor of the Originator
which has been duly perfected.
"End-User" shall mean any party that uses the Financed Item pursuant to
an End-User Contract.
"End-User Contract" shall mean any CSA, Secured Note, Lease, IPA, or
other Financing Agreement covering Financed Items originated or purchased by
either or the Financing Originators.
"Equipment" means the tangible assets (including but not limited to
printing, pre-press, machine tool, plastics, computer hardware, restaurant,
transportation, energy related, medical and industrial equipment) financed or
leased by an Obligor pursuant to a Contract and/or, unless the context otherwise
requires, a security interest in such assets.
"Event of Default" shall have the meaning specified in Section 5.01 of
the Indenture.
"Excess Contract", as of any date of determination, means each Contract
selected by the Servicer in accordance with Section 11.01 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.01, the removal of which pursuant to Section 11.01 hereof
and the applicable Originator's repurchase thereof or substitution of a
Substitute Contract therefor pursuant to Section 11.01, shall remedy such
breach.
"Exchange Act" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.
"Excluded Amounts" means (i) any collections on deposit in the
Collection Account or otherwise received by the Servicer on or with respect to
the Contracts Pool or related Equipment, which collections are attributable to
any taxes, fees or other charges imposed by any Governmental Authority, (ii) any
collections representing reimbursements of insurance premiums or payments for
services that were not financed by the applicable Originator, and (iii) any
proceeds from the sale or other disposition of Equipment in excess of the
difference between (x) the Discounted Contract Balance of the related Contract
as of the applicable Cutoff Date, over (y) the present value as of the
applicable Cutoff Date of all amounts actually received by the Trust in respect
of such Contract, discounted monthly at the Discount Rate.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"Financed Items" means Equipment, Software, Services and other property
and services that are permitted to be financed under Contracts in accordance
with the standard policies and procedures of the Originators.
"Financing Agreement" means each financing agreement covering Financed
Items other than a CSA, a Secured Note, a Lease or an IPA.
"Fitch" means Fitch IBCA, Inc. or any successor thereto.
"Governmental Authority" means the United States of America, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government.
"▇▇▇▇▇▇ Leasing" has the meaning assigned such term in the preamble
hereto.
"HFI" has the meaning assigned such term in the preamble hereto.
12
"Highest Required Investment Category" means (i) with respect to
ratings assigned by Fitch, F-1+ for short-term instruments and AAA for long-term
instruments, (ii) with respect to ratings assigned by ▇▇▇▇▇'▇, A2 or P-1 for one
month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for six
month instruments and Aaa or P-1 for instruments with a term in excess of six
months and (iii) with respect to ratings assigned by DCR, D-1+ for short-term
instruments and AAA for long-term instruments.
"Holder" means (i) with respect to a Certificate, the Person in whose
name such Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"Indebtedness" means, with respect to any Person at any date, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such person has not assumed or
otherwise become liable for the payment thereof.
"Indenture" means the Indenture, dated as of the date hereof, between
the Trust and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Trust, the Trust Depositor
or the Servicer, (ii) is not a director, officer or employee of any Affiliate of
the Trust, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Trust, the Trust Depositor or the Servicer or any
of their respective Affiliates, (iv) is not a holder (directly or indirectly) of
more than 10% of any voting securities of the Trust, the Trust Depositor or the
Servicer or any of their respective Affiliates, and (v) is not connected with
the Trust, the Trust Depositor or the Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"Ineligible Contract" has the meaning specified in Section 11.01.
"Initial Class A-1 Principal Amount" means $[______________].
"Initial Class A-2 Principal Amount" means $[______________].
"Initial Class A-3 Principal Amount" means $[______________].
"Initial Class A-4 Principal Amount" means $[______________].
"Initial Class B Principal Amount" means $[______________].
"Initial Class C Principal Amount" means $[______________].
"Initial Class D Principal Amount" means $[______________].
"Initial Principal Amount" means, when used in the context of a
reference to an individual Class of Notes, the Initial Class Principal Amount
applicable to such Class as defined above, and otherwise means, collectively,
the sum of the Initial Class A-1 Principal Amount, the Initial Class A-2
Principal Amount, the Initial Class ▇-▇ ▇▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇, the Initial Class A-4 Principal Amount, the Initial Class B Principal
Amount, the Initial Class C Principal Amount and the Initial Class D Principal
Amount, i.e., $[______________].
"Initial Contracts" means those Contracts conveyed to the Trust on the
Closing Date.
"Initial Cutoff Date" means April 1, 1999.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such person to the entry of an order for relief in an involuntary case under
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of this property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
"Insolvency Laws" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
"Insurance Policy" means, with respect to any Contract, 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.
"Investment Earnings" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Collection Account and the
Reserve Fund, to be credited to the Collection Account on such Distribution Date
pursuant to Section 7.03.
"IPA" means each installment payment agreement, including as
applicable, schedules, subschedules, supplements and amendments to a software
license agreement, pursuant to which the Originator financed the purchase or
acquisition of specified assets by an Obligor for specified monthly, quarterly
or semiannual payments.
"Late Charges" means any late payment fees paid by Obligors on
Contracts after all sums received have been allocated first to regular
installments due or overdue and all such installments are then paid in full.
"Lease" means each agreement, including both operating and financing
agreements, and, as applicable, schedules, subschedules, supplements and
amendments to a master lease, pursuant to which the Originator, as lessor,
leased specified assets to a Lessee at a specified monthly, quarterly,
semiannual or annual rental.
"Lessee" means, with respect to any Lease, the Obligor with respect to
such Lease.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
14
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"Liquidation Expenses" means, with respect to any Contract, the
aggregate amount of all out-of-pocket expenses reasonably incurred by the
Servicer (including amounts paid to any subservicer) and any reasonably
allocated costs of internal counsel, in each case in accordance with the
Servicer's customary procedures in connection with the repossession,
refurbishing and disposition of any related Equipment upon or after the
expiration or earlier termination of such Contract 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 Contract if it is a Defaulted
Contract.
"Liquidation Proceeds" means, with respect to a Defaulted Contract,
proceeds from the sale, lease or re-lease of the Equipment, proceeds of the
related Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment, net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
"List of Contracts" means the list identifying each Contract
constituting part of the Trust Assets, which list shall consist of the initial
List of Contracts reflecting the Initial Contracts transferred to the Trust on
the Closing Date, together with any Subsequent List of Contracts amending the
most current List of Contracts reflecting the Substitute Contracts transferred
to the Trust on the related Subsequent Transfer Date (together with a deletion
from such list of the related Contract or Contracts identified on the
corresponding Addition Notice with respect to which an Addition Event or a
Substitution Event has occurred), and which list in each case (a) identifies
each Contract included in the Contracts Pool, and (b) sets forth as to each such
Contract (i) the Discounted Principal Balance as of the applicable Cutoff Date,
and (ii) the maturity date, and which list (as in effect on the Closing Date) is
attached to this Agreement as Exhibit H.
"Material Modification" means a termination or release (including
pursuant to prepayment), or an amendment, modification or waiver, or equivalent
similar undertaking or agreement, by the Servicer with respect to a Contract
which would not otherwise be permitted under the standards and criteria set
forth in Sections 5.08 and/or 5.09 hereof, as applicable.
"Maturity Date" means, as applicable, the Class A-1 Maturity Date,
Class A-2 Maturity Date, Class A-3 Maturity Date, Class A-4 Maturity Date, Class
B Maturity Date, Class C Maturity Date or Class D Maturity Date.
"Monthly Principal Amount" means, with respect to a Distribution Date,
the difference between (i) the sum of the aggregate Principal Amount of the
Notes and the Overcollaterization Balance as of the immediately preceding
Distribution Date (after making any principal payments on such date) and (ii)
the ADCB as of the last day of the related Collection Period.
"Monthly Report" has the meaning specified in Section 9.01.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc. or any successor
thereto.
"Note" means any one of the notes of the Trust of any Class executed
and authenticated in accordance with the Indenture.
"Note Distribution Account" means the account established and
maintained as such pursuant to Section 7.01.
"Note Register" has the meaning given such term in Section 2.04 of the
Indenture.
15
"Obligor" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"Officer's Certificate" shall mean a certificate signed by any officer
of the Trust Depositor or the Servicer and delivered to the Owner Trustee or the
Indenture Trustee, as the case may be.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel (including internal counsel) for the Trust Depositor or the Servicer and
who shall be reasonably acceptable to the Owner Trustee or the Indenture
Trustee, as the case may be.
"Originator" means either of HFI or ▇▇▇▇▇▇ Leasing, each in the
capacity as an Originator of a Contract under this Agreement (including in
respect of a Substitute Contract pursuant to a Subsequent Purchase Agreement).
"Outstanding" has the meaning given such term in the Indenture.
"Overcollateralization Balance" means, with respect to a Distribution
Date, an amount equal to the excess, if any, of (i) the ADCB as of the last day
of the related Collection Period over (ii) the aggregate Principal Amount of the
Notes as of such date after giving effect to all principal payments made to the
Noteholders on such date.
"Owner Trustee" means the Person acting, not in its individual
capacity, but solely as Owner Trustee, under the Trust Agreement, its successors
in interest and any successor owner trustee under the Trust Agreement.
"Paying Agent" means as described in Section 6.11 of the Indenture and
Section 3.10 of the Trust Agreement.
"Permitted Liens" means (a) with respect to Contracts in the Contracts
Pool:
(i) Liens for state, municipal or other local taxes if such taxes
shall not at the time be due and payable or if the Trust Depositor
shall currently be contesting the validity thereof in good faith by
appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto, (ii) Liens in favor of the Trust
Depositor created by an Originator and transferred to the Trust
pursuant hereto, (iii) Liens in favor of the Trust created pursuant to
this Agreement, and (iv) Liens in favor of the Indenture Trustee
created pursuant to the Indenture and/or this Agreement;
and (b) with respect to the related Equipment:
(i) materialmen's, warehousemen's, mechanics' and other liens
arising by operation of law in the ordinary course of business for sums
not due, (ii) Liens for state, municipal or other local taxes if such
taxes shall not at the time be due and payable or if the Trust
Depositor shall currently be contesting the validity thereof in good
faith by appropriate proceedings and shall have set aside on its books
adequate reserves with respect thereto, (iii) Liens in favor of the
Trust Depositor created by the Originators and transferred by the Trust
Depositor to the Trust pursuant to this Agreement, (iv) Liens in favor
of the Trust created pursuant to this Agreement, (v) Liens in favor of
the Indenture Trustee created pursuant to the Indenture and/or this
Agreement, (vi) subordinated liens which are subordinated to the prior
payment of the Notes and the Certificate on terms described herein, and
(vii) Liens granted by the End-Users which are subordinated to the
interest of the Trust in such Equipment.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
16
"Placement Agency Agreement" means the Placement Agency Agreement,
dated [__________], 1999, between [ ] as Agent thereunder, the Trust Depositor,
and HFI, with respect to the private placement of the Class D Notes.
"Placement Agent" means [ ,] as Agent under the Placement
Agency Agreement.
"Prepaid Contract" means any Contract that has terminated or been
prepaid in full prior to its scheduled expiration date (including because of a
Casualty Loss), other than a Defaulted Contract.
"Prepayment Amount" has the meaning specified in Section 5.09.
"Prepayments" means any and all partial and full prepayments on a
Contract (including, with respect to any Contract and any Collection Period, any
Scheduled Payment (or portion thereof) which is due in a subsequent Collection
Period which the Servicer has received, and (if such Contract is not otherwise
prepayable by its terms) expressly permitted the related Obligor to make, in
advance of its scheduled due date and which will be applied to such Scheduled
Payment on such due date, and any and all cash proceeds or rents realized from
the sale, lease, re-lease or re-financing of Equipment under a Prepaid Contract,
net of Liquidation Expenses), Liquidation Proceeds, amounts received in respect
of Transfer Deposit Amounts and payments upon an optional termination of the
Trust pursuant to Section 7.08.
"Principal Amount" means, with respect to a Class of Notes, the
aggregate Initial Principal Amount thereof reduced by (i) the aggregate amount
of any distributions applied in reduction of such principal amount and (ii) the
aggregate amount of any distributions then on deposit in the Note Distribution
Account, if any, for such Class of Notes established in accordance with the
Indenture and to be applied in reduction of such principal amount in accordance
with such Indenture.
"Program Agreement" means each Vendor finance program agreement
pursuant to which End-User Contracts originated by a Vendor are assigned to an
Originator.
"Prospectus" has the meaning given such term in the Underwriting
Agreement.
"Qualified Eligible Investments" means Eligible Investments acquired by
the Indenture Trustee in its name and in its capacity as Indenture Trustee,
which are held by the Indenture Trustee in the Collection Account or the Reserve
Fund and with respect to which (a) the Indenture Trustee has noted its interest
therein on its books and records, and (b) the Indenture Trustee has purchased
such investments for value without notice of any adverse claim thereto (and, if
such investments are securities or other financial assets or interests therein,
within the meaning of Section 8-102 of the UCC as enacted in Illinois, without
acting in collusion with a securities intermediary in violating such securities
intermediary's obligations to entitlement holders in such assets, under Section
8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of
such entitlement holders), and (c) either (i) such investments are in the
possession of the Indenture Trustee, or (ii) such investments, (A) if
certificated securities and in bearer form, have been delivered to the Indenture
Trustee, or in registered form, have been delivered to the Indenture Trustee and
either registered by the issuer in the name of the Indenture Trustee or endorsed
by effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in Illinois) representing interests in securities or other
financial assets (or interests therein) held by a securities intermediary
(within the meaning of said Section 8-102), a securities intermediary indicates
by book entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its Affiliates.
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"Qualified Institution" means (a) the corporate trust department of the
Indenture 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), (i) (A) 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, (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, and
(ii) whose deposits are insured by the FDIC.
"Rating Agency" means each of Moody's, DCR and Fitch, so long as such
Persons maintain a rating on the Notes and the Certificate; and if either
Moody's, DCR or Fitch no longer maintains a rating on the Notes and the
Certificate, such other nationally recognized statistical rating organization
selected by the Trust Depositor.
"Rating Agency Condition" means, with respect to any action or series
of related actions or proposed transaction or series of related proposed
transactions, that each Rating Agency shall have notified the Trust Depositor
and the Owner Trustee and the Indenture Trustee in writing that such action or
series of related actions or the consummation of such proposed transaction or
series of related transactions will not result in a Ratings Effect.
"Ratings Effect" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
"Record Date" means, with respect to a Distribution Date, the last
Business Day of the preceding calendar month.
"Recoveries" means any and all recoveries on account of a Defaulted
Contract, including, without limitation, any and all cash proceeds or rents
realized from the sale, lease, re-lease or re-financing of repossessed Equipment
or other property, Insurance Proceeds, amounts representing late fees and
penalties and amounts received pursuant to a Program Agreement (including,
without limitation, amounts received from any "ultimate net loss pool" that may
have been created under such Program Agreement), but in each case net of
Liquidation Expenses.
"Released Amounts" means, with respect to any payment or collection
received with respect to any Contract on any Business Day (whether such payment
or collection is received by the Servicer, the Owner Trustee or the Trust
Depositor), an amount equal to that portion of such payment or collection
constituting Excluded Amounts.
"Required Holders" means (i) prior to the payment in full of the Class
A Notes Outstanding, Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and/or Class A-4 Noteholders evidencing more than 66 2/3% of the
Aggregate Principal Amount of all Class A Notes Outstanding, (ii) from and after
the payment in full of the Class A Notes Outstanding, Class B Noteholders
evidencing more than 66 2/3% of the Aggregate Principal Amount of all Class B
Notes Outstanding, (iii) from and after the payment in full of the Class B Notes
Outstanding, Class C Noteholders evidencing more than 66 2/3% of the Aggregate
Principal Amount of all Class C Notes Outstanding, and (iv) from and after the
payment in full of the Class C Notes Outstanding, Class D Noteholders evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class D Notes
Outstanding.
"Required Reserve Amount" means, with respect to a Distribution Date,
an amount equal to 0.70% of the aggregate Principal Amount of the Notes as of
the last day of the related Collection Period.
"Requirements of Law" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person
18
or to which such Person is subject, whether Federal, state or local (including,
without limitation, usury laws, the Federal Truth in Lending Act and Regulation
Z and Regulation B of the Board of Governors of the Federal Reserve System).
"Reserve Fund" means the Reserve Fund established and maintained
pursuant to Section 7.01 hereof.
"Reserve Fund Initial Deposit" means $400,000.
"Residual Investment" means, with respect to certain Leases, any funds
that an Originator shall have advanced against all or any portion of the
anticipated residual value of the leased Equipment upon the expiration of such
Lease in accordance with its terms, and in excess of the discounted present
value of the rental payments due under such Lease.
"Responsible Officer" means, with respect to the Owner Trustee, any
officer in its Corporate Trust Administration Department (or any similar group
of a successor Owner Trustee) and with respect to the Indenture Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Indenture Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"Scheduled Payment" means, with respect to any Contract, the monthly or
quarterly or semi-annual or annual rent or financing (whether principal or
principal and interest) payment scheduled to be made by the related Obligor
under the terms of such Contract after the related Cutoff Date; it being
understood that Scheduled Payments do not include any Excluded Amounts.
"Secondary Contract" shall mean, with respect to a Vendor Loan, each
End-User Contract securing such Vendor Loan.
"Secured Note" means each promissory note with a related security
interest evidenced by written agreement, pursuant to which the purchase of
specified assets by a Obligor is financed for specified monthly, quarterly,
semiannual or annual payments.
"Securities" means the Notes and the Certificate, or any of them.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Securityholders" means the Holders of the Notes or the Certificate.
"Servicer" means initially HFI, or its successor, until any Servicer
Transfer hereunder and thereafter means the Successor Servicer appointed
pursuant to Article VIII below with respect to the duties and obligations
required of the Servicer under this Agreement.
"Servicer Advance" means, with respect to any Distribution Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Distribution Date in respect of Scheduled Payments pursuant to Section 5.14.
"Servicer Default" shall have the meaning specified in Section 8.01.
"Services" means, in connection with the financing of Software by an
Originator, the support and consulting services related to such Software, the
procurement of which was also financed by such Originator pursuant to a
Contract.
"Servicing Fee" has the meaning specified in Section 5.18.
19
"Servicing Fee Percentage" means 0.40%.
"Servicer Transfer" has the meaning assigned in Section 8.02(a).
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.
"Software" means the computer software programs financed or leased by
an Obligor pursuant to a Contract.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"Substitute Contract Qualification Conditions" means, with respect to
any Substitute Contract being transferred to the Trust pursuant to Section 2.04,
the accuracy of each of the following statements as of the related Cutoff Date
for such Contract:
(a) the Discounted Contract Balance of such Substitute Contract
is not less than that of the Contract or Contracts identified on the
related Addition Notice as the Contract or Contracts to be released by
the Trust to the Trust Depositor and reconveyed to the Originators in
exchange for such Substitute Contract; and
(b) for each separate Collection Period which corresponds to a
Collection Period in which a payment would have been owing on the
Contract or Contracts identified on the related Addition Notice as the
Contract or Contracts to be released by the Trust to the Trust
Depositor and reconveyed to the Originators in exchange for such
Substitute Contract, the amount in respect of Scheduled Payments
receivable (assuming Scheduled Payments are paid and received when due)
on the Substitute Contract in such Collection Period is not less than
that of such related Contract or Contracts; and
(c) if, instead of such Substitute Contract being added to the
Contracts Pool on the related Subsequent Transfer Date, such Substitute
Contract had instead been included in the Contracts Pool as of the
Initial Cutoff Date, and the related Contract or Contracts identified
on the related Addition Notice were not so included (and assuming such
hypothetical inclusion satisfied the criteria set forth in clause (a)
and (b) above that would have been applicable at such time), the
representations of the Originators set forth in Section 3.05 concerning
concentrations would not, as a result of such inclusion, have become
inaccurate or incorrect in any material respect; and
(d) no adverse selection procedure shall have been employed in
the selection of such Substitute Contract from the Originators'
portfolio; and
(e) all actions or additional actions (if any) necessary to
perfect the security interest and assignment of such Substitute
Contract to the Trust Depositor, Trust, and Indenture Trustee shall
have been taken as of or prior to the Subsequent Transfer Date; and
20
(f) the maturity date for the last Scheduled Payment due under
such Substitute Contract is not later than the Class B Maturity Date.
"Subsequent Cutoff Date" means the date specified as such for
Substitute Contracts in the related Subsequent Transfer Agreement.
"Subsequent List of Contracts" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Substitute
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
"Subsequent Purchase Agreement" means, with respect to any Substitute
Contracts, the agreement between the Originators and the Trust Depositor
pursuant to which the applicable Originator will transfer the Substitute
Contracts to the Trust Depositor, the form of which is attached to hereto as
Exhibit M.
"Subsequent Transfer Agreement" means the agreement described in
Section 2.04 hereof.
"Subsequent Transfer Date" means any date on which Substitute Contracts
are transferred to the Trust.
"Substitute Contract" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Substitution Event has occurred
with respect to a Contract or Contracts then held in the Contracts Pool and
identified in the related Addition Notice.
"Substitution Event" shall have occurred if one or more Contracts then
held in the Trust and identified in the related Addition Notice is either (a) a
Prepaid Contract or (b) the subject of a breach of a representation or warranty
under this Agreement or other provision which breach or other provision, in the
absence of a substitution of a Substitute Contract for such Contract or
Contracts pursuant to Section 2.04, would require the payment of a Transfer
Deposit Amount to the Trust in respect of such Contract pursuant to Section
11.01.
"Successor Servicer" has the meaning given such term in Section
8.02(b).
"Tax Opinion" means, with respect to any action, an opinion of Counsel
to the effect that, for federal income tax purposes, (i) following such action
the Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) following such action the Trust will
be disregarded as a separate entity from the Trust Depositor, and (iii) such
action will not affect the tax characterization as debt of Notes of any
outstanding Class issued by the Trust for which an Opinion of Counsel has been
provided that such Notes are debt.
"Title Registry Equipment" means Equipment in the form of aircraft,
where the transfer of interests in such Equipment is subject to certain federal
title registration statutes, regulations and procedures.
"Transaction Documents" means this Agreement, the Indenture, the Trust
Agreement, the Administration Agreement, any Subsequent Transfer Agreement, any
Subsequent Purchase Agreement, the Underwriting Agreements, the Placement Agency
Agreement, and the Note Purchase Agreement (as defined in the Placement Agency
Agreement).
"Transfer Date" means the Business Day immediately preceding each
Distribution Date.
"Transfer Deposit Amount" means, with respect to each Ineligible
Contract or Excess Contract, on any date of determination, the sum of the
Discounted Contract Balances of such Contracts, together with accrued interest
thereon through such date of determination at the Discount Rate, and any
outstanding Servicer Advances thereon.
"Trust" means the trust created by the Trust Agreement and funded
pursuant to this Agreement, consisting of the Trust Assets.
21
"Trust Accounts" means, collectively, the Collection Account, the
Reserve Fund and the Note Distribution Account, or any of them.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including without limitation the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.
"Trust Agreement" means the Trust Agreement, dated as of the date
hereof, between the Trust Depositor and the Owner Trustee.
"Trust Assets" has the meaning given to such term in Section 2.01(b)
hereof (and in Section 2.04(a) hereof in respect of Substitute Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).
"Trust Depositor" has the meaning assigned such term in the preamble
hereunder, or any successor entity thereto.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"Trustees" means the Owner Trustee and the Indenture Trustee, or any of
them individually as the context may require.
"UCC" means the Uniform Commercial Code as enacted in Illinois;
provided, however, in the event that, by reason of mandatory provisions of law,
any and all of the attachment, perfection or priority of the Lien of the Trust
in and to the Trust Assets or the Lien of the Indenture Trustee in and to the
Collateral 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.
"UCC Filing Locations" means the States of Illinois, Delaware, each
other State in which the Originator/Servicer maintains the Contract Files
related to Contracts in the Contracts Pool (as of the Closing Date, Georgia and
California), and each State in which a Vendor which is an Obligor on a Vendor
Loan is located (as defined in the UCC in such State) (as of the Closing Date,
Wisconsin only).
"Uncollectible Advance" means with respect to any Determination Date
and any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 5.14 which the Servicer has as of such Determination Date determined in
good faith will not be ultimately recoverable by the Servicer.
"Underwriting Agreement" means the Underwriting Agreement, dated
[___________], 1999, among [First Union Capital Markets Corp.] (as an
underwriter thereunder and as Representative of the underwriters), [Bear,
▇▇▇▇▇▇▇ & Co., Inc. and ▇▇▇▇▇▇ Brothers] (each as underwriters thereunder), the
Trust Depositor, and HFI.
"United States" means the United States of America.
"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 Sections 7.01 or 7.05 and which
the Servicer has determined in its sole discretion are Uncollectible Advances,
and with respect to which the Servicer has given a written certification to such
effect to each Trustee.
22
"Vendor" means, with respect to a Contract, the equipment manufacturer,
dealer or distributor, or software licensor or distributor, or other Person that
provided financing under such Contract in connection with the acquisition or use
by an End-User of such party's Equipment, Software, Services or other products.
"Vendor Agreements" means the collective reference to Vendor
Assignments and Program Agreements.
"Vendor Assignment" means each assignment agreement pursuant to which
an individual End-User Contract originated by a Vendor is assigned to an
Originator.
"Vendor Loan" means a limited recourse loan agreement payable by a
Vendor and secured by the Vendor's interest in Secondary Contracts and by the
Equipment, if any, related thereto.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACT ASSETS
Section 2.01. Creation and Funding of Trust; Transfer of Contract
Assets. (a) The Trust shall be created pursuant to the terms and conditions of
the Trust Agreement, upon the execution and delivery of the Trust Agreement and
the filing by the Owner Trustee of an appropriately completed Certificate of
Trust under the Business Trust Statute. The Trust Depositor, as settlor of the
Trust, shall fund and convey assets to the Trust pursuant to the terms and
provisions hereof. The Trust shall be administered pursuant to the provisions of
this Agreement and the Trust Agreement for the benefit of the Noteholders and
Certificateholder. The Owner Trustee is hereby specifically recognized by the
parties hereto as empowered to conduct business dealings on behalf of the Trust
in accordance with the terms hereof and of the Trust Agreement.
(b) Transfer of Contract Assets to the Trust Depositor. Subject to and
upon the terms and conditions set forth herein, the Trust Depositor hereby
sells, transfers, assigns, sets over and otherwise conveys to the Trust, for a
purchase price of $[____________] in cash (less underwriting expenses and
certain other expenses associated with the initial offer and sale of the Notes
the proceeds of which represent the consideration paid by the Trust herein), all
the right, title and interest of the Originators in and to (items (i) - (vi)
below, being collectively referred to herein as the "Contract Assets"):
(i) the Initial Contracts, and all monies due or to become due
in payment of such Contracts on and after the Initial Cutoff Date, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the Initial Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements and under any guarantee or similar
credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
provided, that Contract Assets shall not include any Residual Investment. In
addition to the Contract Assets, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust the remittances, deposits
and payments made into the Trust Accounts from time to time, amounts in the
Trust Accounts from time to time (and any investments of such amounts) and all
proceeds and products of the foregoing, which together with the Contract Assets
constitute the corpus of the Trust and are referred to as the "Trust Assets")
(c) The Originators and the Trust Depositor acknowledge that the
representations and warranties of the Originators in Section 3.02, 3.03, 3.04
and 3.05 will run to and be for the benefit of the Trust and the Trustees and
the Trust and the Trustees may enforce directly without joinder of Trust
Depositor, the repurchase obligations of the Originators with respect to
breaches of such representations and warranties as set forth herein and in
Section 11.01.
24
(d) The sale, transfer, assignment, set-over and conveyance of the
Trust Assets by the Trust Depositor to the Trust pursuant to this Agreement does
not constitute and is not intended to result in a creation or an assumption by
the Trust Depositor or the Trust of any obligation of the Originators in
connection with the Contract Assets, or any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligor or
End-User, or any other Person in respect of services not financed by the
Originators, or (1) any taxes, fees, or other charges imposed by any
Governmental Authority and (2) any insurance premiums which remain owing with
respect to any Contract at the time such Contract is sold hereunder.
(e) The Originators, Trust Depositor and Trust intend and agree that
(i) the transfer of the Contract Assets to the Trust Depositor and the transfer
of the Trust Assets to the Trust are intended to be a sale, conveyance and
transfer of ownership of the Contract Assets and Trust Assets, as the case may
be, rather than the mere granting of a security interest to secure a borrowing
and (ii) such Contract Assets shall not be part of the applicable Originator's
estate in the event of a filing of a bankruptcy petition or other action by or
against such Person under any Insolvency Law. In the event, however, that
notwithstanding such intent and agreement, such transfers are deemed to be of a
mere security interest to secure indebtedness, the Originators shall be deemed
to have granted the Trust Depositor and the Trust Depositor shall be deemed to
have granted the Trust, as the case may be, a perfected first priority security
interest in such Contract Assets or Trust Assets respectively and this Agreement
shall constitute a security agreement under applicable law, securing the
repayment of the purchase price paid hereunder and the obligations and/or
interests represented by the Securities, in the order and priorities, and
subject to the other terms and conditions of, this Agreement, the Indenture and
the Trust Agreement, together with such other obligations or interests as may
arise hereunder and thereunder in favor of the parties hereto and thereto.
If any such transfer of the Contract Assets is deemed to be
the mere granting of a security interest to secure a borrowing, the Trust
Depositor may, to secure the Trust Depositor's own borrowing under this
Agreement (to the extent that the transfer of the Contract Assets thereunder is
deemed to be a mere granting of a security interest to secure a borrowing)
repledge and reassign (1) all or a portion of the Contract Assets pledged to
Trust Depositor by the Originators and with respect to which the Trust Depositor
has not released its security interest at the time of such pledge and
assignment, and (2) all proceeds thereof. Such repledge and reassignment may be
made by Trust Depositor with or without a repledge and reassignment by Trust
Depositor of its rights under any agreement with the Originators, and without
further notice to or acknowledgment from the Originators. The Originators waive,
to the extent permitted by applicable law, all claims, causes of action and
remedies, whether legal or equitable (including any right of setoff), against
Trust Depositor or any assignee of Trust Depositor relating to such action by
Trust Depositor in connection with the transactions contemplated by this
Agreement.
Section 2.02. Conditions to Transfer of Trust Assets to Trust. On or
before the Closing Date, the Originators or the Trust Depositor, as applicable,
shall deliver or cause to be delivered to the Owner Trustee and Indenture
Trustee each of the documents, certificates and other items as follows:
(i) A certificate of an officer of each respective Originator
substantially in the form of Exhibits C-1 and C-2 hereto;
(ii) Opinions of counsel for the Originators and the Trust
Depositor substantially in the form of Exhibits D hereto (and including
as an addressee thereof each Rating Agency);
(iii) Copies of resolutions of the Board of Directors of the
respective Originator or of the Executive Committee of the Board of
Directors of the respective Originator approving the execution,
delivery and performance of this Agreement and the transactions
contemplated hereunder, certified in each case by the Secretary or an
Assistant Secretary of the respective Originator;
(iv) Officially certified recent evidence of due incorporation
and good standing of the Originators under the laws of Delaware;
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(v) The initial List of Contracts, certified by the Chairman
of the Board, President or any Vice President of the Trust Depositor,
together with an Assignment substantially in the form of Exhibit A
(along with the delivery of any instruments as required under Section
2.06 below);
(vi) A certificate of an officer of the Trust Depositor
substantially in the form of Exhibit B hereto;
(vii) A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or another nationally
recognized accounting firm, addressed to the Originators and the Trust
Depositor, stating that such firm has reviewed a sample of the Initial
Contracts and performed specific procedures for such sample with
respect to certain contract terms and which identifies those Initial
Contracts which do not conform;
(viii) Copies of resolutions of the Board of Directors of the
Servicer and the Trust Depositor or of the Executive Committee of the
Board of Directors of the Servicer and the Trust Depositor approving
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which any of them is a party, as applicable,
and the transactions contemplated hereunder and thereunder, certified
in each case by the Secretary or an Assistant Secretary of the Servicer
and the Trust Depositor;
(ix) Officially certified, recent evidence of due
incorporation and good standing of the Trust Depositor under the laws
of Delaware;
(x) Evidence of proper filing with appropriate officers in the
UCC Filing Locations of UCC financing statements executed by each
Originator, as debtor, naming the Trust Depositor as secured party (and
the Owner Trustee as assignee) and identifying the Contract Assets as
collateral; and evidence of proper filing with appropriate officer in
the UCC Filing Locations of UCC financing statements executed by the
Trust Depositor, as debtor, naming the Owner Trustee as secured party
(and the Indenture Trustee as assignee) and identifying the Trust
Assets as collateral; and evidence of proper filing with appropriate
officers in the UCC Filing Locations of UCC financing statements
executed by the Trust and naming the Indenture Trustee as secured party
and identifying the Collateral, as collateral;
(xi) An Officer's Certificate listing the Servicer's Servicing
Officers;
(xii) Evidence of deposit in the Collection Account of all
funds received with respect to the Initial Contracts after the Initial
Cutoff Date to the date two days preceeding the Closing Date, together
with an Officer's Certificate from the Servicer to the effect that such
amount is correct;
(xiii) Evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Trust Depositor;
(xiv) A fully executed Trust Agreement;
(xv) A fully executed Administration Agreement;
(xvi) A fully executed Indenture; and
(xvii) An opinion of Winston & ▇▇▇▇▇▇ to the effect that (i)
for federal income tax purposes, the Class A Notes and Class B Notes
will be characterized as debt and the Trust will not be characterized
as an association (or publicly traded partnership) taxable as a
corporation, and (ii) for State of Illinois income tax purposes, the
characterization of the Trust will correspond to its characterization
for federal income tax purposes.
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Section 2.03. Acceptance by Owner Trustee. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, the Trust shall issue
to, or upon the order of, the Trust Depositor the Certificate representing
ownership of a beneficial interest in 100% of the Trust and the Trust shall
issue, and the Indenture Trustee shall authenticate, to, or upon the order of,
the Trust Depositor the Notes secured by the Collateral. The Owner Trustee
hereby acknowledges its acceptance, on behalf of the Trust, of the Trust Assets,
and declares that it shall maintain such right, title and interest in accordance
with the terms of this Agreement and the Trust Agreement upon the trust herein
and therein set forth.
Section 2.04. Conveyance of Substitute Contracts.
(a) Conveyance of Substitute Contracts to the Trust Depositor. Subject
to Section 2.01(d) above and the satisfaction of the conditions set forth in
paragraph (c) below, the Originators may at their option (but shall not be
obligated to) sell, transfer, assign, set over and otherwise convey to the Trust
Depositor (by delivery of an executed Subsequent Purchase Agreement
substantially in the form attached as Exhibit M hereto), without recourse other
than as expressly provided herein and therein (and the Trust Depositor shall be
required to purchase through payment by exchange of one or more related
Contracts released by the Trust to the Trust Depositor on the Subsequent
Transfer Date all the right, title and interest of the Originators in and to
(the property in clauses (i) - (vi) below, upon such transfer, becoming part of
the "Contract Assets"):
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Substitute Contracts on and after the related Subsequent Cutoff Dates,
any Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Subsequent
Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
(b) Conveyance of Substitute Contracts to the Trust. Subject to Section
2.01(d) above and the conditions set forth in paragraph (c) below, the Trust
Depositor shall sell, transfer, assign, set over and otherwise convey to the
Trust, without recourse other than as expressly provided herein and therein, (i)
all the right, title and interest of the Trust Depositor in and to the
Substitute Contracts purchased pursuant to Section 2.04(a) above, and (ii) all
other rights and property interests consisting of Contract Assets related to
such Substitute Contracts (the property in clauses (i)-(ii) above, upon such
transfer, becoming part of the "Trust Assets").
(c) The Originators and Trust Depositor shall transfer to the Trust the
Substitute Contracts and the other property and rights related thereto described
in paragraphs (a), in the case of the Originators, or (b), in the case of the
Trust Depositor, above only upon the satisfaction of each of the following
conditions on or prior to the related
27
Subsequent Transfer Date (and the delivery of a related Addition Notice by the
Trust Depositor shall be deemed a representation and warranty by the Trust
Depositor and of the Originators jointly and severally, that such conditions
have been or will be, as of the related Subsequent Transfer Date, satisfied):
(i) The Trust Depositor shall have provided the Owner Trustee
and the Indenture Trustee with a timely Addition Notice complying with
the definition thereof contained herein;
(ii) there shall have occurred, with respect to each such
Substitute Contract, a corresponding Substitution Event with respect to
one or more Contracts then in the Contracts Pool;
(iii) the Substitute Contract(s) being conveyed to the Trust,
satisfy the Substitute Contract Transfer Conditions;
(iv) the applicable Originator shall have delivered to the
Trust Depositor a duly executed written assignment in substantially the
form of Exhibit M hereto (the "Subsequent Purchase Agreement"), which
shall include a Subsequent List of Contracts listing the Substitute
Contracts;
(v) the Trust Depositor shall have delivered to the Owner
Trustee a duly executed written assignment (including an acceptance by
the Owner Trustee) in substantially the form of Exhibit L hereto (the
"Subsequent Transfer Agreement"), which shall include a Subsequent List
of Contracts listing the Substitute Contracts;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all Collections received with
respect to the Substitute Contracts on or after the related Subsequent
Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither the
Originators nor the Trust Depositor were insolvent nor will any of them
have been made insolvent by such transfer nor are any of them aware of
any pending insolvency;
(viii) no selection procedures believed by the Originators or
the Trust Depositor to be adverse to the interests of the Noteholders
or Certificateholder shall have been utilized in selecting the
Substitute Contracts;
(ix) each of the representations and warranties made by the
Originators pursuant to Sections 3.02, 3.03, 3.04, and 3.05 applicable
to the Substitute Contracts shall be true and correct as of the related
Subsequent Transfer Date, and the Originators shall have performed all
obligations to be performed by them hereunder on or prior to such
Subsequent Transfer Date; and
(x) the applicable Originator shall, at its own expense, on or
prior to the Subsequent Transfer Date, indicate in its Computer Disk
that ownership of the Substitute Contracts identified on the Subsequent
List of Contracts in the Subsequent Transfer Agreement have been sold
to the Trust through the Trust Depositor pursuant to this Agreement.
Section 2.05. Release of Released Amounts. (a) The Indenture Trustee
hereby agrees to release to the Trust from the Trust Assets, and the Trust
hereby agrees to release to the Trust Depositor, an amount equal to the Released
Amounts immediately upon identification thereof, which release shall be
automatic and shall require no further act by the Indenture Trustee or the
Trust, provided that the Indenture Trustee or Owner Trustee shall execute and
deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested by the Trust Depositor. Upon
such release, such Released Amounts shall not constitute and shall not be
included in the Trust Assets.
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(b) Immediately upon the release to the Trust Depositor by the Trustee
of the Released Amounts, the Trust Depositor hereby irrevocably agrees to
release to the Originators such Released Amounts, which release shall be
automatic and shall require no further act by the Trust Depositor, provided,
that the Trust Depositor shall execute and deliver such instruments of release
and assignment, or otherwise confirming the foregoing release of any Excluded
Amounts, as may be reasonably requested by the Originators.
Section 2.06. Delivery of Instruments. (a) The Originators and the
Trust Depositor shall deliver possession of all "instruments" (within the
meaning of Article 9 of the UCC) not constituting part of chattel paper (within
the meaning of such Article 9), which evidence any Contract to the Owner Trust
on behalf of the Trust on the Closing Date (or, if applicable, on the relevant
Subsequent Transfer Date), in each case indorsed in blank without recourse.
Pursuant to Section 3.05 of the Indenture, the Trust is required to deliver such
instruments to the Indenture Trustee as pledgee under the Indenture.
Accordingly, the Trust hereby authorizes and directs the Originators and the
Trust Depositor to deliver possession of any such instruments to the Indenture
Trustee on behalf of and for the account of the Trust, and agrees that such
delivery shall satisfy the condition set forth in the first sentence of this
Section 2.06. The Originators and the Trust Depositor shall also identify on the
List of Contracts (including any deemed amendment thereof associated
with any Substitute Contracts), whether by attached schedule or marking or other
effective identifying designation, all Contracts which are or are evidenced by
such instruments.
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ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Originators jointly and severally make, and upon execution of each
Subsequent Purchase Agreement are jointly and severally deemed to make, the
following representations and warranties, on which Trust Depositor will rely in
conveying the Contract Assets on the Closing Date (and on any Subsequent
Transfer Date) to the Trust, and on which the Trust, the Noteholders and
Certificateholder will rely. The Trust Depositor acknowledges that such
representations and warranties are being made by the Originators for the benefit
of the Trust.
Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Contracts to the Trust. The repurchase obligation or substitution obligation of
the Originators set forth in Section 11.01 constitutes the sole remedy available
for a breach of a representation or warranty of the Originators set forth in
Sections 3.02, 3.03, 3.04 or 3.05 of this Agreement. Notwithstanding the
foregoing, the Originators shall not be deemed to be remaking any of the
representations set forth in Section 3.03 or 3.05 on a Subsequent Transfer Date
with respect to the Substitute Contracts, as such representations relate solely
to the composition of the Initial Contracts conveyed on the Closing Date,
provided, that any inaccurate representation as to concentrations contained in
any Addition Notice shall be subject to the same remedies hereunder as if such
representation were made under Section 3.05 on the Closing Date with respect to
an Initial Contract.
Section 3.01. Representations and Warranties Regarding the Originators.
By its execution of this Agreement and each Subsequent Purchase Agreement, each
Originator jointly and severally represents and warrants that:
(a) Organization and Good Standing. Each Originator is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. Each Originator is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of
each Originator or Trust Depositor. Each Originator is properly
licensed in each jurisdiction to the extent required by the laws of
such jurisdiction in order to originate, and (if such Originator is to
be the Servicer) service the Contracts in accordance with the terms of
this Agreement.
(b) Authorization; Binding Obligation. Each Originator has the
power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the respective
Originator is a party and all of the transactions contemplated under
this Agreement and the other Transaction Documents to which the
respective Originator is a party, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the respective
Originator is a party. This Agreement and the other Transaction
Documents to which the respective Originator is a party constitute the
legal, valid and binding obligation of each Originator is enforceable
in accordance with their terms, except as enforcement of such terms may
be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of
equitable remedies.
(c) No Consent Required. Each Originator is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement and the other Transaction Documents to which the respective
Originator is a party.
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(d) No Violations. Each Originator's execution, delivery and
performance of this Agreement and the other Transaction Documents to
which the respective Originator is a party will not violate any
provision of any existing law or regulation or any order or decree of
any court or the Certificate of Incorporation or Bylaws of the
respective Originator, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the respective
Originator is a party or by which the respective Originator or any of
the Originator's properties may be bound.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of a Originator threatened, against a
Originator or any of its respective properties or with respect to this
Agreement or any other Transaction Document to which the respective
Originator is a party which, if adversely determined, would in the
opinion of the respective Originator have a material adverse effect on
the business, properties, assets or condition (financial or other) of
such Originator or the transactions contemplated by this Agreement or
any other Transaction Document to which the respective Originator is a
party.
(f) Place of Business; No Changes; No Trade Names. Each
Originator's sole place of business or chief executive office (within
the meaning of Article 9 of the UCC) is as set forth in Section 11.01
below, and each location where a Originator maintains custody of
Contract Files is reflected in the definition of UCC Filing Location or
has otherwise been disclosed with all necessary actions taken in
accordance with Section 4.03 hereof. Each Originator has not changed
its name as set forth herein, whether by amendment of its Certificate
of Incorporation, by reorganization or otherwise, and has not changed
the location of its place of business, within the four months preceding
the Closing Date (or Subsequent Transfer Date, as applicable, except in
accordance with the requirements of Section 4.03). The legal name of
each of the Originators is as set forth in this Agreement and within
the five years preceding the Closing Date neither of the Originators
has used, and neither of the Originators currently does use, any trade
names, fictitious names, assumed names, or "doing business as" names.
(g) No Bulk Sales. The execution, delivery and performance of
this Agreement by the Originators does not require compliance with any
"bulk sales" laws by the Originators.
(h) Solvency. Each Originator on the date of and after giving
effect to the transfer of the Contracts to the Trust Depositor pursuant
to [ ] is Solvent.
(i) Use of Proceeds. No proceeds of the sale of any Initial
Contract or Substitute Contract hereunder received by any Originator
will be used by such Originator to purchase or carry any "margin stock"
as such term is defined in Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
(j) Not an Investment Company. Neither Originator is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (or such Originator is exempt from all provisions
of such Act).
(k) Taxes. To the best of each Originator's knowledge, (i)
each Originator has filed all tax returns required to be filed in the
normal course of its business and has paid or made adequate provisions
for the payment of all taxes, assessments and other governmental
charges due from such Originator or is contesting any such tax,
assessment or other governmental charge in good faith through
appropriate proceedings, (ii) no tax lien has been filed with respect
thereto, and (iii) no claim is being asserted with respect to any such
tax, fee or other charge.
(l) Sale Treatment. Each Originator has treated the transfer
of Contract Assets to the Trust Depositor for all purposes (including
financial accounting purposes) as a sale and purchase on all of its
relevant books, records, financial statements and other applicable
documents.
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(m) Marking of Files. Each Originator has, at its own expense,
prior to the Closing Date, indicated in its Computer Disk that
ownership of the Contracts transferred by it to the Trust Depositor and
identified on the List of Contracts have been sold to the Trust
Depositor.
Section 3.02. Representations and Warranties Regarding Each Contract
and as to Certain Contracts in the Aggregate. Each Originator jointly and
severally represents and warrants (x) with respect to subsections (a)-(c) below,
as to each Contract as of the execution and delivery of this Agreement and as of
the Closing Date, and as of each Subsequent Transfer Date with respect to each
Substitute Contract, and (y) with respect to subsections (d)-(f) below, as to
the Contracts Pool in the aggregate as of the Closing Date, and as of each
Subsequent Transfer Date with respect to Substitute Contracts (after giving
effect to the addition of such Substitute Contracts to the Contracts Pool),
that:
(a) List of Contracts. The information set forth in the List
of Contracts (as the same may be amended or deemed amended in respect
of a conveyance of Substitute Contracts on a Subsequent Transfer Date)
is true, complete and correct as of the applicable Cutoff Date.
(b) Eligible Contract. Such Contract satisfies the criteria
for the definition of Eligible Contract set forth in this Agreement as
of the date of its conveyance hereunder.
(c) No "True Leases". In the Originators' reasonable judgment,
no Contract constituting a Lease is a "true lease" as distinguished
from a financing lease.
(d) Contracts Secured by Fixtures. In the Originators'
reasonable judgment, not more than [ ]% of the ADCB of the Contracts
Pool consists of Contracts secured by Equipment constituting fixtures.
(e) Contracts Secured by Other Real Property. Not more than [
]% of the ADCB of the Contracts Pool consists of Contracts additionally
secured by other real property (exclusive of or in addition to
Equipment constituting fixtures).
(f) Contracts Secured by Title Registry Equipment. Not more
than [ ]% of the ADCB of the Contracts Pool consists of Contracts
secured by Equipment constituting Title Registry Equipment.
Section 3.03. Representations and Warranties Regarding the Initial
Contracts in the Aggregate. Each Originator jointly and severally represents
and warrants, as of the Closing Date, that:
(a) Amounts. The ADCB of the Contracts as of the Initial
Cutoff Date equals the sum of the principal balance of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes,
the Class B Notes, the Class C Notes, the Class D Notes and the
Certificates on the Closing Date.
(b) Characteristics. The Initial Contracts have the following
additional characteristics: (i) no Contract has a remaining maturity of
more than [ ] months; (ii) the final scheduled Distribution Date on the
Contract with the latest maturity is not later than [ ]; (iii) no
Contract was originated after the Initial Cutoff Date; and (iv) not
more than [ ]% of the Initial Contracts (as measured by ADCB) provide
for Scheduled Payments due on a basis other than monthly.
Section 3.04. Representations and Warranties Regarding the Contract
Files. Each Originator jointly and severally represents and warrants as of the
Closing Date with respect to the Initial Contracts (or as of the Subsequent
Transfer Date, with respect to Substitute Contracts), that (i) immediately prior
to such date (as applicable), the applicable Originator had possession of each
original Contract and the related complete Contract File, and there were no
other custodial agreements relating to the same in effect; (ii) each of such
documents which is required to be signed by the Obligor has been signed by the
Obligor in the appropriate spaces; (iii) all blanks on any form have been
properly filled
32
in and each form has otherwise been correctly prepared; and (iv) the complete
Contract File for each Contract is in the possession of the Servicer.
Section 3.05. Representations and Warranties Regarding Concentrations
of Initial Contracts. Each Originator represents and warrants as of the Closing
Date, as to the composition of the Initial Contracts in the Contracts Pool as of
the Initial Cutoff Date, that:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed [ ]%
of the ADCB of the Contracts Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or are
related to Software will not exceed [ ]% of the ADCB of the
Contracts Pool;
(iii) the ADCB of all End-User Contracts with Obligors who comprise
the three (3) largest Obligors (measured by ADCB as of the
date of determination) does not exceed [ ]% of the ADCB of the
Contracts Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise
the twenty (20) largest Obligors (measured by ADCB as of the
date of determination) does not exceed [ ]% of the ADCB of the
Contracts Pool;
(v) the ADCB of all End-User Contracts related to a single Vendor,
or representing a Vendor Loan to such Vendor, does not exceed
[ ]% of the ADCB of the Contracts Pool; and
(vi) the ADCB of all End-User Contracts with Obligors located in a
single State of the United States does not exceed [ ]% of the
ADCB of the Contracts Pool.
Section 3.06. Representations and Warranties Regarding the Trust
Depositor. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trust, the
Indenture Trustee, the Noteholders and the Certificateholder that:
(a) Originators' Representations and Warranties. The
representations and warranties set forth in Section 3.02, Section 3.03,
Section 3.04 and Section 3.05 are true and correct.
(b) Organization and Good Standing. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under
the laws of Delaware and has the corporate power to own its assets and
to transact the business in which it is currently engaged. The Trust
Depositor is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires
such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or
condition (financial or other) of the Trust Depositor or the Trust.
(c) Authorization; Valid Sale; Binding Obligations. The Trust
Depositor has the power and authority to make, execute, deliver and
perform this Agreement and the other Transaction Documents to which it
is a party and all of the transactions contemplated under this
Agreement and the other Transaction Documents to which it is a party,
and to create the Trust and cause it to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party
and to cause the Trust to be created. This Agreement and the related
Subsequent Transfer Agreement, if any, shall effect a valid sale,
transfer and assignment of the Trust Assets, enforceable against the
Trust Depositor and creditors of and purchasers from the Trust
Depositor. This
33
Agreement and the other Transaction Documents to which the Trust
Depositor is a party constitute the legal, valid and binding obligation
of the Trust Depositor enforceable in accordance with their terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(d) No Consent Required. The Trust Depositor is not required
to obtain the consent of any other party or any consent, license,
approval or authorization from, or registration or declaration with,
any Governmental Authority in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or the other
Transaction Documents to which it is a party.
(e) No Violations. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party by the Trust Depositor, and the consummation of the transactions
contemplated hereby and thereby, will not violate any Requirement of
Law applicable to the Trust Depositor, or constitute a material breach
of any mortgage, indenture, contract or other agreement to which the
Trust Depositor is a party or by which the Trust Depositor or any of
the Trust Depositor's properties may be bound, or result in the
creation or imposition of any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind upon any of its
properties pursuant to the terms of any such mortgage, indenture,
contract or other agreement, other than as contemplated by the
Transaction Documents.
(f) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Trust Depositor threatened, against
the Trust Depositor or any of its properties or with respect to this
Agreement, the other Transaction Documents to which it is a party or
the Securities (1) which, if adversely determined, would in the
reasonable judgment of the Trust Depositor have a material adverse
effect on the business, properties, assets or condition (financial or
otherwise) of the Trust Depositor or the Trust or the transactions
contemplated by this Agreement or the other Transaction Documents to
which the Trust Depositor is a party or (2) seeking to adversely affect
the federal income tax or other federal, state or local tax attributes
of the Certificate or Notes.
(g) Bulk Sales. The execution, delivery and performance of
this Agreement do not require compliance with any "bulk sales" laws by
the Trust Depositor.
(h) Solvency. The Trust Depositor, at the time of and after
giving effect to each conveyance of Trust Assets hereunder, is Solvent
on and as of the date thereof.
(i) Taxes. The Trust Depositor has filed or caused to be filed
all tax returns which, to its knowledge, are required to be filed and
has put all taxes shown to be due and payable on such returns or on any
assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any amount of tax due, the validity
of which is currently being contested in good faith by appropriate
proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the
books of the Trust Depositor); no tax lien has been filed and, to the
Trust Depositor's knowledge, no claim is being asserted, with respect
to any such tax, fee or other charge.
(j) Place of Business; No Changes. The Trust Depositor's sole
place of business (within the meaning of Article 9 of the UCC) is as
set forth in Section 13.04 below. The Trust Depositor has not changed
its name, whether by amendment of its Certificate of Incorporation, by
reorganization or otherwise, and has not changed the location of its
place of business, within the four months preceding the Closing Date.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Substitute Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
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Section 3.07. Representations and Warranties Regarding the Servicer.
The Servicer represents and warrants to the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholder that:
(a) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of
the Servicer or the Trust. The Servicer is properly licensed in each
jurisdiction to the extent required by the laws of such jurisdiction to
service the Contracts in accordance with the terms hereof.
(b) Authorization; Binding Obligations. The Servicer has the
power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the Servicer is
a party and all of the transactions contemplated under this Agreement
and the other Transaction Documents to which the Servicer is a party,
and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other
Transaction Documents to which the Servicer is a party. This Agreement
and the other Transaction Documents to which the Servicer is a party
constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with their terms, except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) No Consent Required. The Servicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
Governmental Authority in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the other
Transaction Documents to which the Servicer is a party.
(d) No Violations. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the
Servicer is a party by the Servicer will not violate any Requirements
of Law applicable to the Servicer, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the
Servicer is a party or by which the Servicer or any of the Servicer's
properties may be bound, or result in the creation of or imposition of
any security interest, lien, pledge, preference, equity or encumbrance
of any kind upon any of its properties pursuant to the terms of any
such mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Servicer threatened, against the
Servicer or any of its properties or with respect to this Agreement, or
any other Transaction Document to which the Servicer is a party which,
if adversely determined, would in the reasonable judgment of the
Servicer have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of the Servicer or the
Trust or the transactions contemplated by this Agreement or any other
Transaction Document to which the Servicer is a party.
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ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
Section 4.01. Custody of Contracts. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Noteholders, the Certificateholder, the Indenture Trustee, and the Owner Trustee
as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the UCC Filing Locations as shall from time to time be identified to
the Trustees by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; provided, however, that the Servicer will take all
action necessary to maintain the perfection of the Trust's interest in the
Contracts and the proceeds thereof. It is intended that by the Servicer's
agreement pursuant to Section 4.01(a) above and this Section 4.01(b) the
Trustees shall be deemed to have possession of the Contract Files for purposes
of Section 9-305 of the Uniform Commercial Code of the State in which the
Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Noteholders and
the Certificateholder and the Owner Trustee and the Indenture Trustee,
maintain accurate records pertaining to each Contract to enable it to
comply with the terms and conditions of this Agreement, maintain a
current inventory thereof, conduct annual physical inspections of
Contract Files held by it under this Agreement and certify to the Owner
Trustee and the Indenture Trustee annually that it continues to
maintain possession of such Contract Files;
(ii) implement or maintain policies and procedures in writing
and signed by a Servicing Officer with respect to persons authorized to
have access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Noteholders and the
Certificateholder, the Owner Trustee and the Indenture Trustee;
(iv) at all times maintain the original of each fully executed
Contract and store such original Contract in a fireproof vault;
(v) stamp each Contract or Contract File containing the
executed original of such Contract, as of the Closing Date (or
Subsequent Transfer Date, as the case may be), with a legend in the
form attached hereto as Exhibit K; and
(vi) within 30 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the Owner Trustee and the Indenture Trustee certifying that as of a
date no earlier than the Closing Date (or Subsequent Transfer Date, as
the case may be) it has conducted an inventory of the Contract Files
(which in the case of Substitute Contracts, need be only of the
Contract Files related to such Substitute Contracts) and that there
exists a Contract File for each Contract and stating all exceptions to
such statement, if any.
(d) In performing its duties under this Section 4.01, the Servicer
agrees to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the financing of Financed Items
owned and/or serviced by it, and in any event with no less degree of skill and
care than would be exercised by a prudent servicer of such Financed Items. The
Servicer shall promptly report to the Owner Trustee and the Indenture Trustee
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any failure by it to hold the Contract Files as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer further agrees not to assert any
legal or beneficial ownership interest in the Contracts or the Contract Files,
except as provided in Section 5.06. The Servicer agrees to indemnify the
Noteholders, the Certificateholder, the Owner Trustee and the Indenture Trustee
for any and all liabilities, obligations, losses, damages, payments, costs, or
expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Noteholders, the Certificateholder, the Owner Trustee and the
Indenture Trustee as the result of any act or omission by the Servicer relating
to the maintenance and custody of the Contract Files or any other action or
omission of the Servicer in the performance of its duties and obligations as
Servicer hereunder; provided, however, that the Servicer will not be liable for
any portion of any such amount resulting from the gross negligence or willful
misconduct of any Noteholder, Certificateholder, the Owner Trustee or the
Indenture Trustee. The Trustees shall have no duty to monitor or otherwise
oversee the Servicer's performance as custodian hereunder.
Section 4.02. Filing. On or prior to the Closing Date, the Originators,
Trust Depositor and Servicer shall cause the UCC financing statement(s) referred
to in Section 2.02(x) hereof to be filed, and from time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary or desirable or as the Owner Trustee or Indenture Trustee may
reasonably request to perfect and protect the Trust's first priority perfected
interest in the Trust Assets against all other persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
Section 4.03. Name Change or Relocation. (a) During the term of this
Agreement, none of the Originators, the Servicer and the Trust Depositor shall
change its name, identity or structure or relocate its chief executive office,
or relocate or establish a new location where Contract Files are maintained,
without first giving at least 30 days' prior written notice to the Owner Trustee
and the Indenture Trustee.
(b) If any change in either the Servicer's, an Originator's or the
Trust Depositor's name, identity or structure or other action would make any
financing or continuation statement or notice of ownership interest or lien
relating to any Contract Asset seriously misleading within the meaning of
applicable provisions of the UCC or any title statute, the Servicer and/or the
applicable Originator, no later than five days after the effective date of such
change, shall file such amendments as may be required to preserve and protect
the Trust's interests in the Trust Assets and the proceeds thereof. In addition,
neither any Originator, the Servicer nor the Trust Depositor shall change its
place of business (within the meaning of Article 9 of the UCC), or the locations
in which Contract Files are maintained, from the locations specified in Section
13.04 below or the UCC Filing Locations unless it has first taken such action as
is advisable or necessary to preserve and protect the Trust's interest in the
Trust Assets. Promptly after taking any of the foregoing actions, the Servicer
shall deliver to the Owner Trustee and the Indenture Trustee an opinion of
counsel reasonably acceptable to the Owner Trustee stating that, in the opinion
of such counsel, all financing statements or amendments necessary to preserve
and protect the interests of the Owner Trustee in the Trust Corpus have been
filed, and reciting the details of such filing.
Section 4.04. Chief Executive Office. During the term of this
Agreement, and subject to the other terms and provisions herein relating to
changes in location, each Originator will maintain its chief executive office in
one of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
Section 4.05. Costs and Expenses. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trustees' and
Trust's right, title and interest in and to the Contract Assets (including,
without limitation, the security interest in the Equipment related thereto and
the security interests provided for in the Indenture).
Section 4.06 Sale Treatment. The Trust Depositor shall treat the
transfer of Trust Assets made hereunder for all purposes (including financial
accounting purposes) as a sale and purchase on all of its relevant books,
records,
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financial statements and other applicable documents. Notwithstanding the
preceding sentence, for federal income tax purposes the transfer of Trust Assets
by the Trust Depositor hereunder shall not be treated as a sale and purchase for
federal income tax purposes so long as the Trust is disregarded as a separate
entity pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii).
Section 4.07 Separateness from Trust Depositor. Each Originator agrees
to take or refrain from taking or engaging in with respect to the Trust
Depositor, as applicable, each of the actions or activities specified in the
"substantive consolidation" opinion of Winston & ▇▇▇▇▇▇ (including any
certificates of such Originator attached thereto) delivered on the Closing Date,
upon which the conclusions therein are based.
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ARTICLE FIVE
SERVICING OF CONTRACTS
Section 5.01. Appointment and Acceptance; Responsibility for Contract
Administration. HFI is hereby appointed as Servicer and custodian (as
contemplated in Article IV hereof) pursuant to this Agreement. HFI accepts the
appointment and agrees to act as the Servicer and custodian pursuant to this
Agreement.
The Servicer will have the sole obligation to manage, administer, service and
make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Owner Trustee to enable the Servicer to carry
out its servicing and administrative duties hereunder. The Servicer is hereby
appointed the servicer hereunder until such time as any Servicer Transfer may be
effected under Article VIII.
Section 5.02. General Duties. The Servicer will service, administer and
enforce the Contracts in the Contracts Pool on behalf of the Trust 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 and as shall
not contravene the provisions of this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in the Contracts Pool
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable contracts that it services for itself
or others. The Servicer's duties will include collection and posting of all
payments, responding to inquiries of Obligors regarding the Contracts in the
Contracts Pool, investigating delinquencies, accounting for collections,
furnishing monthly and annual statements with respect to collections and
payments in accordance with Article Nine hereof, making Servicer Advances, and
using its best efforts to maintain the perfected first priority security
interest of the Indenture Trustee in the Trust Assets. 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
Contract pursuant to Section 5.15 or commences or participates in a legal
proceeding (including a bankruptcy proceeding) relating to or involving a
Contract in the Contracts Pool, the Trust will be deemed to have automatically
assigned such Contract 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 Trust, pursuant to this Section 5.02, to execute
and deliver, on behalf of itself and the Trust, 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 Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, then the Owner Trustee will, at the
Servicer's expense and direction, take steps on behalf of the Trust to enforce
the Contract, including bringing suit in the Trust's name.
Section 5.03. Consent to Assignment or Replacement. At the request of
an Obligor, the Servicer may in its sole discretion consent to the assignment of
the related Contract or the sublease of a unit of the Equipment relating to a
Contract, so long as such Obligor remains liable for all of its obligations
under such Contract. Upon the request of any Obligor, 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, so long as such Obligor
remains liable for all of its obligations under such Contract.
Section 5.04. Disposition Upon Termination of Contract. Upon the
termination of a Contract included in the Contracts Pool as a result of a
default by the Obligor thereunder, and upon any such Contract becoming a
Defaulted Contract, 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 purchasing such
Equipment or by selling such Equipment to any of its Affiliates for a purchase
price equal to the fair market value thereof. The Servicer will deposit any
Prepayments of any such disposition in accordance with Section 7.01.
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Section 5.05. Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers (including any Affiliate of the
Servicer) to perform all or a portion of the servicing functions on behalf of
the Servicer; provided that the Servicer shall remain obligated and be liable to
the Trust for servicing and administering the Contracts in the Contracts Pool 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 such Contracts. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and its subservicer
and neither the Owner Trustee, the Trust, 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.
Section 5.06. Further Assurance. The Owner Trustee and the Indenture
Trustee 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.
Section 5.07. Notice to Obligors. The Servicer will not be required to
notify any Obligor that such Obligor's Contract or related Equipment, or any
security interest in such Contract or such Equipment, has been sold,
transferred, assigned, or conveyed pursuant to this Agreement; provided that, in
the event that the Servicer resigns or is replaced, then if the place for
payment pursuant to any Contract is changed, the Successor Servicer must give
each related Obligor prompt written notice of the appointment of the Successor
Servicer and the place to which such Obligor should make payments pursuant to
each such Contract.
Section 5.08. Collection Efforts; Modification of Contracts. (a) The
Servicer will make reasonable efforts to collect all payments called for under
the terms and provisions of the Contracts in the Contracts Pool as and when the
same become due, and will follow those collection procedures which it follows
with respect to all comparable contracts that it services for itself or others.
(b) The Servicer may, subject to Sections 5.09 and 5.10, at the request
of an Obligor and at the Servicer's option, waive, modify or otherwise vary any
other provision of a Contract in accordance with its customary and usual
practices; provided, that no such waiver, modification or variance shall (except
as provided in Sections 5.09, 5.10 and 5.15), without the consent of each Rating
Agency,
(i) have the effect of accelerating, delaying or extending the
date for or the amount of any payment of Scheduled Payments with
respect to such Contract;
(ii) be inconsistent with the servicing standards set forth
in Section 5.02; or
(iii) have a material adverse effect on the interests of any
of the Trust, the Trustees or the Securityholders.
Notwithstanding the foregoing, to the extent consistent with the Servicer's past
practices, the Servicer may on only one occasion with respect to any Contract,
permit a deferment of not more than three consecutive Scheduled Payments
(collectively, a "Skipped Payment") under such Contract to the end of the term
of such Contract so long as, as of the Date of Processing for such Skipped
Payment (i) the sum of the Discounted Contract Balances of all Contracts with
respect to which there have been effected Skipped Payment modifications since
the Initial Cutoff Date does not exceed 5% of the ADCB for the Contracts Pool as
of the Initial Cutoff Date, and (ii) such Skipped Payment is deferred to no
later than the last day of the Collection Period related to the Distribution
Date that is twelve months prior to the Class B Maturity Date. Additionally,
notwithstanding the foregoing, the Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course of
servicing any Contract in the Contracts Pool.
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Section 5.09. Prepaid Contract. The Servicer may, at its option and in
accordance with its customary and usual practices, agree to permit a Contract in
the Contracts Pool that is not otherwise contractually prepayable by its terms
to become a Prepaid Contract (which shall not include a Contract that becomes an
Prepaid Contract due to a Casualty Loss); provided, that the Servicer will not
permit the early termination or full prepayment of such a Contract unless (i)
such early termination or full prepayment would not result in the Trust
receiving an amount (the "Prepayment Amount") less than the sum of (A) the
Discounted Contract Balance on the date of such prepayment plus any accrued and
unpaid interest payments thereon (at the Discount Rate) and (B) any outstanding
Servicer Advances thereon, or (ii) if such early termination or full prepayment
would result in the Trust receiving a Prepayment Amount less than the amount set
forth in clause (i), either the Vendor or the Originators shall have agreed to
pay the Trust the difference between the Prepayment Amount actually paid and the
amount set forth in clause (i) (such payment by the Vendor or Originator also to
be considered a "Prepayment Amount"). At the option of the Originators, the
Servicer may use the Prepayment Amount to purchase a Substitute Contract for
such Prepaid Contract from the Originators.
Section 5.10. Acceleration. The Servicer, in its sole discretion, may
accelerate (or elect not to accelerate) the maturity of all or any Scheduled
Payments under any Contract in the Contracts Pool 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 Payments due under any Contract in the Contracts Pool (and take
other action in accordance with the applicable Originator's past practice,
including repossessing or otherwise converting the related Equipment, to realize
upon the value of such Contract and the related Equipment) to the fullest extent
permitted by the terms of such Contract, promptly after such Contract becomes a
Defaulted Contract.
Section 5.11. Taxes and Other Amounts. To the extent provided for in
any Contract in the Contracts Pool, the Servicer will make reasonable efforts to
collect (or cause to be collected) all payments with respect to amounts due for
taxes, assessments and insurance premiums relating to such Contracts or the
Equipment and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
Section 5.12. [Reserved].
Section 5.13. Remittances. The Servicer will service all Collections
in accordance with Section 7.01 hereof.
Section 5.14. Servicer Advances. For each Collection Period, if the
Servicer determines that any Scheduled Payment (or portion thereof) which was
due and payable pursuant to a Contract in the Contracts Pool during such
Collection Period was not received prior to the end of such Collection Period,
the Servicer is required to make a Servicer Advance in an amount up to the
amount of such delinquent Scheduled 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 Contract. Notwithstanding the
foregoing, if the Servicer is not HFI, then Servicer shall not be required to
make a Servicer Advance. The Servicer will deposit any Servicer Advances into
the Collection Account on or prior to 11:00 a.m. (Chicago time) on the related
Transfer Date, in immediately available funds. The Servicer will be entitled to
be reimbursed for Servicer Advances pursuant to Sections 7.05(a) and 7.05(b).
Section 5.15. Realization Upon Defaulted Contract. The Servicer will
use its best efforts consistent with its customary and usual practices and
procedures in its servicing of contracts to repossess or otherwise comparably
convert the ownership of any Equipment relating to a Defaulted Contract and will
act as sales and processing agent for Equipment or Applicable Security 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
contracts and other actions by the Servicer in order to realize upon such
Equipment or Applicable Security, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Equipment or Applicable Security 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 or Applicable Security to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof. In any case in which
any such Equipment or Applicable Security has suffered damage, the Servicer will
not expend funds in connection with any repair or toward the repossession of
such Equipment or Applicable Security unless it determines in its discretion
that such repair and/or
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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 with the sale or disposition of
Equipment or Applicable Security relating to a Defaulted Contract in accordance
with Section 7.01 net of any amounts payable to a Vendor.
Section 5.16. Maintenance of Insurance Policies. The Servicer will use
its best efforts to ensure that each Obligor maintains an Insurance Policy with
respect to the related Equipment in an amount at least equal to the sum of the
Discounted Contract Balance of the related Contract in the Contracts Pool;
provided that the Servicer, in accordance with its customary servicing
procedures, may allow Obligors to self -insure. Additionally, the Servicer will
require that each Obligor maintain property damage liability insurance during
the term of each Contract in the Contracts Pool in amounts and against risks
customarily insured against by the Obligor on equipment owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor. In
connection with its activities as Servicer of the Contracts, the Servicer agrees
to present, on behalf of itself, the Trust, the Indenture Trustee 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 Contract. The Servicer's Insurance
Policies with respect to the related Equipment will insure against liability for
personal injury and property damage relating to such Equipment, will name the
Indenture Trustee as an insured thereunder and will contain a breach of warranty
clause.
Section 5.17. Other Servicer Covenants. The Servicer hereby covenants
that:
(a) Contract Files. The Servicer will, at its own cost and
expense, maintain all Contract Files in accordance with its customary
procedures. Without limiting the generality of the preceding sentence,
the Servicer will not dispose of any documents constituting the
Contract 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 Contract except as contemplated by this Agreement.
(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 Contracts in the Contracts
Pool and related Equipment and Contract 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 Trust on behalf of the Holders or
the Indenture Trustee on behalf of the Noteholders, with respect to)
the Trust Assets.
(c) Obligations with Respect to Contracts; Modifications. The
Servicer will duly fulfill and comply with, in all material respects,
all obligations on the part of the Trust Depositor to be fulfilled or
complied with under or in connection with each Contract in the
Contracts Pool and will do nothing to impair the rights of the
Indenture Trustee and the Holders in, to and under the Trust Assets.
The Servicer will perform such obligations under the Contracts in the
Contracts Pool and will not change or modify the Contracts, except as
otherwise provided herein and except insofar as any such failure to
perform, change or modify would not materially and adversely affect the
value of (or the rights of the Trust, on behalf of the Holders, or the
Indenture Trustee, on behalf of the Noteholders, with respect to) the
Contracts or the related Equipment.
(d) No Bankruptcy Petition. Prior to the date that is one year
and one day after the payment in full of all amounts owing in respect
of all outstanding Securities, the Servicer will not institute against
the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or
other similar proceedings under the laws of the United States or any
state of the United States. This Section 5.17(d) will survive the
termination of this Agreement.
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(f) Location of Contract Files. The Contract Files shall
remain at all times in the possession of the Servicer.
Section 5.18. Servicing Compensation. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in Section
5.19, the Servicer shall be entitled to receive a monthly servicing fee in
respect of any Collection Period (or portion thereof) prior to the termination
of the Trust (with respect to each Collection Period, the "Servicing Fee") equal
to one-twelfth of the product of (A) the Servicing Fee Percentage and (B) the
ADCB of the Contracts Pool as of the first day of such Collection Period.
Section 5.19. Payment of Certain Expenses by Servicer. The Servicer
will be required to pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of independent
accountants, the Owner Trustee, the Indenture Trustee, 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 Trust or the Trust Depositor, but excluding
Liquidation Expenses incurred as a result of activities contemplated by Section
5.15. The Servicer will be required to pay all reasonable fees and expenses
owing to the Owner Trustee or the Indenture Trustee in connection with the
maintenance of the Trust Accounts. The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment or
reimbursement therefor other than the Servicing Fee.
Section 5.20. Records. The Servicer shall, during the period it is
Servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
Section 5.21. Inspection. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel to
assist in any examination of such records by the Owner Trustee or the Indenture
Trustee, or such authorized agents, and allow copies of the same to be made. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Owner Trustee or the Indenture Trustee may, using generally accepted audit
procedures, verify the status of each Contract and review the Computer Disk and
records relating thereto for conformity to Monthly Reports prepared pursuant to
Article IX and compliance with the standards represented to exist as to each
Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by Securityholders.
Section 5.22. Trustees to Cooperate in Releases. At the same time as
(i) any Lease in the Contracts Pool becomes an Expired Lease and the Equipment
related to such Lease is sold, (ii) any Contract becomes a Prepaid Contract and
in connection therewith the Equipment related to such Prepaid Contract is sold,
or (iii) the Servicer substitutes or replaces any unit of Equipment as
contemplated in Section 5.03, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee, on behalf of the Noteholders, will to the extent requested by
the Servicer release the Trust's interest in the Equipment relating to such
Expired Lease or Prepaid Contract or such substituted or replaced Equipment, as
the case may be; provided that such release will not constitute a release of the
Trust's interest in the proceeds of such sale (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
sale of such Equipment, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee 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 neither the Owner Trustee nor the Indenture Trustee will make any
representation or warranty, express or implied, with respect to any such
Equipment in connection with such sale or transfer and assignment. Nothing in
this Section 5.22 shall diminish the Servicer's obligations pursuant to Section
7.01 with respect to the proceeds of any such sale.
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ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR
Section 6.01. Corporate Existence. During the term of this Agreement,
the Trust Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Transaction
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Trust Depositor
and its Affiliates will be conducted on an arm's-length basis.
Section 6.02. Contracts Not to be Evidenced by Promissory Notes. The
Trust Depositor will take no action to cause any Contract not originally
evidenced by an instrument as described in Section 2.06 hereof, to be evidenced
by an instrument (as defined in the UCC), except in connection with the
enforcement or collection of such Contract.
Section 6.03. Security Interests. The Trust Depositor will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Contract in the Contracts Pool or related
Equipment, whether now existing or hereafter transferred to the Trust, or any
interest therein. The Trust Depositor will immediately notify the Owner Trustee
and the Indenture Trustee of the existence of any Lien on any Contract in the
Contracts Pool or related Equipment; and the Trust Depositor shall defend the
right, title and interest of the Trust in, to and under the Contracts in the
Contracts Pool and the related Equipment, against all claims of third parties;
provided, however, that nothing in this Section 6.03 shall prevent or be deemed
to prohibit the Trust Depositor from suffering to exist Permitted Liens upon any
of the Contracts in the Contracts Pool or any related Equipment.
Section 6.04. Delivery of Collections. The Trust Depositor agrees to
pay to the Servicer promptly (but in no event later than two Business Days after
receipt) all Collections received by the Trust Depositor in respect of the
Contracts in the Contracts Pool, for application in accordance with Section
7.01.
Section 6.05. Regulatory Filings. The Trust Depositor shall make any
filings, reports, notices, applications and registrations with, and seek any
consents or authorizations from, the Commission and any state securities
authority on behalf of the Trust as may be necessary or that Trust Depositor
deems advisable to comply with any federal or state securities or reporting
requirements laws.
Section 6.06. Compliance With Law. Trust Depositor hereby agrees to
comply in all material respects with all Requirements of Law applicable to Trust
Depositor.
Section 6.07. Activities. The Trust Depositor shall not engage in any
business or activity of any kind, or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other undertaking, which is
not directly related to the transactions contemplated and authorized by this
Agreement or the other Transaction Documents; provided, however, that the Trust
Depositor may purchase and sell (or grant Liens in respect of) assets similar to
the Contract Assets to other Persons in securitization or other non-recourse
financing transactions involving the Originators or any of their Affiliates on
terms and conditions (with respect to liabilities and restrictions on its
activities, as well as restrictions on its interactions with the Originators or
their Affiliates, relevant to the "bankruptcy remoteness" or "substantive
consolidation" analysis relating to the Trust Depositor) substantially similar
to the terms and conditions applicable to the Trust Depositor under the
Transaction Documents.
Section 6.08. Indebtedness. The Trust Depositor shall not create,
incur, assume or suffer to exist any Indebtedness or other liability whatsoever,
except (i) obligations incurred under this Agreement, or (ii) liabilities
incident to the maintenance of its corporate existence in good standing.
44
Section 6.09. Guarantees. The Trust Depositor shall not become or
remain liable, directly or contingently, in connection with any Indebtedness or
other liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase, agreement to
supply or advance funds, or otherwise except in connection with the transactions
described in Section 6.07.
Section 6.10. Investments. The Trust Depositor shall not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Person except (i) for purchases of Contracts
from the Originators, or (ii) for investments in Eligible Investments in
accordance with the terms of this Agreement. Without limiting the generality of
the foregoing, the Trust Depositor shall not: (i) provide credit to any
Securityholder for the purpose of enabling such Securityholder to purchase any
Securities or (ii) lend any money to the Trust.
Section 6.11. Merger; Sales. The Trust Depositor shall not enter into
any transaction of merger or consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution) or acquire or be acquired by any Person,
or convey, sell, lease or otherwise dispose of all or substantially all of its
property or business, except as provided for in this Agreement.
Section 6.12. Distributions. The Trust Depositor shall not declare or
pay, directly or indirectly, any dividend or make any other distribution
(whether in cash or other property) with respect to the profits, assets or
capital of the Trust Depositor or any Person's interest therein, or purchase,
redeem or otherwise acquire for value any of its capital stock now or hereafter
outstanding, except that so long as no Event of Default has occurred and is
continuing and no Event of Default would occur as a result thereof or after
giving effect thereto and the Trust Depositor would continue to be Solvent as a
result thereof and after giving effect thereto, the Trust Depositor may declare
and pay dividends on its capital stock.
Section 6.13. Other Agreements. The Trust Depositor shall not become a
party to, or permit any of its properties to be bound by, any indenture,
mortgage, instrument, contract, agreement, lease or other undertaking, except
this Agreement and the other Transaction Documents to which it is a party and
any agreement relating to another securitization transaction permitted by
Section 6.07; nor shall it amend or modify the provisions of its Certificate of
Incorporation or issue any power of attorney except to the Owner Trustee, the
Indenture Trustee or the Servicer except in accordance with the Transaction
Documents.
Section 6.14. Separate Corporate Existence. The Trust Depositor shall:
(i) Maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions. The funds of the Trust Depositor will not be
diverted to any other Person or for other than corporate uses
of the Trust Depositor.
(ii)Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or
Affiliates, the salaries of and the expenses related to
providing benefits to such officers and other employees shall
be fairly allocated among such entities, and each such entity
shall bear its fair share of the salary and benefit costs
associated with all such common officers and employees.
(iii) Ensure that, to the extent that it jointly
contracts with any of its stockholders or Affiliates to do
business with vendors or service providers or to share
overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, and each such entity
shall bear its fair share of such costs. To the extent that
the Trust Depositor contracts or does business with vendors or
service providers when the goods and services provided are
partially for the benefit of any other Person, the
45
costs incurred in so doing shall be fairly allocated to or
among such entities for whose benefit the goods and services
are provided, and each such entity shall bear its fair share
of such costs. All material transactions between Trust
Depositor and any of its Affiliates shall be only on an arm's
length basis.
(iv)To the extent that the Trust Depositor and any of its
stockholders or Affiliates have offices in the same location,
there shall be a fair and appropriate allocation of overhead
costs among them, and each such entity shall bear its fair
share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary,
appropriate and customary corporate formalities, including,
but not limited to, holding all regular and special
stockholders' and directors' meetings appropriate to authorize
all corporate action, keeping separate and accurate minutes of
its meetings, passing all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including,
but not limited to, payroll and intercompany transaction
accounts.
(vi)Take or refrain from taking, as applicable, each of
the activities specified in the "substantive consolidation"
opinion of Winston & ▇▇▇▇▇▇, delivered on the Closing Date,
upon which the conclusions expressed therein are based.
Section 6.15. Location; Records. The Trust Depositor (x) shall not move
outside the State of Illinois, the location of its chief executive office,
without 45 days' prior written notice to the Owner Trustee and the Indenture
Trustee and (y) shall not move or permit the Servicer to move the location of
the Contract Files from the location(s) thereof on the Closing Date, without 45
days' prior written notice to the Owner Trustee and the Indenture Trustee and
(z) will promptly take all actions required (including, but not limited to, all
filings and other acts necessary or advisable under the UCC of each relevant
jurisdiction in order to continue the first priority perfected security interest
of the Indenture Trustee in all Contracts in the Contracts Pool. The Trust
Depositor will give the Owner Trustee and the Indenture Trustee prompt notice of
a change within the State of Illinois of the location of its chief executive
office.
Section 6.16. Liability of Trust Depositor; Indemnities. The Trust
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Trust Depositor under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Servicer from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein and in the other Transaction
Documents, including any sales, gross receipts, general corporation, tangible
personal property, Illinois personal property replacement privilege or license
taxes (but, in the case of the Trust, not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the Trust or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Contracts, or federal or other income taxes arising out of
distributions on the Certificate or the Notes) and costs and expenses in
defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, and the Indenture Trustee from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
and, in the case of the Owner Trustee, in the Trust Agreement and, in the case
of the Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance,
46
bad faith or negligence of the Owner Trustee, or shall arise from the breach by
the Owner Trustee of any of its representations or warranties set forth in
Section 7.03 of the Trust Agreement, or (ii) the Indenture Trustee, shall be due
to the willful misfeasance, bad faith or negligence of the Indenture Trustee.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; provided, however, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Certificate or a Noteholder in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the immediately preceding sentence for which the
Trust Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph. The obligations of the Trust Depositor under this paragraph
shall be evidenced by the Certificate described in the Trust Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee from and against any loss, liability or
expense incurred by reason of the Trust Depositor's or Trust's violation of
federal or state securities laws in connection with the offering and sale of the
Notes.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the Trust
Depositor shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Trust Depositor, without interest.
Section 6.17. Bankruptcy Limitations. The Trust Depositor shall not,
without the affirmative vote of a majority of the members of the Board of
Directors of the Trust Depositor (which must include the affirmative vote of at
least two duly appointed Independent directors) (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a substantial
part of its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally as they
become due, or (G) take any corporate action in furtherance of the actions set
forth in clauses (A) through (F) above; provided, however, that no director may
be required by any shareholder of the Trust Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the Trust Depositor
so long as it is Solvent.
Section 6.18 Limitation on Liability of Trust Depositor and Others. The
Trust Depositor and any director or officer or employee or agent of the Trust
Depositor may rely in good faith on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of the Owner Trustee's or the Indenture Trustee's willful
misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder. The Trust
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
Section 6.19. Chief Executive Office. During the term of this
Agreement, the Trust Depositor will maintain its chief executive office in one
of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
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ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND
Section 7.01. Trust Accounts; Collections. (a) On or before the Closing
Date, the Trust Depositor shall establish the Collection Account, Note
Distribution Account and Reserve Fund, each in the name of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholder, respectively. The
Servicer and Indenture Trustee are hereby required to ensure that each of the
Trust Accounts is established and maintained as an Eligible Account with a
Qualified Institution. If any institution with which any of the accounts
established pursuant to this Section 7.01(a) are established ceases to be a
Qualified Institution, the Servicer or the Indenture Trustee (as the case may
be) shall within 10 Business Days establish a replacement account at a Qualified
Institution after notice of such event.
(b) The Servicer shall deposit or cause to be deposited, without
deposit into any intervening account, into the Collection Account as promptly as
practical after the Date of Processing (but in any case not later than the
second Business Day following the Date of Processing thereof, and in all events
not later than five Business Days following actual receipt of such remittance by
the Servicer), all Collections on deposit with the Servicer in the form of
available funds, and all Collections otherwise received by the Servicer.
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or
cause to be deposited, on the Closing Date and on each Subsequent Transfer Date
thereafter, in immediately available funds into the Collection Account, all
Collections received after the applicable Cutoff Date and through and including
the date two days preceeding the Closing Date or Subsequent Transfer Date, as
the case may be, in respect of Contracts being transferred to the Trust on such
date.
(d) Notwithstanding Sections 7.01(b) and (c), the Servicer shall not be
required to deposit or cause to be deposited Collections on any Contracts in the
Contracts Pool on which (and to the extent that) the Servicer has previously
made a Servicer Advance which has not been reimbursed, which amounts the
Servicer may retain (as reimbursement of such Servicer Advance).
(e) Notwithstanding Sections 7.01(b) and (c), if (i) the Servicer makes
a deposit into the Collection Account in respect of a Collection of a Contract
in the Contract Pool and such Collection was received by the Servicer in the
form of a check which is not honored for any reason, or (ii) the Servicer makes
a mistake with respect to the amount of any Collection and deposits an amount
that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not
to have been paid.
Section 7.02. Reserve Fund Deposit. On the Closing Date, the Owner
Trustee, on behalf of the Trust Depositor, shall deposit the Reserve Fund
Initial Deposit into the Reserve Fund from the net proceeds of the Securities.
Section 7.03. Trust Account Procedures. If the Servicer so directs, in
writing, the Indenture Trustee shall invest the amounts in the Trust Accounts in
Qualified Eligible Investments of the type specified in such written direction
that mature not later than one Business Day prior to the next succeeding
Distribution Date. Once such funds are invested, the Indenture Trustee shall not
change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Subject
to the restrictions herein, the Indenture Trustee may purchase a Qualified
Eligible Investment from itself or an Affiliate. Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and
48
any certificate or other instrument evidencing any such investment, if any,
shall be delivered directly to the Indenture Trustee or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Indenture Trustee in a manner which complies with this Section
7.03. All Investment Earnings on investments of funds in the Trust Accounts
shall be deposited in the Collection Account pursuant to Section 7.01 and
distributed on the next Distribution Date pursuant to Section 7.05. The Trust
Depositor and the Trust agree and acknowledge that the Indenture Trustee is to
have "control" (within the meaning of Section 8-102 of the UCC as enacted in
Illinois) of collateral comprised of "Investment Property" (within the meaning
of Section 9-115 of the UCC as enacted in Illinois) for all purposes of this
Agreement. In the absence of timely written direction from the Servicer, the
Indenture Trustee shall invest amounts in the Trust Accounts in Qualified
Eligible Investments of the type specified in clause (vi) of the definition of
Eligible Investments herein.
Section 7.04. Securityholder Distributions. (a) Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee, or Owner Trustee, respectively, at least ten days prior to
such Distribution Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and Certificateholder required
hereunder. The Indenture Trustee hereby agrees that all amounts held by it for
payment hereunder will be held in trust for the benefit of the Noteholders and
Certificateholder.
Section 7.05. Allocations and Distributions.
(a) Allocations and Distributions Prior to an Event of Default. On each
Determination Date prior to an Event of Default, the Servicer, pursuant to
written monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw, and on the succeeding Distribution Date the
Indenture Trustee acting in accordance with such written instructions shall
withdraw, the amounts required to be withdrawn from the Collection Account
pursuant to this Section and deposited to the Note Distribution Account
(pursuant to Sections 3.01 and 8.02(b) of the Indenture) in order to make the
following payments or allocations from the Available Amounts for the related
Distribution Date (in each case, such payment or transfer to be made only to the
extent funds remain available therefor after all prior payments and transfers
for such Distribution Date have been made), in the following order of priority:
(i) pay to the Servicer, the amount of any Unreimbursed
Servicer Advance;
(ii) pay to the Servicer, if the Servicer is no longer HFI or
an Affiliate of HFI, the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing
Fee that were due in respect of prior monthly periods that remain
unpaid;
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders an amount equal to interest accrued in respect of the
related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate and Class A-4 Interest Rate, respectively, for the
Accrual Period immediately preceding such Distribution Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; provided that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such remaining
Available Amounts shall be allocated to each Holder of a Class A Note
pro rata based upon the outstanding Principal Amount thereof;
(iv) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the
Class B Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no
49
allocation was previously made; provided, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the
full amount required to be so paid, such remaining Available Amount
shall be paid to each Class B Noteholder pro rata based on the
outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the
Class C Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class C
Noteholder pro rata based on the outstanding Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to interest accrued thereon at the Class D
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class D
Noteholder pro rata based on the outstanding principal amount thereof;
(vii) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Class A Principal Payment Amount for such Distribution
Date; provided that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-1 Note pro rata based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class
A-2 Noteholders, (A) $0 until the Distribution Date on which the
Principal Amount of the Class A-1 Notes is $0; (B) on the Distribution
Date on which the Principal Amount of the Class A-1 Notes is reduced to
$0, the excess of the Monthly Principal Amount over the amount
necessary to reduce the Principal Amount of the Class A-1 Notes to $0
on such date and (C) on each subsequent Distribution Date, the Class A
Principal Payment Amount; provided that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the
full amount required to be so paid, such remaining Available Amounts
shall be allocated to each Class A-2 Note pro rata based on the
outstanding principal amount thereof;
(ix) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes and Class A-2 Notes is $0 and (B) on each
subsequent Distribution Date, the Class A Principal Payment Amount;
provided that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-3 Note pro rata based on the outstanding principal amount thereof;
(x) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is
$0 and (B) on each subsequent Distribution Date, the Class A Principal
Payment Amount; provided that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class A-4 Note pro rata based on the outstanding
principal amount thereof;
(xi) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes is $0 and (B) on each subsequent
Distribution Date, the Class B Principal Payment Amount; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class B Note pro
rata based on the outstanding principal amount thereof;
50
(xii) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes is $0 and (B) on each subsequent
Distribution Date, the Class C Principal Payment Amount; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class C Note pro
rata based on the outstanding principal amount thereof;
(xiii) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, (A) $0 until the Distribution Date on which the Principal
Amount of the Class A-1 Notes is $0 and (B) on each subsequent
Distribution Date, the Class D Principal Payment Amount; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class D Note pro
rata based on the outstanding principal amount thereof;
(xiv) pay to the Indenture Trustee,
(A) on behalf of the Class A-1 Noteholders, the
Additional Principal, if any, until the Principal Amount of
the Class A-1 Notes is $0; provided, that if the amount of
Additional Principal exceeds the amount needed to reduce the
Principal Amount of the Class A-1 Notes to $0, then such
excess shall be paid to the Class A-2 Noteholders;
(B) on behalf of the Class A-2 Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes is $0 and (2) on each subsequent
Distribution Date, the Additional Principal, if any, until the
Principal Amount of the Class A-2 Notes is $0; provided, that
if the Additional Principal exceeds the amount needed to
reduce the Principal Amount of the Class A-2 Notes to $0, then
such excess shall be paid to the Class A-3 Noteholders;
(C) on behalf of the Class A-3 Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes and Class A-2 Notes is $0 and (2) on each
subsequent Distribution Date, the Additional Principal, if
any, until the Principal Amount of the Class A-3 Notes is $0;
provided, that if the Additional Principal exceeds the amount
needed to reduce the Principal Amount of the Class A-3 Notes
to $0, then such excess shall be paid to the Class A-4
Noteholders;
(D) on behalf of the Class A-4 Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is $0
and (2) on each subsequent Distribution Date, the Additional
Principal, if any, until the Principal Amount of the Class A-4
Notes is $0; provided, that if the Additional Principal
exceeds the amount needed to reduce the Principal Amount of
the Class A-4 Notes to $0, then such excess shall be paid to
the Class B Noteholders;
(E) on behalf of the Class B Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes is $0 and (2) on each subsequent Distribution
Date, the Additional Principal, if any, until the Principal
Amount of the Class B Notes is $0; provided, that if the
Additional Principal exceeds the amount needed to reduce the
Principal Amount of the Class B Notes to $0, then such excess
shall be paid to the Class C Noteholders;
(F) on behalf of the Class C Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes and Class B Notes is $0 and (2) on each subsequent
Distribution Date, the Additional Principal, if any, until the
Principal Amount of the Class C Notes is $0; provided, that if
the Additional Principal
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exceeds the amount needed to reduce the Principal Amount of
the Class C Notes to $0, then such excess shall be paid to the
Class D Noteholders;
(G) on behalf of the Class D Noteholders, (1) $0
until the Distribution Date on which the Principal Amount of
the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes, Class B Notes and Class C Notes is $0 and (2) on
each subsequent Distribution Date, the Additional Principal,
if any, until the Principal Amount of the Class D Notes is $0;
provided, that if the Additional Principal exceeds the amount
needed to reduce the Principal Amount of the Class D Notes to
$0, then such excess shall be paid as provided in paragraphs
(xiv)-(xv) below;
(xiv) pay to the Servicer, if the Servicer is HFI or an
Affiliate of HFI, the monthly Servicing Fee for the preceding monthly
period together with any amounts in respect of the Servicing Fee that
were due in respect of prior monthly periods that remain unpaid;
(xv) pay to the Indenture Trustee, for deposit into the
Reserve Fund, such remaining Available Amounts up to such amount as may
be required to cause the amounts on deposit in the Reserve Fund to
equal the Reserve Fund Amount; and
(xv) pay any remaining Available Amounts to the Holder of the
Certificate.
Prior to the occurrence of an Event of Default, if the Available
Amounts are less than the amount required to make in full the payments and
allocations set forth in Sections 7.05(a)(i)-(vi) above, amounts held in the
Reserve Fund shall be withdrawn in order for any of such payments or allocations
to be made and such amounts will be considered as Available Amounts for such
purpose only. Upon full payment of the amounts described in Section 7.05(a)(i)-
(vi), if the Available Amounts are less than the amount required to make in full
the payments and allocations set forth in Sections 7.05(a)(vii)-(xiii), amounts
held in the Reserve Fund in excess of the Required Reserve Amount shall be
withdrawn in order for any of such payments or allocations to be made and such
amounts will be considered as Available Amounts for such purpose only. Amounts
withdrawn from the Reserve Fund pursuant to the preceding sentence shall be
applied to repay principal of the Notes in such order of priority as set forth
in Sections 7.05(a)(vii)-(xiii) until the Reserve Fund is exhausted.
(b) Allocations and Payments after an Event of Default. On each
Determination Date after the occurrence and during the continuance of an Event
of Default, the Servicer, pursuant to monthly payment instructions and
notification, shall instruct the Indenture Trustee to withdraw, and on the
succeeding Distribution Date the Indenture Trustee acting in accordance with
such instructions shall withdraw, the amounts required to be withdrawn from the
Collection Account pursuant to this Section and deposited to the Note
Distribution Account (pursuant to Sections 3.01 and 8.02(b) of the Indenture) in
order to make the following payments or allocations from the Available Amounts
for the related Distribution Date (in each case, such payment or transfer to be
made only to the extent funds remain available therefor after all prior payments
and transfers for such Distribution Date have been made), in the following order
of priority:
(i) pay to the Indenture Trustee the amount of any unpaid fees
and expenses to which the Indenture Trustee is entitled under Section
5.06(a)(i) of the Indenture;
(ii) pay to the Servicer, if the Servicer is no longer HFI or
an Affiliate of HFI, the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing
Fee that were due in respect of prior monthly periods that remain
unpaid.
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders an amount equal to interest accrued in respect of the
related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate and Class A-4 Interest Rate, respectively, for the
Accrual Period immediately preceding such Distribution Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; provided that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such
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remaining Available Amounts shall be allocated to each Holder of a
Class A Note pro rata based upon the outstanding Principal Amount
thereof;
(iv) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the
Class B Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amount shall be paid to each Class B
Noteholder pro rata based on the outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the
Class C Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class C
Noteholder pro rata based on the outstanding Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class D
Noteholders, an amount equal to the interest accrued thereon at the
Class D Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; provided, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class D
Noteholder pro rata based on the outstanding principal amount thereof;
(vii) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Principal Amount of the Class A-1 Notes; provided that
if the Available Amounts remaining to be allocated pursuant to this
clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class A-1 Note
pro rata based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class ▇-
▇ Noteholders, Class A-3 Noteholders and Class A-4 Noteholders, the
Principal Amounts of the Class A-2 Notes, Class A-3 Notes and Class A-4
Notes; provided that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-2 Note, Class A-3 Note and Class A-4 Note pro rata based on the
outstanding principal amount of each such Class of Notes;
(ix) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; provided (i) that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class B Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class B Note principal in full, then such excess shall be applied in
repayment of principal on the Class C Notes;
(x) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; provided (i) that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class C Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class C Note principal in full, then such excess shall be applied in
repayment of principal on the Class D Notes;
53
(xi) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; provided (i) that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class D Note pro rata based on the outstanding
principal amount thereof, and (ii) if the amount to be allocated
pursuant to this clause exceeds the amount needed to repay outstanding
Class D Note principal in full, then such excess shall be applied in
repayment of principal on the Certificates; and
(xii) pay all other remaining Available Amounts to the Holder
of the Certificates.
Following the occurrence and during the continuance of an Event of
Default, if the Available Amounts are less than the amount required to make in
full the payments and allocations set forth in Sections 7.05(b)(i)-(xi) above,
amounts held in the Reserve Fund shall be withdrawn in order for the payments or
allocations set forth in Sections 7.05(b)(vi)-(xi) to be made and such amounts
will be considered as Available Amounts for such purpose only. Amounts withdrawn
from the Reserve Fund pursuant to the preceding sentence shall be applied to
repay principal of such Notes in such order of priority set forth in
7.05(b)(vi)-(xi) until the Reserve Fund is exhausted.
54
ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER
Section 8.01. Servicer Default. "Servicer Default" means the occurrence
of any of the following:
(a) any failure by the Servicer to make any payment, transfer
or deposit or to give instructions or notice to the Owner Trustee or
the Indenture Trustee pursuant to this Agreement on or before the date
occurring three Business Days after the date such payment, transfer,
deposit, or such instruction or notice or report is required to be made
or given, as the case may be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement which has a material adverse
effect on the Noteholders or Certificateholder, which continues
unremedied for a period of 30 days after the first to occur of (i) the
date on which written notice of such failure requiring the same to be
remedied shall have been given to the Servicer by the Indenture Trustee
or to the Servicer and the Indenture Trustee by the Noteholders or
Certificateholder or the Indenture Trustee on behalf of such
Noteholders of Notes aggregating not less than 25% of the Principal
Amount of any Class adversely affected thereby and (ii) the date on
which the Servicer becomes aware thereof and such failure continues to
materially adversely affect such Noteholders or Certificateholder for
such period; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
the this Agreement shall prove to have been incorrect when made, which
has a material adverse effect on the Noteholders or Certificateholder
and which continues to be incorrect in any material respect for a
period of 30 days after the first to occur of (i) the date on which
written notice of such incorrectness requiring the same to be remedied
shall have been given to the Servicer and the Owner Trustee by the
Indenture Trustee, or to the Servicer, the Owner Trustee and the
Indenture Trustee by Noteholders or Certificateholder or by the
Indenture Trustee on behalf of Noteholders of Notes aggregating not
less than 25% of the Principal Amount of any Class adversely affected
thereby and (ii) the date on which the Servicer becomes aware thereof,
and such incorrectness continues to materially adversely affect such
Holders for such period; or
(d) an Insolvency Event shall occur with respect to the
Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five Business Days or
referred to under clause (b) or (c) for a period of 60 days (in addition to any
period provided in (a), (b) or (c)) shall not constitute a Servicer Default
until the expiration of such additional five Business Days or 60 days,
respectively, 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 other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Owner Trustee, the Indenture Trustee and the
Trust Depositor prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee in writing of any Servicer Default.
Section 8.02. Servicer Transfer. (a) If a Servicer Default has occurred
and is continuing, (x) the Required Holders, or (y) the Indenture Trustee may,
by written notice (a "Termination Notice") delivered to the parties hereto,
terminate all (but not less than all) of the Servicer's management,
administrative, servicing, custodial and collection functions.
55
(b) Upon delivery of the notice required by Section 8.02(a) (or, if
later, on a date designated therein), and on the date that a successor Servicer
shall have been appointed pursuant to Section 8.03 (such appointment being
herein called a "Servicer Transfer"), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts, the Contract Files or otherwise, shall pass to and be vested
in such successor (the "Successor Servicer") pursuant to and under this Section
8.02; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts. The Servicer
shall transfer to the Successor Servicer all records held by the Servicer
relating to the Contracts in such electronic form as the Successor Servicer may
reasonably request and (ii) any Contract Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Servicer Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer.
Section 8.03. Appointment of Successor Servicer; Reconveyance;
Successor Servicer to Act . Upon delivery of the notice required by Section
8.02(a) (or, if later, on a date designated therein), the Servicer shall
continue to perform all servicing functions under this Agreement until the date
specified in the Termination Notice or, if no such date is specified, until a
date mutually agreed by the Servicer and the Indenture Trustee. The Indenture
Trustee shall as promptly as possible after the giving of or receipt of a
Termination Notice, appoint a Successor Servicer, and such Successor Servicer
shall accept its appointment by a written assumption in a form acceptable to the
Indenture Trustee and Owner Trustee. If within 60 days of delivery of a
Termination Notice the Indenture Trustee is unable to obtain any bids from
eligible servicers and the Servicer shall have yet to cure the Servicer Default,
then the Indenture Trustee shall offer the Trust Depositor, and the Trust
Depositor shall offer the Originators, the right to accept retransfer of all the
Trust Assets, and such parties may accept retransfer of such Trust Assets in
consideration of the Trust Depositor's delivery to the Collection Account on or
prior to the next upcoming Distribution Date of a sum equal to the Aggregate
Principal Amount of all Securities (other than the Certificates) then
outstanding, together with accrued and unpaid interest thereon through such date
of deposit (provided, that the Indenture Trustee, if so directed by the Required
Holders, need not accept and effect such reconveyance in the absence of evidence
(which may include valuations of an investment bank or similar entity)
reasonably acceptable to such Trustee or Required Holders that such retransfer
would not constitute a fraudulent conveyance of the Trust Depositor or the
Originators).
In the event that a Successor Servicer has not been appointed and has
not accepted its appointment at the time when the then Servicer has ceased to
act as Servicer, the Indenture Trustee without further action shall
automatically be appointed the Successor Servicer. Notwithstanding the
foregoing, if the Indenture Trustee is legally unable or prohibited from so
acting, it shall petition a court of competent jurisdiction to appoint any
established financial institution having a net worth of at least $50,000,000 and
whose regular business includes the servicing of contracts similar to the
Contracts as the Successor Servicer hereunder. On or after a Servicer Transfer,
the Successor Servicer shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the terminated Servicer shall be relieved of such responsibilities,
duties and liabilities arising after such Servicer Transfer; provided, however,
that (i) the Successor Servicer will not assume any obligations of the Servicer
described in Section 8.03 and (ii) the Successor Servicer shall not be liable
for any acts or omissions of the Servicer occurring prior to such Servicer
Transfer or for any breach by the Servicer of any of its representations and
warranties contained herein or in any related document or agreement. As
compensation therefor, the Successor Servicer shall be entitled to receive
reasonable compensation equal to the monthly Servicing Fee. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. To the extent the terminated Servicer has made
56
Servicer Advances, it shall be entitled to reimbursement of the same
notwithstanding its termination hereunder, to the same extent as if it had
continued to service the Contracts hereunder. In addition, it is understood and
agreed that if an Event of Default has occurred and a Servicer Transfer is being
effected by action of the Indenture Trustee hereunder, any documented expenses
reasonably incurred by the Indenture Trustee in connection with effecting such
Servicer Transfer shall be deemed expenses reimbursable from Available Amounts
after an Event of Default pursuant to Section 7.05(b)(i) hereof and Section
5.06(a)(i) of the Indenture.
Section 8.04. Notification to Securityholders. (a) Promptly following
the occurrence of any Servicer Default, the Servicer shall give written notice
thereof to the Trustees, the Trust Depositor and each Rating Agency at the
addresses described in Section 13.04 hereof and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Trust Depositor at the
addresses described in Section 13.04 hereof, and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
Section 8.05. Effect of Transfer. (a) After a Servicer Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section 8.03 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Servicer Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Contracts.
Section 8.06. Database File. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii) thereafter, as of
the last day of the preceding Collection Period on each Determination Date prior
to a Servicer Default and (iv) on and as of the Business Day before the actual
commencement of servicing functions by the Successor Servicer following the
occurrence of a Servicer Default.
Section 8.07. Successor Servicer Indemnification. The original Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.07 hereof. The indemnification
provided by this Section 8.07 shall survive the termination of this Agreement.
Section 8.08. Responsibilities of the Successor Servicer. The Successor
Servicer will not be responsible for delays attributable to the Servicer's
failure to deliver information, defects in the information supplied by the
Servicer or other circumstances beyond the control of the Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Contract information. The current
57
Servicer shall be obligated to pay the costs associated with the transfer of the
servicing files and records to the Successor Servicer.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Contract with applicable law or the breach
or the inaccuracy of any representation or warrant made with respect to any
Contract.
If the Indenture Trustee or any other Successor Servicer assumes the
role of Successor Servicer hereunder such Successor Servicer shall be entitled
to the benefits of (and subject to the provisions of) Section 5.05 concerning
delegation of duties to subservicers.
Section 8.09. Rating Agency Condition For Servicer Transfer.
Notwithstanding the foregoing provisions relating to a Servicer Transfer, no
Servicer Transfer shall be effective hereunder unless prior written notice
thereof shall have been given to the Rating Agencies, and the Rating Agency
Condition shall have been satisfied with respect thereto.
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ARTICLE NINE
REPORTS
Section 9.01. Monthly Reports. With respect to each Distribution Date
and the related Collection Period, the Servicer will provided to each Trustee,
and each Rating Agency, on the related Determination Date, a monthly statement
(a "Monthly Report") substantially in the form of Exhibit I hereto.
Section 9.02. Officer's Certificate. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer certifying the accuracy of the Monthly Report and that no Servicer
Default or event that with notice or lapse of time or both would become a
Servicer Default has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
Section 9.03. Other Data. In addition, the Servicer shall, upon the
request of any Trustees, or any Rating Agency, furnish such Trustee or Rating
Agency, as the case may be, such underlying data used to generate a Monthly
Report as may be reasonably requested.
Section 9.04. Annual Report of Accountants.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer or its Affiliates, to deliver to
the Trustees and each Rating Agency, on or before March 31 (or 90 days after the
end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 2000 (i) with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date), a report addressed
to the Board of Directors of the Servicer and to the Trustees, to the effect
that such firm (A) has reviewed certain documents and records relating to the
servicing of the Contracts in the Contracts Pool, and (B) based on such review,
such firm is of the opinion that the Monthly Reports for such 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, and (ii) a report with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) to the effect that
such accountants have applied certain agreed-upon procedures to certain
documents and records relating to the servicing of Contracts under this
Agreement, compared the information contained in the Servicer's certificates
delivered during the period covered by such report with such documents and
records and that no matters came to the attention of such accountants that
caused them to believe that such servicing was not conducted in compliance with
this Agreement, except for such exceptions as such accountants shall believe to
be immaterial and such other exceptions as shall be set forth in such statement.
A copy of such report (the "Accountant's Report") may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, in the case of
a Noteholder, or to the Owner Trustee, in the case of a Certificateholder,
addressed to its respective Corporate Trust Office. In the event such firm of
Independent Accountants requires the Indenture Trustee to agree to the
procedures performed by such firm of Independent Accountants, the Servicer shall
direct the Indenture Trustee in writing to so agree; it being understood and
agreed that the Indenture Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and the Indenture
Trustee has not made any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
Section 9.05. Annual Statement of Compliance from Servicer. The
Servicer will deliver to the Trustees, and each of the Rating Agencies, on or
before January 31 of each year commencing January 31, 2000, an Officer's
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer's
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knowledge, based on such review, the Servicer has fully performed or cause to be
performed in all material respects all its obligations under this Agreement and
no Servicer Default has occurred or is continuing, or, if there has been a
Servicer Default, specifying each such default known to such officer and the
nature and status thereof and the steps being taken or necessary to be taken to
remedy such event. A copy of such certificate may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, with respect to
any Noteholder, or the Owner Trustee, with respect to any Certificateholder.
Section 9.06. Annual Summary Statement. On or prior to January 31 of
each year, commencing January 31, 2000, the Servicer shall prepare and provide
to each Trustee, and each Rating Agency, a cumulative summary of the information
required to be included in the Monthly Reports for the Collection Periods ending
during the immediately preceding calendar year.
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ARTICLE TEN
TERMINATION
Section 10.01. Sale of Trust Assets.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to allocate and apply (after the
application on such Distribution Date of Available Amounts and funds on deposit
in the Reserve Fund pursuant to Section 7.04) the Insolvency Proceeds as if (and
in the same order of priority as) the Insolvency Proceeds were Available Amounts
being allocated and distributed on such date pursuant to Section 7.04(b).
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee pursuant
to this Agreement.
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ARTICLE ELEVEN
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION
Section 11.01. Repurchases of, or Substitution For, Contracts for
Breach of Representations and Warranties. Upon a discovery by the Servicer, the
Trust Depositor or the Trustees of a breach of a representation or warranty of
the Originators as set forth in Section 3.02, Section 3.03, Section 3.04, and
Section 3.05 or as made or deemed made in any Addition Notice or any Subsequent
Purchase Agreement relating to Substitute Contracts that materially adversely
affects the Trust's interest in such Contract (without regard to the benefits of
the Reserve Fund) (an "Ineligible Contract"), or of an inaccuracy with respect
to the representations as to concentrations of the Initial Contracts made under
Section 3.05, the party discovering the breach shall give prompt written notice
to the other parties (and the Servicer shall, with respect to an inaccuracy
concerning concentrations, select one or more Contracts, without employing
adverse selection, as the related Excess Contract for purposes of this Section),
provided, that the Trustees shall have no duty or obligation to inquire or to
investigate the breach by the Originators of any of such representations or
warranties. The Originators shall repurchase each such Ineligible Contract or
Excess Contract, at a repurchase price equal to the Transfer Deposit Amount, not
later than ninety (90) days following the date the Originator becomes aware of,
or receives written notice from any Trustee, the Servicer or the Trust Depositor
of, any such breach or inaccuracy and which breach or inaccuracy has not
otherwise been cured; provided, however, that if the Originator is able to
effect a substitution for any such Ineligible Contract or Excess Contract in
compliance with Section 2.04, the Originator may, in lieu of repurchasing such
Contract, effect a substitution for such affected Contract with a Substitute
Contract not later than the date a repurchase of such affected Contract would be
required hereunder, and provided further that with respect to a breach of
representation or warranty relating to the Contracts in the aggregate and not to
any particular Contract the Originator may select Contracts (without adverse
selection) to repurchase (or substitute for) such that had such Contracts not
been included as part of the Trust Assets (and, in the case of a substitution,
had such Substitute Contract been included as part of the Trust Assets instead
of the selected Contract) there would have been no breach of such representation
or warranty. Notwithstanding any other provision of this Agreement, the
obligation of the Originators described in this Section 11.01 shall not
terminate or be deemed released by any party hereto upon a Servicer Transfer
pursuant to Article VIII. The repurchase obligation described in this Section
11.01 is in no way to be satisfied with monies in the Reserve Fund.
Section 11.02. Reassignment of Repurchased or Substituted Contracts.
Upon receipt by the Indenture Trustee for deposit in the Collection Account of
the amounts described in Section 11.01 or Section 11.03 (or upon the Subsequent
Transfer Date related to a Substitute Contract described in Section 11.01), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as Exhibit G, the Indenture Trustee shall assign to the Trust Depositor and the
Trust Depositor shall assign to the original applicable Originator all of the
Trust's (or Trust Depositor's, as applicable) right, title and interest in the
repurchased or substituted Contract and related Trust Assets without recourse,
representation or warranty. Such reassigned Contract shall no longer thereafter
be included in any calculations of Discounted Contract Balances required to be
made hereunder or otherwise be deemed a part of the Trust.
Section 11.03. Originators' and Trust Depositor's Repurchase Option. On
written notice to the Owner Trustee and the Indenture Trustee at least 20 days
prior to a Distribution Date, and provided that the ADCB of all Contracts in the
Contracts Pool is then less than 10% of the ADCB of such Contracts as of the
Initial Cutoff Date, the Originators, through the Trust Depositor, may (but are
not required to) repurchase from the Trust Depositor (and the Trust Depositor
concurrently from the Trust) on that Distribution Date all outstanding Contracts
at a price equal to the aggregate outstanding Principal Amount of the Securities
(other than the Certificates) as of the current Distribution Date thereon, the
amount of unreimbursed Servicer Advances (if any) as well as accrued and unpaid
monthly Servicing Fees to the date of such repurchase. Such price is to be
deposited in the Collection Account not later than one Business Day before such
Distribution Date, against the Owner Trustee's and Indenture Trustee's and Trust
Depositor's release of the Contracts and the Contract Files to the Originators.
62
ARTICLE TWELVE
ORIGINATOR INDEMNITIES
Section 12.01. Originators' Indemnification. The Originators will
jointly and severally defend and indemnify Trust Depositor, the Trust, the
Trustees, any agents of the Trustees and the Certificateholder and Noteholders
(any of which, an "Indemnified Party") against any and all costs, expenses,
losses, damages, claims and liabilities, joint or several, including reasonable
fees and expenses of counsel and expenses of litigation (collectively, "Costs")
arising out of or resulting from (i) this Agreement or the use, ownership or
operation of any Equipment by the respective Originator or the Servicer or any
Affiliate of either, (ii) any representation or warranty or covenant made by the
respective Originator in this Agreement being untrue or incorrect (subject to
the limitations described in the preamble to Article III of this Agreement), and
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or in any amendment thereto or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement was made in conformity with information
furnished to Trust Depositor by the Originators specifically for use therein;
provided, however, that the Originators shall not be required to so indemnify
any such Indemnified Party for such Costs to the extent that such Cost shall be
due to or arise from the willful misfeasance, bad faith or gross negligence of
such Indemnified Party, or the failure of such Indemnified Party to comply with
any express undertaking, agreement or covenant made by such Indemnified Party in
a Transaction Document to which it is a party. Notwithstanding any other
provision of this Agreement, the obligation of the Originators under this
Section 12.01 shall not terminate upon a Servicer Transfer pursuant to Article
VIII of this Agreement and shall survive any termination of that agreement or
this Agreement.
Section 12.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Contracts is intended to be assumed by the
Trustees, the Trust, the Noteholders or the Certificateholder under or as a
result of this Agreement and the transactions contemplated hereby.
Section 12.03. Tax Indemnification.
(a) The Originators jointly and severally agree to pay, and to
indemnify, defend and hold harmless the Trust Depositor, the Trust, the
Trustees, the Noteholders or the Certificateholder from, any taxes
which may at any time be asserted with respect to, and as of the date
of, the transfer of the Contracts to Trust Depositor and the transfer
by the Trust Depositor of the Contracts to the Trust and the further
pledge by the Trust to the Indenture Trustee, including, without
limitation, any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but not including any federal,
state or other taxes arising out of the creation of the Trust and the
issuance of the Notes and Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising
by reason of the acts to be performed by a Originator or the Servicer
under this Agreement or imposed against the Trust, a Noteholder, a
Certificateholder or otherwise. Notwithstanding any other provision of
this Agreement, the obligation of the Originators under this Section
12.03 shall not terminate upon a Servicer Transfer pursuant to Article
VIII of this Agreement and shall survive any termination of this
Agreement.
(b) The Originators jointly and severally agree to pay and to
indemnify, defend and hold harmless the Trust and the Trustees, on an
after-tax basis (as hereinafter defined), from any state or local
personal property taxes, gross rent taxes, leasehold taxes or similar
taxes which may at any time be asserted with respect to the ownership
of the Contracts (including security interests therein) and the receipt
of rentals therefrom by the Trust, and costs, expenses and reasonable
counsel fees in defending against the same, excluding, however, taxes
based upon or measured by gross or net income or receipts (other than
taxes imposed specifically with respect to rentals). As used in this
Section, the term "after-tax basis" shall mean, with respect to any
payment to be received by an indemnified person, that the amount to be
paid by the Originators shall be equal to the sum of (i) the amount to
be received without regard to this sentence, plus (ii)
63
any additional amount that may be required so that after reduction by
all taxes imposed under any federal, state and local law, and taking
into account any current credits or deductions arising therefrom,
resulting either from the receipt of the payments described in both
clauses (i) and (ii) hereof, such sum shall be equal to the amount
described in clause (i) above.
Section 12.04. Adjustments. The Originators jointly and severally agree
that, with respect to each Contract (i) which provides for a Prepayment Amount
less than the amount calculated in accordance with the definition thereof and
(ii) as to which the related Vendor has not agreed to indemnify the Trust
Depositor or any assignee of the Trust Depositor in an amount at least equal to
the excess of the "Prepayment Amount" as calculated in accordance with the
definition thereof over the amount otherwise payable upon prepayment of such
Contract, the Originators shall indemnify the Trust Depositor or the Trust as
assignee thereof, in an amount equal to the amount specified in the foregoing
clause (ii).
The Originators hereby jointly and severally agree that if, with
respect to any Lease with Lessees that are governmental entities or
municipalities, (i) such Lease may be canceled in accordance with its terms and
(ii) the Vendor that assigned such Lease to the respective Originator is not
unconditionally obligated to repurchase such Lease from the Originators for a
purchase price not less than the Discounted Contract Balance of such Lease as of
the date of repurchase (assuming that the interest rate to be applied in
calculating the Discounted Contract Balance of such Lease is the Discount Rate
on the date of repurchase) plus interest at the Discount Rate through the date
of repurchase (such amount, the "Required Lease Cancellation Payment") then the
respective Originator shall indemnify the Trust Depositor or the Trust as
assignee thereof against such cancellation in an amount equal to the difference
between the amount, if any, received from the related Vendor and the Required
Lease Cancellation Payment.
The Originators hereby further agree that if any real property
collateral securing any Contract described in Section 3.02(e) hereof becomes the
subject of any claims, proceedings, liens or encumbrances with respect to any
violation or claimed violation of any federal or state environmental laws or
regulations, such Contract shall for all purposes hereunder be, at and following
the time of discovery by any Originator, the Trust Depositor, the Servicer or
any Trustee of such fact, deemed an Ineligible Contract subject to the same
remedial and recourse provisions hereunder as other Contracts determined to be
Ineligible Contracts hereunder.
Section 12.05. Operation of Indemnities. Indemnification under this
Article XII shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If a Originator has made any indemnity
payments to Trust Depositor or the Trustees pursuant to this Article XII and
Trust Depositor or the Trustees thereafter collects any of such amounts from
others, Trust Depositor or the Trustees will repay such amounts collected to the
respective Originator's, except that any payments received by Trust Depositor or
the Trustees from an insurance provider as a result of the events under which
the respective Originator's indemnity payments arose shall be repaid prior to
any repayment of the Originators' indemnity payment.]
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ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.01. Amendment.
(a) This Agreement may be amended by the Originators, the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Trust, collectively, without the consent of any Securityholders, to cure
any ambiguity, to correct or supplement any provisions in this Agreement which
are inconsistent with the provisions herein, or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement, provided, however that any
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originators, the Trust Depositor, the Servicer, the Indenture Trustee and the
Owner Trustee on behalf of the Trust, with the consent of the Required Holders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholder; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of (A) Collections of payments on
the Contracts or distributions that shall be required to be made on any Note or
Certificate (including by way of amendment of related definitions), or (B) the
manner in which the Reserve Fund is applied, or (ii) change in any manner
(including through amendment of related definitions), the Holders which are
required to consent to any such amendment, or (iii) make any Note or Certificate
payable in money other than Dollars, without the consent of the Holders of all
Notes and Certificates of the relevant affected Class then outstanding.
(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, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholder pursuant to Section 13.01(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 of evidencing the authorization by Noteholders and
Certificateholder of the execution thereof shall be subject to such reasonable
requirements as the Owner Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and Indenture Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is authorized
or permitted by this Agreement. Such Trustee may, but shall not be obligated to,
enter into any such amendment which affects such Trustee's own rights, duties or
immunities under this Agreement or otherwise.
(f) Notwithstanding anything to the contrary in this Section 13.01, the
Trust Depositor or the Servicer, acting on behalf of the Trust Depositor, may
request each Rating Agency to approve a formula for determining the Reserve Fund
Amount that is different from the formula or result determined from the current
definition thereof contained herein so as to result in a decrease in the amount
of the Reserve Fund Amount or the manner by which such Reserve Fund is funded.
If each Rating Agency delivers to the Indenture Trustee and Owner Trustee a
written notice or letter satisfying the Rating Agency Condition in connection
with such change, then the Reserve Fund Amount will be theretofore determined in
accordance with such changed formula or manner of funding, and an amendment to
this Agreement effecting such change may be executed without the consent of any
Securityholders.
Section 13.02. Protection of Title to Trust.
65
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Trust, the Securityholders, the Indenture Trustee
and the Owner Trustee in the Contracts and in the proceeds thereof. The Servicer
shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Originator, the Trust Depositor nor the Servicer shall
change its name, identity or corporate structure in any manner that would, could
or might make any financing statement or continuation statement filed in
accordance with Section 4.02(a) seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trust, the Owner
Trustee and the Indenture Trustee at least 60 days' prior written notice thereof
and shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) The Originators, the Trust Depositor and the Servicer shall give
the Trust, the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of the principal executive office of any
Originator, or the Trust Depositor or the Servicer if, as a result of such
relocation, the applicable provisions of the UCC would require filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement, and the Servicer shall promptly file or cause to be
filed any such amendment or new financing statement. The Servicer shall at all
times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in or credited to the
Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Trust and the Indenture Trustee in such Contract and that such Contract is owned
by the Trust and has been pledged to the Indenture Trustee. Indication of the
Trust's ownership of and the Indenture Trustee's interest in a Contract shall be
deleted from or modified on the Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or substituted
for.
(f) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee and reciting
the details of each filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
Section 13.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee shall be
governed by the laws of the State of Delaware.
Section 13.04. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an
66
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Servicer or Originator:
▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Asset Distribution and Investments
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Trust Depositor:
▇▇▇▇▇▇ Funding Corporation II
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, National Association
Northstar West, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Services/Asset
Backed Administration
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to the Owner Trustee:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇]
(v) If to DCR:
Duff & ▇▇▇▇▇▇ Credit Rating Co.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset-Backed Monitoring Group
(Equipment Leases)
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
67
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 13.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 13.06. Third Party Beneficiaries. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this Agreement,
and specifically that the Obligors are not third party beneficiaries of this
Agreement.
Section 13.07. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
together constitute but one and the same instrument.
Section 13.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 13.09. No Bankruptcy Petition; Disclaimer. (a) Each of the
Originators, the Indenture Trustee, the Servicer, the Owner Trustee and each
Holder (by acceptance of the applicable Securities) covenants and agrees that,
prior to the date that is one year and one day after the payment in full of all
amounts owing in respect of all outstanding Securities, it will not institute
against the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 13.09 will survive the termination of this
Agreement.
(b) The Trust acknowledges and agrees that the Certificates represent a
beneficial interest in the Trust and Trust Assets only and the Securities doe
not represent an interest in any assets (other than the Trust Assets) of the
Trust Depositor (including by virtue of any deficiency claim in respect of
obligations not paid or otherwise satisfied from the Trust Assets and proceeds
thereof). In furtherance of and not in derogation of the foregoing, to the
extent that the Trust Depositor enters into other securitization transactions as
contemplated in Section 6.07, the Trust acknowledges and agrees that it shall
have no right, title or interest in or to any assets (or interests therein)
other than the Trust Assets conveyed or purported to be conveyed (whether by way
of a sale, capital contribution or by the granting of a Lien) by the Trust
Depositor to any Person other than the Trust (the "Other Assets").
To the extent that notwithstanding the agreements contained in this
Section, the Trust or any Securityholder, either (i) asserts an interest in or
claim to, or benefit from any Other Assets, whether asserted against or through
the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is
deemed to have any interest, claim or benefit in or from any Other Assets,
whether by operation of law, legal process, pursuant to applicable provisions of
Insolvency Laws or otherwise (including without limitation pursuant to Section
1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted
against or through the Trust Depositor or any other Person owned by the Trust
Depositor, then the Trust and each Securityholder by accepting a Note or
Certificate further acknowledges and agrees that any such interest, claim or
benefit in or from the Other Assets is and shall be expressly subordinated to
the indefeasible payment in full of all obligations and liabilities of the Trust
Depositor which, under the terms of the documents relating to the securitization
of the Other Assets, are entitled to be paid from, entitled to the benefits of ,
or otherwise secured by such Other Assets (whether or not any such entitlement
or security interest is legally perfected or otherwise entitled to a priority of
distribution under applicable law, including Insolvency Laws, and whether
asserted against the Trust Depositor or any other Person owned by the Trust
Depositor) including, without limitation, the payment of post-petition interest
on such other obligations and liabilities. This subordination agreement shall be
deemed
68
a subordination agreement within the meaning of Section 510(a) of the Bankruptcy
Code. Each Securityholder is deemed to have acknowledged and agreed that no
adequate remedy at law exists for a breach of this Section 13.09 and that the
terms and provisions of this Section 13.09 may be enforced by an action for
specific performance.
(c) The provisions of this Section 13.09 shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.
Section 13.10. Jurisdiction. Any legal action or proceeding with
respect to this Agreement may be brought in the courts of the United States for
the Northern District of Illinois, and by execution and delivery of this
Agreement, each party hereto consents, for itself and in respect of its
property, to the non-exclusive jurisdiction of those courts. Each such party
irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, which it may now or hereafter
have to the bringing of any action or proceeding in such jurisdiction in respect
of this Agreement or any document related hereto.
Section 13.11. Tax Characterization. Notwithstanding the provisions of
Section 2.01 and Section 2.04 hereof, the Trust Depositor and Owner Trustee
agree that pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii), the
Trust is to be disregarded as a separate entity from the Trust Depositor for
federal and State of Illinois income tax purposes.
Section 13.12. Prohibited Transactions with Respect to the Trust. The
Originators shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
(c) Except in its capacity as Servicer as provided in this Agreement,
lend any money to the Trust.
Section 13.13. Merger or Consolidation of Originators. (a) Each of the
Originators will keep in full force and effect its existence, rights and
franchise as a Delaware corporation, and each Originator will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and of any of the Contracts and to
perform its duties under this Agreement.
(b) Any person into which an Originator may be merged or consolidated,
or any corporation resulting from such merger or consolidation to which such
Originator is a party, or any person succeeding to the business of such
Originator shall be the successor to the Originator hereunder, without execution
or filing of any paper or any further act on the part of any of the parties
hereto, notwithstanding anything herein to the contrary.
(c) Upon the merger or consolidation of the Originators as described in
this Section 13.13, the Originators shall provide the Rating Agencies notice of
such merger or consolidation within thirty (30) days after completion of the
same.
Section 13.14. Assignment or Delegation by the Originators. Except as
specifically authorized hereunder, the Originators may not convey and assign or
delegate any of its rights or obligations hereunder absent the prior written
consent of the Trust Depositor and the Trustees, and any attempt to do so
without such consent shall be void.
69
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
▇▇▇▇▇▇ EQUIPMENT ASSET RECEIVABLES TRUST 1999-1
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee on behalf of the Trust
By:___________________________________
Printed Name:______________________
Title:_____________________________
▇▇▇▇▇▇ FUNDING CORPORATION II, as Trust Depositor
By:___________________________________
Printed Name:______________________
Title:_____________________________
▇▇▇▇▇▇ FINANCIAL, INC., as Servicer and as an
Originator
By:___________________________________
Printed Name:______________________
Title:_____________________________
▇▇▇▇▇▇ FINANCIAL LEASING INC., as an Originator
By:___________________________________
Printed Name:______________________
Title:_____________________________
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Indenture Trustee
By:___________________________________
Printed Name:______________________
Title:_____________________________
70
Exhibit A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "Sale and
Servicing Agreement") dated as of [_________], 1999 made by and between the
undersigned, as Trust Depositor ("Trust Depositor"), ▇▇▇▇▇▇ Financial, Inc., as
Servicer, ▇▇▇▇▇▇ Financial and ▇▇▇▇▇▇ Financial Leasing, Inc., as Originators,
Norwest Bank Minnesota, National Association, as Indenture Trustee and the
▇▇▇▇▇▇ Equipment Asset Receivables Trust 1999-1 (the "Trust"), as assignee
thereunder, the undersigned does hereby sell, transfer, convey and assign, set
over and otherwise convey to the Trust (i) all the right, title and interest of
the Trust Depositor in and to the Initial Contracts listed on the initial List
of Contracts delivered on the Closing Date (including, without limitation, all
rights to receive Collections with respect thereto on or after the Initial
Cutoff Date, but excluding any rights to receive payments which were collected
pursuant thereto prior to the Initial Cutoff Date), and (ii) all other Contract
Assets relating to the foregoing.
Capitalized terms used herein have the meaning given such terms in the
Sale and Servicing Agreement.
This Assignment is made pursuant to and in reliance upon the
representation and warranties on the part of the undersigned contained in
Article III of the Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this __th day of ______________, 1999.
▇▇▇▇▇▇ FUNDING CORPORATION II
By:________________________________________
Printed Name:______________________________
Title:_____________________________________
A-1
Exhibit B
[Form of Closing Certificate of Trust Depositor]
▇▇▇▇▇▇ Funding Corporation II
Officer's Certificate
The undersigned certifies that he/she is [________] of ▇▇▇▇▇▇ Funding
Corporation II, a Delaware corporation (the "Trust Depositor"), and that as such
is duly authorized to execute and deliver this certificate on behalf of the
Trust Depositor in connection with the Sale and Servicing Agreement (the
"Agreement") dated as of [_________], 1999 (the "Effective Date") by and among
the Trust Depositor, Norwest Bank Minnesota, National Association (the
"Indenture Trustee"), as Indenture Trustee, ▇▇▇▇▇▇ Financial, Inc. ("HFI"), as
Servicer and as Originator, ▇▇▇▇▇▇ Financial Leasing, Inc., as Originator and
the ▇▇▇▇▇▇ Equipment Asset Receivables Trust 1999-1 ("Trust") (all capitalized
terms used herein without definition having the respective meanings set forth in
the Agreement), and further certifies as follows:
(1) Attached hereto as Exhibit I is a true and correct copy of
the Certificate of Incorporation of the Trust Depositor, together with
all amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of the Trust Depositor since
_____, and no such amendment has been authorized by the Board of
Directors or shareholders of the Trust Depositor.
(3) Attached hereto as Exhibit II is a Certificate of the
Secretary of State of the State of Delaware dated _______ ___, 1999
stating that the Trust Depositor is duly incorporated under the laws of
the State of Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy
of the Bylaws of the Trust Depositor, as amended, which were in full
force and effect on _______ ___, 1999, and at all times subsequent
thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy
of resolutions adopted pursuant to the unanimous written consent of the
Board of Directors of the Trust Depositor relating to the execution,
delivery and performance of (among other things) the Agreement; the
Trust Agreement dated as of the Effective Date between the Trust
Depositor and Wilmington Trust Company (the "Owner Trustee"), as Owner
Trustee; the Administration Agreement dated as of the Effective Date
among the Trust Depositor, the Trust, the Indenture Trustee, and HFI,
as Administrator; the Placement Agency Agreement (as defined in the
Agreement); and the Underwriting Agreements (as defined in the
Agreement) (collectively, the "Program Agreements"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to the Trust Depositor has occurred
and is continuing which would constitute an Event of Default or an
event that, with notice or the passage of time or both, would become an
Event of Default as defined in the Agreement. To the best of my
knowledge after reasonable investigation, there has been no material
adverse change in the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Trust
Depositor, whether or not arising in the ordinary course of business
since the respective dates as of which information is given in the
Prospectus and except as set forth therein.
B-1
(7) All federal, state and local taxes of the Trust Depositor
due and owing as of the date hereof have been paid.
(8) All representations and warranties of the Trust Depositor
contained in the Program Agreements or any other related documents, or
in any document, certificate or financial or other statement delivered
in connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending
or, to our knowledge, threatened against the Trust Depositor before any
court, administrative agency or other tribunal (a) asserting the
invalidity of the Program Agreements; (b) seeking to prevent the
consummation of any of the transactions contemplated by the Program
Agreements; or (c) which is likely materially and adversely to affect
the Trust Depositor's performance of its obligations under, or the
validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by the Trust Depositor for the
Trust Depositor's consummation of the transactions contemplated by the
Program Agreements, except such as have been obtained or made and such
as may be required under the blue sky laws of any jurisdiction in
connection with the issuance and sale of the Securities.
(11) The Trust Depositor is not a party to any agreements or
instruments evidencing or governing indebtedness for money borrowed or
by which the Trust Depositor or its property is bound (other than the
Program Agreements). Neither the Originators' transfer and assignment
of the Contract Assets to the Trust Depositor, the Trust Depositor's
concurrent transfer and assignment of the Trust Assets to the Trust,
nor the concurrent transfer and assignment of the Collateral by the
Trust to the Indenture Trustee nor the issuance and sale of the
Certificates and the Notes, nor the execution and delivery of the
Program Agreements, nor the consummation of any other of the
transactions contemplated therein, will violate or conflict with any
agreement or instrument to which the Trust Depositor is a party or by
which it is otherwise bound.
(12) In connection with the transfer of Contracts and related
collateral contemplated in the Agreement, (a) the Trust Depositor has
not made such transfer with actual intent to hinder, delay or defraud
any creditor of the Trust Depositor, and (b) the Trust Depositor has
not received less than a reasonably equivalent value in exchange for
such transfer, is not on the date thereof insolvent (nor will become
insolvent as a result thereof), is not engaged (or about to engage) in
a business or transaction for which it has unreasonably small capital,
and does not intend to incur or believe it will incur debts beyond its
ability to pay when matured.
(13) Each of the agreements and conditions of the Trust
Depositor to be performed on or before the Closing Date pursuant to the
Program Agreements have been performed in all material respects.
* * * *
B-2
In Witness Whereof, I have affixed my signature hereto this __th day of
[__________], 1999.
By:________________________________________
Printed Name:________________________
Title:_______________________________
Exhibit C-1
[Form of Closing Certificate of Servicer/Originator]
▇▇▇▇▇▇ Financial, Inc.
Officer's Certificate
The undersigned certifies that he/she is ___________ of ▇▇▇▇▇▇
Financial, Inc. ("HFI"), and that as such he/she is duly authorized to execute
and deliver this certificate on behalf of HFI, as Servicer, in connection with
the Sale and Servicing Agreement (the "Agreement") dated as of [____________],
1999 (the "Effective Date") by and among HFI, as Servicer, HFI and ▇▇▇▇▇▇
Financial Leasing, Inc., as Originators, ▇▇▇▇▇▇ Funding Corporation II ("HFC"),
Norwest Bank Minnesota, National Association as Indenture Trustee, and ▇▇▇▇▇▇
Equipment Asset Receivables Trust 1999-1 ("Trust"), and as an Originator (all
capitalized terms used herein without definition having the respective meanings
set forth in the Agreement), and further certifies as follows (it being
understood that these certifications are being relied upon by, among others,
Winston & ▇▇▇▇▇▇ in connection with its delivery of a legal opinion (the
"Opinion") required in connection with the subject transactions addressing,
among other things, enforceability and UCC perfection issues, and by the
Underwriters in connection with their undertakings in connection with the
subject transactions):
(1) Attached hereto as Exhibit I is a true and correct copy of
the Certificate of Incorporation of HFI, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFI since [_______],
19__, and no such amendment has been authorized by the Board of
Directors or shareholders of HFI.
(3) Attached hereto as Exhibit II is a Certificate of the
Secretary of State of the State of Delaware dated _______ ___, 1999
stating that HFI is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy
of the Bylaws of HFI which were in full force and effect on [________],
19__ and at all times subsequent thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of HFI and relating to the authorization, execution,
delivery and performance of (among other things) the Agreement; the
Underwriting Agreements (as defined in the Agreement); the Placement
Agency Agreement (as defined in the Agreement); and the Administration
Agreement dated as of the Effective Date among HFI, HFC, the Trust and
Norwest Bank Minnesota, National Association as Indenture Trustee (the
"Indenture Trustee") (the "Administration Agreement"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to HFI has occurred and is
continuing which would constitute an Event of Default or Servicer
Default or an event that, with notice or the passage of time, would
constitute an Event of Default or Servicer Default as defined in the
Sale and Servicing Agreement. To the best of my knowledge after
reasonable investigation, there has been no material adverse change in
the condition, financial or otherwise, or the earnings, business
affairs or business prospects of HFI, whether or not arising in the
ordinary course of business, since the respective dates as of which
information is given in the Prospectus and except as set forth therein.
C-1-1
(7) All federal, state and local taxes of HFI due and owing as
of the date hereof have been paid.
(8) All representations and warranties of HFI contained in the
Agreement, the Underwriting Agreements, the Placement Agency Agreement
and the Administration Agreement (collectively, the "Program
Agreements") or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(9) There is no action, investigation or proceeding pending
or, to my knowledge, threatened against HFI before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which HFI is a party; or (b) which is likely
materially and adversely to affect HFI's performance of its obligations
under, or the validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by HFI for HFI's consummation
of the transactions contemplated by the Program Agreements, except such
as have been obtained or made and such as may be required under the
blue sky laws of any jurisdiction in connection with the issuance and
sale of the Notes or Certificates.
(11) Neither HFI's transfer and assignment of the Contract
Assets to HFC, HFC's concurrent transfer and assignment of the Trust
Assets to the Trust, nor the concurrent transfer and assignment by the
Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or Certificates or the entering into of the Program
Agreements, nor the consummation of any other of the transactions
contemplated therein, will violate or conflict with any agreement or
instrument to which HFI is a party or by which it is otherwise bound.
(12) In connection with the transfers of Contracts and related
assets contemplated in the Agreement, (a) HFI has not made such
transfer with actual intent to hinder, delay or defraud any creditor of
HFI, and (b) HFI has not received less than a reasonably equivalent
value in exchange for such transfer, is not on the date hereof
insolvent (nor will HFI become insolvent as a result thereof), is not
engaged (or about to engage) in a business or transaction for which it
has unreasonably small capital, and does not intend to incur or believe
it will incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of HFI to be
performed or satisfied on or before the Closing Date under the Program
Agreements has been performed or satisfied in all material respects.
(14) HFI has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming HFI
as debtor, HFI has conducted a review of its internal records and
determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not
relate to, Contracts being conveyed by HFI and constituting part of the
Initial Contracts Pool, and HFI further represents that such agreements
are never to be conveyed as a Substitute Contract. In addition, HFI has
conducted a review of its internal records and determined that the
single Contract in the Initial Contracts Pool secured by a mortgage on
real property is not part of either of the fixed mortgage loan pools
described in the financing statements of record with respect to such
pools and referred to in the Opinion, and HFI further represents that
no agreement that is part of any such fixed mortgage loan pool will
ever by conveyed as a Substitute Contract.
* * * * * *
C-1-2
In Witness Whereof, I have affixed my signature hereto this
[____]th day of [_________], 1999.
By:____________________________________
Printed Name:___________________
Title:__________________________
C-1-3
Exhibit C-2
[Form of Closing Certificate of HFLI as Originator]
▇▇▇▇▇▇ Financial Leasing, Inc.
Officer's Certificate
The undersigned certifies that he/she is ___________ of ▇▇▇▇▇▇
Financial Leasing, Inc. ("HFLI"), and that as such he/she is duly authorized to
execute and deliver this certificate on behalf of HFLI, as an Originator in
connection with the Sale and Servicing Agreement (the "Agreement") dated as of
[____________], 1999 (the "Effective Date") by and among ▇▇▇▇▇▇ Financial Inc.
("HFI"), as Servicer, and HFI and HFLI, as Originators, ▇▇▇▇▇▇ Funding
Corporation II ("HFC"), Norwest Bank Minnesota, National Association as
Indenture Trustee, and ▇▇▇▇▇▇ Equipment Asset Receivables Trust 1999-1 ("Trust")
(all capitalized terms used herein without definition having the respective
meanings set forth in the Agreement), and further certifies as follows (it being
understood that these certifications are being relied upon by, among others,
Winston & ▇▇▇▇▇▇ in connection with its delivery of a legal opinion (the
"Opinion") required in connection with the subject transactions addressing,
among other things, enforceability and UCC perfection issues, and by the
Underwriters in connection with their undertakings in connection with the
subject transactions):
(1) Attached hereto as Exhibit I is a true and correct copy of
the Certificate of Incorporation of HFLI, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFLI since [_______],
19__, and no such amendment has been authorized by the Board of
Directors or shareholders of HFLI.
(3) Attached hereto as Exhibit II is a Certificate of the
Secretary of State of the State of Delaware dated ___________, 1999
stating that HFLI is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as Exhibit III is a true and correct copy
of the Bylaws of HFLI which were in full force and effect on
[________], 19__ and at all times subsequent thereto.
(5) Attached hereto as Exhibit IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of HFLI and relating to the authorization,
execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated therein. Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) To the best of my knowledge after reasonable
investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of HFLI, whether or not arising in the ordinary
course of business, since the respective dates as of which information
is given in the Prospectus and except as set forth therein.
(7) All federal, state and local taxes of HFLI due and
owing as of the date hereof have been paid.
C-2-1
(8) All representations and warranties of HFLI contained in
the Agreement or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(9) There is no action, investigation or proceeding pending
or, to my knowledge, threatened against HFLI before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which HFLI is a party; or (b) which is likely
materially and adversely to affect HFLI's performance of its
obligations under, or the validity or enforceability of, the Agreement.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by HFLI for HFLI's
consummation of the transactions contemplated by the Agreement, except
such as have been obtained or made and such as may be required under
the blue sky laws of any jurisdiction in connection with the issuance
and sale of the Notes or Certificates.
(11) Neither HFLI's transfer and assignment of the Contract
Assets to HFC, HFC's concurrent transfer and assignment of the Trust
Assets to the Trust, nor the concurrent transfer and assignment by the
Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or Certificates, nor the consummation of any other of
the transactions contemplated therein, will violate or conflict with
any agreement or instrument to which HFLI is a party or by which it is
otherwise bound.
(12) In connection with the transfers of Contracts and related
assets contemplated in the Agreement, (a) HFLI has not made such
transfer with actual intent to hinder, delay or defraud any creditor of
HFI, and (b) HFLI has not received less than a reasonably equivalent
value in exchange for such transfer, is not on the date hereof
insolvent (nor will HFLI become insolvent as a result thereof), is not
engaged (or about to engage) in a business or transaction for which it
has unreasonably small capital, and does not intend to incur or believe
it will incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of HFLI to be
performed or satisfied on or before the Closing Date under the
Agreement has been performed or satisfied in all material respects.
(14) HFLI has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming HFLI
as debtor, HFLI has conducted a review of its internal records and
determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not
relate to, Contracts being conveyed by HFLI and constituting part of
the Initial Contracts Pool, and HFLI represents that such agreements
are never to be conveyed as a Substitute Contract.
* * * * * *
C-2-2
In Witness Whereof, I have affixed my signature hereto this
[___]th day of [________], 1999.
By:_____________________________________
Printed Name:____________________
Title:___________________________
C-2-3
Exhibit D
Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)
D-1
Exhibit E
Form of Opinion of Counsel for Trust
Depositor Regarding the "True Sale" Nature
of the Transaction
E-1
Exhibit F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
F-1
Exhibit G
[Form of Certificate Regarding Repurchased Contracts]
▇▇▇▇▇▇ Financial, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he/she is a ____________________________
of ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation (the "Servicer"), and that as
such he/she is duly authorized to execute and deliver this certificate on behalf
of the Servicer pursuant to Section 11.02 of the Sale and Servicing Agreement
(the "Agreement") dated as of [___________], 1999 by and among ▇▇▇▇▇▇ Funding
Corporation II, as Trust Depositor, the Servicer, ▇▇▇▇▇▇ Financial, Inc. and
▇▇▇▇▇▇ Financial Leasing, Inc., as Originators, Norwest Bank Minnesota, National
Association as Indenture Trustee, and ▇▇▇▇▇▇ Equipment Asset Receivables Trust
1999-1 (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased
by the Originator on the date hereof, or substituted for by
the Originator, pursuant to and in accordance with Section
11.01 of the Agreement.
2. Upon deposit of the Transfer Deposit Amount for such Contracts
(or the effective conveyance of one or more Substitute
Contracts therefor), such Contracts may, pursuant to Section
11.02 of the Agreement, be assigned by the Owner Trustee to
the Originator.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______
day of ______, ____.
▇▇▇▇▇▇ Financial, Inc.
By:_______________________________________
Printed Name:_______________________
Title:______________________________
G-1
Exhibit H
[List of Contracts]
H-1
Exhibit I
[Form of Monthly Report to Noteholders And Certificateholder]
[see attached]
I-1
Exhibit J
[Reserved]
J-1
Exhibit K
[Form of Contract Stamp]
This Contract/Note is subject to a security interest granted to Wilmington Trust
Company, as Owner Trustee for the ▇▇▇▇▇▇ Equipment Asset Receivables Trust
1999-1. UCC-1 Financing Statements covering this Contract/Note have been filed
with the Secretary of State of the State of Illinois. Such lien will be released
only in connection with appropriate filings in such offices. Consequently,
potential purchasers of this Contract/Note must refer to such filings to
determine whether such lien has been released.
K-1
Exhibit L
[Form of Subsequent Transfer Agreement]
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of
[________], by and among ▇▇▇▇▇▇ Equipment Asset Receivables Trust 1999-1 (the
"Trust"), ▇▇▇▇▇▇ Funding Corporation II, a Delaware corporation (the "Trust
Depositor"), Norwest Bank Minnesota, National Association, as Indenture Trustee
(the "Indenture Trustee") and ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation, as
Servicer and as an Originator and ▇▇▇▇▇▇ Financial Leasing, Inc. a Delaware
corporation, as an Originator, pursuant to the Sale and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust, the Trust Depositor, the Servicer, the Originators
and the Indenture Trustee, are parties to the Sale and Servicing Agreement,
dated as of [___________], 1999 (the "Sale and Servicing Agreement");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Trust
Depositor wishes to sell the Substitute Contracts to the Trust, and the Trust
wishes to purchase the same, for the consideration described in the Sale and
Servicing Agreement; and
WHEREAS, the Servicer has timely delivered an Addition Notice related
to such conveyance as required in by Section [2.04(b)] of the Sale and Servicing
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"Subsequent Cutoff Date" shall mean, with respect to
the Substitute Contracts transferred hereby, [_____].
"Substitute Contracts" shall mean, for purposes of
this Agreement, the Substitute Contracts listed in the
Subsequent List of Contracts attached hereto as Exhibit A.
"Subsequent Transfer Date" shall mean, with respect
to the Substitute Contracts transferred hereby, [______].
Section 2. Subsequent List of Contracts. The Subsequent List of
Contracts attached hereto as Exhibit A is an amendment to the initial List of
Contracts attached as Exhibit H to the Sale and Servicing Agreement, as
contemplated in the definition of List of Contracts set forth therein. The
Subsequent List of Contracts separately identifies the Substitute Contracts to
be transferred pursuant to this Agreement on the Subsequent Transfer Date, and
also further separately identifies the related Contract or Contracts with
respect to which an Addition Event or Substitution Event has occurred and which
Contracts are being deleted from the List of Contracts by virtue of the delivery
of the Subsequent List of Contracts.
Section 3. Transfer of Substitute Contracts. Subject to and upon the
terms and conditions set forth in Section [2.04(b)] of the Sale and Servicing
Agreement and this Agreement, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust:
L-1
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Contracts on and after the related Subsequent Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi all rights (but not the obligations) of the Trust
Depositor under the Sale and Servicing Agreement related to such
Contracts (to the extent not already conveyed under Section 2.01(b) of
the Sale and Servicing Agreement), as well as all rights, but not the
obligations, of the Trust Depositor under the Subsequent Purchase
Agreement related to such Contracts; and
(vii) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
It is the intention of the Trust Depositor and Owner Trustee that the transfer
contemplated by this Agreement shall constitute an absolute assignment and sale
of the Substitute Contracts from the Trust Depositor to the Trust, conveying
good title thereto free and clear of any Liens.
Section 4. Representations and Warranties of the Trust Depositor. (a)
The Trust Depositor hereby represents and warrants to the Trust that the
representations and warranties of the Trust Depositor set forth in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) The Trust Depositor hereby repeats and remakes with respect to the
Substitute Contracts as of the Subsequent Transfer Date the representations and
warranties set forth in Section 3.01 of the Sale and Servicing Agreement and
deemed to be made with respect to the Substitute Contracts thereunder.
(c) The Trust Depositor hereby represents and warrants that (a) the
ADCB of the Substitute Contracts listed on the Subsequent List of Contracts and
conveyed to the Trust Depositor pursuant to this Agreement is $___________ as of
the Subsequent Cutoff Date, and (b) the conditions set forth in [Section
2.04(b)] of the Sale and Servicing Agreement have been satisfied as of the
Subsequent Transfer Date.
Section 5. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
Section 6. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
L-2
Section 7. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 8. Authorization of Trustee. By its execution hereof, the
Trust Depositor hereby authorizes and directs the Owner Trustee to execute and
deliver this Agreement on behalf of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
▇▇▇▇▇▇ FUNDING CORPORATION II
By:_______________________________________
Printed Name:
Title:
▇▇▇▇▇▇ FINANCIAL, INC., as Servicer and
as an Originator
By:_______________________________________
Printed Name:
Title:
▇▇▇▇▇▇ FINANCIAL LEASING, INC., as an
Originator
By:_______________________________________
Printed Name:
Title:
▇▇▇▇▇▇ EQUIPMENT ASSET RECEIVABLES TRUST
1999-1
By: Wilmington Trust Company, not in
its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By:_______________________________________
Printed Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture Trustee
By:_______________________________________
Printed Name:
Title:
L-3
Exhibit M
[Form of Subsequent Purchase Agreement]
SUBSEQUENT PURCHASE AGREEMENT (the "Agreement"), dated as of [_____],
[____], by and among ▇▇▇▇▇▇ Funding Corporation II, a Delaware corporation (the
"Trust Depositor"), ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation ("HFI" or an
"Originator"), and ▇▇▇▇▇▇ Financial Leasing, Inc., a Delaware corporation
("HFLI" or an "Originator"), pursuant to the Sale and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust Depositor and the Originators are parties to the
Sale and Servicing Agreement, dated as of [____________], 1999 (the "Sale and
Servicing Agreement");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Originators
wish to sell the Substitute Contracts to the Trust Depositor, and the Trust
Depositor wishes to purchase the same, for the purchase price set forth in
Section 3 below; and
WHEREAS, the Originators have timely delivered an Addition Notice
related to such conveyance as required in the Sale and Servicing Agreement).
NOW, THEREFORE, the Originators jointly and severally, and the Trust
Depositor, hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Subsequent Cutoff Date" shall mean, with respect to
the Substitute Contracts transferred hereby, [________].
"Substitute Contracts" shall mean, for purposes of
this Agreement, the Substitute Contracts listed in the
Subsequent List of Contracts attached hereto as Exhibit A.
"Subsequent Transfer Date" shall mean, with respect
to the Substitute Contracts transferred hereby, [________].
Section 2. Subsequent List of Contracts. The Subsequent List of
Contracts attached hereto as Exhibit A is an amendment to the initial List of
Contracts attached as Exhibit H to the Sale and Servicing Agreement, as
contemplated in the definition of List of Contracts set forth therein. The
Subsequent List of Contracts separately identifies (by attached schedule, or
marking or other effective identifying designation) the Substitute Contracts to
be transferred pursuant to this Agreement on the Subsequent Transfer Date, and
also further separately identifies (by attached schedule, or marking or other
effective identifying designation) the related Contract or Contracts with
respect to which an Addition Event or Substitution Event has occurred and which
Contracts are being deleted from the List of Contracts by virtue of the delivery
of the Subsequent List of Contracts.
M-1
Section 3. Transfer of Substitute Contracts. Subject to and upon the
terms and conditions set forth in Section 2.04 of the Sale and Servicing
Agreement and this Agreement, the Originators hereby sell, transfer, assign, set
over and otherwise convey to Trust Depositor, in consideration of Trust
Depositor's (x) payment of $__________ as the purchase price therefor,
representing the prepayment proceeds received with respect to the related
Addition Event (if applicable) or (y) release and redelivery to the original
applicable Originator of the related Contract Assets with respect to which a
Substitution Event has occurred (if applicable),
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Contracts on and after the related Subsequent Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
It is the intention of the Originators and the Trust Depositor that the transfer
contemplated by this Agreement shall constitute a sale of the Substitute
Contracts from the Originator to the Trust Depositor, conveying good title
thereto free and clear of any Liens, and that the Substitute Contracts shall not
be part of the applicable Originator's estate in the event of the filing of a
bankruptcy petition by or against a Originator under any bankruptcy or similar
law.
Section 4. Representations and Warranties of the Originator. (a) Each
Originator hereby jointly and severally represents and warrants to the Trust
Depositor that the representations and warranties of Originator in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) Each Originator hereby jointly and severally repeats and remakes
with respect to the Substitute Contracts as of the Subsequent Transfer Date, the
representations and warranties set forth in the Sale and Servicing Agreement and
deemed to be made with respect to such Substitute Contracts thereunder.
(c) Originator hereby represents and warrants that (i) the ADCB of the
Substitute Contracts listed on the Subsequent List of Contracts and conveyed to
the Trust Depositor pursuant to this Agreement is $__________ as of the
Subsequent Cutoff Date, and (ii) the conditions set forth in Section 2.04(b) of
the Sale and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
Section 5. Ratification of Agreement. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
M-2
Section 6. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
Section 7. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
[remainder of page intentionally blank]
M-3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
▇▇▇▇▇▇ FUNDING CORPORATION II
By:________________________________________
Printed Name:
Title:
▇▇▇▇▇▇ FINANCIAL, INC.
By:________________________________________
Printed Name:
Title:
▇▇▇▇▇▇ FINANCIAL LEASING, INC.
By:________________________________________
Printed Name:
Title: