EXHIBIT 4.2
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CONTRIBUTION AND SERVICING AGREEMENT
among
CONSECO FINANCE LEASE 2000-1, LLC
Issuer
GREEN TREE LEASE FINANCE II, INC.
Contributor
CONSECO FINANCE VENDOR SERVICES CORPORATION
In its Individual Capacity and as Servicer
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
Trustee
Dated as of July 1, 2000
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TABLE OF CONTENTS
Page
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INTRODUCTION................................................................. 1
ARTICLE I DEFINITIONS.........................................................1
SECTION 1.1. Definitions...................................................1
SECTION 1.2. Usage of Terms................................................8
SECTION 1.3. Calculations..................................................9
SECTION 1.4. Section References............................................9
SECTION 1.5. No Recourse...................................................9
ARTICLE II CONVEYANCE OF LEASES...............................................9
SECTION 2.1. Conveyance of Leases and Related Assets.......................9
SECTION 2.2. Custody of Lease Files.......................................10
SECTION 2.3. Further Assurances...........................................12
SECTION 2.4. Representations and Warranties of Contributor................12
SECTION 2.5. Nonpetition Covenant.........................................15
SECTION 2.6. Repurchase of Leases Upon Breach of Representations
and Warranties.,,,,,,,,,,,,,,,,,,,,,,......................15
ARTICLE III ADMINISTRATION AND SERVICING OF LEASES...........................16
SECTION 3.1. Duties of the Servicer.......................................16
SECTION 3.2. Collection of Lease Payments; Modifications of Leases........17
SECTION 3.3. Realization Upon Leases......................................18
SECTION 3.4. Insurance, Maintenance and Taxes.............................20
SECTION 3.5. Maintenance of Security Interests in Equipment...............22
SECTION 3.6. Covenants, Representations, and Warranties of Servicer.......22
SECTION 3.7. Sub-Servicers................................................24
SECTION 3.8. Total Servicing Fee; Payment of Expenses by Servicer.........24
SECTION 3.9. Servicer's Certificate.......................................24
SECTION 3.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event.........................................25
SECTION 3.11. Annual Independent Accountants' Report.......................25
SECTION 3.12. Access to Certain Documentation and Information
Regarding Leases..........................................26
SECTION 3.13. Certain Duties of the Servicer...............................26
SECTION 3.14. Duties of the Servicer under the Indenture...................26
SECTION 3.15. Fidelity Bond................................................27
ARTICLE IV COLLECTIONS AND DEPOSITS..........................................28
SECTION 4.1. Initial Deposit..............................................28
SECTION 4.2. Collections..................................................28
SECTION 4.3. Application of Collections...................................29
SECTION 4.4. Net Deposits.................................................30
SECTION 4.5. Servicer Advances............................................30
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ARTICLE V TERMINATION........................................................30
SECTION 5.1. Optional Purchase of All Leases; Liquidation of
Trust Assets...............................................30
SECTION 5.2. Mandatory Purchase of Leases.................................31
ARTICLE VI THE CONTRIBUTOR...................................................31
SECTION 6.1. Liability of Contributor.....................................31
SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of, Contributor; Amendment of Certificate
of Incorporation...........................................31
SECTION 6.3. Limitation on Liability of Contributor and Others............32
SECTION 6.4. Contributor May Own Notes....................................32
SECTION 6.5. Covenants of the Contributor.................................32
ARTICLE VII THE SERVICER.....................................................33
SECTION 7.1. Liability of Servicer; Indemnities...........................33
SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer...............................34
SECTION 7.3. Limitation on Liability of Servicer and Others...............35
SECTION 7.4. Servicer Not to Resign.......................................35
SECTION 7.5. Corporate Existence..........................................35
ARTICLE VIII SERVICER TERMINATION EVENTS.....................................35
SECTION 8.1. Servicer Termination Event..................................35
SECTION 8.2. Consequences of a Servicer Termination Event................37
SECTION 8.3. Trustee to Act; Appointment of Successor....................37
SECTION 8.4. Notification to Noteholders.................................38
SECTION 8.5. Waiver of Past Defaults.....................................38
ARTICLE IX SUBSTITUTION OF LEASES............................................38
SECTION 9.1. Substitution.................................................38
SECTION 9.2. Procedure....................................................39
SECTION 9.3. Objection and Repurchase.....................................40
SECTION 9.4. Vendor Services' and Servicer's Subsequent Obligations.......41
ARTICLE X MISCELLANEOUS PROVISIONS...........................................41
SECTION 10.1. Amendment...................................................41
SECTION 10.2. Protection of Title to Trust Assets.........................42
SECTION 10.3. Governing Law...............................................44
SECTION 10.4. Severability of Provisions..................................44
SECTION 10.5. Assignment..................................................44
SECTION 10.6. Third-Party Beneficiaries...................................44
SECTION 10.7. Counterparts................................................44
SECTION 10.8. Intention of Parties........................................45
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SECTION 10.9. Notices.....................................................45
SECTION 10.10. Income Tax Characterization.................................45
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EXHIBITS
Exhibit A -- Schedule of Leases and Equipment
Exhibit B -- Form of Servicer's Certificate
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THIS CONTRIBUTION AND SERVICING AGREEMENT, dated as of July 1, 2000, is
made among CONSECO FINANCE LEASE 2000-1, LLC, a Delaware limited liability
company (the "Issuer"), GREEN TREE LEASE FINANCE II, INC., a Minnesota
corporation, as Contributor (the "Contributor"), Conseco Finance VENDOR SERVICES
CORPORATION, a Delaware corporation, in its individual capacity and as Servicer
(in its individual capacity, "Vendor Services"; in its capacity as Servicer, the
"Servicer"), and ▇▇▇▇▇ Fargo Bank Minnesota, N.A., a national banking
association organized and existing under the laws of the United States of
America, as trustee under the Indenture (the "Trustee").
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 1.1. Definitions. All terms defined in the Indenture (as defined
below) shall have the same meaning in this Agreement. Whenever capitalized and
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
Accountants' Report: The report of a firm of nationally recognized
independent accountants described in Section 3.11.
Accounting Date: With respect to a Payment Date, the last day of the
preceding calendar month.
Adjusted Lease: A Lease that has had one or more terms adjusted or modified
by the Servicer, other than modifications permitted by Section 3.2.
Administrative Fee: With respect to any Collection Period, all
administrative fees, expenses and charges collected in respect of the Leases
during such Collection Period, including late fees, late payment interest,
documentation fees, insurance administration charges and any Extension Fees.
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
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Agreement or "this Agreement": This Contribution and Servicing Agreement,
all amendments and supplements thereto and all exhibits and schedules to any of
the foregoing.
Book Value: With respect to any Equipment, the value of such Equipment as
shown on the accounting books and records of Vendor Services as of the Cut-Off
Date. The Book Value for each item of Equipment shall be set forth on Exhibit A
hereto (as the same may be revised from time to time).
Business Day: Any day (other than a Saturday, Sunday or legal holiday) on
which commercial banking institutions in St. ▇▇▇▇, Minnesota, or any other
location of any successor Servicer or successor Trustee, are open for regular
business.
Collection Account: The account designated as such in, and established and
maintained pursuant to, Section 8.02 of the Indenture.
Collection Period: With respect to a Payment Date, the calendar month
preceding the month in which such Payment Date occurs (such calendar month being
referred to as the "related" Collection Period with respect to such Payment
Date). With respect to an Accounting Date, the Collection Period in which such
Accounting Date occurs is referred to herein as the "related" Collection Period
with respect to such Accounting Date.
Collection Records: All manually prepared or computer generated records
relating to collection efforts or payment histories with respect to the Leases.
Contributor: Green Tree Lease Finance II, Inc., a Minnesota corporation, or
its successor in interest pursuant to Section 6.2.
Cut-Off Date: The Initial Cut-Off Date or, in the case of a Substitute
Lease, the first day of the month of transfer of such Substitute Lease to the
Issuer.
Deposit Date: With respect to any Collection Period, the Business Day
immediately preceding the related Determination Date.
Determination Date: With respect to any Collection Period, the first
Business Day immediately preceding the related Payment Date.
Eligible Lease: A Lease satisfying the Representations and Warranties.
Eligible Servicer: Vendor Services, the Trustee or another Person which at
the time of its appointment as Servicer (i) is servicing a portfolio of
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables comparable to
the Leases, (ii) is legally qualified and has the capacity to service the
Leases, (iii) has demonstrated the ability professionally and competently to
service a portfolio of equipment lease
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contracts, installment sale contracts, promissory notes, loan and security
agreements and other similar types of receivables comparable to the Leases with
reasonable skill and care, (iv) has available software which is adequate to
perform its duties and responsibilities under this Agreement, and (v) satisfies
the Rating Agency Condition.
Equipment: The Equipment subject to a Lease, as more particularly described
on Exhibit A hereto (as the same may be revised from time to time).
Extension Fees: Any fee received by the Servicer in consideration for the
granting of an extension on the payment of any Scheduled Payment due under a
Lease.
Indenture: The Indenture, dated as of July 1, 2000, between the Issuer and
the Trustee, as the same may be amended and supplemented from time to time.
Initial Cut-Off Date: July 1, 2000.
Initial Pool Principal Balance: $614,154,373.70
Insurance, Maintenance and Tax Accounts: The accounts which are established
and maintained pursuant to Section 3.4(a).
Insurance Policy: Any insurance policy benefiting the lessor or secured
party under a Lease providing loss or physical damage, theft or similar coverage
with respect to the Equipment.
Issuer: Conseco Finance Lease 2000-1, LLC.
Lease File: The documents, electronic entries, instruments and writings
listed in Section 2.2 pertaining to a particular Lease.
Lease Pool Principal Balance: With respect to any Payment Date, the sum of
the Principal Balances (computed as of the related Accounting Date) for all
Leases.
Leases: The lease contracts listed on Exhibit A hereto
(excluding any such lease contract which has become a Purchased Lease but
including all Substitute Leases) and all rights and obligations under such
contracts, including, without limitation, all monies at any time paid or payable
thereon or in respect thereof from and after the Cut-Off Date (whether in the
form of (i) Scheduled Payments (including those Scheduled Payments due prior to,
but not received as of, the Cut-Off Date, but excluding those Scheduled Payments
due on or after, but received prior to, the Cut-Off Date), (ii) Prepayments,
(iii) Liquidation Proceeds (including all net proceeds from the disposition of
the related Equipment), (iv) Extension Fees, (v) payments to be applied by the
Servicer to the payment of insurance charges, maintenance, taxes or other
similar obligations, (vi) payments to be retained by the Servicer in payment of
Administrative Fees, or otherwise), and all rights of the lessor in the related
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Equipment (other than any ownership interest of the lessor in such Equipment),
Insurance Policies and any other security for the payment of amounts due under
such contracts.
Lien: Any security interest, lien, charge, pledge, preference, equity or
encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
Liquidated Lease: With respect to any Collection Period, (i) a Lease which,
during such Collection Period, was charged off as uncollectible by the Servicer
in accordance with its credit and collection policies and procedures (which
shall be no later than the date as of which the Servicer has repossessed and
disposed of the related Equipment and otherwise collected all proceeds
(including any proceeds of insurance to be applied as described in Section
3.4(c)(ii)) which, in the Servicer's reasonable judgment, can be collected under
such Lease) following a default thereunder or upon damage to or destruction of
such Equipment (if such Equipment is not to be replaced or repaired in
accordance with Section 3.4(c)(i)), or (ii) a Lease as to which, during such
Collection Period, 10% or more of a Scheduled Payment shall have become 180 days
delinquent.
Liquidation Proceeds: All amounts received by the Servicer (i) in
connection with the liquidation of any Lease and disposition of the related
Equipment or (ii) as insurance proceeds with respect to any damaged or destroyed
Equipment to be applied as described in Section 3.4(c)(ii), in each case net of
(a) reasonable out-of-pocket expenses incurred by or on behalf of the Servicer
in connection with the collection of such Lease and the maintenance,
repossession, repair, storage and disposition of the related Equipment
(including taxes and insurance charges, to the extent in excess of amounts
available therefor and relating to such Lease in the Insurance, Maintenance and
Tax Accounts, as well as attorneys' fees) and (b) amounts that are required to
be refunded to the Obligor on such Lease; provided, however, that the
Liquidation Proceeds with respect to any Lease and disposition of the related
Equipment shall in no event be less than zero.
Monthly Records: All records and data maintained by the Servicer with
respect to the Leases in accordance with its customary standards, policies and
procedures.
Note Majority: Holders of Notes representing a majority of the Principal
Balance of each Class of the Notes then Outstanding.
Obligor: The lessee, borrower, purchaser or any other Person or Persons who
are obligated to make payments under a Lease.
Opinion of Counsel: A written opinion of counsel acceptable in form and
substance and from counsel acceptable to the Issuer and, if such opinion or a
copy thereof is required to be delivered to the Trustee, to the Trustee.
Original Term: The term of a Lease as of the Cut-Off Date (which shall
include any renewals or extensions of the original term thereof prior to the
Cut-Off Date), as such term may be
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extended in accordance with Section 3.2(c) or as a result of a bankruptcy
proceeding with respect to the related Obligor, but excluding, in the case of
any Lease, any other extensions or renewals thereof.
Payment Date: The twentieth day of each calendar month (or, if such
twentieth day is not a Business Day, the next succeeding Business Day),
commencing August 21, 2000.
Person: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
Pledged Revenues: (i) All Scheduled Payments on the Leases received on or
after the Cut-Off Date (including all Scheduled Payments due prior to, but not
received as of, the Cut-Off Date, but excluding any Scheduled Payments due on or
after, but received prior to, the Cut-Off Date); (ii) any Prepayments received
on the Leases on or after the Cut-Off Date (to the extent Vendor Services has
not delivered a Substitute Lease); (iii) the Purchase Amount of any Leases
repurchased by Vendor Services (to the extent Vendor Services has not delivered
a Substitute Lease) in accordance with Section 2.6 (other than any portion
thereof attributable to the Book Value of the Equipment); (iv) the amount paid
by the Contributor to repurchase the Leases pursuant to Section 5.1; (v)
Liquidation Proceeds received in respect of any Leases and the disposition of
the related Equipment on or after the Cut-Off Date (to the extent Vendor
Services has not delivered a Substitute Lease); and (vi) any earnings on the
investment of amounts credited to the Collection Account.
Portfolio Expense Account: The account designated as such in, and
established and maintained pursuant to, Section 8.09 of the Indenture.
Predecessor Lease: As defined in Section 9.1.
Prepaid Lease: With respect to any Collection Period, a Lease that has been
prepaid in full, whether pursuant to its terms or with the Servicer's consent in
accordance with Section 3.2(d).
Prepayment: With respect to any Collection Period for any Lease, a
voluntary prepayment during such Collection Period of amounts due and owing
under such Lease.
Principal Balance: As of any Accounting Date,
(1) in the case of any Lease that does not by its terms permit
prepayment or early termination, the present value of the unpaid Scheduled
Payments due on such Lease after such last day of the Collection Period
(excluding all Scheduled Payments due on or prior to, but not received as
of, such last day, as well as any Scheduled Payments due after such last
day and received on or prior thereto), after giving effect to any
Prepayments received on or prior to such last day, discounted monthly
(assuming, for purposes of such calculation, that each Scheduled Payment is
due on the last day of the applicable Collection Period) at the rate of
_____% per annum;
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(2) in the case of any Lease that permits prepayment or early
termination only upon payment of a premium that is at least equal to the
present value (calculated in the manner described in clause (1) above) of
the unpaid Scheduled Payments due on such Lease after the date of such
prepayment, the amount specified in clause (1) above; and
(3) in the case of any Lease that permits prepayment or early
termination without payment of a premium at least equal to the amount
specified in clause (2) above, the lesser of (a) the outstanding principal
balance of such Lease after giving effect to Scheduled Payments due on or
prior to such last day of the Collection Period, whether or not received,
as well as any Prepayments, and any Scheduled Payments due after such last
day, received on or prior to such last day, and (b) the amount specified in
clause (1) above;
provided that the Principal Balance of any Lease which became a Liquidated Lease
during the related Collection Period or was required to be repurchased by Vendor
Services as of the last day of the related Collection Period in accordance with
Section 2.6, will be deemed to be zero on and after the last day of such
Collection Period.
Purchase Amount: With respect to a Lease and related Equipment required to
be repurchased by Vendor Services in accordance with Section 2.6, the sum of (i)
the Required Payoff Amount for such Lease as of the Accounting Date on which
such obligation to so repurchase arises, plus (ii) the Book Value (if any) of
the related Equipment.
Purchased Lease: As of any Deposit Date, any Lease which Vendor Services
has repurchased (or substituted with a Substitute Lease therefor) as of the
related Accounting Date, as required by Section 2.6.
Related Assets: The assets, in addition to the Leases, transferred by the
Contributor to the Issuer pursuant to Section 2.1(a).
Related Documents: The Indenture, the Underwriting Agreement with the
Underwriters of the Notes, the Notes and the Transfer Agreement. The Related
Documents executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
Representations and Warranties: As defined in Section 2.6.
Required Payoff Amount: With respect to any Collection Period for any
Lease, the sum of (i) the Scheduled Payment due in such Collection Period,
together with any Scheduled Payments due in prior Collection Periods but not yet
received, plus (ii) the Principal Balance of such Lease (after taking into
account the Scheduled Payment due in such Collection Period, whether or not
received).
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Reserve Account: The account designated as such in, and established and
maintained pursuant to, Section 8.07 of the Indenture.
Residual Account: The account designated as such in, and established and
maintained pursuant to, Section 8.06 of the Indenture.
Residual Realizations: Cash flows realized from the sale or re-lease of the
Equipment following the scheduled expiration dates or voluntary early
termination of the Leases, other than Equipment subject to (i) Liquidated Leases
or (ii) Prepaid Leases for which Vendor Services has delivered a Substitute
Lease in accordance with Section 9.2.
Responsible Officer: When used with respect to the Servicer, the
Contributor or any other Person, the President, any Vice-President or Assistant
Vice-President or the Controller of such Person, or any other officer or
employee having similar functions.
Schedule of Leases: Collectively, the schedules of Leases (which shall be
made available to the parties hereto on a computer disk or other data storage
medium) attached hereto as (or described in) Exhibit A, as such schedules may be
revised from time to time in accordance with Sections 2.6 and 9.2(a).
Scheduled Payment: With respect to any Collection Period for any Lease
during the Original Term of such Lease, the required payment or payments due
under such Lease in such Collection Period other than those portions of such
payments which (i) under such Lease, are to be applied by the Servicer to the
payment of insurance charges, maintenance, taxes and other similar obligations,
or (ii) are retained by the Servicer in payment of Administrative Fees or are
late payments as to which Servicer Advances were made on a Payment Date.
Servicer: Conseco Finance Vendor Services Corporation, its successor in
interest pursuant to Section 8.2 or, after any termination of the Servicer upon
a Servicer Termination Event, any successor Servicer.
Servicer Advance: As defined in Section 4.5.
Servicer Termination Event: An event described in Section 8.1.
Servicer's Certificate: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached hereto as Exhibit B.
Servicing Account: The account designated as such in, and established and
maintained pursuant to, Section 8.05 of the Indenture.
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Servicing Fee: With respect to any Collection Period, the fee payable to
the Servicer or any successor servicer for services rendered during such
Collection Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Lease Pool Principal Balance determined as of the last day of
the second preceding Collection Period (or, in the case of the Servicing Fee
with respect to the Collection Period commencing on the Initial Cut-Off Date, an
amount equal to the product of (i) the Servicing Fee Rate, (ii) the Initial
Lease Pool Principal Balance, and (iii) a fraction, the numerator of which is
___ and the denominator of which is 360. If the Servicing Fee on any Payment
Date is less than $75,000 (either because of an insufficient Amount Available or
because the Lease Pool Principal Balance has been reduced), the Trustee will
withdraw the amount equal to the excess of $75,000 over the Servicing Fee
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Servicing Fee Rate: 0.50% per annum prior to and including the July 2001
Payment Date and 0.75% per annum thereafter. If any successor servicer is
appointed pursuant to this Agreement, the Servicing Fee Rate shall be 0.75% for
such successor servicer.
Sub-Servicer: The Person named as servicer or sub-servicer in any agreement
between the Servicer and such Person by which such Person is contractually
obligated to perform on the Servicer's behalf all or a part of the servicing
obligations described herein.
Substitute Lease: An Eligible Lease substituted by Vendor Services for (a)
a Liquidated Lease, (b) a Prepaid Lease, (c) a Warranty Lease or (d) an Adjusted
Lease, in accordance with Section 9.2.
Total Servicing Fee: The sum of the Servicing Fee, the Administrative Fees,
any applicable Additional Servicer Compensation and any earnings on the
investment of amounts in the Servicing Account.
Transfer Agreement: The Transfer Agreement, dated as of July 1, 2000,
between Vendor Services and the Contributor.
Trust Accounts: The Collection Account, the Servicing Account, the Residual
Account, the Reserve Account, the Insurance, Maintenance and Tax Accounts, the
Portfolio Expense Account, the Security Deposit Account and such other accounts
as may be established in the name of the Issuer or the Trustee pursuant to the
Indenture or this Agreement.
Trustee: The Person acting as Trustee under the Indenture, its successors
in interest and any successor Trustee under the Indenture.
Trustee Fee: 0.015% per annum, with a minimum of $2,500 per month.
UCC: The Uniform Commercial Code as in effect in the relevant jurisdiction.
Vendor Services: Conseco Finance Vendor Services Corporation, a Delaware
corporation.
Warranty Lease: A Lease subject to repurchase by Vendor Services pursuant
to Section 2.6.
SECTION 1.2. Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing
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words in a visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the terms "include" or "including" mean "include without limitation" or
"including without limitation."
SECTION 1.3. Calculations. All calculations of the Principal Balance of any
Lease and of the amount of the Servicing Fee shall be made on the basis of a
360-day year consisting of twelve 30-day months. All references to the Principal
Balance of a Lease as of any date shall refer to the close of business on such
date.
SECTION 1.4. Section References. All references to Articles, Sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
SECTION 1.5. No Recourse. No recourse may be taken, directly or indirectly,
under this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer or director, as such, of
the Contributor, Vendor Services, the Servicer or the Trustee or of any
predecessor or successor of the Contributor, Vendor Services, the Servicer or
the Trustee.
ARTICLE II
CONVEYANCE OF LEASES
SECTION 2.1. Conveyance of Leases and Related Assets. (a) Subject to the
terms and conditions of this Agreement, the Contributor, pursuant to the
mutually agreed upon terms contained herein, hereby transfers, assigns, and
otherwise conveys to the Issuer, without recourse (but without limitation of its
obligations in this Agreement), as of the Closing Date, all of the right, title
and interest, including any security interest, whether now owned or hereafter
acquired, of the Contributor in and to the following:
(i) the Leases, including, without limitation, (A) all monies at
any time paid or payable thereon or in respect thereof from and after
the Initial Cut-Off Date or, in the case of Substitute Leases, the
applicable Cut-Off Date, in the form of (1) Scheduled Payments
(including those Scheduled Payments due prior to, but not received as
of, the Cut-Off Date, but excluding those Scheduled Payments due on or
after, but received prior to, the Cut-Off Date), (2) Prepayments, (3)
Liquidation Proceeds (including all net proceeds from the disposition
of the related Equipment), (4) Extension Fees, (5) payments to be
applied by the Servicer to the payment of insurance charges,
maintenance, taxes or other similar obligations, and (6) payments to
be retained by the Servicer in payment of Administrative Fees, (B) all
rights of the lessor or the secured party, as the case may be, in all
present or future leases and other contracts relating
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to the Equipment and all revenues, payments, rights to payment,
profits, accounts, chattel paper, products and contract rights arising
from or related to such Equipment or any use thereof or from any such
lease or other contract, (C) all rights of the lessor or secured
party, as the case may be, in all Insurance Policies and any other
security (other than any ownership interest of the lessor in the
Equipment) for the payment of amounts due under the Leases (including
all rights, if any, the lessor or the secured party may have against
vendors and other third parties for payments of such amounts) and (D)
all items contained in the related Lease Files and any and all other
documents that are kept on file in accordance with Vendor Services'
customary procedures relating to the Leases;
(ii) all funds on deposit from time to time in the Trust Accounts
and all investments therein and proceeds thereof;
(iii) the Transfer Agreement;
(iv) the Residual Realizations; and
(v) any and all proceeds of the foregoing;
The foregoing does not constitute, nor is it intended to result in, the
creation or assumption by the Issuer, the Trustee or any Noteholder of any
obligation of the Contributor, the Servicer or any other Person in
connection with the Leases or the related Equipment or any agreement or
instrument relating thereto, including any obligation to the Obligors.
(b) As security for the payment of amounts described in Section
2.1(a)(i)(3) and 2.1(a)(iv), the Contributor hereby grants to the Issuer a
security interest in all of the right, title and interest, whether now
owned or hereafter acquired, of the Contributor in and to the Equipment and
all proceeds thereof.
(c) The execution and delivery of this Agreement shall constitute an
acknowledgment by each of the Contributor and the Issuer that they intend
that each assignment and transfer herein contemplated constitute an
assignment outright, and not for security, of the property described in
Section 2.1(a), conveying good title thereto free and clear of any Liens,
from the Contributor to the Issuer, and that all such property shall not be
a part of the estate of the Contributor in the event of the bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, or the
occurrence of another similar event, of, or with respect to the
Contributor. In the event that such conveyance is determined to be made as
security for a loan made by the Issuer or the Noteholders to the
Contributor, the Contributor hereby grants to the Issuer a security
interest in all of the Contributor's right, title and interest in and to
the property described in Section 2.1(a) to secure the loan determined to
have been made to the Contributor and the payment and performance of the
other obligations of the Contributor under this Agreement, and agrees that
in such event this Agreement shall constitute a security agreement under
applicable law.
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SECTION 2.2. Custody of Lease Files.
(a) The Issuer hereby appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Issuer as custodian of
the following documents or instruments (with respect to each Lease), which
will be, as of the Closing Date (or, in the case of a Substitute Lease, as
of the date of substitution in accordance with Section 9.2), in the
possession of the Servicer or its agents:
(i) the fully executed original of the Lease (together with any
agreements modifying the Lease, including, without limitation, any
extension agreements);
(ii) all documents related to the Leases;
(iii) documents evidencing or related to any Insurance Policy, or
copies thereof; and
(iv) such documents, if any, that Vendor Services keeps on file
in accordance with its customary procedures indicating that the
Equipment is owned or leased by the Obligor and subject to the
interest of the lessor or secured party.
(b) The Servicer agrees to maintain the Lease Files at the locations
where they are currently maintained, or at such other locations as shall
from time to time be identified to the Trustee by written notice. The
Servicer may temporarily move individual Lease Files or any portion thereof
without notice as necessary to conduct collection and other servicing
activities in accordance with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Lease Files on behalf of the Contributor, the
Issuer, the Noteholders and the Trustee, maintain accurate records
pertaining to each Lease to enable it to comply with the terms and
conditions of this Agreement and the Related Documents, maintain a
current inventory thereof and certify to the Trustee annually that it
continues to maintain possession of such Lease Files;
(ii) implement written policies and procedures with respect to
persons authorized to have access to the Lease Files and the
receipting for Lease Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes; and
(iii) attend to all details in connection with maintaining
custody of the Lease Files on behalf of the Contributor, the Issuer,
the Noteholders and the Trustee.
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(d) In performing its duties under this Section, the Servicer agrees
to service the Leases in accordance with customary and usual procedures of
institutions which service equipment Leases, installment sale contracts,
promissory notes, loan and security agreements and other similar types of
receivables comparable to the Leases and, to the extent more exacting, the
degree of skill and attention that the Servicer exercises from time to time
with respect to all comparable such contracts that it services for itself
or others. The Servicer shall promptly report to the Trustee any failure by
it to hold the Lease Files as herein provided and shall promptly take
appropriate action to remedy any such failure. In acting as custodian of
the Lease Files, the Servicer agrees further not to assert any beneficial
ownership interests in the Leases or the Lease Files. The Servicer agrees
to indemnify the Contributor, the Issuer, the Noteholders and the Trustee
for any and all liabilities, obligations, losses, damages, payments, costs
or expenses of any kind whatsoever which may be imposed on, incurred or
asserted against the Contributor, the Issuer, the Noteholders or the
Trustee as the result of any act or omission by the Servicer relating to
the maintenance and custody of the Lease Files; provided, however, that the
Servicer will not be liable for any portion of any such amount resulting
from the negligence or willful misconduct of the Contributor, the Issuer,
any Noteholder or the Trustee.
SECTION 2.3. Further Assurances. Following the Closing Date, the
Contributor shall, at the reasonable request of the Trustee or the Servicer, and
at the Contributor's expense, execute and deliver any further instruments of
transfer or other documents, and shall take all such other actions that may be
necessary, appropriate or desirable, to fully convey the Leases and the Related
Assets to the Issuer or otherwise to evidence, effectuate or implement the
transactions contemplated hereby. In addition, the Contributor, as agent for the
Issuer, shall defend the Leases and the Related Assets against any and all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to that of the Issuer.
SECTION 2.4. Representations and Warranties of Contributor. By its
execution of this Agreement, the Contributor makes the following representations
and warranties. Unless otherwise specified, such representations and warranties
speak as of the Closing Date.
(a) Organization and Good Standing. The Contributor has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Minnesota, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
transfer the Leases and the other property transferred to the Issuer.
(b) Due Qualification. The Contributor is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the performance of its
obligations under this Agreement and the Related Documents.
(c) Power and Authority. The Contributor has the power and authority
to execute and deliver this Agreement and the Contributor's Related
Documents and to carry out
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the terms hereof and thereof; the Contributor has full power and authority
to transfer and assign the Trust Assets to be transferred and assigned to
and deposited with the Issuer by it and has duly authorized such transfer
and assignment to the Issuer by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Contributor's
Related Documents have been duly authorized by the Contributor by all
necessary corporate action.
(d) No Consent Required. No consent, license, approval or
authorization of, or registration or declaration with, any Person or any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made or as
described in paragraph (n) below.
(e) Valid Transfer; Binding Obligations. This Agreement effects, as of
the Closing Date, a valid transfer and assignment of the Leases and the
other Trust Assets, enforceable against the Contributor and creditors of
and purchasers from the Contributor; and this Agreement and the
Contributor's Related Documents, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Contributor
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(f) No Violation. The execution and delivery of this Agreement and the
Related Documents, the consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms
of this Agreement and the Related Documents shall not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice or lapse of time, or both) a default under the articles of
incorporation or by-laws of the Contributor, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Contributor is a
party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other
than this Agreement, or violate any law, order, rule or regulation
applicable to the Contributor of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Contributor or any of its
properties.
(g) No Proceedings. There are no proceedings or investigations pending
or, to the Contributor's knowledge, threatened against the Contributor,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Contributor or
its properties (A) asserting the invalidity of this Agreement or any of the
Related Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Contributor of its obligations
under, or the validity or enforceability of, this Agreement or any of
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the Related Documents, or (D) seeking to adversely affect (i) the federal
income tax or other federal, state or local tax attributes of the Notes or
(ii) the federal, state or local tax treatment of any of the transactions
contemplated by this Agreement and the Related Documents.
(h) Place of Business. The principal executive offices of the
Contributor, and the offices where the Contributor keeps its records
concerning the Leases and related documents, are located at 1100 Landmark
Towers, ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(i) Registration Statement. No stop order suspending the effectiveness
of the Registration Statement relating to the Notes has been issued, and no
proceeding for that purpose has been instituted or is threatened, by the
Securities and Exchange Commission.
(j) Filings. Since the effective date of the Registration Statement
relating to the Notes, there has occurred no event required to be set forth
in an amendment or supplement to the Registration Statement or Prospectus
that has not been so set forth, and there has been no document required to
be filed under the Securities Exchange Act of 1934 and the rules and
regulations of the Securities and Exchange Commission thereunder that upon
such filing would be deemed to be incorporated by reference in the
Prospectus that has not been so filed.
(k) Good Title. Immediately prior to the transfer and assignment of
the Leases and Related Assets to the Issuer pursuant to Section 2.1(a), the
Contributor had good title thereto and was the sole owner thereof (subject,
in the case of amounts in the Insurance, Maintenance and Tax Accounts, to
the rights of the Obligors therein), free of any Lien. Upon the transfer
and assignment of the Leases and Related Assets to the Issuer pursuant to
Section 2.1(a), the Issuer will have good title thereto and will be the
sole owner thereof (subject, in the case of amounts in the Insurance,
Maintenance and Tax Accounts, to the rights of the Obligors therein), free
of any Lien.
(l) No Impairment. No person has a participation in or other right to
receive Scheduled Payments under any Lease, and the Contributor has taken
no action to convey any right to any Person that would result in such
Person having a right to Scheduled Payments received with respect to any
Lease.
(m) Lawful Assignment. No Lease was originated in, or is subject to
the laws of, any jurisdiction the laws of which would make unlawful, void
or voidable the transfer and assignment of such Lease from the Contributor
to the Issuer under this Agreement. Each Lease may be sold, assigned and
transferred by the Contributor to the Issuer without the consent of, or
prior approval from, or any notification to, the applicable Obligor, other
than (i) certain Leases (which, in proportion to the aggregate of all of
the Leases, are not material) that require notification of the assignment
to the Obligor, which notification will be given by the Servicer not later
than 10 days following the Closing Date, and (ii) certain Leases (which, in
proportion to the aggregate of all of the Leases, are not material) that
require the consent of the
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Obligor, which consent will be obtained by the Servicer not later than 10
days following the Closing Date.
(n) All Filings Made. All filings and other actions required to be
made, taken or performed by any Person in any jurisdiction to give the
Issuer a first priority perfected lien or ownership interest in the Leases
has been made, taken or performed.
(o) Schedule of Leases Accurate. The information with respect to the
Leases contained in the Schedule of Leases is true and correct in all
material respects.
SECTION 2.5. Nonpetition Covenant. None of the Contributor, the Servicer,
nor Vendor Services shall petition or otherwise invoke the process of any court
or government authority for the purpose of commencing or sustaining a case
against the Issuer or the Contributor under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or the
Contributor or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Issuer or the Contributor.
SECTION 2.6. Repurchase of Leases Upon Breach of Representations and
Warranties. Concurrently with the execution and delivery of this Agreement,
Vendor Services and the Contributor have entered into the Transfer Agreement,
the rights of the Contributor under which have been assigned by the Contributor
to the Issuer pursuant to Section 2.1(a). Under the Transfer Agreement, Vendor
Services has made certain representations and warranties to the Contributor with
respect to the Leases (the "Representations and Warranties"). As of the second
Deposit Date following its discovery or its receipt of notice of any breach of
the Representations and Warranties that materially and adversely affects the
value of any Lease (including any Liquidated Lease), Vendor Services shall,
unless such breach shall have been cured in all material respects, either (A)
(i) repurchase such Lease from the Issuer and (ii) repurchase the related
Equipment from the Contributor or (B) substitute a Substitute Lease for such
Lease and the related Equipment. On or before the related Deposit Date, Vendor
Services shall pay the Purchase Amount to the Servicer and the Contributor, as
their interests may appear, or substitute a Substitute Lease. The obligations of
the Contributor with respect to any such breach of representations and
warranties shall be limited to taking any and all actions necessary to enable
the Issuer or the Trustee to enforce directly the obligations of Vendor Services
to repurchase the applicable Lease and Equipment under the Transfer Agreement.
It is understood and agreed that, except as set forth in the following
paragraph, the obligation of Vendor Services to repurchase or substitute another
Lease for any Lease, together with the related Equipment, as to which a breach
has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against Vendor Services for such breach available to
the Contributor or the Trustee on behalf of the Noteholders and to the
Contributor, as their interests may appear.
In addition to the foregoing and notwithstanding whether the Lease and
related Equipment shall have been repurchased by Vendor Services, Vendor
Services shall indemnify the Contributor, the Issuer, the Noteholders and the
Trustee against all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel, which may be asserted against
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or incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach.
ARTICLE III
ADMINISTRATION AND SERVICING OF LEASES
SECTION 3.1. Duties of the Servicer. The Servicer is hereby authorized to
act as agent for the Issuer and the Contributor and in such capacity shall
manage, service, administer and make collections on the Leases, and perform the
other actions required by the Servicer under this Agreement. The Servicer agrees
that its servicing of the Leases shall be carried out in accordance with
customary and usual procedures of institutions which service equipment lease
contracts, installment sale contracts, promissory notes, loan and security
agreements and other similar types of receivables comparable to the Leases and,
to the extent more exacting, the degree of skill and attention that the Servicer
exercises from time to time with respect to all comparable such contracts that
it services for itself or others. In performing such duties, so long as Vendor
Services is the Servicer, it shall comply in all material respects with its
customary standards, policies and procedures in effect from time to time. The
Servicer may at any time change its customary standards, policies and
procedures; provided that any such change shall not materially impair the
collectibility of any Lease nor the Servicer's ability to perform its
obligations under this Agreement and the Related Documents. The Servicer's
duties shall include, without limitation, billing, collection and posting of all
payments, responding to inquiries of Obligors on the Leases, investigating
delinquencies, sending invoices to Obligors, accounting for collections and
furnishing monthly and annual statements to the Issuer and the Trustee with
respect to distributions, monitoring the status of Insurance Policies with
respect to the Equipment and performing the other duties specified herein. The
Servicer shall also administer and enforce all material rights and
responsibilities of the lessor or secured party under the Leases and provided
for in the Insurance Policies, to the extent that such Insurance Policies relate
to the Leases, the Equipment or the Obligors. To the extent consistent with the
standards, policies and procedures otherwise required hereby, the Servicer shall
follow its customary standards, policies and procedures and shall have full
power and authority to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable, including the authority to forego collection efforts under
circumstances deemed appropriate by the Servicer in accordance with its
customary standards, policies and procedures. Without limiting the generality of
the foregoing, the Servicer is hereby authorized and empowered by the Issuer to
execute and deliver, on behalf of the Contributor and the Issuer or either of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments, with respect to
the Leases and with respect to the Equipment in accordance with its customary
standards, policies and procedures. The Servicer is hereby authorized to
commence, in its own name (or in the name of the Issuer, provided the Servicer
has obtained the Issuer's consent, which consent shall not be unreasonably
withheld), a legal proceeding to enforce a Lease pursuant to Section 3.3 or to
commence or participate in any other legal proceeding (including, without
limitation, a bankruptcy proceeding) relating to or involving a Lease, an
Obligor or the related Equipment. If the Servicer commences or participates in
such a legal proceeding
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in its own name, the Issuer shall thereupon be deemed to have automatically
assigned such Lease to the Servicer solely for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Issuer to execute and deliver in the Servicer's
name any notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceeding. The Issuer
shall furnish the Servicer with any powers of attorney and other documents which
the Servicer may reasonably request and which the Servicer deems necessary or
appropriate and take any other steps which the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
SECTION 3.2. Collection of Lease Payments; Modifications of Leases.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Leases as and
when the same shall become due, and shall follow such collection procedures
as it follows with respect to all comparable contracts that it services for
itself or others and otherwise act with respect to the Leases, the related
Equipment, the Insurance Policies and the other Trust Assets in such manner
as will, in the reasonable judgment of the Servicer, maximize the amount to
be received by the Issuer and the Contributor with respect thereto. The
Servicer is authorized in its discretion to waive any Administrative Fees
or Extension Fees that may be collected in the ordinary course of servicing
any Lease.
(b) The Servicer may at any time agree to a modification or amendment
of a Lease in accordance with its credit and collection policies and
procedures (it being acknowledged that any modification or amendment of a
Lease resulting from a bankruptcy proceeding with respect to the Obligor
will not be deemed to have been agreed to by the Servicer hereunder):
(i) in order to (A) change the Obligor's regular due date to a
date within the Collection Period in which such due date occurs or (B)
re-amortize (over the remainder of the original term) the Scheduled
Payments on a Lease following a partial Prepayment (provided that the
sum of such partial Prepayment and the Principal Balance of the Lease
after the re-amortization is at least equal to the Required Payoff
Amount for such Lease prior to the partial Prepayment), or
(ii) for any other purpose, provided that no such modification or
amendment shall:
(A) change the amount or the due date of any Scheduled
Payment (except as provided in clauses (i)(A) and (B) above,
Section 3.2(c) or Section 3.2(d)),
(B) release the related Equipment from the Lease, unless (1)
equipment of equal or greater value is substituted, (2) the
remaining related Equipment has a value at least equal to the
Required Payoff Amount of the Lease, or (3) the release is
pursuant
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to a partial Prepayment (which, in the case of a partial
Prepayment on a Lease, meets the requirements of Section 3.2(d))
and the ratio of the value of the related Equipment to the
Principal Balance of the Lease after such Prepayment and release
is at least equal to such ratio prior to such Prepayment and
release;
(C) cause any of the representations or warranties contained
in the Representations and Warranties to cease to be true; or
(D) except as provided in clause (ii)(A) above, result in
the Principal Balance or Required Payoff Amount of the Lease
being less than it would have been absent such modification or
amendment.
(c) The Servicer may grant payment extensions on a Lease in accordance
with its credit and collection policies and procedures (it being
acknowledged that any extensions on a Lease resulting from a bankruptcy
proceeding with respect to the Obligor will not be deemed to have been
granted by the Servicer hereunder) if the Servicer believes in good faith
that such extension is necessary to avoid a termination and liquidation of
such Lease and will maximize the amount to be received by the Issuer with
respect to such Lease; provided, however, that:
(i) the aggregate period of all extensions granted on a Lease
shall not exceed six months; and
(ii) in no event may any Lease be extended beyond the Collection
Period immediately preceding the final Stated Maturity Date.
Nothing in this Section 3.2(c) shall be deemed to prevent the Servicer from
extending or renewing, or otherwise accepting the continued performance by
the Obligor under, a Lease after expiration of its stated term.
(d) The Servicer may, in its discretion, allow a Prepayment, in whole
or in part, of any Lease which, by its terms, is not prepayable, but only
if the amount of such Prepayment (or, in the case of a partial Prepayment,
the sum of such Prepayment and the remaining Principal Balance of the Lease
after application of such Prepayment), together with such additional
amounts as are (i) available to the Servicer for the purpose of prepaying
such Lease (excluding any monies otherwise constituting Pledged Revenues)
and (ii) deposited in the Collection Account in respect of such Lease
contemporaneously with the deposit therein of such Prepayment, is at least
equal to the Required Payoff Amount for such Lease.
(e) The Servicer shall remit all payments by or on behalf of the
Obligors (other than amounts constituting Administrative Fees) received by
the Servicer to the Servicing Account as soon as practicable, but in no
event later than the second Business Day after receipt thereof.
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(f) If the Servicer agrees to a modification, amendment or extension
of a Lease not permitted by Sections 3.2(b) or 3.2(c), the Servicer shall,
on the next Deposit Date, either (i) repurchase such Adjusted Lease in
accordance with Section 2.6, or (ii) deliver a Substitute Lease therefor in
accordance with Article IX.
SECTION 3.3. Realization Upon Leases. Consistent with the standards,
policies and procedures required by this Agreement, the Servicer shall, except
as provided in the following paragraph, take such action as is reasonably
necessary (including making commercially reasonable efforts to repossess (or
otherwise comparably convert the ownership of) and dispose of the related
Equipment) to collect from the Obligor or otherwise all amounts payable under
any Lease as to which the Obligor is in default in the making of one or more
Scheduled Payments thereunder, if the Servicer has determined such default is
not likely to be cured. The Servicer will not be required to repossess (or
otherwise comparably convert the ownership of) any Equipment the repossession of
which, in accordance with the Servicer's credit and collection policies and
procedures, and based on the Servicer's good faith estimate of the value of the
Equipment and its availability, would not be reasonable. The Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by Section
3.1, which practices and procedures may include the sale of the related
Equipment at public or private sale, the submission of claims under an Insurance
Policy and other actions by the Servicer in order to realize upon such a Lease.
The foregoing is subject to the provision that, in any case in which the
Equipment shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Equipment unless
it shall determine in its reasonable judgment that such repair and/or
repossession shall increase the proceeds of liquidation of the related Lease by
an amount greater than the amount of such expenses. All amounts received upon
liquidation of a Lease (except as otherwise provided below), including any
proceeds derived from the disposition of the related Equipment, shall be
remitted by the Servicer to the Servicing Account as soon as practicable, but in
no event later than the second Business Day after receipt thereof. The Servicer
shall, to the extent the proceeds of such liquidation are sufficient therefor,
be entitled to recover all reasonable out-of-pocket expenses incurred by it in
the course of liquidating a Lease, which amounts may be retained by the Servicer
from such proceeds (and shall not be required to be deposited as provided in
Section 3.2(e)) to the extent of such expenses. The Servicer shall be entitled
to retain in the Servicing Account, from liquidation proceeds, a reserve for
out-of-pocket liquidation expenses in an amount equal to such expenses, in
addition to those previously incurred, as it reasonably estimates will be
incurred. Upon completion of such liquidation, the remainder of any such
reserve, after reimbursement to the Servicer of all out-of-pocket liquidation
expenses, shall constitute Liquidation Proceeds and be transferred as provided
in Section 4.2(a). The Servicer shall, in accordance with Section 3.4(f), pay on
behalf of the Issuer and the Contributor any sales, use, personal property and
other taxes assessed on repossessed Equipment, as well as any sales or similar
taxes on the disposition thereof, and shall be entitled to reimbursement of any
such tax from liquidation proceeds with respect to the related Lease as provided
in Section 3.4(b).
The Servicer will use its best efforts to sell or re-lease any Equipment
upon the termination of the Lease to which such Equipment is subject (whether as
a result of early termination
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following an Obligor default or upon scheduled expiration of the Lease), in a
timely manner and in a manner so as to maximize, to the extent possible under
the prevailing market conditions, the net proceeds of such Equipment. The
Servicer may, in its discretion, choose to dispose of Equipment through a new
lease or in some other manner which provides for payment for the Equipment over
time. In any such event (other than permitting continued payments by the Obligor
beyond the scheduled expiration date of the Lease), the Servicer will be
required to pay from its own funds, and deposit in the Servicing Account, an
amount which, in its reasonable judgment, is equal to the fair market value of
such Equipment (less any related out-of-pocket liquidation expenses), and the
Servicer will be entitled to all payments received thereafter in respect of such
Equipment. Any such amounts so deposited by the Servicer shall be treated as
additional Liquidation Proceeds, or Residual Realizations, depending on the
reason for the disposition of the Equipment, with respect to the related Lease
and Equipment.
SECTION 3.4. Insurance, Maintenance and Taxes.
(a) The Servicer shall establish one or more insurance, maintenance
and tax accounts (collectively, the "Insurance, Maintenance and Tax
Accounts") in the name of the Servicer and for the benefit of the
respective Obligors and, to the extent provided herein, the Issuer and the
Contributor. The Servicer shall deposit into the Insurance, Maintenance and
Tax Accounts any payments made by or on behalf of Obligors which constitute
(i) insurance charges paid by an Obligor to the lessor or secured party
under a Lease (unless paid directly by such insurance company or comparable
third party directly to the Obligor), (ii) any insurance payments or
recoveries paid by an insurance company or comparable third party and
related to the damage to, or destruction of, the Equipment related to such
Lease (unless paid directly by such insurance company or comparable third
party directly to the Obligor), (iii) any payments made by or on behalf of
Obligors which constitute amounts paid by an Obligor to the lessor or
secured party under a Lease in respect of the maintenance of the related
Equipment, and (iv) taxes paid by the Obligor with respect to the related
Lease or Equipment (except for any such payments in respect of taxes which
were paid by Vendor Services prior to the Cut-Off Date, which payments
shall constitute Scheduled Payments hereunder). None of the foregoing
payments shall constitute Pledged Revenues except under the circumstances
described in clause (c)(ii) below.
(b) The Servicer may pay from its own funds, or may withdraw amounts
from the Insurance, Maintenance and Tax Accounts, when and if appropriate,
to pay, when due (i) all insurance charges in the amounts received under
clause (a)(i) above, (ii) any amounts payable under any applicable
maintenance contract or otherwise with respect to the maintenance of the
related Equipment in the amounts received under clause (a)(iii) above, and
(iii) all taxes in the amounts received under clause (a)(iv) above. If the
Servicer has paid any such insurance charges, maintenance costs or taxes
from its own funds (including any such amounts that may have been paid
prior to the Closing Date), the Servicer shall be entitled to reimbursement
therefor from any appropriate amounts available therefor in the Insurance,
Maintenance and Tax Accounts, from payments thereafter received from the
applicable Obligor in respect thereof or from liquidation proceeds in the
event such Lease is liquidated. The Servicer is authorized in its
discretion to waive its right to receive reimbursement of any such amount.
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(c) Amounts on deposit in the Insurance, Maintenance and Tax Accounts
which represent amounts received by the Servicer pursuant to clause (a)(ii)
above shall be applied by the Servicer as follows: (i) if equipment is
purchased to replace the Equipment that was damaged or destroyed, and such
replacement equipment is (in the reasonable opinion of the Servicer) of
comparable use and equivalent value to the Equipment that was damaged or
destroyed, or if the Equipment is to be repaired, the Servicer shall
release such amount so received from the insurance company or comparable
third party in payment or reimbursement for such replacement equipment or
such repair; and (ii) if such replacement option is not exercised or the
Equipment is not to be repaired, then the Servicer shall treat such amount
as Liquidation Proceeds (after netting any amounts therefrom as is provided
pursuant to the definition of "Liquidation Proceeds" herein) and transfer
such amount from the Insurance, Maintenance and Tax Accounts to the
Collection Account.
(d) The Servicer may ▇▇▇ to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Issuer and the
Contributor. If the Servicer elects to commence a legal proceeding to
enforce an Insurance Policy, the act of commencement shall be deemed to be
an automatic assignment of the rights of the Issuer and the Contributor
under such Insurance Policy to the Servicer for purposes of collection
only. If, however, in any enforcement suit or legal proceeding it is held
that the Servicer may not enforce an Insurance Policy on the grounds that
it is not a real party in interest or a holder entitled to enforce the
Insurance Policy, the Issuer, on behalf of the Contributor, shall take such
steps as the Servicer deems necessary to enforce such Insurance Policy,
including bringing suit in its name or the name of the Trustee for the
benefit of the Noteholders.
(e) Consistent with its customary standards, policies and procedures,
with respect to each Lease, the Servicer shall maintain insurance against
casualty loss with respect to any Equipment financed by or leased pursuant
to the Lease, to the extent the Lease requires the lessor or secured party
under the Lease to maintain such insurance, and shall otherwise require the
Obligor under the Lease to maintain such insurance, to the extent the Lease
requires that such insurance be maintained by the Obligor. The Servicer
shall not otherwise be liable to the Issuer, the Trustee, the Contributor
or any Noteholder for any casualty loss with respect to any Equipment
related to a Lease, except to the extent otherwise explicitly provided in
this Agreement.
(f) The Servicer shall determine and pay when due all sales, use,
personal property and other taxes payable in respect of the Equipment
related to each Lease. To the extent the Servicer has previously received
from the related Obligor payments with respect to such taxes and has
deposited such payments in the Insurance, Maintenance and Tax Accounts in
accordance with clause (a)(iv) above, the Servicer shall, in accordance
with clause (b)(iii) above, either (i) pay such taxes from amounts
withdrawn from the Insurance, Maintenance and Tax Accounts, or (ii) pay
such taxes from its own funds and thereafter reimburse itself from amounts
withdrawn from the Insurance, Maintenance and Tax Accounts. In the event
the Servicer has not previously received payments from the Obligor for this
purpose, or to the extent any such payments received were insufficient to
pay the taxes due, the Servicer shall nonetheless pay such taxes from its
own funds and shall ▇▇▇▇ the Obligor for any amounts so paid. The Servicer
shall be entitled to reimbursement for any taxes so paid from its own
funds, as provided in clause (b)(iii) above. Failure on the part of the
Servicer to perform its duties in a timely
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fashion under this clause shall constitute a breach of this Agreement by
the Servicer for which indemnity will be available in accordance with
Section 7.1.
(g) The Servicer shall give prompt written notice to the Trustee of
the Servicer's failure to pay when due any insurance charge or tax payment
required to be paid pursuant to this Section 3.4 and the reason for such
failure. Upon receipt of any such notice, or if the Trustee has otherwise
received notice of any such failure to pay an insurance charge or tax
payment, the Trustee shall take such actions as are reasonably necessary
(including the withdrawal of monies, if any, available therefor in the
Insurance, Maintenance and Tax Accounts and attributable to payments
previously made by the related Obligor and payment of such insurance charge
or tax payment) to cause any such amounts to be paid. The Trustee shall be
permitted to withdraw monies from the Insurance, Maintenance and Tax
Accounts for purposes of performing its obligations under this paragraph,
but shall not, in any event, be required to use its own funds for such
purposes.
SECTION 3.5. Maintenance of Security Interests in Equipment. To the extent
the Servicer's credit and collection policies and procedures in this regard
would so require (it being acknowledged that, in certain instances, such credit
and collection policies and procedures would not so require), the Servicer shall
take such steps as are necessary to maintain perfection of any security interest
created by each Lease in the related Equipment on behalf of the Issuer and the
Contributor, including, but not limited to, obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and continuation
statements as are necessary to maintain such security interest granted by the
Obligors under the respective Leases. The Issuer hereby authorizes the Servicer,
and the Servicer agrees (to the extent the Servicer's credit and collection
policies and procedures in this regard would so require), to take any and all
steps necessary to re-perfect such security interest on behalf of the Issuer and
the Contributor as necessary because of the relocation of Equipment or for any
other reason.
SECTION 3.6. Covenants, Representations, and Warranties of Servicer. By its
execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants.
(a) The Servicer covenants as follows:
(i) Liens in Force. The Equipment securing each Lease shall not
be released in whole or in part from any interest the lessor or
secured party may have in such Equipment under the terms of the Lease,
except upon payment in full of the Lease or as otherwise contemplated
herein;
(ii) No Impairment. The Servicer shall do nothing to impair the
rights of the Issuer, the Contributor or the Noteholders in the
Leases, the Insurance Policies or the other Trust Assets; and
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(iii) No Amendments. The Servicer shall not extend or otherwise
amend the terms of any Lease with respect to the Scheduled Payments
thereon, except (A) in accordance with Section 3.2, or (B) at such
time as the Notes are no longer Outstanding, with the consent of the
Issuer.
(b) The Servicer represents, warrants and covenants as of the date of
execution and delivery of this Agreement:
(i) Organization and Good Standing. The Servicer has been duly
organized and is validly existing and in good standing under the laws
of its jurisdiction of organization, with power, authority and legal
right to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power,
authority and legal right to enter into and perform its obligations
under this Agreement and the Servicer's Related Documents;
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions where the
failure to do so would materially and adversely affect the performance
of its obligations under this Agreement and the Related Documents;
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out the
terms hereof; and the execution, delivery and performance of this
Agreement and the Servicer's Related Documents have been duly
authorized by the Servicer by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the Servicer's
Related Documents shall each constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
(v) No Violation. The execution and delivery of this Agreement,
the consummation of the transactions contemplated by this Agreement
and the Servicer's Related Documents, and the fulfillment of the terms
hereof, shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time, or both) a default under, the articles of incorporation
or bylaws of the Servicer, or any 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
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creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement or any Related
Document, or violate any law, 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
pending or, to the Servicer's knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction
over the Servicer or its properties (A) asserting the invalidity of
this Agreement or any of the Servicer's Related Documents, (B) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Servicer's
Related 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 any of the Servicer's Related Documents or (D) seeking to
adversely affect (i) the federal income tax or other federal, state or
local tax attributes of the Notes or (ii) the federal, state or local
tax treatment of any of the transactions contemplated by this
Agreement and the Related Documents; and
(vii) No Consents. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or
any of the Servicer's Related Documents.
SECTION 3.7. Sub-Servicers. The Servicer may, without the Issuer's or the
Trustee's consent, maintain or enter into one or more agreements with
Sub-Servicers for the servicing and administration of the Leases by such
Sub-Servicers. Notwithstanding the terms or existence of any such agreement
between the Servicer and a Sub-Servicer, the Servicer shall not be relieved of
any of its obligations under this Agreement by reason of such agreement and
shall be obligated to the same extent and under the same terms and conditions as
if the Servicer alone was servicing and administering the Leases, and neither
the Issuer nor the Trustee shall have any obligation to deal with anyone other
than the Servicer with respect to the servicing of the Leases.
SECTION 3.8. Total Servicing Fee; Payment of Expenses by Servicer. On each
Payment Date, the Servicer shall be entitled to receive out of the Collection
Account the Servicing Fee for the related Collection Period and any unreimbursed
Servicer Advances or Nonrecoverable Servicer Advances in respect of a prior
Payment Date, pursuant to Section 8.03 of the Indenture. The Servicer shall be
entitled to retain, as additional servicing compensation under this Agreement,
any Administrative Fees and any earnings on the investment of amounts in the
Servicing Account. The Servicer shall be required to pay all expenses incurred
by it in connection with its activities under this
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Agreement (including taxes imposed on the Servicer and all expenses incurred in
connection with reports to Noteholders). In addition, the Servicer shall pay to
the Trustee, and the Trustee shall be entitled to, certain annual fees and shall
reimburse the Trustee for all ordinary and reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under
the Indenture (excluding those incurred or made in the performance of its duties
under Article V of the Indenture, as referred to in Section 6.07(b) of the
Indenture).
SECTION 3.9. Servicer's Certificate. No later than 10:00 a.m. St. ▇▇▇▇,
Minnesota time on each Determination Date, the Servicer shall deliver to the
Issuer, the Trustee and each Rating Agency a Servicer's Certificate executed by
a Responsible Officer of the Servicer containing, among other things, (i) all
information necessary to enable the Trustee to make the withdrawals and
distributions required by Section 8.03 of the Indenture, (ii) all information
necessary to enable the Trustee to send the statements to Noteholders required
by Section 7.05 of the Indenture, and (iii) all information necessary to enable
the Trustee to reconcile all deposits to, and withdrawals from, the Servicing
Account, the Collection Account, the Residual Account, the Portfolio Expense
Account and the Reserve Account for the related Collection Period and Payment
Date, including the accounting required by Section 4.4. Leases repurchased (or
for which a Substitute Lease was substituted) by Vendor Services on the related
Deposit Date or by the Contributor on the related Accounting Date and each Lease
which became a Liquidated Lease or which was paid in full during the related
Collection Period, shall be identified by account number (as set forth in the
Schedule of Leases), and information regarding each Substitute Lease shall be
provided. A copy of such certificate may be obtained by any Noteholder (or by
any Note Owner, upon certification that such Person is a Note Owner and payment
of any expenses associated with the distribution thereof) by a request in
writing to the Trustee addressed to the Corporate Trust Office.
SECTION 3.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, on or before March 31 (or 90 days after the end of the
Servicer's fiscal year, if other than December 31) of each year, beginning
on March 31, 2001, a certificate signed by any Responsible Officer of the
Servicer, dated as of December 31 (or other applicable date) of the
immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as
shall have elapsed from the Closing Date to the date of the first such
certificate) and of its performance under this Agreement has been made
under such officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under
this Agreement throughout such period, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known
to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Issuer, the Trustee and each
Rating Agency, promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, written notice in a
certificate signed by any Responsible Officer of the Servicer of any event
which with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event
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under Section 8.1(a). The Contributor or the Servicer shall deliver to the
Issuer, the Trustee, the Servicer or the Contributor (as applicable) and
each Rating Agency promptly after having obtained knowledge thereof, but in
no event later than three Business Days thereafter, written notice in a
certificate signed by any Responsible Officer of the Servicer of any event
which with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under any other clause of Section 8.1.
SECTION 3.11. Annual Independent Accountants' Report.
(a) On or before May 1 of each year, commencing May 1, 2001, the
Servicer at its expense shall cause a firm of independent public
accountants which is a member of the American Institute of Certified Public
Accountants to issue to the Servicer a report that such firm has examined
selected documents, records and management's assertions relating to leases
and loans serviced by the Servicer and stating that, on the basis of such
examination, such servicing has been conducted in compliance with the
minimum servicing standards identified in the Mortgage Bankers Association
of America's Uniform Single Attestation Program for Mortgage Bankers, or
any successor uniform program, except for such significant exceptions or
errors in records that, in the opinion of such firm, generally accepted
attestation standards requires it to report.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Contributor and the Servicer within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
(c) A copy of the Accountants' Report may be obtained by any
Noteholder (or by any Note Owner, upon certification that such Person is a
Note Owner and payment of any expenses associated with the distribution
thereof) by a request in writing to the Trustee addressed to the Corporate
Trust Office.
SECTION 3.12. Access to Certain Documentation and Information Regarding
Leases. The Servicer shall provide to representatives of the Issuer and the
Trustee reasonable access to the documentation regarding the Leases. In each
case, such access shall be afforded without charge but only upon reasonable
request and during normal business hours. Nothing in this Section shall derogate
from the obligation of the Servicer to observe any applicable law, rule or
contractual provision with an Obligor prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
SECTION 3.13. Certain Duties of the Servicer. The Servicer shall, and
hereby agrees that it will, monitor the Issuer's compliance with all applicable
provisions of federal securities laws, notify the Issuer of any actions to be
taken by the Issuer necessary for compliance with such laws and prepare on
behalf of the Issuer all notices, filings or other documents or instruments
required to be filed under such laws.
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SECTION 3.14. Duties of the Servicer under the Indenture. The Servicer
shall, and hereby agrees that it will, perform on behalf of the Issuer the
following duties of the Issuer under the Indenture (references are to the
applicable Sections in the Indenture):
(a) the direction to the Paying Agents, if any, to deposit moneys with
the Trustee (Section 3.03);
(b) the obtaining and preservation of the Issuer's qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes and each other instrument and agreement included in the Trust Estate
(Section 3.04);
(c) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.05 of the Indenture,
necessary to protect the Trust Estate (Section 3.05);
(d) the annual delivery of Opinions of Counsel, in accordance with
Section 3.06 of the Indenture, as to the Trust Estate, and the annual
delivery of the Officers' Certificate and certain other statements, in
accordance with Section 3.09 of the Indenture, as to compliance with the
Indenture (Sections 3.06 and 3.09);
(e) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 4.01);
(f) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officers'
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);
(g) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or removal
of any co-trustee or separate trustee (Sections 6.08 and 6.11);
(h) the opening of one or more accounts in the Issuer's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of
Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.02, 8.04, 8.05 and
8.06);
(i) the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures (Sections
9.01, 9.02 and 9.03);
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(j) the preparation of all Officers' Certificates, Opinions of Counsel
and Independent Certificates with respect to any requests by the Issuer to
the Trustee to take any action under the Indenture (Section 11.01); and
(k) the recording of the Indenture, if applicable (Section 11.15).
SECTION 3.15. Fidelity Bond. Within 30 days after the Closing Date, the
Servicer shall obtain, and shall thereafter maintain, (i) a policy or policies
of insurance covering errors and omissions by the Servicer, and (ii) a fidelity
bond. Such policy or policies and such fidelity bond shall be in such form and
amount as is generally customary among persons that service a portfolio of
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables having an
unpaid balance of at least $100,000,000 and which are generally regarded as
servicers acceptable to institutional investors. Each such policy shall name the
Issuer, the Trustee and the Contributor as parties insured thereunder as their
respective interests may appear.
ARTICLE IV
COLLECTIONS AND DEPOSITS
SECTION 4.1. Initial Deposit. No later than the second Business Day
following the Closing Date, the Servicer shall deposit in the Servicing Account
(i) all Scheduled Payments and Prepayments of Leases received by the Servicer on
or after the Initial Cut-Off Date (including those Scheduled Payments due prior
to, but not received as of, the Initial Cut-Off Date, but excluding those
Scheduled Payments due on or after, but received prior to, the Cut-Off Date) and
on or prior to the second Business Day immediately preceding such date and (ii)
all Liquidation Proceeds (including proceeds of Insurance Policies to be treated
as such in accordance with Section 3.4) realized in respect of the Leases and
related Equipment and applied by the Servicer on and after the Initial Cut-Off
Date.
SECTION 4.2. Collections.
(a) Pursuant to the Indenture, the Trustee has established the
Servicing Account. The Servicer shall make deposits to and transfers from
the Servicing Account, and shall be entitled to make withdrawals therefrom,
as provided in this Agreement. The Servicer shall remit to the Servicing
Account all payments by or on behalf of the Obligors on the Leases (other
than amounts constituting Administrative Fees), all Residual Realizations
and all Liquidation Proceeds (including (1) proceeds of Insurance Policies
to be treated as such in accordance with Section 3.4 and (2) deficiency
amounts paid by the Servicer with respect to the disposition of Equipment
to be treated as such in accordance with the last paragraph of Section 3.3)
received by the Servicer, in each case, as soon as practicable, but in no
event later than the second Business Day after receipt thereof. Within
three Business Days after the deposit of such payments and proceeds
therein, the Servicer shall transfer all amounts credited to the Servicing
Account on account of such payments and proceeds (i) to the extent they
constitute
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, to the Collection Account and (ii) to the extent they
represent Residual Realizations, to the Residual Account. Notwithstanding
the foregoing, the Servicer may utilize an alternative remittance schedule
acceptable to the Servicer if the Servicer provides to the Trustee written
confirmation from each Rating Agency that such alternative remittance
schedule will not result in the downgrading or withdrawal by the Rating
Agency of the rating then assigned to the Notes. Amounts from time to time
in the Servicing Account shall be invested in accordance with Section 8.07
of the Indenture, and the Servicer shall be entitled to any earnings on
such investments as additional servicing compensation hereunder. In the
event of any losses on such investments, the Servicer shall deposit in the
Servicing Account the amount thereof, net of any earnings otherwise
distributable to the Servicer.
(b) The Servicer shall remit to the Collection Account (i) no later
than the second Business Day prior to a Payment Date, that portion of any
Purchase Amount relating to the Required Payoff Amount received by the
Servicer upon the repurchase by Vendor Services of any Lease pursuant to
Section 2.6, and (ii) that portion of the amount paid by the Contributor to
repurchase the Leases pursuant to Section 5.1 as is required to be
deposited in the Collection Account pursuant to such Section.
(c) Notwithstanding the provisions of subsections (a) and (b) hereof,
the Servicer will be entitled to be reimbursed from amounts on deposit in
the Servicing Account or the Collection Account with respect to a
Collection Period for amounts previously deposited in the Servicing Account
or the Collection Account but later determined by the Servicer in good
faith to (i) have resulted from mistaken deposits or postings or checks
returned for insufficient funds, or (ii) be required to be repaid to an
Obligor. The amount to be reimbursed hereunder may be retained pursuant to
Section 4.4 at any time or may otherwise be paid to the Servicer on the
related Payment Date pursuant to Section 8.03(i) of the Indenture upon
certification by the Servicer of such amounts and the provision of such
information to the Trustee as may be necessary to verify the accuracy of
such certification.
SECTION 4.3. Application of Collections. For the purposes of this
Agreement, all collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Lease, payments by or on behalf of the
Obligor thereof (other than Administrative Fees with respect to such Lease,
to the extent collected) shall be applied to Scheduled Payments and
Prepayments in accordance with the terms of such Lease and the Servicer's
credit and collection policies and procedures. With respect to each
Liquidated Lease, the Liquidation Proceeds shall be applied, for purposes
of this Agreement and the Indenture only, to Scheduled Payments and
Prepayments on the Lease as if the Liquidation Proceeds had been paid by
the Obligor on the Accounting Date, and then to any other amounts due and
payable with respect to such Lease. The Servicer shall not be entitled to
any Administrative Fees with respect to a Liquidated Lease unless the
Required Payoff Amount for such Lease has been deposited in the Collection
Account.
(b) With respect to each Lease that has become a Purchased Lease as of
any Deposit Date, the Purchase Amount shall be applied, for purposes of
this Agreement and
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the Indenture only, to Scheduled Payments and Prepayments on the Lease as
if the Purchase Amount had been paid by the Obligor on the related
Accounting Date. All payments by or on behalf of an Obligor received with
respect to any Purchased Lease after the Accounting Date immediately
preceding the Deposit Date on which the Purchase Amount was paid by Vendor
Services, shall be paid to Vendor Services and shall not be included in
Pledged Revenues.
(c) With respect to each Lease that has been repurchased by the
Contributor pursuant to Section 5.1, the purchase price shall be applied,
for purposes of this Agreement and the Indenture only, to Scheduled
Payments and Prepayments on the Lease as if such purchase price had been
paid by the Obligor on the Accounting Date. All payments by or on behalf of
an Obligor received with respect to any Lease so repurchased after the
Accounting Date on which the purchase price was paid by the Contributor,
shall be paid to the Contributor and shall not be included in the Amount
Available.
SECTION 4.4. Net Deposits. So long as no Servicer Termination Event shall
have occurred and be continuing with respect to the Servicer, the Servicer may
make the remittances or transfers to be made by it pursuant to Section 4.2 net
of amounts (which amounts may be netted prior to any such remittance or
transfer) that would otherwise be distributed to it pursuant to Section 8.03(i)
of the Indenture; provided, however, that the Servicer shall account for all of
such amounts in the related Servicer's Certificate as if such amounts were
deposited and distributed separately. If an error is made by the Servicer in
calculating the amount to be deposited or retained by it, with the result that
an amount less than required is deposited in the Collection Account, the
Servicer shall make a payment of the deficiency to the Collection Account
immediately upon becoming aware, or receiving notice from the Trustee, of such
error.
SECTION 4.5. Servicer Advances. On each Determination Date, the Servicer
may, but will not be required to, advance and remit to the Trustee, in such
manner as will ensure that the Trustee will have immediately available funds on
account thereof by 11:00 a.m. St. ▇▇▇▇, Minnesota time on the second Business
Day prior to the next succeeding Payment Date, an amount (a "Servicer Advance")
equal to any Scheduled Payments due during the prior Collection Period but
unpaid prior to such Determination Date with respect to any Lease. In
consideration of each Servicer Advance the Servicer will be entitled to retain
any late payment fees recovered from the Obligor with respect to any Lease
Payment covered by a Servicer Advance, and, if the Servicer later determines
that such Servicer Advance will not be reimbursed from the recovery on the
delinquent Lease (a "Nonrecoverable Servicer Advance") from the Amount Available
on the next Payment Date. If the Servicer elects not to make a Servicer Advance,
all late fees paid by the Obligors on the Leases with respect to those late
payments must be deposited in the Collection Account and will be treated as part
of the Pledged Revenues when received. In addition, the Servicer will be
reimbursed for Servicer Advances from funds in the Collection Account in
accordance with the Indenture on the second following Payment Date.
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ARTICLE V
TERMINATION
SECTION 5.1. Optional Purchase of All Leases; Liquidation of Trust Assets.
(a) At such time as the sum of the Aggregate Principal Balance of the
Notes is less than 20% of the Initial Pool Principal Balance, the
Contributor shall have the option to purchase all of the Leases from the
Issuer; provided, however, that the amount to be paid for such purchase (as
set forth in the following sentence) shall, in any event, be sufficient to
pay the full amount of unpaid principal of and interest payable on the
Notes on the related Payment Date. To exercise such option, the Contributor
shall, on any Accounting Date, pay to the Servicer the aggregate purchase
price for the Leases (which shall be an amount equal to the sum of the
Required Payoff Amounts for all of the Leases), plus the appraised value of
any other property (including the right to receive any future recoveries)
held as Trust Assets, such appraisal to be conducted by an appraiser
mutually agreed upon by the Contributor and the Trustee (or, if the Notes
are no longer Outstanding, the Issuer), and shall succeed to all interests
in and to the Trust Assets. The fees and expenses related to such appraisal
shall be paid by the Contributor. The Servicer shall immediately deposit
the purchase price so paid into the Collection Account, to be treated as
Available Pledged Revenues and distributed in accordance with Section 8.03
of the Indenture.
(b) Notice of any termination of the Issuer shall be given by the
Servicer to the Issuer and the Trustee as soon as practicable (but in no
event more than three Business Days) after the Servicer has received notice
thereof.
SECTION 5.2. Mandatory Purchase of Leases. On any Payment Date, if the
aggregate amounts on deposit in the Collection Account, the Reserve Account, the
Portfolio Expense Account and the Residual Account are greater than or equal to
the sum of (i) the Aggregate Principal Amount of the Notes, (ii) the accrued and
unpaid interest payments on the Notes, (iii) the accrued and unpaid Trustee Fee,
(iv) the accrued and unpaid Servicing Fee and (v) the unreimbursed Servicer
Advances, the Contributor will repurchase all of the Leases and prepay the
outstanding Notes.
ARTICLE VI
THE CONTRIBUTOR
SECTION 6.1. Liability of Contributor. The Contributor shall be liable
hereunder only to the extent of the obligations in this Agreement specifically
undertaken by the Contributor and the representations made by the Contributor.
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SECTION 6.2. Merger or Consolidation of, or Assumption of the Obligations
of, Contributor; Amendment of Certificate of Incorporation.
(a) The Contributor shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the
Contributor's business except in accordance with the requirements of this
Section. The certificate of incorporation of any corporation (i) into which
the Contributor may be merged or consolidated, (ii) resulting from any
merger or consolidation to which the Contributor shall be a party, or (iii)
succeeding to the business of Contributor, shall contain provisions
relating to limitations on business and other matters substantively
identical to those contained in the Contributor's certificate of
incorporation. Any such successor corporation shall execute an agreement of
assumption of every obligation of the Contributor under this Agreement and
each Related Document and, whether or not such assumption agreement is
executed, shall be the successor to the Contributor under this Agreement
without the execution or filing of any document or any further act on the
part of any of the parties to this Agreement. The Contributor shall provide
prompt notice of any merger, consolidation or succession pursuant to this
Section 6.2 to the Issuer, the Trustee and the Rating Agencies.
Notwithstanding the foregoing, the Contributor shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to the Contributor's business, unless (w) immediately after
giving effect to such transaction, no representation or warranty made
pursuant to Section 2.4 shall have been breached (for purposes hereof, such
representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse
of time, or both, would become an Event of Default or a Servicer
Termination Event shall have occurred and be continuing, (x) the
Contributor shall have delivered to the Issuer and the Trustee a
certificate of a Responsible Officer of the Contributor and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 6.2 and that all
conditions precedent, if any, provided for in this Agreement relating to
such transaction have been complied with, (y) the Contributor shall have
delivered to the Issuer and the Trustee an Opinion of Counsel, stating
that, in the opinion of such counsel, either (A) all financing statements
and continuation statements and amendments thereto have been executed and
filed that are necessary to preserve and protect the interest of the Issuer
in the Trust Assets and reciting the details of the filings or (B) no such
action shall be necessary to preserve and protect such interest, and (z)
the Rating Agency Condition shall have been satisfied.
(b) The Contributor hereby agrees that it shall not (i) take any
action prohibited by Article VIII of its certificate of incorporation or
(ii) without the prior written consent of the Issuer and the Trustee and
without satisfaction of the Rating Agency Condition, amend Article III,
Article V, Article VI or Article VIII of its certificate of incorporation.
SECTION 6.3. Limitation on Liability of Contributor and Others. The
Contributor and any director or officer or employee or agent of the Contributor
may rely in good faith on the advice of counsel or on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising under this Agreement. The Contributor shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations as transferor of the Leases under this Agreement and that in its
opinion may involve it in any expense or liability.
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SECTION 6.4. Contributor May Own Notes. Each of the Contributor and any
Affiliate of the Contributor may in its individual or any other capacity become
the owner or pledgee of Notes with the same rights as it would have if it were
not the Contributor or an Affiliate thereof except as otherwise specifically
provided herein or in the Related Documents. Notes so owned by or pledged to the
Contributor or such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement or any Related Document, without
preference, priority, or distinction as among all of Notes; provided that any
Notes owned by the Contributor or any Affiliate thereof, during the time such
Notes are owned by them, shall be without voting rights for any purpose set
forth in this Agreement or any Related Document. The Contributor shall notify
the Issuer and the Trustee promptly after it or any of its Affiliates become the
owner or pledgee of a Note.
SECTION 6.5. Covenants of the Contributor. The Contributor hereby covenants
that:
(a) Separate Business. The Contributor will not permit its assets to
be commingled with those of Vendor Services and the Contributor shall
maintain separate corporate records, books of accounts and bank accounts
from those of Vendor Services. The Contributor will not conduct its
business in the name of Vendor Services and will cause Vendor Services to
conduct its business solely in its own name so as not to mislead others as
to the identity of the entity with which those others are concerned. The
Contributor will provide for its own operating expenses and liabilities
from its own funds, except that the organizational expenses of the
Contributor may be paid by Vendor Services. The Contributor will not hold
itself out, or permit itself to be held out, as having agreed to pay, or as
generally being liable for, the debts of Vendor Services. The Contributor
shall cause Vendor Services not to hold itself out, or permit itself to be
held out, as having agreed to pay, or as generally being liable for, the
debts of the Contributor except that the organizational expenses of the
Contributor may be paid by Vendor Services. The Contributor will maintain
an arm's length relationship with Vendor Services with respect to any
transactions between the Contributor, on the one hand, and Vendor Services,
on the other.
(b) Adequate Capitalization. The Contributor shall at all times remain
adequately capitalized for the normal obligations reasonably foreseeable in
the conduct of its business, and shall not make any dividend or other
distribution to its shareholders unless the net worth of the Contributor
following such distribution is adequate for the normal obligations
reasonably foreseeable in the conduct of its business.
ARTICLE VII
THE SERVICER
SECTION 7.1. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such and, in the case of Vendor
Services, without limitation of its obligations under the Transfer
Agreement) shall be liable hereunder only to the
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extent of the obligations in this Agreement specifically undertaken by the
Servicer and the representations made by the Servicer.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Trustee, the Contributor, their respective officers, directors, agents
and employees and the Noteholders from and against any and all costs,
expenses, losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was
imposed upon the Issuer, the Trustee, the Contributor or the Noteholders
through the Servicer's breach of this Agreement, the gross negligence,
willful misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
in its individual capacity, its officers, directors, agents and employees,
from and against all costs, taxes, expenses, losses, claims, damages and
liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties contained in the Related Documents,
except to the extent that such cost, taxes (other than income taxes),
expense, loss, claim, damage or liability is due to the willful misfeasance
or gross negligence of the Issuer.
(d) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to
this Article and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts collected to the
Servicer, together with any interest earned thereon.
(e) Vendor Services, in its individual capacity, hereby acknowledges
that the indemnification provisions in the Transfer Agreement benefiting
the Issuer and the Trustee are enforceable by each hereunder.
(f) The provisions of this Section shall survive the termination of
the Related Documents.
SECTION 7.2. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer. The Servicer shall not merge or consolidate with any other
Person, convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to the
Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be an
Eligible Servicer and shall be capable of fulfilling the duties of the Servicer
contained in this Agreement. 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, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part
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of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; provided, however, that nothing contained herein shall
be deemed to release the Servicer from any obligation. The Servicer shall
provide notice of any merger, consolidation or succession pursuant to this
Section to the Issuer, the Trustee and each Rating Agency. Notwithstanding the
foregoing, the Servicer shall not merge or consolidate with any other Person or
permit any other Person to become a successor to the Servicer's business, unless
(a) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.6 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become a Servicer Termination Event shall have occurred and
be continuing, (b) the Servicer shall have delivered to the Issuer and the
Trustee a certificate of a Responsible Officer of the Servicer and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (c) the Servicer shall have delivered to the Issuer and
the Trustee an Opinion of Counsel, stating that, in the opinion of such counsel,
either (1) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Issuer in the Trust Assets and reciting the details of the
filings or (2) no such action shall be necessary to preserve and protect such
interest, and (d) the Rating Agency Condition has been satisfied.
SECTION 7.3. 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 Issuer, the Contributor, the
Noteholders or the Trustee except as provided in this Agreement, for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement; provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of a breach of this Agreement or willful misfeasance, bad
faith or gross negligence (excluding errors in judgment) in the performance of
duties, by reason of reckless disregard of obligations and duties under this
Agreement or any violation of law by the Servicer or such person, as the case
may be; provided further, that this provision shall not affect any liability to
indemnify the Issuer and the Trustee for costs, taxes, expenses, claims,
liabilities, losses or damages paid by the Issuer or the Trustee, each in its
individual capacity. The Servicer and any director, officer, employee or agent
of the Servicer may rely in good faith on the advice of counsel or on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising under this Agreement.
SECTION 7.4. Servicer Not to Resign. Subject to the provisions of Section
7.2, the Servicer shall not resign from the obligations and duties imposed on it
by this Agreement as Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer, and a Note Majority does
not elect to waive the obligations of the Servicer to perform the duties which
render it legally unable to act or to delegate those duties to another Person.
Any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Issuer and
the
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Trustee. No resignation of the Servicer shall become effective until a
successor Servicer that is an Eligible Servicer shall have assumed the
responsibilities and obligations of the Servicer; provided, however, that in the
event a successor Servicer is not appointed within 60 days after the Servicer
has given notice of its resignation and has provided the Opinion of Counsel
required by this Section, the Servicer may petition a court for its removal.
SECTION 7.5. Corporate Existence. The Servicer shall maintain its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which the failure to so qualify would have an adverse effect on the validity or
enforceability of any Lease or this Agreement or on the ability of the Servicer
to perform its duties under this Agreement.
ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. Servicer Termination Event. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deposit within the time periods
specified in this Agreement in the Collection Account for distribution to
Noteholders, or to distribute to the Contributor, any proceeds or payment
required to be so deposited or distributed under the terms of this
Agreement (or, if Vendor Services is the Servicer, the Transfer Agreement)
that continues unremedied for a period of five Business Days (three
Business Days with respect to payment of Purchase Amounts) after written
notice is received by the Servicer from the Trustee or after discovery of
such failure by a Responsible Officer of the Servicer; or
(b) Failure by the Servicer to deliver to the Trustee and the Issuer
the Servicer's Certificate by the third Business Day prior to the related
Payment Date, or failure on the part of the Servicer to observe its
covenants and agreements set forth in Section 7.2; or
(c) Failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in this Agreement (or, if Vendor Services is the Servicer, the
Transfer Agreement), which failure (i) materially and adversely affects the
rights of the Issuer or Noteholders, and (ii) continues unremedied for a
period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
the Issuer, the Trustee or any Noteholder; or
(d) (i) The commencement of an involuntary case under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (ii) the
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entry of a decree or order for relief by a court or regulatory authority
having jurisdiction in respect of the Servicer in an involuntary case under
the federal bankruptcy laws, as now or hereafter in effect, or another
present or future, federal or state, bankruptcy, insolvency or similar law,
or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any
substantial part of their respective properties or ordering the winding up
or liquidation of the affairs of the Servicer; or
(e) The commencement by the Servicer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law,
or the consent by the Servicer to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Servicer or of any substantial part of its
property or the making by the Servicer of an assignment for the benefit of
creditors or the failure by the Servicer generally to pay its debts as such
debts become due or the taking of corporate action by the Servicer in
furtherance of any of the foregoing;
(f) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered by the
Servicer pursuant hereto shall prove to be incorrect in any material
respect as of the time when the same shall have been made, the
incorrectness of such representation, warranty or statement has a material
adverse effect on the Issuer or Noteholders, and, within 30 days after
written notice thereof shall have been given to the Servicer or the
Contributor by the Issuer, the Trustee or any Noteholder, the circumstances
or condition in respect of which such representation, warranty or statement
was incorrect shall not have been eliminated or otherwise cured; or
(g) The Monthly Loss Percentage on three consecutive Payment Dates
exceeds 7.0% and the holders of a majority in Aggregate Principal Balance
of each outstanding class of Notes (a "Note Majority") votes to declare a
Servicer Termination Event.
SECTION 8.2. Consequences of a Servicer Termination Event. The Servicer
shall provide written notice of a Servicer Termination Event to the Trustee, the
Issuer and each Rating Agency promptly after obtaining knowledge of such event.
If a Servicer Termination Event shall occur and be continuing, the Trustee may,
and at the direction of a Note Majority shall, by notice given in writing to the
Servicer and the Issuer, terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority, power, obligations and responsibilities of the
Servicer under this Agreement, whether with respect to the Notes, the Trust
Assets or otherwise, shall be terminated and automatically shall pass to, be
vested in and become obligations and responsibilities of the Trustee (unless and
until a successor Servicer is appointed in accordance with Section 8.3);
provided, however, that the Trustee shall have no liability with respect to any
obligation which was required to be performed by the terminated Servicer prior
to the date that the Trustee becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The Trustee
is authorized and empowered by this Agreement to execute and deliver, on behalf
of the terminated Servicer, as attorney-in-fact or otherwise, any and all
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documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination.
The terminated Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the terminated Servicer under
this Agreement, including, without limitation, the transfer to the Trustee for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in any of the Trust Accounts or thereafter received with respect to
the Leases and the delivery to the Trustee of all Lease Files, Monthly Records
and Collection Records and a computer tape in readable form as of the most
recent Business Day containing all information necessary to enable the Trustee
or a successor Servicer to service the Leases and the other Trust Assets. The
terminated Servicer shall grant the Issuer, the Trustee and the successor
Servicer reasonable access to the terminated Servicer's premises at the
terminated Servicer's expense.
SECTION 8.3. Trustee to Act; Appointment of Successor.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.2, the Trustee shall be the successor in
all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for in this Agreement,
and shall be subject to all the responsibilities, restrictions, duties,
liabilities and termination provisions relating thereto placed on the
Servicer by the terms and provisions of this Agreement. As compensation
therefor, the Trustee shall be entitled to receive the Total Servicing Fee
(which amount shall include any Additional Servicer Compensation). The
Issuer and the Trustee shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) Notwithstanding the foregoing, the Trustee may, if it shall be
unwilling to so act, or shall, if it is legally unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any Eligible
Servicer as the successor to the Servicer hereunder in the performance of
all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Pending appointment of a successor pursuant to the
preceding sentence, the Trustee shall act as successor Servicer unless it
is legally unable to do so, in which event the outgoing Servicer shall
continue to act as Servicer until a successor has been appointed and
accepted such appointment.
(c) In connection with such appointment and assumption, the Trustee
may make such arrangements for the compensation of such successor out of
payments on the Leases as it and such successor shall agree; provided,
however, that no such monthly compensation shall, without the written
consent of the Contributor and 100% of the Noteholders, exceed the Total
Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any
such succession.
(d) If a successor Servicer is acting as Servicer hereunder, it shall
be subject to termination under Section 8.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.
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SECTION 8.4. Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Issuer shall give prompt written notice thereof to each Rating Agency, and the
Trustee shall give prompt written notice thereof to Noteholders at their
respective addresses appearing in the Note Register.
SECTION 8.5. Waiver of Past Defaults. A Note Majority may 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 Servicer Termination Event 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.
ARTICLE IX
SUBSTITUTION OF LEASES
SECTION 9.1. Substitution.
(a) Subject to the satisfaction of the requirements set forth in
Section 9.1(b) hereof, the Contributor will have the right (but not the
obligation) at any time to substitute one or more Substitute Leases for a
Lease (for purposes of this Section 9.1, such Lease referred to as a
"Predecessor Lease") if:
(i) the Predecessor Lease became (A) a Liquidated Lease, (B) a
Prepaid Lease, (C) a Warranty Lease or (D) an Adjusted Lease during
the immediately preceding Collection Period; and
(ii) the aggregate Principal Balance of the Liquidated Leases,
Adjusted Leases and Warranty Leases that are Predecessor Leases shall
not in the aggregate exceed 10% of the Initial Pool Principal Balance.
(b) Each transfer of Substitute Leases will be subject to the
satisfaction of the following conditions precedent:
(i) after giving effect to such substitutions and any adjustments
pursuant to Section 3.2, the aggregate Book Value of such Leases must
be not less than 90% of the Book Value of the Leases substituted or
adjusted since the Closing Date.
(ii) either the final payment on such Substitute Lease must be on
or prior to June 30, 2007 or, to the extent the final payment on such
Lease is due subsequent to June 30, 2007 only scheduled payments due
on or prior to such date may be included in the Principal Balance of
such Lease for the purpose of making any calculation under the
Indenture.
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(iii) the Lease Pool Principal Balance, after giving effect to
such adjustments and substitutions, must not be less than the Lease
Pool Principal Balance prior to such adjustment or substitution
(without giving effect to the proviso to the definition of "Principal
Balance").
(iv) the weighted average life of the Notes, after giving effect
to such adjustments and substitutions, must not differ materially from
the weighted average life of the Notes prior to such adjustments and
substitutions.
(v) after giving effect to such adjustments and substitutions,
the aggregate Principal Balance of the Leases that were originated by
Vendor Services must not be less than the aggregate Principal Balance
of the Leases that were originated by Vendor Services prior to such
adjustment or substitution.
SECTION 9.2. Procedure.
(a) By 11:00 a.m. on the Business Day prior to each Deposit Date, the
Contributor shall give written notice to the Servicer of any substitution
of Substitute Leases for Predecessor Leases during the preceding Collection
Period. By 11:00 a.m. on the Deposit Date, the Contributor shall deliver to
the Servicer and the Trustee and, to the extent not included in the
Servicer's Certificate, the Trustee shall promptly deliver to each Rating
Agency (i) a supplement to Exhibit A hereto setting forth the information
shown thereon for each such Substitute Lease, (ii) an Officer's Certificate
(A) certifying that each such Substitute Lease is an Eligible Lease, (B)
specifying each Predecessor Lease for which a substitution has been made
and the Principal Balance and the Book Value under each such Predecessor
Lease and the Principal Balance and the Book Value under each Substitute
Lease being transferred thereby and (C) that all conditions precedent to
such addition or substitution have been satisfied and (iii) such additional
information concerning such Substitute Leases or Predecessor Leases as may
be needed for the Servicer to prepare its Servicer's Certificates pursuant
to Section 3.9 and to otherwise carry out its duties as servicer hereunder.
(b) Subject to the provisions of Section 9.3, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section
9.2(a) shall be conclusive evidence, without further act or deed, that
during the immediately preceding Collection Period and as of the related
Cut-Off Date (i) Vendor Services assigned to the Contributor pursuant to
Section 2.2 of the Transfer Agreement all of Vendor Services' right, title
and interest in and to the Substitute Leases identified in such supplement
and the related rights described in Section 2.1(a) of the Transfer
Agreement, (ii) Vendor Services transferred to the Contributor, as a
contribution to capital pursuant to Section 2.2 of the Transfer Agreement,
all of Vendor Services' right, title and interest in and to the Equipment
subject to such Substitute Leases and the related rights described in
Section 2.1(a) of the Transfer Agreement, and (iii) the Contributor
assigned and transferred to Vendor Services, without representation or
warranty, all of the Contributor's right, title and interest in and to the
Predecessor Leases identified in such Officer's Certificate and the
Equipment subject thereto. The Contributor shall promptly deliver or cause
to be delivered to the Servicer the original executed copy of each
Substitute Lease assigned to
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the Contributor pursuant to Section 9.1 hereof and the related Lease File
and the Contributor shall promptly request the Servicer to deliver to
Vendor Services the original executed copy of each Predecessor Lease for
which substitution has been made pursuant to Section 9.1 hereof and the
related Lease File.
(c) Subject to the provisions of Section 9.3, the delivery of any
Officer's Certificate and supplement to Exhibit A pursuant to Section
9.2(a) shall be conclusive evidence, without further act or deed, that
during the immediately preceding Collection Period and as of the related
Cut-Off Date (i) the Contributor assigned to the Issuer pursuant to Section
9.1 hereof all of the Contributor's right, title and interest in and to the
Substitute Leases identified in such supplement and the related rights
described in Section 2.1 hereof, (ii) the Contributor transferred to the
Issuer, as a contribution to capital, all of the Contributor's right, title
and interest in and to the rights described in Section 2.1 hereof as they
relate to the Equipment subject to such Substitute Leases, and (iii) the
Issuer assigned and transferred to the Contributor, without representation
or warranty, all of the Issuer's right, title and interest in and to the
Predecessor Leases identified in such Officer's Certificate and the
Equipment subject thereto. Upon such assignment of a Substitute Lease, the
Issuer shall be deemed to have appointed and the Servicer shall be deemed
to have accepted appointment as Custodian of the related Lease File
pursuant to Section 2.2.
SECTION 9.3. Objection and Repurchase. If any holder of the Notes objects
to any substitution of Leases within ten days of receipt of the Servicer's
Certificate providing notice thereof pursuant to Section 3.9, on the grounds
either that any Substitute Lease is not an Eligible Lease or that such
substitution or addition is otherwise not permitted under the provisions of
Section 9.1 hereof, the Contributor shall be entitled to present such additional
information as it deems appropriate in an effort to demonstrate that such Lease
is an Eligible Lease and that such substitution is permitted under the
provisions of Section 9.1 hereof. Following such presentation, the substitution
shall remain effective if each person originally objecting to the substitution
withdraws his objection. If the conditions specified in the preceding sentence
are not satisfied, or if at any time it is established that any lease was not,
at the time of substitution, an Eligible Lease, then Vendor Services shall be
required to repurchase such Lease in accordance with the provisions of Section
2.6 hereof.
SECTION 9.4. Vendor Services' and Servicer's Subsequent Obligations. Upon
any substitution of Leases in accordance with the provisions of this Section 9,
Vendor Services', the Contributor's and the Servicer's obligations hereunder
with respect to the Predecessor Lease shall cease, but Vendor Services, the
Contributor and the Servicer shall each thereafter have the same obligations
with respect to the Substitute Lease substituted as it has with respect to all
other Leases subject to the terms hereof.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment.
(a) This Agreement may be amended by the Contributor, the Servicer,
the Issuer and the Trustee without the consent of any of the Noteholders,
(i) to cure any ambiguity, (ii) to correct or supplement any provisions in
this Agreement that may be inconsistent with any other provision herein, or
(iii) to make any other provisions with respect to matters or questions
arising under this Agreement that are not inconsistent with the provisions
hereof; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests
of the Noteholders.
(b) This Agreement may also be amended from time to time by the
Contributor, the Servicer, the Issuer and the Trustee with the consent of a
Note Majority (which consent of any Holder of a Note given pursuant to this
Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such
Note and of any Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made
upon the Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Notes; provided,
however, that no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of
payments on Leases or distributions required to be made on any Note or the
rate of interest payable thereon, (b) amend any provisions of Section 5.06
or 8.03 of the Indenture in such a manner as to affect the priority of
payment of interest or principal to Noteholders, or (c) reduce the
aforesaid percentage required to consent to any such amendment or any
waiver hereunder, without the consent of the Holders of all Notes then
Outstanding and affected thereby; and provided, further, that no such
amendment shall be effective unless and until the Rating Agency Condition
has been satisfied.
(c) Promptly after the execution of any such amendment or consent, the
Issuer or the Trustee, as appropriate, shall furnish written notification
of the substance of such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant
to Section 10.1(b) to approve the particular form of any proposed amendment
or consent, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents (and any other
consents of Noteholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Noteholders shall be subject
to such reasonable requirements as the Issuer or Trustee, as applicable,
may prescribe, including the establishment of record dates.
(e) Prior to the execution of any amendment to this Agreement, the
Issuer shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is
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authorized or permitted by this Agreement, in addition to the Opinion of
Counsel referred to in Section 10.2(h). The Issuer may, but shall not be
obligated to, enter into any such amendment which affects the Issuer's own
rights, duties or immunities under this Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust Assets.
(a) The Contributor shall execute and file such financing statements
and cause to be executed and filed such continuation and other statements
(including those prepared by the Servicer pursuant to Section 3.14(c)), all
in such manner and in such places as may be required by law fully to
preserve, maintain and protect the interest of the Issuer, the Issuer and
the Trustee in the Trust Assets and in the proceeds thereof; except that
(i) UCC-1 financing statements and continuation statements, listing the
Obligor as debtor and the related Equipment as collateral, need be filed
only as required by Section 3.5; and (ii) no assignments of any such
financing statements relating to the Equipment shall be filed to reflect
the assignment of the Leases by Vendor Services to the Contributor and by
the Contributor to the Issuer. The Contributor shall deliver (or cause to
be delivered) to the Issuer and the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) Neither the Contributor nor the Issuer shall change its name,
identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed by the
Contributor in accordance with paragraph (a) above seriously misleading
within the meaning of Section 9-402(7) of the UCC, unless it shall have
given the Issuer and the Trustee at least 60 days' prior written notice
thereof, and shall promptly file appropriate amendments to all previously
filed financing statements and continuation statements.
(c) Each of the Contributor, the Servicer and the Issuer shall give
the Issuer and the Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation
statement or of any new financing statement. The Servicer shall at all
times maintain each office from which it services Leases and its principal
executive office within the United States of America.
(d) The Servicer shall maintain accounts and records as to each Lease
accurately and in sufficient detail to permit (i) the reader thereof to
know at any time the status of such Lease, 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
Lease and the amounts from time to time deposited in the Collection Account
in respect of such Lease.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of transfer and assignment under this Agreement of the
Leases to the Issuer, the Servicer's master computer records (including any
backup archives) that refer to any Lease indicate clearly that the Lease is
owned by the Issuer. Indication of the Issuer's ownership of a Lease shall
be deleted from or modified on the Servicer's computer systems when, and
only when, the Lease has been paid in full,
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liquidated (including receipt of all recoveries reasonably expected to be
collected), a Substitute Lease substituted therefor, or purchased by the
Contributor or Vendor Services.
(f) Upon receipt by the Servicer of reasonable prior notice, Servicer
shall permit the Issuer, the Trustee and their respective agents, at any
time during the Servicer's normal business hours to inspect, audit and make
copies of and abstracts from the Servicer's records regarding any Leases or
any other portion of the Trust Assets.
(g) The Servicer shall furnish to the Issuer and the Trustee at any
time upon request a list (which may, at the option of the Servicer, be on a
computer disk or other electronic storage medium) of all Leases then held
as part of the Trust Assets, together with a reconciliation of such list to
the Schedule of Leases and to each of the Servicer's Certificates furnished
before such request indicating removal of Leases from the Issuer. Upon
request, the Servicer shall furnish a copy of any list to the Contributor.
Subject to the following sentence, the Issuer shall hold any such list and
Schedule of Leases for examination by interested parties during normal
business hours at the Corporate Trust Office upon reasonable notice by such
Persons of their desire to conduct an examination. The Issuer shall and
shall cause its representatives to hold in confidence all information
thereon relating to the identity of the Obligors except to the extent
disclosure may be required by ss. 9-208 of the UCC or by other applicable
law (and all reasonable applications for confidential treatment are
unavailing) and except to the extent that the Issuer may reasonably
determine that such disclosure is consistent with its obligations under the
Indenture.
(h) The Contributor and the Servicer shall deliver to the Issuer and
the Trustee simultaneously with the execution and delivery of this
Agreement and of each amendment thereto and upon the occurrence of the
events giving rise to an obligation to give notice pursuant to Section
10.2(b) or (c), an Opinion of Counsel either (a) stating that, in the
opinion of such Counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the Trustee in the
Leases and the other Trust Assets, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are given,
or (b) stating that, in the opinion of such counsel, no such action is
necessary to preserve and protect such interest.
(i) The Servicer shall deliver to the Issuer and the Trustee, within
90 days after the beginning of each calendar year beginning with the first
calendar year beginning more than three months after the Closing Date, an
Opinion of Counsel, either (a) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Issuer and the Trustee in the Leases, and reciting the
details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (b) stating that, in the opinion of such
counsel, no action shall be necessary to preserve and protect such
interest.
SECTION 10.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS
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OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.4. 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
respective rights of the Holders thereof.
SECTION 10.5. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer), this Agreement may not be assigned by the Contributor or the
Servicer without (i) the prior written consent of the Issuer, the Trustee and a
Note Majority, and (ii) satisfaction of the Rating Agency Condition.
SECTION 10.6. Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or claim under
this Agreement.
SECTION 10.7. Counterparts. For the purpose of facilitating its execution
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 10.8. Intention of Parties. The parties hereto intend that, in the
event that the conveyance of the Leases and other Trust Assets pursuant to this
Agreement is determined to be made as security for a loan made by the Issuer or
the Noteholders to the Contributor, the Contributor hereby grants to the Issuer
to secure such loan a first priority security interest in all of the
Contributor's right, title and interest in and to the rights and property
intended to be conveyed to the Issuer pursuant to Section 2.1(a). This Agreement
shall, in such event, constitute a security agreement under applicable law.
SECTION 10.9. Notices. All demands, notices and communications under this
Agreement shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, or by facsimile transmission, and shall be deemed
to have been duly given upon receipt (a) in the case of Vendor Services, the
Contributor, the Issuer or the Servicer, at the following address: 1100 Landmark
Towers, ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel and (b) in the case of the Trustee, at its Corporate Trust Office, or at
such other address as shall be designated by any such party in a written notice
to the other parties.
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SECTION 10.10. Income Tax Characterization. The Contributor has structured
the Indenture and the Notes with the intention that the Notes will qualify under
applicable federal, state, local and foreign tax law as indebtedness of the
Contributor secured by the Leases. The Contributor and the Servicer agree to
treat and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income.
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IN WITNESS WHEREOF, the Issuer, the Contributor, Vendor
Services, the Servicer and the Trustee have caused this Contribution and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
ISSUER:
CONSECO FINANCE LEASE 2000-1, LLC
By GREEN TREE LEASE FINANCE II, INC.
By ________________________________
Name: _____________________________
Title: _____________________________
CONTRIBUTOR:
GREEN TREE LEASE FINANCE II, INC.
By ________________________________
Name: _____________________________
Title: _____________________________
CONSECO FINANCE VENDOR SERVICES
CORPORATION
In its individual capacity and
as Servicer
By ________________________________
Name: _____________________________
Title: _____________________________
TRUSTEE:
▇▇▇▇▇ FARGO BANK MINNESOTA, N.A.
not in its individual capacity but solely
as Trustee
By ________________________________
Name: _____________________________
Title: _____________________________
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EXHIBIT A
SCHEDULE OF LEASES AND EQUIPMENT
--------------------------------
A-1
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
The undersigned, on behalf of Conseco Finance Vendor Services Corporation,
in its capacity as servicer (the "Servicer") under the Contribution and
Servicing Agreement, dated as of July 1, 2000 (the "Contribution and Servicing
Agreement"), among Conseco Finance Lease 2000-1, LLC, Green Tree Lease Finance
II, Inc., ▇▇▇▇▇ Fargo Bank Minnesota, N.A., as trustee under the Indenture, and
Conseco Finance Vendor Services Corporation, in its individual capacity and as
Servicer, DOES HEREBY CERTIFY that he/she is a Responsible Officer of the
Servicer and, pursuant to Section 3.9 of the Contribution and Servicing
Agreement, DOES HEREBY FURTHER CERTIFY the following with respect to the Payment
Date occurring on _____________________________________:
B-1
This Certificate shall constitute the Servicer's Certificate required by
Section 3.9 of the Contribution and Servicing Agreement with respect to the
above Payment Date. Any term capitalized but not defined herein shall have the
meaning ascribed thereto in the Contribution and Servicing Agreement.
IN WITNESS WHEREOF the undersigned has hereunto set his/her
hand this _____________ day of _________________, ____________.
CONSECO FINANCE VENDOR SERVICES
CORPORATION
By
-------------------------------------
Name:
------------------------------
Title:
-----------------------------
B-2