Exhibit 4.4
SERVICING AGREEMENT
by and among
AMERICAN BUSINESS LEASING, INC.,
as Servicer and as Originator,
ABFS FINANCE LLC 1999-A,
as a Transferor,
ABFS RESIDUAL LLC 1999-A,
as a Transferor,
ABFS EQUIPMENT CONTRACT TRUST 1999-A,
as Issuer,
CHASE BANK OF TEXAS, N.A.
as Collateral Agent
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee and as Back-up Servicer
Dated as of June 1, 1999
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..........................................................1
Section 1.01 Definitions...................................................1
Section 1.02 General Interpretive Principles...............................1
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS...........................2
Section 2.01 Representations, Warranties and Covenants of the Servicer.....2
Section 2.02 Representations and Warranties of the Originator with
Respect to the Contracts.....................................7
Section 2.03 Representations and Warranties of the Back-up Servicer.......16
Section 2.04 Representations, Warranties and Covenants of the
Collateral Agent...........................................17
ARTICLE III PERFECTION OF TRANSFER............................................18
Section 3.01 Filing; Custody of Files; Contract Files.....................18
Section 3.02 Name Change or Relocation....................................20
Section 3.03 Chief Executive Offices......................................20
Section 3.04 Costs and Expenses...........................................20
Section 3.05 Possession of Contract Files; Access to Contract Files.......21
Section 3.06 Acceptance of the Trust Property; Certification by the
Collateral Agent...........................................21
ARTICLE IV ADMINISTRATION AND SERVICING OF THE CONTRACTS......................22
Section 4.01 Acceptance of Appointment; Duties of Servicer................22
Section 4.02 Collection of Payments.......................................24
Section 4.03 Servicer Advances............................................25
Section 4.04 Realization Upon Defaulted Contracts.........................26
Section 4.05 Maintenance of Insurance Policies; Fidelity Policies.........27
Section 4.06 Servicing Compensation; Payment of Certain Expenses
by Servicer................................................27
Section 4.07 Monthly Statement............................................28
Section 4.08 Quarterly Certificates as to Compliance......................28
Section 4.09 Annual Independent Public Accountant's Servicing Reports.....28
Section 4.10 Access to Certain Documentation and Information Regarding
the Pledged Property.......................................28
Section 4.11 Financial Statements and Other Necessary Data................30
Section 4.12 Responsibilities of the Back-up Servicer.....................31
Section 4.13 Back-up Servicer Compensation................................32
Section 4.14 Merger or Consolidation of, or Assumption of the
Obligations of,Back-up Servicer............................33
Section 4.15 Back-up Servicer's Waiver of Set-off.........................33
Section 4.16 Retention and Termination of the Servicer....................33
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ARTICLE V THE SERVICER AND THE BACK-UP SERVICER...............................34
Section 5.01 Liability of Servicer; Indemnities...........................34
Section 5.02 Merger, Consolidation, or Assumption of the Obligations
of Servicer................................................35
Section 5.03 Limitation on Liability of Servicer and Others...............36
Section 5.04 Servicer Not to Resign.......................................36
Section 5.05 Limitation on Liability of Back-up Servicer and Others.......36
Section 5.06 Back-up Servicer Not to Resign...............................37
Section 5.07 Indemnity for Liability Claims...............................38
ARTICLE VI SERVICING TERMINATION; BACK-UP SERVICING TERMINATION...............38
Section 6.01 Events of Servicing Termination..............................38
Section 6.02 Back-up Servicer to Act; Appointment of Successor............41
Section 6.03 Notification to Noteholders..................................42
Section 6.04 Waiver of Past Defaults......................................42
Section 6.05 Effects of Termination of Servicer...........................42
Section 6.06 Events of Back-up Servicing Termination......................43
Section 6.07 Waiver of Defaults...........................................45
ARTICLE VII THE COLLATERAL AGENT..............................................45
Section 7.01 Duties of the Collateral Agent...............................45
Section 7.02 Certain Matters Affecting the Collateral Agent...............46
Section 7.03 Collateral Agent Not Liable for Notes or Contracts...........48
Section 7.04 Collateral Agent May Own Notes...............................48
Section 7.05 Collateral Agent's Fees and Expenses; Indemnity..............48
Section 7.06 Eligibility Requirements for Collateral Agent................48
Section 7.07 Resignation and Removal of the Collateral Agent..............49
Section 7.08 Successor Collateral Agent...................................49
Section 7.09 Merger or Consolidation of Collateral Agent..................50
ARTICLE VIII MISCELLANEOUS PROVISIONS.........................................50
Section 8.01 Amendment....................................................50
Section 8.02 Counterparts.................................................51
Section 8.03 GOVERNING LAW................................................51
Section 8.04 Notices......................................................51
Section 8.05 Severability of Provisions...................................52
Section 8.06 Third Party Beneficiary......................................52
Section 8.07 Assignment...................................................52
Section 8.08 Binding Effect...............................................52
Section 8.09 Survival of Agreement........................................53
Section 8.10 Captions.....................................................53
Section 8.11 Exhibits.....................................................53
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Section 8.12 Calculations.................................................53
Section 8.13 No Proceedings...............................................53
EXHIBITS
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Exhibit A -- Form of Contract
Exhibit B -- Form of Monthly Statement
Exhibit C -- Form of Source Agreement
Exhibit D -- Collateral Agent's Acknowledgement of Receipt
Exhibit E -- Indenture Trustee's Acknowledgement of Receipt
Exhibit F -- Form of Request for Release of Documents
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This SERVICING AGREEMENT, dated as of June 1, 1999 (this
"Agreement"), by and among AMERICAN BUSINESS LEASING INC., a Pennsylvania
corporation ("ABL"), as Servicer (the "Servicer") and as Originator (the
"Originator"), ABFS FINANCE LLC 1999-A, a Delaware limited liability company,
as a Transferor ("Transferor I"), ABFS RESIDUAL LLC 1999-A, a Delaware limited
liability company, as a Transferor ("Transferor II" and, together with
Transferor I, the "Transferors"), ABFS Equipment Contract Trust 1999-A, a
Delaware statutory business trust, as Issuer (the "Trust" or the "Issuer"),
CHASE BANK OF TEXAS, N.A., a national banking association, as Collateral Agent
(the "Collateral Agent"), and THE CHASE MANHATTAN Bank, a New York banking
corporation, not in its individual capacity but solely as the Indenture Trustee
(the "Indenture Trustee") and as Back-up Servicer (the "Back-up Servicer").
WITNESSETH:
WHEREAS, the Issuer has entered into a Receivables Pledge
Agreement, dated as of June 1, 1999 (the "Receivables Pledge Agreement"), with
the Transferors, the Indenture Trustee and Prudential Securities Secured
Financing Corporation, as depositor (the "Depositor"), pursuant to which the
Transferors have issued the Pledged Notes to the Issuer, which Pledged Notes
are secured by a pledge by the Transferors to the Trust of the Conveyed Assets;
and
WHEREAS, the Issuer has entered into an Indenture, dated as
of June 1, 1999 (the "Indenture"), with the Servicer, the Back-up Servicer and
the Indenture Trustee, pursuant to which the Issuer has pledged the Pledged
Property to the Indenture Trustee, for the benefit of the Noteholders and the
Note Insurer; and
WHEREAS, it is contemplated that following such pledge the
Servicer will service the Receivables pursuant to this Agreement for the
benefit of the Issuer, the Noteholders, the Transferors and the Note Insurer;
and
WHEREAS, each of the Servicer, the Back-up Servicer and the
Originator agree that all of the respective representations, warranties,
covenants and agreements made by it herein shall also be for the benefit of the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the Collateral
Agent, the Noteholders and the Note Insurer;
NOW, THEREFORE, in consideration of the mutual agreements
herein contained, and of other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Capitalized terms used herein but
not defined herein shall have the meanings specified in Annex A to the
Indenture.
SECTION 1.02 General Interpretive Principles. For purposes of
this Agreement except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to
include the other gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP as in effect on the
date hereof;
(c) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference
to a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(d) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also apply
to Paragraphs and other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any
particular provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01 Representations, Warranties and Covenants of the
Servicer. The Servicer hereby makes the following representations, warranties
and covenants to the Indenture Trustee, the Owner Trustee, the Issuer, the
Collateral Agent, the Transferors, the Depositor, the Back-up Servicer, the
Note Insurer and the Noteholders on which the Indenture Trustee relies in
accepting the Pledged Property in trust and authenticating the Notes, on which
the Note Insurer relies in executing and delivering the Note Insurance Policy
and on which the Back-up Servicer relies in executing and delivering this
Agreement. Such representations, warranties and covenants are made as of the
Closing Date, shall be deemed to be reaffirmed on each Subsequent Funding Date
and on each Transfer Date, and shall survive the pledge of any Pledged Property
to the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer.
(a) The Servicer represents and warrants as to itself:
(i) Organization and Good Standing. The Servicer is a
corporation duly organized, validly existing in good standing under
the laws of the Commonwealth of Pennsylvania, has the power to own its
assets and to transact the business in which it is presently engaged,
and had at all relevant times and now has the power, authority and
legal right to service the Contracts and perform its obligations
hereunder and under the other Transaction Documents to which it is a
party.
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation and is in good standing, and has
obtained all necessary licenses and
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approvals, in all jurisdictions where the failure to be so qualified
and in good standing or obtain such licenses or approvals would have a
material adverse effect on the Servicer's business and operations or
in which the servicing of the Contracts as required by this Agreement
or the performance of its obligations under the Transaction Documents
to which it is a party requires or will require such qualification,
licenses or approvals.
(iii) Authorization. The Servicer has the power, authority
and legal right to execute, deliver and perform this Agreement and the
other Transaction Documents to which it is a party, and the execution,
delivery and performance of this Agreement and the other Transaction
Documents to which it is a party have been duly authorized by the
Servicer by all necessary corporate action.
(iv) Binding Obligation. Each of this Agreement and the other
Transaction Documents to which it is a party, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes a legal, valid and binding obligation of the Servicer,
enforceable against the Servicer in accordance with its terms, except
that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought, whether in a proceeding
at law or in equity.
(v) No Violation. The consummation by the Servicer of the
transactions contemplated by this Agreement and the other Transaction
Documents and the fulfillment of the terms hereof and thereof will not
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice, lapse of time or both) a
default under, the articles of incorporation or by-laws of the
Servicer, or any material indenture, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a party or by which
it is bound, or result in the creation or imposition of any Lien upon
any of its material properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument,
other than as contemplated in any Transaction Document, or violate any
material law or, to the best of the Servicer's knowledge, any order,
rule or regulation applicable to the Servicer of any court or of any
Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or
any of its properties.
(vi) No Proceedings. There are no proceedings or
investigations to which the Servicer, or any of the Servicer's
Affiliates, is a party pending or, to the best of the Servicer's
knowledge, threatened before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement or the
other Transaction Documents or the Notes, (B) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or the other Transaction Documents or
(C) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement or the
other Transaction documents to which it is a party.
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(vii) Approvals. All approvals, authorizations, consents,
orders or other actions of any Person or court required on the part of
the Servicer in connection with the execution and delivery of this
Agreement and the other Transaction Documents to which it is a party
have been or will be taken or obtained on or prior to the Closing
Date.
(viii) Event of Servicing Termination. No Event of Servicing
Termination has occurred and no condition exists, which, upon the
issuance of the Notes would constitute an Event of Servicing
Termination or a default or event of default under any Transaction
Document.
(b) The Servicer additionally covenants as follows as to the
Pledged Property:
(i) Contract Management System. (A) The Servicer will, at its
own cost and expense, (I) retain the Contract Management System, or an
alternative system of equal capability, used by the Servicer to
maintain a master record of the Contracts and any Contract Files held
by the Servicer (except the original executed contract for each
Contract which shall be held by the Collateral Agent, on behalf of the
Indenture Trustee) and (II) note on the Contract Management System and
▇▇▇▇ on the original of each Contract, or other physical records of
the Contracts to the effect that the Contracts and the related
Equipment listed thereon (x) have been sold to the Transferors
pursuant to the Receivables Sale Agreement, (y) pledged by the
Transferors to the Trust, pursuant to the Receivables Pledge
Agreement, and (z) such security interest therein has been assigned by
the Trust to the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, pursuant to the Indenture, and (B) the Servicer does
not rely upon any third party for data processing capability with
respect to the Contract Management System.
(ii) Compliance with Law. The Servicer will comply, in all
material respects, with all acts, rules, regulations, orders, decrees
and directions of any Governmental Authority applicable to the
Contracts, the Equipment (or any part thereof) or any other portion of
the Conveyed Assets; provided, however, that the Servicer may contest
any act, regulation, order, decree or direction in any reasonable
manner which shall not materially and adversely affect the rights of
the Transferors, the Issuer, the Indenture Trustee, the Noteholders,
the Collateral Agent or the Note Insurer in any Contract and the
related Equipment; provided, however, that such contests shall be in
good faith by appropriate proceedings and as to which adequate
reserves in accordance with GAAP have been established, but only so
long as such proceedings shall not individually or in the aggregate
subject the Note Insurer or the Indenture Trustee to any civil or
criminal liability.
(iii) Preservation of Security Interest. The Servicer shall
execute and file such continuation statements and any other documents
reasonably requested by the Indenture Trustee or the Note Insurer
(unless a Note Insurer Default has occurred and is continuing) or
which may be required by law to fully preserve and protect the
interest of the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, in and to the Pledged Property and the interests of
the Indenture Trustee, on behalf of the Issuer, in and to the Conveyed
Assets; provided, that, in the event of the implementation of a
revised Article 9 of the UCC, neither the Indenture Trustee nor the
Note Insurer shall require
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compliance with such revised Article 9 if compliance with the current
Article 9 is allowed thereunder and is still effective to maintain the
perfection and priority of the Indenture Trustee, on behalf of the
Noteholders and the Note Insurer, in and to the Pledged Property.
(iv) Obligations with Respect to Contracts. The Servicer will
use commercially reasonable best efforts to duly fulfill and comply,
in all material respects, with all obligations, if any, on the part of
the "lessor" to be fulfilled under or in connection with each Contract
and the Servicer will do nothing to impair the rights of the Indenture
Trustee in the Contracts and the Equipment. The Servicer will use such
efforts and will not change or modify the Contracts, except insofar as
any change or failure to so comply or conform would not materially and
adversely affect the rights of the Transferors, the Depositor, the
Issuer, the Indenture Trustee, the Collateral Agent, the Note Insurer
or the Noteholders; provided, however, that any successor Servicer
will be obligated to use commercially reasonable best efforts to
fulfill and comply with the obligations, if any, on the part of the
"lessor" under each Contract only to the extent that any out-of-pocket
costs associated with such compliance or fulfillment are reimbursed by
the Transferors or such other Person as may be acceptable to the
successor Servicer.
(v) Notification. The Servicer agrees to notify the Issuer,
the Owner Trustee, the Note Insurer, each Rating Agency, the
Collateral Agent, the Depositor and the Indenture Trustee as soon as
practicable, but in no event later than five (5) Business Days after
the earlier of the Servicer's discovery or its receipt of notice
thereof, of a breach of any representation or warranty contained
herein, or the failure of the Servicer to perform its duties
hereunder.
(vi) Lien in Force. The Servicer shall not release or assign
any Lien in favor of the Indenture Trustee on any Contract or item of
Equipment related to any such Contract in whole or in part, except as
provided herein. The Servicer shall use its best efforts to remove, or
to cause the related Obligor to remove, any Liens on the Conveyed
Assets, other than the Lien created by the Receivables Pledge
Agreement, and any Liens on the Pledged Property, other than the Lien
created by the Indenture.
(vii) Fulfill Obligations. The Servicer will in all material
respects duly fulfill all obligations on the Servicer's part to be
fulfilled under or in connection with the Conveyed Assets, the Trust
Property and the Receivables. The Servicer will not amend, rescind,
cancel or modify any Contract or term or provision thereof, except as
contemplated herein, and the Servicer will not do anything that would
impair the rights of the Noteholders or the Note Insurer in the
Conveyed Assets, the Trust Property or the Receivables.
(viii) Preservation of the Equipment. As more specifically
set forth in this Agreement, in performing its servicing duties
hereunder, the Servicer shall, in accordance with the Servicing
Standard, use its commercially reasonable best efforts to collect all
payments required to be made by the Obligors under the Contracts,
enforce all material rights of the Issuer under the Contracts and
defend the Equipment against all Persons, claims and demands
whatsoever. The Servicer shall not assign, sell, pledge, or exchange,
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or in any way encumber or otherwise dispose of the Equipment, except
as permitted under this Agreement, the Receivables Pledge Agreement
and the Indenture.
(ix) Requests for Information. The Servicer shall deliver to
the Issuer, the Depositor, the Collateral Agent, the Note Insurer,
each Noteholder, the Indenture Trustee, the Back-up Servicer and the
Rating Agencies:
(A) Notice of Event of Servicing Termination.
Immediately upon becoming aware of the existence of any
condition or event which constitutes an Event of Servicing
Termination or an Event of Default, or any event (other than
any payments which have not yet come due), which with the
lapse of time and/or the giving of notice would constitute an
Event of Servicing Termination or an Event of Default or a
written notice describing its nature and period of existence
and, in the case of an Event of Servicing Termination, which
action the Servicer is taking or proposes to take with
respect thereto; and
(B) Requested Information. With reasonable
promptness, any other data and information which may be
reasonably requested in writing from time to time.
(x) Delivery of Contracts. Upon an Event of Servicing
Termination, the Servicer shall promptly deliver possession of any
Contracts Files that may have been delivered to the Servicer pursuant
to Section 3.01(b) hereof to, or at the direction of, the successor
Servicer appointed by the Note Insurer or, if none has been so
appointed, to the Back-up Servicer.
(xi) No Forgiveness. The Servicer shall not forgive any
Scheduled Payment or Final Scheduled Payment with respect to any
Contract.
(xii) No Modification. Subject to the provisions of Section
4.01(f), unless an Obligor is in payment or monetary default, the
Servicer shall not permit any modification with respect to a Contract
which would defer or change the timing or amount of any Scheduled
Payment or Final Scheduled Payment or change the final maturity date
on any Contract; provided, however, that no change in the final
maturity date of any Contract shall be permitted under any
circumstances if such new maturity date is later than the latest
maturity date of any other Contract then pledged to the Indenture
Trustee, on behalf of the Trust.
(xiii) Prepayments. The Servicer may accept Prepayment in
part or in full; provided, that (1) in the event of Prepayment in
full, the Servicer may consent to such Prepayment only in an amount
not less than the Prepayment Amount and (2) in the event of a partial
Prepayment, the Servicer may consent to such partial Prepayment only
if (x) following such partial Prepayment there are no delinquent
Scheduled Payments then due from the Obligor, (y) such partial
Prepayment is paid along with an amount equal to the product of (i)
one-twelfth, (ii) the Discount Rate, and (iii) the Discounted Contract
Principal Balance of the Contract prior to such partial Prepayment and
(z) such partial
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Prepayment will not reduce the Discounted Contract Principal Balance
by more than the amount of such partial Prepayment.
(xiv) Partial Prepayment. In the event of a partial
Prepayment, the Servicer shall recalculate the Discounted Contract
Principal Balance of such Contract based on the revised schedule of
Scheduled Payments and any Final Scheduled Payment after first giving
effect to such partial Prepayment.
(xv) Delivery of Computer Tapes. On each Determination Date,
the Servicer shall deliver a computer tape to the Back-up Servicer to
enable the Back-up Servicer to confirm the information contained in
the Monthly Statement. Such computer tape shall be in the format
agreed to by such parties.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.01 shall survive delivery
of the respective Contract Files to the Collateral Agent, on behalf of the
Indenture Trustee, or to another Custodian, as the case may be, and shall inure
to the benefit of the Indenture Trustee, on behalf of the Noteholders and the
Note Insurer.
SECTION 2.02 Representations and Warranties of the Originator
with Respect to the Contracts. With respect to each Contract, the Originator
hereby makes the following representations, warranties and covenants to the
Indenture Trustee, the Issuer, the Collateral Agent, the Depositor, the Back-up
Servicer, the Note Insurer and the Noteholders on which the Indenture Trustee
relies in accepting the Pledged Property in trust and authenticating the Notes,
on which the Note Insurer relies in executing and delivering the Note Insurance
Policy and on which the Back-up Servicer relies in executing and delivering
this Agreement. Such representations, warranties and covenants are made or
deemed to be made, (x) with respect to the Initial Contracts and Initial
Equipment, as of the Initial Cut-Off Date, (y) with respect to the Subsequent
Contracts and Subsequent Equipment, as of the Subsequent Cut-Off Date, and (z)
with respect to the Substitute Contracts and Substitute Equipment, as of the
related Transfer Date, and shall survive the pledge of any Conveyed Assets by
the Transferors to the Trust, and the pledge of any Pledged Property to the
Indenture Trustee, for the benefit of the Noteholders and the Note Insurer:
(a) Each Contract is for the Equipment identified therein and
only the Equipment relating to the Vehicle Contracts is of a type
which requires issuance of a certificate of title to evidence
ownership thereof or a security interest therein.
(b) The information with respect to each Contract and the
Equipment subject to each Contract in the List of Contracts is true
and correct.
(c) No provision of any Contract has been waived, altered or
modified in any respect, except by instrument or documents contained
in its Contract File and identified by the Originator, no Contract has
been rewritten or extended other than with respect to non-credit
related matters (i.e., change in day of the month for payment or
change due to damage to Equipment) and any document evidencing any
such change has been included in the related Contract File, and no
modification or amendment of any Contract would individually or in the
aggregate materially and adversely affect the Issuer's or the
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Indenture Trustee's rights thereunder or has reduced the amount of any
Scheduled Payment (or the aggregate amount of Scheduled Payments) or
Final Scheduled Payment owing thereunder or extended the expiration
date thereof.
(d) Each Contract is a valid and binding payment obligation
of the related Obligor and is enforceable in accordance with its terms
(except as may be limited by applicable insolvency, bankruptcy,
moratorium, reorganization, or other similar laws affecting
enforceability of creditors' rights generally and the availability of
equitable remedies) and is in full force and effect.
(e) Each Contract contains a "hell or high water" clause
under which the Obligor's obligations are non-cancelable and
unconditional and not subject to any valid right of set-off, defense,
abatement, counterclaim, reduction or recoupment; no Contract is or
will be subject to valid rights of rescission, set-off, counterclaim
or defense; each Contract provides for acceleration of the Scheduled
Payments upon default by the Obligor; and, with respect to each
Contract which relates to Equipment which is surveillance Equipment,
the Originator is not obligated to engage in any activity in the event
that the Obligor surveillance provider fails to perform its third
party obligations.
(f) The Contracts do not violate any material laws of any
applicable state or of the United States, including, without
limitation, usury, truth-in-lending and equal credit opportunities
laws applicable to such Contract.
(g) Each Contract requires the Obligor to pay any
maintenance, taxes, insurance or other expenses and each Contract
contains provisions requiring the Obligor to maintain the Equipment,
at its sole expense, at all times during the term of the Contract, in
good operating order, repair, condition and appearance, and protect
the Equipment from deterioration (except for normal wear and tear)
and, maintain an Insurance Policy with respect to the Equipment in an
amount at least equal to the replacement value thereof, naming the
Originator as loss payee (if the Original Equipment Cost was greater
than $100,000, a copy of such Insurance Policy or a certificate
evidencing such Insurance Policy shall be included in the Contract
File delivered to or on behalf of the Indenture Trustee), and upon the
occurrence of a casualty, to pay any difference between the proceeds
of such insurance and the implicit principal balance of such Contract
(which implicit principal balance is equal to or greater than the
Discounted Contract Principal Balance of such Contract) and to pay all
sales, use, rental, property or similar taxes or fees, fines and
penalties with respect to the Equipment and to assume all risk of loss
or malfunction of the related Equipment.
(h) As of the Closing Date or the related Conveyance Date, as
the case may be, all action shall have been taken by the Originator to
convey all of its right, title and interest in and to (i) the
Contracts to Transferor I and (ii) the ownership or security interest
of the Originator in each item of Equipment and any Residual Receipts
to Transferor II.
(i) Any party executing a Contract on behalf of the
Originator had the legal capacity and authority to execute such
Contract and, to the best of the Originator's
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knowledge, all other parties to such Contract had the legal capacity
to execute such Contract.
(j) The right, title and interest of the Originator in and to
each Contract and the related Equipment (or any other property
conveyed pursuant to the Receivables Sale Agreement) has not been
sold, transferred, assigned or pledged by the Originator to any other
Person (or any such pledge has been released as evidenced by releases
of collateral). At the time of the conveyance of such Contracts and
the related Equipment to the Transferors, the Originator was the owner
of, and had good and marketable title to, such Contract and either the
owner of, or the holder of a first priority security interest (in
accordance with the Filing Requirements) in, the related Equipment.
The Originator had the power to convey such Contract and assign its
interest in the related Equipment free and clear of any Liens (other
than any Lien released and/or assigned simultaneously with the
execution of the Transaction Documents). With respect to each
Contract, the Equipment does not secure any other Contract or other
obligation of the Obligor to the Originator or its affiliates now or
in the future.
(k) No Contract provides for the substitution, addition or
exchange of any item of Equipment which would result in any reduction
of payments due under such Contract.
(l) All of the Contracts permit the Originator to accelerate
Scheduled Payments and any Final Scheduled Payment if an Obligor is in
default under the Contract and the amount payable as a result of any
such acceleration shall not be less than the Prepayment Amount for
such Contract.
(m) At the time of origination, all the Contracts materially
met the Originator's Credit Policies and Procedures.
(n) Each Contract conveyed includes only the remaining, in
the event the Contract does not include all original Scheduled
Payments under the Contract, non-cancelable Scheduled Payments and any
Final Scheduled Payment.
(o) As of the Cut-Off Date or the related Conveyance Date, as
the case may be, no Obligor will have been released, in whole or in
part, from any of its obligations in respect of any such Contract; no
such Contract will have been satisfied, canceled, extended or
subordinated, in whole or in part, or rescinded, and no Equipment
covered by any such Contract will have been released from such
Contract, in whole or in part, nor will any instrument have been
executed that would effect any such satisfaction, release,
cancellation, subordination or rescission.
(p) Each Contract is either "chattel paper" or an
"instrument" for purposes of Section 9-105(1)(b), 9-105(1)(i) or 9-308
of the UCC and there is not more than one counterpart of each
Contract; any such counterpart that contitutes "chattel paper" has
been or will be legended to reflect the security interest of the
Indenture Trustee and all such counterparts have been or shall be
delivered to, or on behalf of, the Collateral Agent,
9
on behalf of the Indenture Trustee, on the Closing Date or the related
Conveyance Date, as the case may be.
(q) The Originator has duly fulfilled all material
obligations on its part to be fulfilled under or in connection with
each Contract and the related Equipment, including, without
limitation, giving any notices or consents necessary to effect the
contribution, assignment, transfer, and conveyance from the Originator
of the Contracts and the related Equipment to the related Transferor,
and has done nothing to materially impair the rights of the
Transferors, the Indenture Trustee, the Collateral Agent, the Issuer,
the Noteholders or the Note Insurer in such Contract, the related
Equipment or the proceeds with respect thereto.
(r) No Contract has been amended after the Cut-Off Date, the
Subsequent Cut-Off Date or the Substitute Contract Cut-Off Date, as
the case may be, such that the amount of any Scheduled Payment (or the
aggregate Scheduled Payments) or Final Scheduled Payment has been
reduced or the maturity date thereof has been extended, except as
otherwise permitted hereunder.
(s) No proceedings or, to the best of the Originator's
knowledge, investigations, are pending, or have been threatened
asserting the invalidity of any Contract, or seeking any determination
or ruling that might adversely and materially affect the validity or
enforceability of any Contract.
(t) All filings (including UCC filings) necessary to (i)
evidence the pledge of the Pledged Notes to the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, and to perfect
the first priority perfected security interest of the Indenture
Trustee, for the benefit of the Noteholders and the Note Insurer, in
the Contracts and related Equipment, (ii) evidence the pledge of the
Conveyed Assets to the Trust, and to perfect the first priority
perfected security interest of the Trust, in the Contracts and related
Equipment, and (iii) evidence the sale, contribution and transfer of
the Contracts and the Equipment to the related Transferor and to
perfect the first priority perfected security interest of the
Transferors in the Contracts and related Equipment (each, in
accordance with the Filing Requirements), have been made in all
appropriate jurisdictions and are in full force and effect.
(u) No Obligor is, to the best of the Originator's knowledge,
subject to bankruptcy or other insolvency proceedings.
(v) Each Obligor is a Person domiciled in the United States,
each item of Equipment is located in the United States, and each
Obligor's billing address is in the United States.
(w) All payments under each Contract are required to be made
in United States dollars.
(x) No Contract requires the prior written consent of an
Obligor or contains another restriction relating to the transfer or
assignment of such Contract (except such as have been obtained).
10
(y) No Contract permits the prepayment thereof at the option
of the Obligor for an amount that is less than the Prepayment Amount
related to such Contract from time to time.
(z) No Contract is the subject of litigation or has been
referred to counsel, and the Originator has no knowledge of any
challenge or dispute by any Obligor under any Contract.
(aa) With respect to each Contract for which the Originator
collects maintenance payments, the Originator remits such maintenance
payments to the related maintenance providers.
(bb) No Contract is a "consumer lease" as defined in Article
2A of the UCC or a "consumer credit lease" subject to the FTC Rule (16
C.F.R., Part 433).
(cc) Each Contract is a "finance lease" under U.S. GAAP;
(dd) Each Contract will commence no later than (x) for
Initial Contracts, the Closing Date, (y) for Subsequent Contracts, the
Subsequent Funding Date, and (z) for Substitute Contracts, the
Transfer Date, and no Contract had a final payment date later than
twelve months prior to the Class A-4 Maturity Date.
(ee) No more than 1% of the Initial Aggregate Collateral
Balance is attributable to Obligors that are governments or
municipalities; and no Obligor is an affiliate of the Originator.
(ff) Each Contract is either a contract "intended as
security" within the meaning of UCC Section 1-201(37) or a "Lease"
within the meaning of UCC Section 2A-103(1)(j).
(gg) As of the Cut-Off Date, the Subsequent Cut-Off Date and
the Substitute Contract Cut-Off Date, as the case may be, each
Contract provides for monthly Scheduled Payments; provided, that less
than 1% of the Initial Aggregate Collateral Balance is attributable to
Contracts which provide for non-monthly Scheduled Payments; no
Contract has a Final Scheduled Payment which is greater than five
times its Scheduled Payment; and the weighted average life of the
remaining Scheduled Payments comprising the Aggregate Discounted
Contract Principal Balance does not exceed 24 months.
(hh) In the event of a Casualty Loss, the Originator may
require the Obligor, at the Obligor's expense, to (i) replace the
Equipment with like equipment in equivalent condition, acceptable to
the Originator, or (ii) pay the Discounted Contract Principal Balance
and the Booked Residual Value of the related Equipment.
(ii) No Contract permits the Obligor to utilize any security
deposit to offset any Scheduled Payment or Final Scheduled Payment.
(jj) To the best knowledge of the Originator, any guarantees
required at the time of origination of a Contract remain in full force
and effect.
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(kk) No Contract was selected on any adverse basis which
would have any material effect on the Noteholders or the Note Insurer.
(ll) Each Source has entered into a valid sale and assignment
of each Contract originated by such Source to the Originator utilizing
a form of Source Agreement that complies in all material respects to
form attached hereto as Exhibit C; the related Source Agreement does
not provide for (A) recourse to the Source with respect to payment or
monetary defaults by the Obligor or (B) the sharing of residual
payments with respect to the Source.
(mm) No one broker Source (including its Affiliates) has
originated more than 5% of the Initial Aggregate Collateral Balance
and no one vendor Source (including its Affiliates) has originated
more than 8% of the Initial Aggregate Collateral Balance, except, in
either case, if the Note Insurer shall have given its prior written
consent.
(nn) Each Contract agreement conforms, in all material
respects, to the form of Contract contained in Exhibit A hereto.
(oo) As of the related Cut-Off Date, no one Obligor
(including its Affiliates) is the Obligor under Contracts for which
the sum of the Discounted Contract Principal Balances exceeds 1% of
the Initial Aggregate Collateral Balance; no more than 17% of the
Initial Aggregate Collateral Balance is attributable to Contracts
relating to Obligors (including their respective Affiliates) in any
one state, except for the state of California, in which Obligors
(including their respective Affiliates) under Contracts representing
no more than 25% of the Initial Aggregate Collateral Balance are
located; no more than 6% of the Initial Aggregate Collateral Balance
is attributable to Contracts relating to Obligors (including their
respective Affiliates) in the states of Maryland, Tennessee,
Louisiana, Georgia and Oklahoma.
(pp) The transfer, assignment and contribution to the
Transferors of the Contracts and the Originator's right, title and
interest in and to any item of Equipment will not violate the terms or
provisions of any such Contract or any other material agreement to
which the Originator then is a party or by which it is bound.
(qq) After giving effect to each pledge contemplated by the
Receivables Pledge Agreement, the Trust will be the holder of a valid
perfected first priority security interest in the Contracts and the
related Equipment.
(rr) At the time that any item of Equipment (or any security
interest therein) is pledged pursuant to the terms of the Receivables
Pledge Agreement or the Indenture, the Originator will have no
knowledge that such Equipment has suffered any loss or damage except
for such Equipment that has been restored to its original value,
ordinary wear and tear excepted.
(ss) (A) To the best of the Originator's knowledge after due
inquiry, no event has occurred and is continuing which with notice,
the lapse of time or both would constitute a default under any
Contract, and (B) the Originator has not waived any of the foregoing.
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(tt) No Contract by its terms permits early termination for
an amount less than the Prepayment Amount.
(uu) As of the Initial Cut-Off Date, the aggregate of the
Booked Residual Values relating to the Contracts is $2,743,055.06.
(vv) All of the Equipment relating to the Contracts which are
"true" or "operating" leases, if any, is owned by Transferor II, and,
subject to the Filing Requirements, Transferor II has a security
interest in all of the Equipment relating to the Contracts which are
"finance" leases.
(ww) No Contract has been originated in or is subject to the
laws of any jurisdiction whose laws would make the assignment and
transfer thereof pursuant to the terms hereof or any transaction
contemplated by the Transaction Documents unlawful.
(xx) Each Contract provides that the Originator has no
obligation to assemble, install, test, adjust or service the Equipment
subject to a Contract.
(yy) To the best of the Originator's knowledge, no item of
Equipment has been relocated from the jurisdiction set forth in the
Contract or, if the Originator has knowledge of any such relocation,
all UCC filings necessary to continue the first priority security
interest in such Equipment have been made in a manner consistent with
the Filing Requirements.
(zz) Each Obligor has accepted the related Equipment, and
each Contract file contains an executed delivery and acceptance
certificate.
(aaa) The Contracts were originated or acquired by the
Originator in the ordinary course of its business. The Credit Policies
and Procedures used by the Originator with respect to the origination
of each Contract have been legal in all respects except where the
failure to do so would not result in a material adverse effect on the
Contracts.
(bbb) The Initial Aggregate Discounted Contract Principal
Balance of all Contracts is equal to $69,676,194.41.
(ccc) As of the Cut-Off Date, the Subsequent Cut-Off Date or
the Substitute Contract Cut-Off Date, as the case may be, no item of
Equipment, Subsequent Equipment, or Substitute Equipment, as
applicable, has been repossessed.
(ddd) The Originator has the right under each Contract to
exercise appropriate remedies with respect to the related Equipment
without obtaining the consent of any third parties.
(eee) The Originator will cause its records to be marked to
reflect (i) the transfer, assignment and contribution of (A) the
Contracts to Transferor I and (B) the ownership or security interest
of the Originator in each item of Equipment and any Residual Receipts
(up to the Booked Residual Value) to Transferor II, (ii) the pledge of
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the Conveyed Assets to the Trust, and (iii) the assignment of such
pledge of the Conveyed Assets to the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer.
(fff) The Originator purchased each item of Equipment from
either (i) the manufacturer or other supplier following receipt of an
invoice from such manufacturer or supplier or (ii) an Obligor
following confirmation that such item of Equipment was on such
Obligor's premises.
(ggg) The sale, transfer, assignment and conveyance
contemplated by the Receivables Sale Agreement is not subject to and
will not result in any tax, fee or governmental charge payable to any
federal, state or local government ("Transfer Taxes") other than
Transfer Taxes which have been or will be paid by the Originator as
due. In the event that the Indenture Trustee receives actual notice of
any Transfer Taxes arising out of such transfer, assignment and
conveyance, on written demand by the Indenture Trustee, the
Noteholders or upon the Originator otherwise being given notice
thereof, the Originator shall pay, and otherwise indemnify and hold
the Indenture Trustee and the Note Insurer harmless, on an after-tax
basis, from and against any and all such Transfer Taxes (it being
understood that the Noteholders, the Indenture Trustee and the Note
Insurer shall have no obligation to pay such Transfer Taxes).
(hhh) Each Contract has a remaining term of at least 3 months
but not greater than 60 months, except for 7% of the Contracts, by
Initial Aggregate Collateral Balance, which have a remaining term of
greater than 60 months but less than 84 months, and at least one
Scheduled Payment has been received on each Contract prior to the
related Cut-Off Date. With respect to Subsequent Contracts and
Substitute Contracts, the remaining term is no greater than one year
prior to the Class A Maturity Date.
(iii) The Originator has filed UCC-1 financing statements in
accordance with the Filing Requirements.
(jjj) As of the Closing Date, the related Subsequent Funding
Date and the related Transfer Date, as the case may be, the Originator
had no actual knowledge that any Contract would not be paid in full.
(kkk) Each Contract was either originated by the Originator
or acquired by the Originator from a Source; not more than 5.5% of the
Initial Aggregate Collateral Balance of the Contracts will result from
Software Contracts.
(lll) Each Contract constitutes an Eligible Contract.
(mmm) If obtained during the original Contract approval, the
Contract File contains a guarantee of the Obligor's obligations under
the Contract.
(nnn) With respect to each Contract, the Contract File for
such Contract has been delivered to, or on behalf of, the Collateral
Agent, on behalf of the Indenture Trustee, on or prior to (i) the
Closing Date, with respect to the Initial Contracts, (ii) the
14
Subsequent Funding Date, with respect to Subsequent Contracts, and
(iii) the Transfer Date, with respect to the Substitute Contracts.
(ooo) Each Source has received the purchase price for the
related Contract.
(ppp) Each Contract that is a master lease or loan agreement
shall contain only one schedule per agreement, or if more than one
schedule exists, each schedule and the related master agreement
constitute a separate contract. (qqq) As of the Cut-Off Date, the
Subsequent Cut-Off Date or the Substitute Contract Cut-Off Date, as
the case may be, no Contract has a Final Scheduled Payment which is
more than five times the amount of the regular Scheduled Payments on
such Contract.
(rrr) To the best knowledge of the Originator, no Obligor is
a Person involved in the business of selling equipment of the same
type as the Equipment subject to the related Contract.
(sss) To the best knowledge of the Originator, no Contract is
a refinancing due to delinquencies under a prior lease, security
agreement or loan with the same Obligor relating to the Equipment.
(ttt) None of the Contracts relating to surveillance
Equipment are Contracts for which the Originator is responsible for
the provision of maintenance services to or on behalf of the related
Obligor.
(uuu) To the best knowledge of the Originator, no error,
omission, misrepresentation, negligence, fraud or similar occurrence
with respect to a Contract has taken place on the party of any person,
including, without limitation, the Source or the Originator, or any
other party involved in the origination of the Contract or in the
application of any insurance in relation to such Contract.
(vvv) As of the related Cut-Off Date, no more than 7% of the
Contracts by Initial Aggregate Collateral Balance relate to Equipment
which are signs, restaurant equipment or used equipment.
(www) As of the related Cut-Off Date, no Contract has
Scheduled Payments which are more than 60 days delinquent.
(xxx) As of the related Cut-Off Date, no more than 0.50% of
the Contracts by Initial Aggregate Collateral Balance are Vehicle
Contracts.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.02 shall survive the
execution and delivery of the Agreement, the delivery of the respective
Contract Files to the Collateral Agent, on behalf of the Indenture Trustee, or
to another custodian, as the case may be, and shall inure to the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
15
SECTION 2.03 Representations and Warranties of the Back-up
Servicer. The Back-up Servicer hereby makes the following representations and
warranties for the benefit of the Issuer, the Indenture Trustee, the Servicer,
the Collateral Agent, the Depositor, the Owner Trustee, the Note Insurer and
the Noteholders. Such representations and warranties are made as of the Closing
Date, and shall be deemed to be reaffirmed on each Subsequent Funding Date and
on each Transfer Date.
The Back-up Servicer represents and warrants as to itself:
(a) Organization and Good Standing. The Back-up Servicer is a
New York banking corporation duly organized, validly existing and in
good standing under the laws of the state of New York and has the
power, authority and legal right to perform its obligations hereunder.
(b) Due Qualification. The Back-up Servicer has obtained all
necessary licenses and approvals, where the failure to be so qualified
and in good standing or obtain such licenses or approvals would have a
material adverse effect on the Back-up Servicer's business and
operations or in which the performance of its obligations hereunder
requires or will require such qualification, licenses or approvals.
(c) Authorization. The Back-up Servicer has the power,
authority and legal right to execute, deliver and perform this
Agreement, and the execution, delivery and performance of this
Agreement has been duly authorized by the Back-up Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes a legal, valid and binding obligation of the Back-up
Servicer, enforceable against the Back-up Servicer in accordance with
its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws (whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought, whether in a proceeding at law or in equity.
(e) No Violation. The consummation by the Back-up Servicer of
the transactions contemplated by this Agreement and the fulfillment of
the terms hereof will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice,
lapse of time or both) a default under, the charter documents or
by-laws of the Back-up Servicer.
(f) No Proceedings. There are no proceedings or
investigations to which the Back-up Servicer, or any of the Back-up
Servicer's Affiliates, is a party pending or, to the best of such
Responsible Officer's knowledge, threatened before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality (A) asserting the invalidity of this
Agreement or the Notes, (B) seeking to prevent the
16
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Back-up Servicer of its obligations under, or the validity or
enforceability of, this Agreement.
(g) Approvals. All approvals, authorizations, consents,
orders or other actions of any Person or court required on the part of
the Back-up Servicer in connection with the execution and delivery of
this Agreement in the State of New York have been or will be taken or
obtained on or prior to the Closing Date.
(h) Event of Back-up Servicing Termination. No Event of
Back-up Servicing Termination has occurred and no condition exists,
which, upon the issuance of the Notes or the giving of notice or
passage of time or both, would constitute an Event of Back-up
Servicing Termination.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.03 shall survive the
execution and delivery of this Agreement, the delivery of the respective
Contract Files to the Collateral Agent, on behalf of the Indenture Trustee or
to another custodian, as the case may be, and shall inure to the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
SECTION 2.04 Representations, Warranties and Covenants of the
Collateral Agent. The Collateral Agent hereby makes the following
representations and warranties for the benefit of the Indenture Trustee, the
Issuer, the Servicer, the Back-up Servicer, the Depositor, the Owner Trustee,
the Note Insurer and the Noteholders. Such representations and warranties are
made as of the Closing Date, and shall be deemed to be reaffirmed on each
Subsequent Funding Date and on each Transfer Date.
The Collateral Agent represents and warrants as to itself:
(a) Organization and Good Standing. The Collateral Agent is a
national banking association duly organized, validly existing and in
good standing under the laws of the United States of America and has
the power, authority and legal right to perform its obligations
hereunder.
(b) Authorization. The Collateral Agent has the power,
authority and legal right to execute, deliver and perform this
Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by the Collateral Agent by all
necessary corporate action.
(c) Binding Obligation. This Agreement has been duly and
validly authorized, executed and delivered by the Collateral Agent,
all requisite corporate action having been taken, and, assuming the
due authorization, execution and delivery hereof by the other parties
hereto, constitutes or will constitute the legal, valid and binding
agreement of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights of
17
creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04 shall survive the
execution and delivery of this Agreement, the delivery of the respective
Contract Files to the Collateral Agent, on behalf of the Indenture Trustee or
to another custodian, as the case may be, and shall inure to the benefit of the
Indenture Trustee, on behalf of the Noteholders and the Note Insurer.
ARTICLE III
PERFECTION OF TRANSFER
SECTION 3.01 Filing; Custody of Files; Contract Files. (a) On
the Closing Date with respect to the Initial Contracts, on the related
Subsequent Funding Date with respect to the Subsequent Contracts, and on the
related Transfer Date with respect to Substitute Contracts, the Servicer shall
submit the Financing Statements for filing in the respective filing offices
named therein. From time to time thereafter, the Servicer shall take or cause
to be taken such actions and execute such documents as are necessary to perfect
and protect the Issuer's, the Indenture Trustee's, the Collateral Agent's, the
Noteholders' and the Note Insurer's interests, as such interests may appear, in
the Receivables 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.
(b) (i) Pursuant to (A) the Receivables Pledge Agreement, the
Trust acknowledges the pledge of the Transferor Collateral by the
Transferors to the Trust, as security for the Pledged Notes, and (B)
the Indenture, the Indenture Trustee, on behalf of the Noteholders and
the Note Insurer, acknowledges the pledge of the Pledged Property by
the Trust and declares that the Indenture Trustee, will hold such
Pledged Property, and the Collateral Agent will hold the Conveyed
Assets, including the Contract Files, on behalf of the Indenture
Trustee, in trust, for the use and benefit of the Issuer and all the
Noteholders and the Note Insurer, as their interests may appear,
subject to the terms and provisions thereof.
(ii) From time to time and as appropriate for the foreclosure
or servicing of any of the Contracts, the Collateral Agent is hereby
authorized, upon receipt of a written request and receipt provided by
the Servicer acknowledged by the Indenture Trustee and the Note
Insurer, in substantially the form annexed as Exhibit F hereto (a
"Request for Release"), to release to the Servicer within five (5)
Business Days --------- of receipt of such Request for Release, the
related Contract File or the documents from a Contract File set forth
in such Request for Release. All documents so released to the Servicer
shall be held by the Servicer in trust for the benefit of Indenture
Trustee. The Servicer shall return to the Collateral Agent each and
every document previously requested from the Contract File when the
Servicer's need therefor in connection with such foreclosure or
servicing no longer exists, unless the Contract has been liquidated,
is a Reacquired Contract or is a Substituted Contract, in which case,
upon receipt of a certification to this effect from the
18
Servicer, as set forth in the Request for Release, the Servicer's
Request for Release shall be returned by the Collateral Agent to the
Servicer.
(iii) Notwithstanding the foregoing or any other provision of
the other Transaction Documents, the following limitations shall apply
with respect to the ability of the Servicer to obtain custody of any
Contract File:
(A) except with the prior written consent of the Note
Insurer in each instance, the Servicer shall not be
entitled to obtain possession of the original
counterpart of any Contract;
(B) except with the prior written consent of the Note
Insurer in each instance, the Servicer shall not be
entitled to be in possession at any point in time of
Contract Files for Contracts (other than Contract
Files relating to Defaulted Contracts, Substituted
Contracts or Reacquired Contracts) representing more
than five percent (5%) of the then Aggregate
Discounted Contract Principal Balance; and;
(C) in no event shall the Servicer permit any Person
(other than the Collateral Agent and the Servicer and
its employees and agents) to maintain possession of
any Contract File;
(iv) Within five Business Days after the end of each month,
the Collateral Agent shall provide to the Indenture Trustee and the
Note Insurer (x) a list of all the Contracts for which the Collateral
Agent holds a Contract File pursuant to this Agreement which has been
released to the Servicer and remain in the possession of the Servicer
as of the last day of such month and (y) a calculation of the
Discounted Contract Principal Balance of the Contracts for which the
related Contact File is then in possession of the Servicer.
(v) To the extent the Servicer, as agent of the Indenture
Trustee and the Transferors, holds any Contract File or other Conveyed
Asset or Pledged Property, it shall do so in accordance with the
Servicing Standard as such standard applies to servicers acting as
custodial agents. The Servicer shall promptly report to the Collateral
Agent and the Indenture Trustee any failure by it to hold the complete
Contract Files previously provided by the Collateral Agent, on behalf
of the Indenture Trustee, as herein provided and shall promptly take
appropriate action to remedy any such failure but only to the extent
(A) any such failure is caused by the acts or omissions of the
Servicer and (B) such remedial action is otherwise within its
capabilities or control. As custodian, the Servicer shall have and
perform the following powers and duties:
(A) hold the Contract Files (exclusive of the original
counterpart of the Contract) that it may from time to
time receive hereunder from the Collateral Agent, on
behalf of the Indenture Trustee, maintain accurate
records pertaining to each Contract to enable it to
comply with the terms and conditions of the Indenture
and this Agreement, and maintain a current inventory
thereof;
19
(B) with respect to the handling and custody of such
Contract Files, implement policies and procedures in
accordance with the Servicing Standard so that the
integrity and physical possession of such Contract
Files will be maintained; and
(C) attend to all details in connection with maintaining
custody of such Contract Files on behalf of the
Indenture Trustee.
(vi) In so acting as custodian of such Contract Files
pursuant to Section 3.01(b)(ii), the Servicer agrees further that it
does not and will not have or assert any beneficial ownership interest
in the Contracts or the Contract Files. Promptly upon the Transferor's
acquisition thereof, the Servicer on behalf of the Indenture Trustee
shall ▇▇▇▇ conspicuously each Contract with a legend and note in its
Contract Management System that the related Transferor has acquired
the Contracts and all right and title thereto and interest therein as
provided herein and the pledge thereof to the Indenture Trustee, on
behalf of the Issuer.
(vii) The Servicer agrees to maintain any Contract Files that
it may from time to time receive from the Indenture Trustee at its
office located in Bala Cynwyd, Pennsylvania or at such other offices
of the Servicer as shall from time to time be identified by prior
written notice to the Indenture Trustee, the Collateral Agent and the
Note Insurer. Subject to the foregoing, 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 the Servicing Standard.
SECTION 3.02 Name Change or Relocation. If any change in the
Issuer's name, identity, structure or the location of its principal place of
business or chief executive office occurs, then the Servicer, on behalf of the
Issuer, shall deliver thirty (30) days' prior written notice of such change or
relocation to the Depositor, the Collateral Agent, the Note Insurer and the
Indenture Trustee. No later than five (5) days after the effective date of such
change or relocation, the Servicer, on behalf of the Issuer, shall file such
amendments or statements as may be required to preserve and protect the
Issuer's, the Depositor's and the Collateral Agent's, the Noteholders', the
Indenture Trustee's and the Note Insurer's respective interests in the Pledged
Property, the Conveyed Assets and the Receivables and deliver copies thereof to
the Indenture Trustee.
SECTION 3.03 Chief Executive Offices. During the term of this
Agreement, the Indenture and the Trust Agreement, the Owner Trustee, on behalf
of the Issuer, will maintain the Issuer's chief executive office and principal
places of business in one of the states of the United States.
SECTION 3.04 Costs and Expenses. The Servicer agrees to pay
all costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Issuer's, the
Indenture Trustee's, the Depositor's, the Collateral Agent's, the Noteholders'
and the Note Insurer's respective rights and interests in and to the Pledged
Property, the Conveyed Assets and the Receivables (other than with respect to
the Equipment, any cost in excess of that necessary to comply with the Filing
Requirements). The
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Servicer agrees to pay all taxes (other than net income taxes or taxes imposed
in lieu thereof), if any, owed in connection with ownership of the Equipment.
SECTION 3.05 Possession of Contract Files; Access to Contract
Files. (a) In accordance with the Transaction Documents, the Transferors shall
on or before the Closing Date, with respect to the Initial Contracts, and shall
on or before the Subsequent Transfer Date or Transfer Date with respect to
Subsequent Contracts or Substitute Contracts, as applicable, deliver, or cause
the Originator to deliver, to the Collateral Agent, on behalf of the Indenture
Trustee (as pledgee of the Trust pursuant to the Indenture) the Contract File
related to each Initial Contract, Subsequent Contract, or Substitute Contract,
as the case may be.
(b) The Collateral Agent will be the custodian, on behalf of
the Indenture Trustee, to hold the Contract Files in trust for the benefit of
all present and future Noteholders and the Note Insurer. In the event the
Collateral Agent resigns or is removed, the Indenture Trustee shall either (x)
hold the Contract Files, or (y) appoint a successor Collateral Agent to hold
the Contract Files as set forth in Section 7.08 hereof.
(c) The Collateral Agent shall afford the Depositor, the
Trust, the Note Insurer, the Back-up Servicer and the Servicer reasonable
access to all records and documentation regarding the Contracts relating to
this Agreement, such access being afforded at customary charges, upon
reasonable prior written request and during normal business hours at the
offices of the Collateral Agent. Notwithstanding the foregoing, the ability of
the Servicer (or the Back-up Servicer) to obtain actual possession of a
Contract File (or any of its contents) shall be determined under Section
3.01(a) hereof.
SECTION 3.06 Acceptance of the Trust Property; Certification
by the Collateral Agent. (a) The Indenture Trustee agrees to execute and
deliver to the Depositor, the Note Insurer, the Collateral Agent and the
Servicer on or prior to the Closing Date an acknowledgement of receipt of the
Note Insurance Policy and the Pledged Notes in the form attached as Exhibit E
hereto.
(b) The Servicer will cause Norwest Bank Minnesota, National
Association, as bailee, on behalf of the Collateral Agent, to execute and
deliver to the Depositor, the Note Insurer, the Indenture Trustee and the
Servicer, on or prior to the Closing Date, an acknowledgement and receipt of
the Contract File for each of the Initial Contracts, in the substantially the
form attached as Exhibit D hereto. The Collateral Agent, on behalf of the
Indenture Trustee, agrees to execute and deliver to the Depositor, the Note
Insurer, the Indenture Trustee and the Servicer, within thirty days of the
Closing Date or on or prior to any Subsequent Transfer Date or Transfer Date,
as applicable, with respect to each Contract transferred on such date, an
acknowledgement of receipt of the Contract File for such Contract in the form
attached as Exhibit D hereto.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF THE CONTRACTS
SECTION 4.01 Acceptance of Appointment; Duties of Servicer.
(a) The Servicer shall service, administer and enforce the Contracts as
Servicer and shall have full power and authority to do any and all things in
connection with such servicing and administration which it may deem necessary
or desirable in accordance with this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in accordance with
the terms of this Agreement, the Contracts, the Credit Policies and Procedures
and applicable law and, to the extent consistent with such terms, in the same
manner in which, and with the same care, skill, prudence and diligence with
which, it services and administers leases of similar credit quality for itself
or others, if any, giving due consideration to customary and usual standards of
practice of prudent institutional small ticket equipment finance lease
servicers (the "Servicing Standard"). The Servicer's duties shall include
collection and posting of all payments, responding to inquiries of Obligors on
the Contracts, investigating delinquencies, accounting for collections and
furnishing statements as provided in Sections 4.07, 4.08 and 4.09, making
Servicer Advances and using commercially reasonable best efforts to maintain
the first priority perfected security interest of the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer, in the Pledged Notes, the
Contracts and the Equipment, including, but not limited to, the filing of any
financing or continuation statements required to be filed pursuant to the UCC,
which continuation statements shall be filed on or before the 60th day prior to
the expiration date of such financing statement; and promptly delivering
evidence of all such filings to the Indenture Trustee, the Collateral Agent and
the Note Insurer which evidence shall be satisfactory in form and substance to
the Indenture Trustee, the Collateral Agent and the Note Insurer, with evidence
of the filing of continuation statements being delivered on or before the 30th
day before the expiration of such financing statements. The Servicer shall
follow its customary standards, policies, and procedures as set forth in its
Credit Policies and Procedures and shall have full power and authority, acting
alone, to do any and all things in connection with such managing, servicing,
administration, and collection that it may deem necessary or desirable;
provided, however, that the Servicer shall not allow any optional termination
of any Contract prior to its scheduled expiration unless the Obligor shall have
paid an amount not less than the Prepayment Amount. The Servicer may waive,
modify or vary any term of a Contract if the Servicer, in its reasonable and
prudent judgment, determines that it will not be materially adverse to the
Noteholders or the Note Insurer. If the Servicer commences a legal proceeding
to enforce a Defaulted Contract pursuant to Section 4.04 hereof or participates
in a legal proceeding (including, without limitation, a bankruptcy proceeding
relating to or involving a Contract or Defaulted Contract), the Indenture
Trustee shall thereupon 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 Indenture Trustee, pursuant to this Section 4.01, to execute and
deliver, on behalf of itself or the Indenture Trustee, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceedings. The Indenture
Trustee shall furnish the Servicer, and the Servicer shall 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. If in any
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enforcement suit or legal proceeding it shall be held that the Servicer may not
enforce a Contract on the ground that it shall not be a real party-in-interest
or a holder entitled to enforce the Contract, the Servicer, on behalf of the
Issuer, shall, at the Servicer's expense and direction, take steps to enforce
the Contract, including bringing suit in its name or the name of the Indenture
Trustee (prior written notice of which shall be given to the Indenture
Trustee).
(b) Consent to Assignment or Replacement. At the request of
an Obligor, the Servicer may in its sole discretion, consent to the assignment
or sublease of a unit of the Equipment under a Contract; provided, that (i) the
Obligor will remain liable for all of its obligations under such Contract, (ii)
that such assignee or sub-lessee satisfies the credit criteria set forth in the
Credit Policies and Procedures and (iii) in the case of an assignment,
financing statements are filed naming the assignees, as debtors, and the
related Transferor, as secured party. Upon the request of any Obligor, the
Servicer may, in its sole discretion, provide for additions and upgrades to a
Contract, and the substitution or replacement of any unit of Equipment for a
substantially similar unit of additional equipment having substantially the
same fair market value as the unit of Equipment that will be replaced or
substituted.
(c) Maintenance of Credit Files. The Servicer (i) shall
maintain the Credit Files in a manner consistent with the Servicing Standard
and the performance of its obligations as Servicer pursuant to this Agreement
and 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 (ii) will not permit any lien upon, any
Contract File (other than Contract Files which relate solely to an Early
Termination Contract, an Expired Contract or a Reacquired Contract and, to the
extent applicable, the related Equipment) except for those liens contemplated
by the Transaction Documents.
(d) Subservicers. The Servicer may enter into servicing
agreements with one or more subservicers acceptable to the Note Insurer (unless
a Note Insurer Default has occurred and is continuing) in its reasonable
discretion to perform all or a portion of the servicing functions on behalf of
the Servicer; provided, that the Servicer will remain obligated and be liable
to the Indenture Trustee and the Issuer for servicing and administering the
Contracts in accordance with the provisions of this Agreement without
diminution of such obligation and liability by virtue of the appointment of
such subservicer, to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Contracts. The fees
and expenses of the subservicer (if any) will be as agreed between the Servicer
and its subservicer and none of the Indenture Trustee, the Issuer, the
Depositor, the Noteholders, the Collateral Agent or the Note Insurer 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.
(e) Further Assurances. 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.
(f) Modification of Contracts. In performing its obligations
hereunder, the Servicer may, acting in the name of the Issuer and without the
necessity of obtaining the prior
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consent of the Issuer, the Note Insurer, the Collateral Agent or the Indenture
Trustee, enter into and grant modifications, waivers and amendments to the
terms of any Contract, except for modifications, waivers or amendments that (i)
are inconsistent with the Servicing Standard, (ii) would extend the date of the
last Scheduled Payment or any Final Scheduled Payment on any Contract beyond
the Class A Maturity Date, (iii) would reduce or adversely affect, individually
or in the aggregate, the Obligor's obligation to maintain, service, insure and
care for the Equipment or would permit the permanent alteration of any item of
Equipment in any way which could adversely affect its present or future value,
(iv) are affected on any Contract that is either 90 days or more delinquent or
a Defaulted Contract or (v) otherwise could adversely affect, individually or
in the aggregate, the interest of any of the Indenture Trustee, the Depositor,
the Collateral Agent, the Note Insurer or the Noteholders. Notwithstanding the
provisions of clause (ii) of the preceding sentence, the Servicer may (1)
permit any of the actions set forth in clause (ii) of the preceding sentence,
which in the Servicer's sole discretion, in accordance with the Servicing
Standard, would maximize Defaulted Contract Recoveries, or (2) permit
termination of a Contract which does not otherwise provide for termination by
requiring, in the case of either clause (1) or (2), that the Obligor pay, or,
if the terms of such extension or termination do not provide for such payment
by the Obligor that the Servicer deposit, in lieu of all future Scheduled
Payments and any Final Scheduled Payment with respect to such Contract, an
amount which equals or exceeds the related Prepayment Amount for such Contract
as of 3:00 p.m. New York time on the Determination Date prior to the Payment
Date next succeeding the making of such payment into the Collection Account;
provided, however, that the Servicer will not be permitted to allow prepayment
by an Obligor if there are any amounts due under the related Contract after
such prepayment.
In the event of any modification, waiver or amendment of any
Contract in accordance with this Section 4.01, the Servicer will promptly
furnish the Issuer, the Depositor, the Collateral Agent, the Indenture Trustee
and the Note Insurer with a copy thereof, together with a certificate of the
Servicer signed by Servicing Officer stating that such modification, waiver or
amendment is not prohibited by the provisions of this Section 4.01.
SECTION 4.02 Collection of Payments. (a) The Servicer shall
use its commercially reasonable best efforts to collect all payments called for
under the terms and provisions of the Contracts as and when the same shall
become due, and shall use collection procedures consistent with the Servicing
Standard as it follows with respect to all comparable equipment leases that it
services for itself or others in a manner consistent with the Servicing
Standard. The Servicer may waive any prepayment charge, late payment charge, or
any other fees that may be collected in the ordinary course of servicing a
Contract if, in the Servicer's reasonable and prudent determination, such
waiver is not materially adverse to the Noteholders or the Note Insurer.
(b) Notwithstanding the terms of any Contract, the Servicer
may in its discretion (if in the Servicer's reasonable determination, such
action is not materially adverse to the Noteholders or the Note Insurer) allow
full Prepayments of a Contract by or on behalf of the Obligor. Any Prepayments
shall be in an amount no less than the Prepayment Amount with respect to the
prepaid Contract. All Prepayments shall be deposited in the Collection Account.
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(c) To the extent provided for in any Contract, the Servicer
shall make all reasonable efforts to collect all payments with respect to
amounts due for maintenance, taxes or assessments on the Equipment or the
Contracts and shall remit such amounts to the appropriate maintenance provider
or governmental entity on or prior to the date such payments are due.
(d) The Servicer shall deposit all Collections received by it
by wire transfer into the Collection Account no later than the second Business
Day following the date of receipt of such Collections by the Servicer and the
Servicer's determination that such amounts relate to the Contracts, but in no
event later than three Business Days following receipt thereof. The Servicer
shall notify the Indenture Trustee in writing of all amounts transferred into
the Collection Account. The Indenture Trustee shall retain all Advance Payments
(except to the extent that such Advance Payment relates to a Scheduled Payment
which has been invoiced by the Servicer) in the Collection Account until the
last day of the Collection Period in which such Advance Payment or portion
thereof is due in accordance with the provisions of the related Contract and
such Advance Payment will not be included as Available Funds until such later
Collection Period. The Servicer shall deposit into the Collection Account all
Collections received during the period from (x) the Cut-Off Date through the
Closing Date, (y) the Subsequent Cut-Off Date through the Subsequent Funding
Date, or (z) the Substitute Contract Cut-Off Date through the Transfer Date, as
the case may be.
(e) Based upon the amounts set forth on the Monthly
Statement, the Indenture Trustee shall cause the distribution of Available
Funds in the Collection Account according to the priority set forth in Section
3.04(b) of the Indenture.
(f) In the event that Servicer acquires title to any item of
Equipment in the enforcement of any Contract or otherwise at the expiration of
the term of a Contract, the Servicer shall use its best efforts to sell or
otherwise dispose promptly of such item of Equipment, consistent with the
Servicing Standard. The Servicer shall not lease, operate or otherwise manage
any such items of Equipment unless prior thereto, the Servicer remits the
related Prepayment Amount with respect to such Contract.
(g) Any payments (net of Excluded Amounts, except taxes)
received from a Contract will be allocated first to any sales, use, property or
ad valorem taxes due or payable to any taxing authority, second to any
Scheduled Payments due on the related Contract (allocating such payments in the
order that Scheduled Payments become due), and third to all other amounts then
payable under the Contract.
SECTION 4.03 Servicer Advances. If on any Determination Date
occurring prior to the repayment in full of the Notes, the Servicer determines
that any Scheduled Payments or Final Scheduled Payments due on the Contracts
(other than Defaulted Contracts) with respect to the related Collection Period
have not been received by such Determination Date, the Servicer, to the extent
that in its reasonable discretion it determines that it can recoup such
Servicer Advance from subsequent collections or recoveries under the related
Contract, will make a Servicer Advance up to an amount equal to the amount of
such delinquent Scheduled Payments or Final Scheduled Payments not received by
such Determination Date. The Servicer shall deposit any Servicer Advances into
the Collection Account on or prior to 3:00 p.m. (New York time) on such
Determination Date in next day funds. On each Determination Date, the
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Servicer shall deliver to the Indenture Trustee, the Note Insurer and the
Rating Agencies a report listing the aggregate amount of Scheduled Payments and
Final Scheduled Payments not received for the immediate prior Collection Period
as of the related Determination Date which it has determined in its sole
discretion and in accordance with the Servicing Standard is likely to be
recoverable from the related Obligors (such report, the "Servicer Report"). If
the Servicer determines that any Servicer Advance it has made, or is
contemplating making, would be a non-recoverable advance, the Servicer shall
deliver to the Indenture Trustee and the Note Insurer a certificate of a
Servicing Officer stating the basis for such determination.
The Servicer shall be reimbursed for Servicer Advances on
each Payment Date from amounts on deposit in the Collection Account as follows:
(i) for any Servicer Advance made with respect to a Delinquent Contract, from
subsequent Collections on such Delinquent Contract, Prepayment Amounts or
Reacquisition Amounts and (ii) for any non-recoverable Servicer Advance, from
all Collections received on all of the Contracts.
SECTION 4.04 Realization Upon Defaulted Contracts. (a) The
Servicer shall use commercially reasonable best efforts consistent with the
Servicing Standard to (i) accelerate, repossess, or otherwise comparably
convert the ownership of any Equipment that it has reasonably determined should
be repossessed or otherwise converted following a default under the related
Contract, (ii) remarket, either through sale or re-lease, the Equipment upon
the expiration of the term of the related Contract; provided, that upon any
such re-lease, the final maturity of such re-leased Contract shall not be later
than the final maturity of the latest maturing Contract then pledged to the
Issuer and (iii) act as sales and processing agent for Equipment which it
repossesses. The Servicer shall follow such practices and procedures as are
consistent with the Servicing Standard and as it shall deem necessary or
advisable and as shall be customary and usual in its servicing of equipment
leases and other actions by the Servicer in order to realize upon such a
Contract, which may include reasonable efforts to enforce any recourse
obligations of Obligors and repossessing and selling the Equipment at public or
private sale. The foregoing is subject to the provision that, in any case in
which the Equipment shall have suffered damage, the Servicer shall not be
required to expend funds in connection with any repair or towards the
repossession of such Equipment unless it shall determine in its discretion that
such repair and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses.
(b) Notwithstanding the foregoing, the Servicer shall take
action to (i) enforce the obligations of the related Source and/or (ii)
accelerate all amounts due under any Contract immediately after such Contract
becomes a Defaulted Contract and shall, in accordance with its Credit Policies
and Procedures, bring an action against the Source under the Source Agreement
or the Obligor for all amounts due under the Contract and, to the extent
applicable, institute proceedings to repossess and sell or re-lease the
Equipment; provided, however, that the Servicer will not accelerate any
Scheduled Payment unless permitted to do so by the terms of the Contract or
under applicable law; and provided, further, that the Servicer shall not
declare an Obligor to be in default under a Contract nor exercise any other
remedies under such Contract based solely on a default by such Obligor under
any other obligation of such Obligor to the Originator if such Obligor is not
also in default under such Contract unless it concludes that declaring such
default is in the best interest of the Noteholders and the Note Insurer.
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(c) The Servicer shall remit to the Collection Account within
two (2) Business Days of receipt thereof all Liquidation Proceeds, except those
which constitute Excluded Amounts.
SECTION 4.05 Maintenance of Insurance Policies; Fidelity
Policies. (a) In connection with its activities as Servicer of the Contracts,
the Servicer agrees to present, on behalf of itself, the Indenture Trustee, the
Issuer, the Noteholders and the Note Insurer claims to the insurer under each
Insurance Policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract.
(b) The Servicer shall maintain, at its own expense, (i) a
blanket insurance policy with respect to claims relating to the Obligors and
the Contracts and (ii) a blanket fidelity bond and an errors and omissions
insurance policy, in each case, with coverage appropriate and customary in the
industry with responsible companies on all officers, employees, or other
persons acting in any capacity with regard to the Contracts to handle funds,
money, documents and papers relating to the Contracts. Any such fidelity bond
and errors and omissions insurance shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons and shall be maintained in a form
and amount that would meet the requirements of a prudent institutional
servicer. No provision of this Section 4.05 requiring such fidelity bond and
errors and omissions insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. Any such fidelity bond
or insurance policy shall not be cancelled or modified in a materially adverse
manner without ten (10) days' prior written notice to the Note Insurer and the
Rating Agencies. Promptly upon receipt of any notice from the surety or the
insurer that such fidelity bond or insurance policy has been terminated or
materially modified, the Servicer shall notify the Note Insurer, the Indenture
Trustee and the Rating Agencies of any such termination or modification.
SECTION 4.06 Servicing Compensation; Payment of Certain
Expenses by Servicer. As compensation for its activities, the Servicer shall be
entitled to receive the Servicer Fee and any Servicing Charges. The Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder, including, without limitation, (a) fees and disbursements
of the Independent Public Accountants, taxes imposed on the Servicer or the
Issuer (but excluding any sales taxes or other taxes imposed on any Obligor,
the Originator, the Servicer, the Transferors, the Depositor, the Collateral
Agent, the Indenture Trustee, the Note Insurer, the Back-up Servicer, any
Noteholder or any other Person), (b) expenses incurred in connection with
distributions and reports to Noteholders and the Note Insurer and (c) all other
fees and expenses not expressly stated hereunder to be for the account of the
Noteholders or the Note Insurer. The Servicer shall be entitled to retain, out
of any amounts actually recovered by the Servicer in the performance of its
obligations under Sections 4.02 and 4.04 hereof with respect to any Contract or
the Equipment subject thereto, the Servicer's actual out-of-pocket expenses
reasonably incurred in the course of such performance with respect to such
Contract or Equipment. (For all purposes of this Section 4.06, the Servicer's
"out-of-pocket expenses" means only those expenses incurred to non-Affiliated
third parties (e.g., outside counsel in a collection suit) and shall not
include salaries, operating costs, overtime wages and other such "overhead"
costs or expenses of the Servicer or its Affiliates, and shall not include
expenses of or payments to an agent or subservicer allowed hereunder, except
that out-of-pocket expenses for the fees and
27
expenses of an agent used to remarket Equipment subject to Contracts shall be
included as "out-of-pocket expenses").
SECTION 4.07 Monthly Statement. With respect to each Payment
Date and the related Collection Period, the Servicer will provide to the
Indenture Trustee, the Note Insurer and the Rating Agencies, not less than
three (3) Business Days prior to such Payment Date, a monthly statement (a
"Monthly Statement"), signed by a Responsible Officer of the Servicer and
substantially in the form of Exhibit B.
SECTION 4.08 Quarterly Certificates as to Compliance. The
Servicer will provide to the Indenture Trustee, the Note Insurer, the
Depositor, the Collateral Agent and the Rating Agencies, no later than fifty
(50) days following the end of each fiscal quarter, an Officer's Certificate
stating that (a) a review of the activities of the Servicer, and the Servicer's
performance pursuant to this Agreement, for the period ending on the last day
of the immediately preceding fiscal quarter has been made under such Person's
supervision and (b) to the best of such Person's knowledge, based on such
review, the Servicer has performed or has caused to be performed in all
material respects all of its obligations under this Agreement throughout such
period and no Event of Servicing Termination has occurred and is continuing
(or, if an Event of Servicing Termination has so occurred and is continuing,
specifying each such event, the nature and status thereof and the steps
necessary to remedy such event, and, if an Event of Servicing Termination
occurred during such fiscal quarter and no notice thereof has been given to the
Indenture Trustee and the Note Insurer, specifying such Event of Servicing
Termination and the steps taken to remedy such event).
SECTION 4.09 Annual Independent Public Accountant's Servicing
Reports. The Servicer will cause an Independent Public Accountant (who may also
render other services to the Servicer) to furnish to the Indenture Trustee, the
Note Insurer, the Depositor, the Collateral Agent and the Rating Agencies, no
later than April 30 of each year, commencing April 30, 2000, a report relating
to the previous calendar year to the effect that (a) such firm has reviewed
certain documents and records relating to the servicing of the Contracts, and
(b) based on such examination, such firm is of the opinion that the Monthly
Statements for such calendar 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. In the event such
firm requires the Indenture Trustee to agree to the procedures performed by
such firm, 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 makes no independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.
SECTION 4.10 Access to Certain Documentation and Information
Regarding the Pledged Property. (a) The Servicer shall provide the Indenture
Trustee, the Collateral Agent, the Note Insurer (unless a Note Insurer Default
has occurred and is continuing) and their respective duly authorized
representatives, attorneys or accountants access to any and all documentation
regarding the Pledged Property, the Conveyed Assets or the Receivables
(including the List of Contracts) that the Servicer may possess, such access
being afforded without charge but only upon reasonable advance written request
and during normal business
28
hours, so as not to interfere unreasonably with the Servicer's normal
operations or customer or employee relations, at offices of the Servicer
designated by the Servicer.
(b) At all times during the term hereof, the Servicer shall
either (i) keep available in physical form at its principal executive office
for inspection by the Indenture Trustee, the Collateral Agent, any Noteholder,
the Note Insurer (unless a Note Insurer Default has occurred and is continuing)
or their respective duly authorized representatives, attorneys or accountants a
list of all Contracts then held on behalf of the Issuer, together with a
reconciliation of such list to the List of Contracts and each of the Monthly
Statements, indicating the cumulative removals and additions of Contracts from
the Trust or (ii) maintain electronic facilities which allow such list and
reconciliation to be generated.
(c) The Servicer will maintain accounts and records as to
each respective Contract serviced by the Servicer that are accurate and
sufficiently detailed as to permit (i) the reader thereof to know 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 the Collection Account in respect of such Contract.
(d) The Servicer will maintain its Contract Management System
and other computerized records so that, from and after the time of the pledge
under the Receivables Pledge Agreement of each Contract and the related
Equipment to the Trust and subsequent assignment of such pledge by the Trust to
the Indenture Trustee, on behalf of the Noteholders and the Note Insurer, the
Servicer's accounts and records (including any back-up computer archives) that
refer to any Contract indicate clearly that the Contract has been so pledged.
Indication of a Contract being pledged will be deleted from or modified on the
Servicer's accounts and records when, and only when such Contract is an Early
Termination Contract, an Expired Contract or a Reacquired Contract.
(e) Nothing in this Section 4.10 shall derogate from the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure, as a result of such
obligation of the Servicer, to provide access as provided in this Section 4.10
shall not constitute a breach of this Section 4.10.
(f) The Indenture Trustee, the Collateral Agent, and the
Noteholders shall use their respective best efforts to maintain in confidence
all information which has been described as "confidential" and obtained by any
of them regarding the Obligors and the Contracts, whether upon exercise of
their respective rights under this Section 4.10 or otherwise. Notwithstanding
anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) disclosure of any and all information that is or becomes publicly
known, or information obtained by the Indenture Trustee or the Collateral Agent
from sources other than the Servicer or the Issuer, (ii) disclosure of any and
all information (A) if required to do so by any applicable statute, law, rule
or regulation, (B) to any government agency or regulatory body having or
claiming authority to regulate or oversee any respects of the Indenture
Trustee's or the Collateral Agent's business or that of its affiliates, (C)
pursuant to any subpoena, civil investigative demand or similar demand or
request of any court, regulatory authority, arbitrator or arbitration to which
the Indenture Trustee, the Collateral Agent, or an affiliate or an officer,
director, employer or shareholder
29
thereof is a party, (D) in any preliminary or final prospectus supplement,
registration statement or contract or other document pertaining to the
transactions contemplated herein approved in advance by the Servicer and the
Note Insurer or (E) to any affiliate, independent or internal auditor, agent,
employee or attorney of the Indenture Trustee or the Collateral Agent having a
need to know the same, provided that the Indenture Trustee or the Collateral
Agent, as applicable, advise such recipient of the confidential nature of the
information being disclosed, or (iii) any other disclosure authorized by the
Servicer, the Note Insurer or the Issuer. No person entitled to receive copies
of such reports or tapes shall use the information therein for the purpose of
soliciting the customers of the Servicer or any Obligor, or for any other
purpose except as set forth in this Agreement.
SECTION 4.11 Financial Statements and Other Necessary Data.
(a) The Servicer shall provide to the Note Insurer, the Indenture Trustee and
the Rating Agencies:
(i) Annual Statements-- within 120 days after the end of each
fiscal year of ABFS, a copy of:
(A) consolidated (and consolidating) balance sheets of
ABFS and its consolidated subsidiaries, at the end of
such fiscal year, and
(B) consolidated (and consolidating) statements of income
of ABFS and consolidated retained earnings and cash
flows of ABFS and its consolidated subsidiaries for
such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an
opinion of a firm of independent certified public accountants of
recognized national standing, stating that such financial statements
present fairly the financial condition of ABFS and its consolidated
subsidiaries and have been prepared in accordance with generally
accepted accounting principles consistently applied (except for
changes in application in which such accountants concur and footnote),
and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards.
(ii) Quarterly Statements-- within 45 days after the end of
each fiscal quarter of ABFS, a copy of:
(A) consolidated balance sheets of ABFS and its
consolidated subsidiaries, a the end of such fiscal
quarter, and
(B) consolidated statements of income of ABFS and
consolidated retained earnings and cash flows of ABFS
and its consolidated subsidiaries for such fiscal
quarter,
setting forth in each case in comparative form the figures for (i) the
comparable fiscal quarter in the prior fiscal year and (ii) the
year-to-date period then ended;
(iii) Notice of Event of Servicing Termination. Immediately
upon becoming aware of the existence of any condition or event which
constitutes an Event of Servicing
30
Termination or which, with notice and lapse of time, would become and
Event of Servicing Termination, a written notice describing its nature
and period of existence and what action the Servicer is taking or
propose to take with respect thereto;
(A) consolidated balance sheets of ABFS and its
consolidated subsidiaries, a the end of such fiscal
quarter, and
(B) consolidated statements of income of ABFS and
consolidated retained earnings and cash flows of ABFS
and its consolidated subsidiaries for such fiscal
quarter,
(iv) Report on Proceedings -- promptly upon the Servicer's
becoming aware of any pending court or administrative proceeding which
individually or in the aggregate involves the possibility of
materially and adversely affecting Pledged Property or Transferor
Collateral or the business or conditions (financial or otherwise) of
the Servicer, a written notice specifying the nature of such
investigation or proceeding and what action the Servicer is taking or
proposes to take with respect thereto and evaluating its merits; and
(b) The Servicer shall, on request of the Indenture Trustee,
the Collateral Agent, the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) or the Owner Trustee, furnish the Indenture
Trustee, the Note Insurer or the Owner Trustee, as the case may be, such data
reasonably necessary for the administration of the Trust, or with respect to
the Pledged Property or the Conveyed Assets, as can be generated by the
Servicer's existing data processing systems; to the extent that the Servicer's
existing data processing systems cannot generate such data, the Servicer will
cooperate with the Indenture Trustee, the Collateral Agent, the Note Insurer or
the Owner Trustee, as the case may be, in finding a method of furnishing such
data.
SECTION 4.12 Responsibilities of the Back-up Servicer. (a)
Until the receipt by the Servicer of a written notice of termination from the
Indenture Trustee in accordance with Section 6.01 hereof (a "Servicer
Termination Notice"), the Back-up Servicer shall perform, on behalf of the Note
Insurer, the Issuer, the Depositor, the Collateral Agent and the Indenture
Trustee, as their interests may appear, the following duties and obligations:
(i) The Servicer shall deliver to the Back-up Servicer, and
the Back-up Servicer shall accept from the Servicer delivery of (x)
the information required to prepare the Monthly Statement, (y) the
Monthly Statement, on tape (including, without limitation, the
Computer Tape); provided, however, the Tape is in an MS-DOS, PC
readable ASCII format or format to be agreed upon by the Back-up
Servicer and the Servicer prior to closing.
(ii) (x) Not later than (2) Business Days prior to each
Determination Date, the Back-up Servicer shall accept delivery on tape
from the Servicer of the database with respect to the Contracts used
to verify the mathematical accuracy of the Monthly Statements (the
"Tape"), and (y) quarterly, a tape containing such lease level
information
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as may be reasonably agreed upon by the Servicer and the Back-up
Servicer from time to time.
(iii) The Back-up Servicer shall convert the database
received on Tape from the Servicer to the database used by the Back-up
Servicer and validate that the data therein matches the same received
on the Tape.
(iv) Prior to the related Payment Date, the Back-up Servicer
shall review the Monthly Statement for completeness.
(v) Within thirty (30) days after each Payment Date,
beginning with the Payment Date occurring in July 1999, the Back-up
Servicer shall verify the mathematical accuracy of the related Monthly
Statement. The Back-up Servicer shall notify the Indenture Trustee,
the Note Insurer and the Servicer in writing of any material
inconsistencies between the related Monthly Statement and the Tape and
of any information that is missing from such Monthly Statement and
shall confirm conformity of actual Servicer remittances to such
Monthly Statement.
(vi) If the Servicer disagrees with the computations provided
under paragraph (v) above by the Back-up Servicer or if the Servicer
or any subservicer has not reconciled such discrepancy, the Back-up
Servicer agrees to confer with the Servicer to resolve such
disagreement on or prior to the next succeeding Determination Date and
shall settle such discrepancy with the Servicer, and notify the
Indenture Trustee and the Note Insurer of the resolution thereof. The
Servicer hereby agrees to cooperate, at its own expense, with the
Back-up Servicer in reconciling any discrepancies herein. If within
thirty (30) days of notice to the Servicer, the Note Insurer and the
Indenture Trustee, such discrepancy is not resolved, the Back-up
Servicer shall promptly notify the Indenture Trustee and the Note
Insurer of such discrepancy. Following receipt of such notice from the
Indenture Trustee, the Servicer shall deliver to the Rating Agencies,
the Noteholders, the Note Insurer, the Back-up Servicer and the
Indenture Trustee no later than the related Payment Date a certificate
describing the nature and cause of such discrepancies and the actions
the Servicer proposes to take with respect thereto.
With respect to the foregoing, the Back-up Servicer, in the
performance of its duties and obligations hereunder, is entitled to rely in
good faith on the contents of each Tape, including, but not limited to, the
completeness and accuracy thereof, provided by the Servicer.
(b) After the receipt of an effective Servicer Termination
Notice by the Servicer in accordance with this Agreement, all authority, power,
rights and responsibilities of the Servicer, under this Agreement, whether with
respect to the Contracts or otherwise shall pass to and be vested in the
Back-up Servicer as long as the Back-up Servicer is not prohibited by an
applicable provision of law from fulfilling the same, as evidenced by an
Opinion of Counsel to such effect addressed to the Indenture Trustee and the
Note Insurer (unless a Note Insurer Default has occurred and is continuing).
SECTION 4.13 Back-up Servicer Compensation. (a) As
compensation for its performance under Section 4.12(a) above, the Issuer agrees
that the Back-up Servicer shall be
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paid the following amounts: (A) due upon Closing Date, the sum of $5,000
(including the acceptance fee for services as Indenture Trustee) and (B) as a
monthly fee payable on each Payment Date from the Collection Account, the
product of (1) one-twelfth (1/12), (2) the Back-up Servicer Fee Rate and (3)
the Aggregate Discounted Contract Principal Balance on the first day of the
immediately preceding Collection Period.
(b) As compensation for its performance under Section 4.12(b)
above, the Back-up Servicer shall be entitled to such Back-up Servicer Fee and
other amounts (whether payable out of the Collection Account or otherwise) as
the Servicer would have been entitled to under this Agreement as if no Servicer
Termination Notice has been given to the Servicer; provided, that the Back-up
Servicer shall not be entitled to receive any compensation in excess of that
which the Servicer was entitled to under this Agreement.
(c) In the event of an Event of Servicing Termination
hereunder, the Servicer, on behalf of the Issuer, shall pay to the Back-up
Servicer a fee in an amount agreed to by the Servicer and the Back-up Servicer
for conversion to the Back-up Servicer's software system, such fee to be
included as an Indenture Trustee Expense.
SECTION 4.14 Merger or Consolidation of, or Assumption of the
Obligations of, Back-up Servicer. Any Person (a) into which the Back-up
Servicer may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Back-up Servicer shall be a party, or (c) which may
succeed to the properties and assets of the Back-up Servicer substantially as a
whole, which Person in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Back-up Servicer hereunder, shall
be the successor to the Back-up Servicer under this Agreement without further
act on the part of any of the parties to this Agreement. In the event that the
resulting entity is not acceptable to the Note Insurer in its reasonable
judgment, the Back-up Servicer, upon the written request of the Note Insurer
(unless a Note Insurer Default has occurred and is continuing), shall resign
from its obligations and duties under this Agreement.
SECTION 4.15 Back-up Servicer's Waiver of Set-off. The
Back-up Servicer, solely in its capacity as Back-up Servicer hereunder, hereby
irrevocably and unconditionally waives all right of set-off that it may have
under contract (including this Agreement), applicable law or otherwise with
respect to any funds or monies of the Trust, the Originator, the Transferors,
the Depositor, the Collateral Agent, the Servicer or the Note Insurer, at any
time held by or in the possession of the Back-up Servicer.
SECTION 4.16 Retention and Termination of the Servicer. The
Servicer hereby covenants and agrees to act as Servicer under this Agreement
for an initial term commencing on the Closing Date and expiring on September
30, 1999 (the "Initial Term"). Thereafter, the Initial Term shall be extendible
in the sole discretion of the Note Insurer by written notice (each, a "Servicer
Extension Notice") of the Note Insurer (or the Indenture Trustee if revocable
written standing instructions of the Note Insurer have been previously
delivered to the Indenture Trustee) to the Servicer, for any specified number
of three-month terms. Each such Servicer Extension Notice, if any, shall be
delivered by the Note Insurer (or the Indenture Trustee, as applicable) to the
other parties to this Agreement. The Servicer hereby agrees that, as of the
date hereof and upon its receipt of any Servicer Extension Notice, the Servicer
shall be
33
bound for the duration of the Initial Term and the term covered by any such
Servicer Extension Notice to act as the Servicer, subject to and in accordance
with the other provisions of this Agreement. The Servicer agrees that if, as of
the fifteenth day prior to the last day of any such servicing term, the
Servicer shall not have received a Servicer Extension Notice from the Note
Insurer (or Indenture Trustee, as applicable), the Servicer shall, within five
(5) days thereafter, give written notice of such non-receipt to the Note
Insurer and the Indenture Trustee. The failure of the Note Insurer or the
Indenture Trustee, as applicable, to deliver a Servicer Extension Notice by the
end of any such three-month term shall result in the automatic termination of
the Servicer; provided, that, if a Note Insurer Default has occurred and is
continuing, the term of the Servicer shall automatically be extended until such
time as the Note Insurer Default has been cured.
The Servicer may not resign from its obligations and duties
as Servicer hereunder, except (i) with the prior written consent of the
Controlling Party or (ii) upon a determination that the Servicer's performance
of such duties is no longer permissible under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an opinion of independent counsel, in form and substance reasonably
satisfactory to the Note Insurer, to such effect delivered to the Indenture
Trustee and the Note Insurer. No such resignation will become effective until
the Back-up Servicer, or a successor thereto has assumed the Servicer's
servicing obligations and duties under this Agreement in accordance with the
terms hereof.
ARTICLE V
THE SERVICER AND THE BACK-UP SERVICER
SECTION 5.01 Liability of Servicer; Indemnities. (a) The
Servicer shall be liable in accordance herewith only to the extent of the
following obligations specifically undertaken by the Servicer herein:
(i) The Servicer shall indemnify, defend and hold harmless
the Indenture Trustee (which shall include any of its directors,
employees, officers and agents), the Owner Trustee (which shall
include any of its directors, employees, officers and agents), the
Issuer, the Originator, the Transferors, the Depositor, the Collateral
Agent, the Back-up Servicer (which shall include any of its directors,
employees, officers and agents), the Noteholders and the Note Insurer
(which shall include any of its directors, employees, officers and
agents) against and from any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use,
repossession or operation of the Equipment by the Servicer or any of
its Affiliates; and
(ii) The Servicer shall indemnify, defend and hold harmless
the Indenture Trustee (which shall include any of its directors,
employees, officers and agents), the Owner Trustee (which shall
include any of its directors, employees, officers and agents), the
Collateral Agent (which shall include any of its directors, employees,
officers and agents), the Noteholders, the Note Insurer (which shall
include any of its directors, employees, officers and agents), the
Issuer, the Transferors, the Depositor, the Back-up Servicer (which
shall include any of its directors, employees, officers and agents)
and the Originator against and from any and all costs, losses,
expenses (including the reasonable fees and expenses of counsel)
claims, damages and liabilities to the extent that such
34
losses, claims, damages or liabilities arose out of, or were imposed
upon the Indenture Trustee, the Owner Trustee, the Collateral Agent,
the Noteholders, the Note Insurer, the Originator, the Transferors,
the Depositor, the Issuer or the Back-up Servicer in connection with
or by reason of (x) the failure by the Servicer to perform its duties
under this Agreement or errors or omissions of the Servicer related to
such duties including the making of any inaccurate representations or
warranties hereunder; (y) in the case of the Indenture Trustee, the
Collateral Agent, the Depositor or the Back-up Servicer, the
performance of their respective duties hereunder or under the other
Transaction Documents, except to the extent that such loss, expense,
claim or liability resulted from the Indenture Trustee's, the
Collateral Agent's, the Depositor's or the Back-up Servicer's
respective breach of this Agreement, negligence or willful misconduct;
or (z) in case of the Owner Trustee, the performance of its duties
hereunder or under the Transaction Documents, except to the extent
that such loss, expense, claim or liability resulted from the Owner
Trustee's breach of this Agreement, gross negligence or willful
misconduct. The provisions of this Section 5.01 shall run directly to
and be enforceable by an injured party subject to the limitations
hereof, and the indemnification provided to the Indenture Trustee, the
Owner Trustee, the Collateral Agent, the Note Insurer, the Issuer, the
Transferors, the Depositor, the Noteholders and the Back-up Servicer
pursuant to this Article V by the Servicer shall survive the payment
in full of the Notes, the termination of the Indenture, and the
resignation of the Indenture Trustee, the Owner Trustee, the
Collateral Agent or the Back-up Servicer or removal of the Indenture
Trustee, the Owner Trustee, the Collateral Agent or the Back-up
Servicer.
(b) The Servicer shall pay any amounts owing pursuant to
Section 5.01(a) hereof directly to the indemnified Person, and such amounts
shall not be deposited in the Collection Account.
(c) Indemnification under this Section 5.01 shall include,
without limitation, reasonable fees and expenses of counsel and expenses of
litigation reasonably incurred. If the Servicer has made any indemnity payments
to the Indenture Trustee, the Owner Trustee, the Collateral Agent, the Issuer,
the Transferors, the Depositor, the Noteholders, the Note Insurer or the
Originator pursuant to this Section 5.01 and such party thereafter collects any
of such amounts from others, such party will promptly repay such amounts
collected to the Servicer, without interest.
SECTION 5.02 Merger, Consolidation, or Assumption of the
Obligations of Servicer. Any corporation (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to
which the Servicer shall be a party or (iii) succeeding to the business of the
Servicer (including, without limitation, by sale of all or substantially all of
the assets of the Servicer in one or more transactions), shall be the successor
to the Servicer hereunder provided that the surviving corporation of such
merger or consolidation or the purchaser of such assets shall have received the
prior written consent of the Note Insurer (unless a Note Insurer Default has
occurred and is continuing), without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding, and such corporation in any of the foregoing
cases shall execute an agreement of assumption, in a form reasonably
satisfactory to the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) and the Indenture Trustee, agreeing to perform
35
every obligation of the Servicer hereunder; provided, however, that the
Servicer shall not merge or consolidate with any other corporation nor sell all
or substantially all of its assets in one or more related transactions until
(x) the Note Insurer shall have given its prior written consent and (y) the
Indenture Trustee and the Note Insurer have received confirmation from the
Rating Agencies that such action shall satisfy the Rating Agency Condition. The
Servicer shall provide prompt written notice of any such event to the Indenture
Trustee, the Note Insurer and the Rating Agencies.
SECTION 5.03 Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Indenture Trustee,
the Collateral Agent, the Originator, the Transferors, the Depositor, the Note
Insurer, the Issuer or the Noteholders for any action taken or for refraining
from the taking of any action pursuant to this Agreement or the Indenture or
for errors in judgment; provided, however, that this provision shall not
protect the Servicer against any liability that would otherwise be imposed by
reason of willful misconduct, bad faith or negligence in the performance of
duties hereunder or under the Indenture. The Servicer and any director or
officer or employee or agent of the Servicer 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 or under the Indenture. Except as
provided herein, the Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties to
service the Trust Property in accordance with this Agreement and that in its
opinion may involve it in any expense or liability; provided, however, that the
Servicer may take any such non-incidental action that is reasonable and that
may be necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto and the interests of the Noteholders and the Note
Insurer hereunder, provided that the Servicer shall notify the Indenture
Trustee and the Note Insurer of such proposed action and the Servicer may
thereafter commence such action only with the consent of the Note Insurer
(unless a Note Insurer Default has occurred and is continuing), unless the
Indenture Trustee shall have disapproved the proposed action by so notifying
the Servicer within five (5) Business Days. In the event the Servicer takes
such action, the reasonably incurred legal expenses and costs of such action
and any liabilities resulting therefrom shall be expenses, costs and
liabilities of the Issuer, and the Servicer shall be entitled to be reimbursed
therefor pursuant to Section 3.04(b)(iii) of the Indenture.
SECTION 5.04 Servicer Not to Resign. Subject to the
provisions of Section 5.02 hereof, the Servicer shall not resign from the
obligations and duties hereby imposed on it as Servicer except upon the prior
written consent of the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) or determination that the performance of its duties
hereunder is no longer permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Indenture Trustee, the Note Insurer and
to the Rating Agencies. No such resignation shall become effective until a
successor Servicer acceptable to the Note Insurer (unless a Note Insurer
Default has occurred and is continuing) shall have assumed the responsibilities
and obligations of the Servicer in accordance with Section 6.02 hereof and the
Rating Agency Condition shall be satisfied.
SECTION 5.05 Limitation on Liability of Back-up Servicer and
Others. (a) Neither the Back-up Servicer nor any of the directors, officers or
employees or
36
agents of the Back-up Servicer shall be under any liability to the Servicer,
the Indenture Trustee, the Issuer, the Owner Trustee, the Transferors, the
Depositor, the Collateral Agent, the Noteholders or the Note Insurer except as
provided herein, for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment not
involving willful misconduct, bad faith or negligence; provided, however, that
this provision shall not protect the Back-up Servicer against any liability
resulting from its breach of any representation or warranty made herein, nor
shall this provision protect the Back-up Servicer against any liability that
would otherwise be imposed by reason of willful misconduct, bad faith or
negligence in the performance of its duties hereunder. Neither the Back-up
Servicer nor any of its directors, officers or employees or agents shall be
under any liability of any kind or type to any Person arising from the
incomplete or inaccurate contents of any Tape provided by the Servicer. The
Back-up Servicer and any director, officer, employee or agent of the Back-up
Servicer 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 or in connection with the transactions contemplated herein. The
Back-up Servicer shall not be under any obligation to appear in, prosecute or
defend any legal motion that is not incidental to its duties to service the
Contracts in accordance with this Agreement and that in its reasonable opinion
may involve it in any expense or liability; provided, however, that the Back-up
Servicer may, but shall not be obligated to, take any such action that is
reasonable and that may be necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto and the interest of the
Noteholders and the Note Insurer; provided, that the Back-up Servicer shall
notify the Issuer, the Noteholders, the Note Insurer and the Indenture Trustee
of such proposed action and the Back-up Servicer may thereafter commence such
action; provided, the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) has consented to such action, unless the Issuer, the
Noteholders or the Indenture Trustee shall have disapproved the proposed action
by so notifying the Back-up Servicer within five (5) Business Days. If any such
proposed action is commenced, the reasonably incurred legal expenses and costs
of such action and any liabilities resulting therefrom shall be expenses, costs
and liabilities of the Noteholders, and the Back-up Servicer shall be entitled
to be reimbursed therefor pursuant hereto.
(b) The Servicer shall indemnify the Back-up Servicer its
officers, directors, employees and agents for, and to hold it harmless against,
any loss, liability or expense incurred, except to the extent that such loss,
liability or expense was incurred through breach of this Agreement, negligence
or willful misconduct on its part, arising out of or in connection with the
performance of its duties hereunder, including the costs and expenses of
defending against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
SECTION 5.06 Back-up Servicer Not to Resign. The Back-up
Servicer shall not resign from the obligations and duties hereby imposed on it
as Back-up Servicer except (a) with the prior written consent of the Note
Insurer (unless a Note Insurer Default has occurred and is continuing), or (b)
upon determination that the performance of its duties hereunder is no longer
permissible under applicable law, as provided in Section 6.06 hereof. Any such
determination permitting the resignation of the Back-up Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Indenture
Trustee, the Note Insurer (unless a Note Insurer Default has occurred and is
continuing) and to the Rating Agencies. Upon the Back-up Servicer resignation
or termination pursuant to Section 6.06 hereof, the Back-up
37
Servicer shall comply with the provisions of this Agreement until the
acceptance of appointment by a successor Back-up Servicer. Any such successor
Back-up Servicer shall be appointed by the Indenture Trustee subject to the
approval of the Note Insurer (unless a Note Insurer Default has occurred and is
continuing) and satisfying of the Rating Agency Condition.
SECTION 5.07 Indemnity for Liability Claims. The Transferors
on behalf of the Issuer shall indemnify, defend and hold harmless the Indenture
Trustee, the Back-up Servicer (which, in each case, shall include any of their
respective directors, employees, officers and agents), the Noteholders and the
Note Insurer against and from any and all costs, expenses, losses, damages,
claims and liabilities arising out of or resulting from the use, repossession
or operation of the Equipment to the extent not covered by the Servicer's
indemnity provided by Section 5.01 hereof.
ARTICLE VI
SERVICING TERMINATION; BACK-UP SERVICING TERMINATION
SECTION 6.01 Events of Servicing Termination. (a) If any of
the following events (each an "Event of Servicing Termination") shall occur and
be continuing:
(i) If there occurs a change of "control" of the Servicer
("control" having the meaning ascribed to it in the Rules and
Regulations under the Securities Exchange Act of 1934, as amended),
unless the Note Insurer (unless a Note Insurer Default has occurred
and is continuing) has determined that such change in control does not
have a material adverse effect on the interests of the Note Insurer;
(ii) Any failure by the Servicer to make (x) any Servicer
Advance within two Business Days of the related Determination Date as
required hereunder or (y) any other payment, deposit, transfer or
delivery required to be made hereunder (other than with respect to the
Monthly Statement, as to which the remedy is set forth in Section
6.01(a)(iii) hereof) that continues unremedied for a period of three
(3) Business Days after the date such payment, deposit, transfer or
delivery is required to be made; provided, that the Servicer shall be
granted a three (3) Business Day grace period on not more than one
occasion during each Collection Period;
(iii) Any failure by the Servicer to submit a Monthly
Statement pursuant to Section 4.07 hereof that continues unremedied
for a period of two (2) Business Days (but in no event later than the
related Payment Date) after the earliest of the date upon which (A)
the Note Insurer or a Noteholder provides written notification to the
Servicer of such failure, (B) the Issuer becomes aware that the Note
Insurer and the Noteholders have not received a copy of the Monthly
Statement in accordance with the provisions hereof or (C) the date on
which an Authorized Officer obtains actual knowledge of such failure;
(iv) Any 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 the Notes or in this Agreement, as the
case may be, or any breach of a representation or warranty of the
Servicer set forth in Section 2.01 of this Agreement, which failure or
breach (A)
38
materially and adversely affects the rights of the Indenture Trustee,
the Depositor, the Collateral Agent, the Noteholders, the Note Insurer
or the Issuer and (B) continues unremedied for a period of 30 days
after the earlier to occur of (x) the date on which written notice of
such failure or breach, requiring the situation giving rise to such
failure or breach to be remedied, shall have been given to a Servicing
Officer by the Indenture Trustee or to a Servicing Officer or a
Responsible Officer of the Indenture Trustee by the Issuer, the Note
Insurer or any Noteholders or (y) the date on which any Servicing
Officer is required pursuant to the terms of this Agreement to provide
notice to the Noteholders and the Note Insurer, of any such failure or
breach pursuant to Section 2.01(b)(ix)(A);
(v) The Servicer shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official)
of itself, or of a substantial part of its property, or shall admit in
writing its inability to pay its debts generally as they come due, a
court of competent jurisdiction shall determine that the Servicer is
generally not paying its debts as they come due or the Servicer shall
make a general assignment for the benefit of creditors;
(vi) The Servicer shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in
effect) or an answer admitting the material allegation of a petition
filed against the Servicer in any such proceeding, or the Servicer
shall, by voluntary petition, answer or consent, seek relief under the
provisions of any now existing or future bankruptcy or other similar
law providing for the reorganization or winding up of debtors, or
providing for an agreement, composition, extension or adjustment with
its creditors;
(vii) An order, judgment or decree in excess of $1,000,000,
individually or in the aggregate, shall be entered in any proceeding
and any such order, judgment or decree or appointment or sequestration
shall remain in force undismissed, unstayed or unresolved for a period
of 90 days after the date of entry thereof;
(viii) A petition against the Servicer in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or
hereafter in effect, shall be filed and shall not be stayed, withdrawn
or dismissed within 90 days thereafter, or if, under the provisions of
any law providing for reorganization or winding-up of debtors which
may apply to the Servicer, any court of competent jurisdiction shall
assume jurisdiction, custody or control of the Servicer, or any
substantial part of its property, and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated
for a period of 90 days;
(ix) Any assignment by the Servicer to a delegate of its
duties or rights hereunder, except as specifically permitted
hereunder, or any attempt to make such an assignment;
(x) The occurrence of an event of default under the Insurance
Agreement;
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(xi) (a) the average Delinquency Trigger Ratio for any
Payment Date and the two immediately preceding Payment Dates exceeds
4.0%, or (b) the average Net Charge-Off Ratio for any Payment Date and
the immediately preceding two Payment Dates exceeds 3.5%;
(xii) ABFS shall fail to have a GAAP net worth (excluding
goodwill) of at least $20,000,000;
(xiii) The sum (expressed as a percentage of the Initial
Aggregate Collateral Balance) of the Defaulted Contract Amounts
(measured as of the first Payment Date for which such Contract is
classified as a Defaulted Contract) of all Contracts which have become
Defaulted Contracts from the Closing Date through any of the dates set
forth below under the column "Measurement Period" exceed the percentage
set forth opposite such Measurement Period in the column entitled
"Maximum Cumulative Net Losses," unless the Note insurer shall have
waived the Event of Servicing Termination set forth in this clause
(xiii):
Maximum Cumulative
Measurement Period Net Losses
------------------------- ------------------
through November 30, 1999 1.00%
through April 30, 2000 2.00%
through October 31, 2000 3.00%
through April 30, 2001 4.00%
and thereafter 6.00%
then, and in each and every case, so long as an Event of Servicing Termination
shall not have been remedied within any applicable period set forth above,
subject to suspension during the occurrence of Force Majeure, as applicable,
the Indenture Trustee shall, at the direction of the Note Insurer (or, if a
Note Insurer Default has occurred and is continuing, the Majority Holders) or
may, with the prior written consent of the Note Insurer (or, if a Note Insurer
Default has occurred and is continuing, the Majority Holders), by Servicer
Termination Notice then given in writing to the Servicer, terminate all, but
not less than all, of the rights and obligations of the Servicer under this
Agreement. The Indenture Trustee shall furnish a copy of any Servicer
Termination Notice to the Rating Agencies.
(b) On and after the time the Servicer receives a Servicer
Termination Notice pursuant to this Section 6.01, or, if a Servicer Extension
Notice has not been received pursuant to Section 4.16 hereof, all authority and
power of the Servicer under this Agreement, whether with respect to the Notes
or the Contracts or otherwise, shall pass to and be vested in the successor
Servicer acceptable to the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) and appointed pursuant to Section 6.02 hereof and,
without limitation, such successor Servicer is hereby 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 or accomplish
all other acts or things necessary or appropriate to effect the purposes of
such Servicer Termination Notice, whether to complete the transfer of the
Contracts and related documents or otherwise.
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The Servicer agrees to cooperate with the Indenture Trustee
and 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
that shall at the time be held by the Servicer for deposit, or have been
deposited by the Servicer, in the Collection Account, or thereafter received
with respect to Contracts. To assist the successor Servicer in enforcing all
rights under Insurance Policies to the extent that they relate to the
Contracts, the Servicer, at its own expense, shall transfer its electronic
records relating to such Contracts to the successor Servicer in such electronic
form as the successor Servicer may reasonably request and shall transfer the
related Contract Files and all other records, correspondence and documents
relating to the Contracts that it may possess to the successor Servicer in the
manner and at such times as the successor Servicer shall reasonably request. In
addition to any other amounts that are then payable to the Servicer under this
Agreement (which amount shall be reduced for any transition costs payable to
the Back-up Servicer in accordance with Section 4.13(c) hereof), the Servicer
shall be entitled to receive reimbursement for any unreimbursed Servicer
Advances made during the period prior to the delivery of a Servicer Termination
Notice pursuant to this Section 6.01.
SECTION 6.02 Back-up Servicer to Act; Appointment of
Successor. (a) On and after the time the Servicer receives a Servicer
Termination Notice pursuant to Section 6.01 or, if a Servicer Extension Notice
has not been received pursuant to Section 4.16 hereof, a successor Servicer
shall be appointed by the Note Insurer, or, if none hs been so appointed, the
Back-up Servicer shall without further action 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; provided, however, that the
Back-up Servicer shall not be liable for any acts or omissions of the
predecessor Servicer or for any breach by either the predecessor Servicer or
the Originator of any of their respective representations and warranties
contained herein or in any related document or agreement. As compensation for
acting as Servicer hereunder, the Back-up Servicer shall be entitled to the
Servicer Fees, Servicing Charges and other compensation (whether payable out of
the Collection Account or otherwise) as the Servicer would have been entitled
to hereunder if no such Servicer Termination Notice had been given.
(b) Notwithstanding the foregoing, if the Back-up Servicer is
not legally permitted to act as Servicer under any applicable law and provides
to the Note Insurer (unless a Note Insurer Default has occurred and is
continuing) and the Indenture Trustee an Opinion of Counsel to such effect, the
Indenture Trustee shall without further action 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; provided, however, that (i) the
Indenture Trustee shall not assume any obligations of the Servicer pursuant to
Article IV of the Indenture and Article V hereof, (ii) the Indenture Trustee
shall not be required to make any Servicer Advance if such Servicer Advance
would be prohibited by applicable law or if the Indenture Trustee in the
exercise of its sole discretion determines that such Servicer Advance would not
be reimbursed and (iii) the Indenture Trustee shall not be liable for any acts
or omissions of the Servicer or for any breach by either the Servicer, the
Transferors, the Depositor, the Collateral Agent or the Originator of any of
their respective representations and warranties
41
contained herein or in any related document or agreement. As compensation for
acting as Servicer hereunder, the Indenture Trustee shall be entitled to the
Servicer Fees, Servicing Charges and other compensation (whether payable out of
the Collection Account or otherwise) as the Servicer would have been entitled
to hereunder if no such Servicer Termination Notice had been given.
(c) Notwithstanding the above, the Indenture Trustee may
appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution reasonably acceptable to the Note Insurer
(unless a Note Insurer Default has occurred and is continuing) and which
satisfies the Rating Agency Condition, which has a net worth of, or is a member
of a consolidated group of entities which has a net worth of, not less than
$10,000,000 and whose regular business includes the servicing of receivables of
a similar nature to the Contracts, as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession. The Indenture Trustee shall inform the
Rating Agencies of the identity of the successor Servicer
(d) Notwithstanding the foregoing, if the Indenture Trustee
is not legally permitted to act as Servicer under any applicable law and
provides to the Issuer, the Note Insurer (unless a Note Insurer Default has
occurred and is continuing) and the Noteholders an Opinion of Counsel to such
effect, then the Indenture Trustee and the Issuer collectively shall use their
best efforts to identify a successor Servicer, other than the Indenture
Trustee, which is acceptable to the Note Insurer (unless a Note Insurer Default
has occurred and is continuing) and satisfies the Rating Agency Condition and
which is willing to act as Servicer under the terms and conditions specified
herein and for a fee equal to or less than the Servicer Fee. In any event the
Indenture Trustee shall, pursuant to Section 6.02(b) hereof, act as successor
Servicer until a different successor Servicer is appointed.
SECTION 6.03 Notification to Noteholders. The Servicer shall
promptly notify the Indenture Trustee, the Note Insurer and the Back-up
Servicer in writing of any Event of Servicing Termination upon actual knowledge
thereof by a Servicing Officer. Upon any termination of, or appointment of a
successor to, the Servicer pursuant to this Article VI, the Indenture Trustee
shall give prompt written notice thereof to the Noteholders at their respective
addresses appearing in the Register, the Issuer, the Note Insurer, the
Depositor, the Collateral Agent and the Rating Agencies.
SECTION 6.04 Waiver of Past Defaults. The Note Insurer
(unless a Note Insurer Default has occurred and is continuing) may, on behalf
of the Noteholders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly waived.
SECTION 6.05 Effects of Termination of Servicer. (a) Upon the
appointment of the successor Servicer, the Servicer shall immediately remit any
Scheduled
42
Payments, Final Scheduled Payments, Residual Receipts or other payments that it
may receive pursuant to any Contract or otherwise to the successor Servicer for
the benefit of the Issuer after such date of appointment.
(b) After the delivery of a Servicer Termination Notice, the
former Servicer shall have no further obligations with respect to the
management or servicing of the Trust Property or the enforcement, custody or
collection of the Contracts, and the successor Servicer shall have all of such
obligations, except that the former Servicer will transmit or cause to be
transmitted directly to the successor Servicer for the benefit of the
Noteholders and the Note Insurer, promptly upon receipt and in the same form in
which received, any amounts held by the former Servicer (properly endorsed
where required for the successor Servicer to collect them) received as payments
upon or otherwise in connection with the Contracts. The former Servicer's
indemnification obligations pursuant to Section 5.01 hereof will survive the
termination of the Servicer hereunder but will not extend to any acts or
omissions of a successor Servicer.
(c) An Event of Servicing Termination shall not affect the
rights and duties of the parties hereunder (including, but not limited to, the
obligations and indemnities of the Servicer pursuant to Article IV of the
Indenture and Sections 5.01 hereof) other than those relating to the
management, servicing, custody or collection of the Contracts.
SECTION 6.06 Events of Back-up Servicing Termination. (a) If
any one or more of the following events (each an "Event of Back-up Servicing
Termination") shall occur and be continuing:
(i) Any failure on the part of the Back-up Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Back-up Servicer set forth in this Agreement (other
than as a result of the failure by the Servicer to provide the Back-up
Servicer with the Tape or the Monthly Statement in accordance with the
provisions of this Agreement), which failure or breach (A) materially
and adversely affects the rights of the Issuer, the Indenture Trustee,
the Note Insurer or the Noteholders and (B), if such failure is
curable, continues unremedied for a period of thirty (30) days after
the earlier to occur of (1) knowledge of such failure or breach by a
Responsible Officer and (2) the date on which the written notice of
such failure or breach, requiring the situation giving rise to such
breach or non-conformity to be remedied, shall have been given to the
Back-up Servicer by the Servicer, the Note Insurer or the Indenture
Trustee; or,
(ii) After the receipt of an effective Servicer Termination
Notice by the Indenture Trustee and the passing and vesting of the
authority, power, rights and responsibilities described in Section
6.02(a) above in the Back-up Servicer, an Event of Servicing
Termination described in Section 6.01 hereof with the Back-up Servicer
then being considered the Servicer;
(iii) The Back-up Servicer shall consent to the appointment
of a custodian, receiver, trustee or liquidator (or other similar
official) of itself, or of a substantial part of its property, or
shall admit in writing its inability to pay its debts generally as
they come due, a court of competent jurisdiction shall determine that
the Back-up Servicer is
43
generally not paying its debts as they come due or the Back-up
Servicer shall make a general assignment for the benefit of creditors;
(iv) The Back-up Servicer shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization
in a proceeding under any bankruptcy laws (as now or hereafter in
effect) or an answer admitting the material allegation of a petition
filed against the Back-up Servicer in any such proceeding, or the
Back-up Servicer shall, by voluntary petition, answer or consent, seek
relief under the provisions of any now existing or future bankruptcy
or other similar law providing for the reorganization or winding up of
debtors, or providing for an agreement, composition, extension or
adjustment with its creditors;
(v) Any representation or warranty made by the Back-up
Servicer in this Agreement proves to have been incorrect in any
material respect when made, which has a material adverse effect on the
Noteholders or the Note Insurer and which continues to have a material
adverse effect or be incorrect in any material respect for a period of
30 days after the Back-up Servicer has knowledge of such inaccuracy or
written notice of such inaccuracy requiring it to be remedied has been
given by the Note Insurer or the Indenture Trustee;
(vi) A petition against the Back-up Servicer in a proceeding
under applicable bankruptcy laws or other insolvency laws, as now or
hereafter in effect, shall be filed and shall not be stayed, withdrawn
or dismissed within 60 days thereafter, or if, under the provisions of
any law providing for reorganization or winding-up of debtors which
may apply to the Back-up Servicer, any court of competent jurisdiction
shall assume jurisdiction, custody or control of the Back-up Servicer,
or any substantial part of its property, and such jurisdiction,
custody or control shall remain in force unrelinquished, unstayed or
unterminated for a period of 60 days;
(vii) Any assignment by the Back-up Servicer to a delegate of
its duties or rights hereunder, except as specifically permitted
hereunder, or any attempt to make such an assignment;
then, and in each and every such case, so long as such Event of Back-up
Servicing Termination shall not have been remedied within the applicable grace
period set forth above, the Indenture Trustee shall, at the direction of the
Note Insurer (or, if a Note Insurer Default has occurred and is continuing, the
Majority Holders), or may, with the consent of the Note Insurer (or, if a Note
Insurer Default has occurred and is continuing, the Majority Holders), by
notice (the "Back-up Servicer Termination Notice") then given in writing to the
Back-up Servicer, terminate all, but not less than all, of the rights and
obligations of the Back-up Servicer under this Agreement. Such notice shall
state the effective date of the termination, which shall not be prior to the
acceptance of the appointment by the successor Back-up Servicer. On and after
the time the Back-up Servicer receives a Back-up Servicer Termination Notice
pursuant to this Section 6.06, all authority and power of the Back-up Servicer
under this Agreement, whether with respect to the Notes or the Contracts or
otherwise, shall pass to and be vested in the Indenture Trustee or a successor
Back-up Servicer appointed pursuant to Section 6.02 hereof and, without
limitation, such successor Back-up Servicer is hereby authorized and empowered
to execute and deliver, on
44
behalf of the Back-up Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such Back-up Servicer
Termination Notice, whether to complete the transfer of the Contracts and
related documents or otherwise.
(b) If a Back-up Servicer Termination Notice is received by
the Back-up Servicer while it is performing under Section 4.12(a) above, the
Back-up Servicer agrees to cooperate with the Issuer, the Indenture Trustee,
the Note Insurer, the Collateral Agent, the successor Servicer or the successor
Back-up Servicer in effecting the termination of the Back-up Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the successor Servicer or the successor Back-up Servicer of all
data then in the possession of the Back-up Servicer; all at the Back-up
Servicer's expense.
SECTION 6.07 Waiver of Defaults. The Indenture Trustee with
the prior written consent of the Note Insurer (unless a Note Insurer Default
has occurred and is continuing), or the Note Insurer (unless a Note Insurer
Default has occurred and is continuing) may waive any events permitting removal
of the Back-up Servicer under Section 6.06 hereof. Upon any waiver of a past
default, such default shall cease to exist, and any Event of Back-up Servicing
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
ARTICLE VII
THE COLLATERAL AGENT
Section 7.01 Duties of the Collateral Agent. (a) The
Collateral Agent, prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or
waived, the Collateral Agent shall exercise such of the rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) The Collateral Agent, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Collateral Agent which are specifically required
to be furnished pursuant to any provision of this Agreement, shall examine them
to determine whether they conform on their face to the requirements of this
Agreement; provided, however, that the Collateral Agent shall not be
responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by
any Person hereunder.
(c) No provision of this Agreement shall be construed to
relieve the Collateral Agent from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct; provided, however,
that:
45
(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Collateral Agent shall be determined
solely by the express provisions of this Agreement, the Collateral
Agent shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement
against the Collateral Agent and, in the absence of bad faith on the
part of the Collateral Agent, the Collateral Agent may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Collateral Agent and conforming to the requirements
of this Agreement;
(ii) the Collateral Agent shall not be personally liable for
an error of judgment made in good faith by a Responsible Officer or
other officers of the Collateral Agent, unless it shall be proved that
the Collateral Agent was negligent in ascertaining the pertinent
facts;
(iii) the Collateral Agent shall not be personally liable
with respect to any action taken, suffered or omitted to be taken by
it in good faith in accordance with the written direction of the Note
Insurer or the Indenture Trustee provided that the prior written
consent of the Note Insurer shall have been obtained in each instance;
(iv) the Collateral Agent shall not be required to expend or
risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of
its rights or powers if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it and none of the provisions
contained in this Agreement shall in any event require the Collateral
Agent to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer or the Indenture Trustee under
this Agreement; and
(v) subject to the other provisions of this Agreement and
without limiting the generality of this Section 7.01, the Collateral
Agent shall have no duty (A) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a
security interest, or to see to the maintenance of any such recording
or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any insurance, (C) to see
to the payment or discharge of any tax, assessment, or other
governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust, the
Trust Property, the Noteholders or the Contracts, (D) to confirm or
verify the contents of any reports or certificates of any Person
delivered to the Collateral Agent pursuant to this Agreement believed
by the Collateral Agent to be genuine and to have been signed or
presented by the proper party or parties.
Section 7.02 Certain Matters Affecting the Collateral Agent.
Except as otherwise provided in Section 7.01 hereof:
46
(a) the Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, Opinion of Counsel, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) the Collateral Agent may consult with counsel and any
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of
Counsel;
(c) the Collateral Agent shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to institute, conduct or defend by litigation hereunder or in relation
hereto at the request, order or direction of the Note Insurer (or, if
a Note Insurer Default is then continuing, the Majority Holders),
pursuant to the provisions of this Agreement, unless such Noteholders
or the Note Insurer, as applicable, shall have offered to the
Indenture Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein by the
Collateral Agent or thereby; nothing contained herein shall, however,
relieve the Collateral Agent of the obligation, upon the occurrence of
an Event of Default (which has not been cured), to exercise such of
the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in its exercise as a prudent person
would exercise or use under the circumstances in the conduct of such
person's own affairs;
(d) the Collateral Agent shall not be personally liable for
any action taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(e) prior to the occurrence of an Event of Default and after
the curing of all Events of Default which may have occurred, the
Collateral Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing
to do so by the Note Insurer or Holders of Notes evidencing Percentage
Interests aggregating not less than 25%; provided, however, that if
the payment within a reasonable time to the Collateral Agent of the
costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Collateral
Agent, not reasonably assured to the Collateral Agent by the security
afforded to it by the terms of this Agreement, the Collateral Agent
may require reasonable indemnity against such expense or liability as
a condition to taking any such action. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the
Collateral Agent, shall be repaid by the Servicer upon demand from the
Servicer's own funds;
(f) the right of the Collateral Agent to perform any
discretionary act enumerated in this Agreement shall not be construed
as a duty, and the Collateral Agent shall not be answerable for
anything other than its negligence or willful misconduct in the
performance of such act;
47
(g) the Collateral Agent may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys; provided, that Collateral Agent will
remain obligated and be liable to the Indenture Trustee and the Issuer
for its duties in accordance with the provisions of this Agreement
without diminution of such obligation and liability by virtue of the
appointment of such agents, to the same extent and under the same
terms and conditions as if the Collateral Agent alone were performing
such duties.
Section 7.03 Collateral Agent Not Liable for Notes or
Contracts. The recitals contained herein shall be taken as the statements of
the Trust and the Servicer, as the case may be, and the Collateral Agent
assumes no responsibility for their correctness. The Collateral Agent makes no
representations as to the validity or sufficiency of this Agreement or of any
Contract or related document. The Collateral Agent shall not be accountable for
the use or application of any funds paid to the Servicer in respect of the
Contract or deposited in or withdrawn from the Collection Account by the
Servicer. The Collateral Agent shall not be responsible for the legality or
validity of the Agreement or the validity, or sufficiency of the Notes issued
or intended to be issued under the Indenture.
Section 7.04 Collateral Agent May Own Notes. The Collateral
Agent in its individual or any other capacity may become the owner or pledgor
of Notes with the same rights it would have if it were not Collateral Agent,
and may otherwise deal with the parties hereto.
Section 7.05 Collateral Agent's Fees and Expenses; Indemnity.
(a) The Collateral Agent acknowledges that in consideration of the performance
of its duties hereunder it is entitled to receive its fees and expenses from
the Servicer, as separately agreed between the Servicer and the Collateral
Agent. The Trust, the Depositor, the Indenture Trustee and the Note Insurer
shall not pay any of the Collateral Agent fees and expenses in connection with
this transaction. The Collateral Agent shall not be entitled to compensation
for any expense, disbursement or advance as may arise from its negligence or
bad faith, and the Collateral Agent shall have no lien on the Trust Property
for the payment of its fees and expenses.
(b) The Collateral Agent and any director, officer, employee
or agent of the Collateral Agent shall be indemnified by the Servicer and held
harmless against any loss, liability, claim, damage or expense arising out of,
or imposed upon the Collateral Agent as a direct result of the Servicer's acts
or omissions in violation of this Agreement, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence of
the Collateral Agent or by reason of the Collateral Agent 's reckless disregard
of obligations and duties hereunder. The obligations of the Servicer under this
Section 7.05 arising prior to any resignation or termination of the Servicer
hereunder shall survive termination of the Servicer and payment of the Notes.
Section 7.06 Eligibility Requirements for Collateral Agent.
The Collateral Agent hereunder shall at all times be a banking entity (a)
organized and doing business under the laws of any state or the United States
of America subject to supervision or examination by federal or state authority,
(b) authorized under such laws to exercise corporate trust powers, including
taking title to the Trust Property on behalf of the Indenture Trustee, for the
benefit of the Noteholders and the Note Insurer, (c) having a combined capital
and surplus of at least
48
$50,000,000, (d) whose long-term deposits, if any, shall be rated at least BBB-
by S&P and Baa3 by Moody's (except as provided herein) or such lower long-term
deposit rating as may be approved in writing by the Note Insurer, and (e)
acceptable to the Note Insurer as evidenced in writing. If such banking entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of determining an entity's combined capital and surplus for clause (c)
of this Section 7.06, the amount set forth in its most recent report of
condition so published shall be deemed to be its combined capital and surplus.
In case at any time the Collateral Agent shall cease to be eligible in
accordance with the provisions of this Section 7.06, the Collateral Agent shall
resign immediately in the manner and with the effect specified in Section 7.07.
Section 7.07 Resignation and Removal of the Collateral Agent.
(a) The Collateral Agent may at any time resign and be discharged from the
trusts hereby created by giving thirty (30) days' written notice thereof to the
Indenture Trustee, the Servicer, and the Note Insurer.
(d) If at any time the Collateral Agent shall cease to be
eligible in accordance with the provisions of Section 7.06 and shall fail to
resign after written request therefor by the Indenture Trustee, the Servicer or
the Note Insurer, or if at any time the Collateral Agent shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Collateral Agent or of its property shall be appointed, or any public officer
shall take charge or control of the Collateral Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Indenture Trustee or the Servicer, with the consent of the Note Insurer, or
the Note Insurer may remove the Collateral Agent.
(e) If the Collateral Agent fails to perform in accordance
with the terms of this Agreement, the Indenture Trustee, the Servicer or the
Majority Noteholders, with the consent of the Note Insurer, or the Note Insurer
may remove the Collateral Agent.
(f) Upon removal or receipt of notice of resignation of the
Collateral Agent, the Indenture Trustee shall either (i) take possession of the
Contract Files and assume the duties of the Collateral Agent hereunder or (ii)
with the prior written consent of the Note Insurer, appoint a successor
Collateral Agent pursuant to Section 7.08. If the Indenture Trustee shall
assume the duties of the Collateral Agent hereunder, it shall notify the Trust,
the Depositor, the Servicer, the Rating Agencies and Note Insurer in writing.
Section 7.08 Successor Collateral Agent. Upon the resignation
or removal of the Collateral Agent, the Indenture Trustee may or shall, at the
written direction of the Note Insurer, appoint a successor Collateral Agent,
which successor shall, in each instance, have been approved in writing by the
Note Insurer, the Note Insurer; provided, however, that the successor
Collateral Agent so appointed shall in no event be the Originator, the
Depositor, either Transferor or the Servicer or any Person known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of the
Originator, the Depositor, either Transferor or the Servicer and shall be
approved by the Note Insurer. The Indenture Trustee or such custodian, as the
case may be, shall assume the duties of the Collateral Agent hereunder. Any
successor Collateral Agent appointed as provided in this Section 7.08 shall
execute, acknowledge and deliver to the Trust, the Depositor, the Note Insurer,
the Servicer, the Indenture Trustee and to its predecessor Collateral
49
Agent an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Collateral Agent shall become
effective and such successor Collateral Agent, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as Collateral Agent herein. The predecessor Collateral Agent shall
deliver to the successor Collateral Agent all Contract Files and related
documents and statements held by it hereunder, and the Servicer and the
predecessor Collateral Agent shall execute and deliver such instruments and do
such other things as may reasonably be required for more fully and certainly
vesting and confirming in the successor Collateral Agent all such rights,
powers, duties and obligations. The cost of any such transfer to the successor
Collateral Agent shall be for the account of the Collateral Agent in the event
of the resignation of the Collateral Agent, and shall be for the account of the
Servicer in the event of the removal of the Collateral Agent. No successor
Collateral Agent shall accept appointment as provided in this Section 7.08
unless at the time of such acceptance such successor Collateral Agent shall be
eligible under the provisions of Section 7.06. Upon acceptance of appointment
by a successor Collateral Agent as provided in this Section 7.08, the Servicer
shall mail notice of the succession of such Collateral Agent hereunder to all
Noteholders at their addresses as shown in the Note Register and to the Rating
Agencies. If the Servicer fails to mail such notice within ten (10) days after
acceptance of appointment by the successor Collateral Agent, the successor
Collateral Agent shall cause such notice to be mailed at the expense of the
Servicer.
Section 7.09 Merger or Consolidation of Collateral Agent. Any
Person into which the Collateral Agent may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Collateral
Agent shall be a party, or any corporation or national banking association
succeeding to the business of the Collateral Agent, shall be the successor of
the Collateral Agent hereunder; provided, that such corporation or national
banking association (i) shall have been approved in writing by the Servicer and
(ii) be eligible under the provisions of Section 7.06, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01 Amendment. (a) This Agreement may be amended
from time to time by the Issuer, the Servicer, the Originator, the Transferors,
the Collateral Agent, the Back-up Servicer and the Indenture Trustee, without
the consent of any of the Noteholders but with the prior written consent of the
Controlling Party, to cure any ambiguity herein; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel acceptable to the
Indenture Trustee, adversely affect in any respect the interests of any
Noteholder.
(b) This Agreement may also be amended from time to time by
the Servicer, the Back-up Servicer, the Issuer, the Originator, the Collateral
Agent, the Transferors and the Indenture Trustee with the prior written consent
of the Controlling Party 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; provided, however,
that
50
no such amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts or
distributions that are required to be made on any Note without the consent of
the Holder of such Note or (ii) reduce the aforesaid percentage required to
consent to any such amendment, without the consent of the Holders of all Notes
then outstanding.
(c) Prior to the effectiveness of any amendment under Section
8.01(a) or (b) hereof, the Rating Agencies shall have confirmed in writing
their respective ratings of the Notes.
(d) Promptly after the execution of any such amendment, the
Servicer shall furnish a written copy of the text of such amendment (and any
consent required with respect thereto) to each Noteholder, the Note Insurer,
and the Rating Agencies.
(e) Approval of the particular form of any proposed amendment
or consent shall not be necessary for the consent of the Noteholders under
Section 8.01(b) hereof, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by the Noteholders shall
be subject to such reasonable requirements as the Indenture Trustee may
prescribe.
(f) The Indenture Trustee, the Collateral Agent, the Rating
Agencies and the Note Insurer (unless a Note Insurer Default has occurred and
is continuing) shall be entitled to receive an officer's certificate and an
Opinion of Counsel to the effect that all conditions precedent to the amendment
of this Agreement have been satisfied. The Indenture Trustee may, but shall not
be obligated to, execute and deliver any such amendment which affects that
Indenture Trustee's rights, powers, immunities or indemnifications hereunder.
SECTION 8.02 Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 8.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
OF ANY STATE.
SECTION 8.04 Notices. All demands, notices, instructions,
directions and communications (other than periodic communications of a routine
nature made in connection with the dissemination of information regarding the
Trust Property, the Servicer and the Trust required to be delivered hereunder,
which shall be delivered or mailed by first class mail or facsimile
transmission) hereunder shall be in writing, personally delivered or mailed by
overnight courier, and shall be deemed to have been duly given upon receipt (a)
in the case of the Servicer, the Originator or the Transferors, c/o American
Business Leasing, Inc., at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (b) in the case
51
of the Issuer, c/o First Union Trust Company, National Association at One
▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Administration, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy
(▇▇▇) ▇▇▇-▇▇▇▇, (c) in the case of the Indenture Trustee, ▇/▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Capital Markets Fiduciary Services, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy (212)
946-8191, (d) in the case of S&P, at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Asset Backed Surveillance, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy (212)
208-8208, (e) in the case of ▇▇▇▇▇'▇, at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (f) in the case
of the Note Insurer, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention:
Surveillance Department (in each case in which notice or other communication to
the Note Insurer refers to an Event of Default, a claim on the Note Insurance
Policy or with respect to which failure on the part of the Note Insurer to
respond shall be deemed to constitute consent or acceptance, then a copy of
such notice or other communication should also be sent to the attention of each
of the General Counsel and the Head -- Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED"), (g) in the case of DCR, at ▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed
Monitoring Department (Equipment Leasing), telecopy (▇▇▇) ▇▇▇-▇▇▇▇, (h) in the
case of the Back-up Servicer, at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Global Trust Services, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy
(▇▇▇) ▇▇▇-▇▇▇▇ and (i) in the case of the Collateral Agent, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Document Custody Manager,
telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopy (▇▇▇) ▇▇▇-▇▇▇▇. Any notice required or
permitted to be mailed to a Noteholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in the Note Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given on the fifth Business Day
following mailing, whether or not the Noteholder receives such notice.
SECTION 8.05 Severability of Provisions. If any 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 the rights of the Holders thereof.
SECTION 8.06 Third Party Beneficiary. The parties hereto
acknowledge and agree that the Note Insurer and the Owner Trustee are express
third party beneficiaries of this Agreement.
SECTION 8.07 Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Section 5.02 hereof, this
Agreement may not be assigned by the Servicer except with prior written consent
of the Controlling Party. Notice of any such assignment received by a
Responsible Officer of the Indenture Trustee shall be given to the Rating
Agencies by the Indenture Trustee.
SECTION 8.08 Binding Effect. This Agreement shall inure to
the benefit of, and shall be binding upon the Servicer, the Issuer, the
Indenture Trustee, the Owner Trustee, the Back-up Servicer and the Noteholders
and their respective successors and permitted assigns, subject, however, to the
limitations contained in this Agreement. This Agreement shall not inure
52
to the benefit of any Person other than the Issuer, the Servicer, the Indenture
Trustee, the Collateral Agent, the Back-up Servicer, the Owner Trustee, the
Note Insurer and the Noteholders.
SECTION 8.09 Survival of Agreement. All covenants,
agreements, representations and warranties made herein and in the other
documents delivered pursuant hereto shall survive the pledge of the Pledged
Property and the issuance of the Notes and shall continue in full force and
effect until terminated pursuant to Section 9.01 of the Indenture.
SECTION 8.10 Captions. The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.
SECTION 8.11 Exhibits. The exhibits to this Agreement are
hereby incorporated herein and made a part hereof and are an integral part of
this Agreement.
SECTION 8.12 Calculations. Except as otherwise provided in
this Agreement, all interest rate calculations under this Agreement, including
those with respect to the Contracts, will be made on the basis of a 360-day
year and twelve 30-day months (i.e., each Interest Accrual Period shall be
deemed to be equal to 30 day periods) and will be carried out to at least seven
decimal places.
SECTION 8.13 No Proceedings. The Servicer, the Originator,
the Back-up Servicer, the Collateral Agent, the Owner Trustee, the Transferors,
and the Indenture Trustee each hereby agrees, and each Noteholder, by its
acceptance of its Note, shall be deemed to agree, that it will not directly or
indirectly institute, or cause to be instituted, against any of the
Transferors, the Managers or the Trust any bankruptcy or insolvency proceeding
so long as there shall not have elapsed one year plus one day since the
maturity date of the latest maturing securities of the Issuer.
53
[Remainder of Page Intentionally Left Blank]
54
IN WITNESS WHEREOF, the Servicer, the Originator, the
Transferors, the Back-Up Servicer, the Collateral Agent, the Issuer and the
Indenture Trustee have caused this Agreement to be duly executed by their
respective officers, all as of the day and year first above written.
ABFS EQUIPMENT CONTRACT TRUST 1999-A, as
Issuer
By: FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION not in its individual
capacity but solely as Owner
Trustee under the Trust Agreement
By:
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee and as Back-up
Servicer
By:
------------------------------------
Name:
Title:
AMERICAN BUSINESS LEASING, INC., as
Servicer and as
Originator
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
Title: Chairman
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Collateral Agent
By:
------------------------------------
Name:
Title:
[Signature Page for Servicing Agreement]
ABFS FINANCE LLC 1999-A, as Transferor
By: ABFS SPECIAL PURPOSE MANAGEMENT,
INC., its Managing Member
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
ABFS RESIDUAL LLC 1999-A, as Transferor
By: SPECIAL PURPOSE MANAGEMENT, INC.,
its Managing Member
By:
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
[Signature Page for Servicing Agreement]
EXHIBIT A
FORM OF CONTRACT
EXHIBIT B
FORM OF MONTHLY STATEMENT
EXHIBIT C
FORM OF SOURCE AGREEMENT
EXHIBIT D
COLLATERAL AGENT'S ACKNOWLEDGEMENT OF RECEIPT
June __, 1999
Prudential Securities Secured American Business Leasing, Inc.
Financing Corporation ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Bala ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The Chase Manhattan Bank, Financial Security Assurance Inc.
as Indenture Trustee ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Chase Bank of Texas, N.A., in its capacity as collateral
agent (the "Collateral Agent") on behalf of The Chase Manhattan Bank, as
indenture trustee (the "Indenture Trustee"), under that certain Servicing
Agreement, dated as of June 1, 1999 (the "Servicing Agreement"), among ABFS
Equipment Contract Trust 1999-A, as issuer (the "Issuer"), American Business
Leasing, Inc., as Servicer (the "Servicer") and originator, ABFS Residual LLC
1999-A, as a transferor, ABFS Finance LLC 1999-A, as a transferor, the
Collateral Agent, and The Chase Manhattan Bank, as Indenture Trustee and
back-up servicer, hereby acknowledges receipt of the Collateral Agent's
Contract Files with respect to each Contract on the List of Contracts
The List of Contracts is attached to this Receipt.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in Annex A to the Indenture, dated as of
June 1, 1999, by and between the Issuer, the Servicer and the Indenture
Trustee.
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent
By:
-----------------------------
Name:
Title:
D-1
EXHIBIT E
INDENTURE TRUSTEE'S ACKNOWLEDGEMENT OF RECEIPT
June ___, 1999
Prudential Securities Secured American Business Leasing, Inc.
Financing Corporation ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Bala ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Chase Bank of Texas, N.A. Financial Security Assurance Inc.
as Collateral Agent ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The Chase Manhattan Bank, it its capacity as indenture
trustee (the "Indenture Trustee") under that certain Indenture, dated as of
June 1, 1999 (the "Indenture"), among ABFS Equipment Contract Trust 1999-A, as
issuer (the "Issuer"), American Business Leasing, Inc., as servicer (the
"Servicer"), and the Indenture Trustee, hereby acknowledges receipt of (x) the
Note Insurance Policy and (y) the Pledged Notes.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in Annex A to the Indenture.
THE CHASE MANHATTAN BANK
as Indenture Trustee
By:
----------------------------
Name:
Title:
E-1
EXHIBIT F
FOR OF REQUEST FOR RELEASE OF DOCUMENTS
________________,
Chase Bank of Texas, N.A.,
as Collateral Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
The Chase Manhattan Bank,
as Indenture Trustee
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Servicing Agreement, dated as of June 1, 1999 among ABFS
Equipment Contract Trust 1999-A, American Business
Leasing, Inc., as Servicer, ABFS Residual LLC 1999-A and
ABFS Finance LLC 1999-A, as Transferors, The Chase
Manhattan Bank, as Indenture Trustee, and Chase Bank of
Texas, N.A., as Collateral Agent
In connection with the administration of the pool of
Contracts held by Chase Bank of Texas, N.A., as Collateral Agent, on behalf of
The Chase Manhattan Bank, as Indenture Trustee, for the benefit of the
Noteholders and the Note Insurer, we request the release, and acknowledge
receipt, of the (Collateral Agent's Contract File/[specify document]) for the
Contract described below, for the reason indicated.
Obligor's Name, Address & Zip Code:
Contract Number:
Reason for Requesting Documents (check one)
____ 1. Contract Paid in Full
(Servicer hereby certifies that all amounts received in connection
therewith have been credited to the Collection Account.)
____ 2. Contract Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Collection Account.)
F-1
____ 3. Contract in Foreclosure.
____ 4. Contract Reacquired.
____ 5. Contract Reacquired or Substituted (Servicer hereby certifies that the
Reacquisition Amount or Substitution Adjustment has been credited
to the Collection Account)
____ 6. Other (explain)____________________________________________________
If box 1 or 2 above is checked, and if all or part of the
Collateral Agent's Contract was previously released to us, please release to us
our previous receipt on file with you, as well as any additional documents in
your possession relating to the above specified Contract.
If box 3, 4, 5 or 6 above is checked, upon our return of all
of the above documents to the Collateral Agent, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
AMERICAN BUSINESS LEASING, INC.,
as Servicer
By:
---------------------------------
Name:
Title:
Documents returned to Collateral Agent:
CHASE BANK OF TEXAS, N.A.,
as Collateral Agent
By:
------------------------------
Name:
Title:
Date:
F-2