DB Draft 8/5/99
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CHARTER FINANCIAL, INC.
SELLER
AND
CHARTER FUNDING CORPORATION V,
TRANSFEROR
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SELLER CONTRIBUTION AND SALE AGREEMENT
Dated as of August 1, 1999
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TABLE OF CONTENTS
Page
RECITALS..........................................................................................................1
AGREEMENTS.........................................................................................................2
ARTICLE I. DEFINITIONS............................................................................................2
ARTICLE II. SALE AND CAPITAL CONTRIBUTION.........................................................................2
Section 2.01 Sale and Capital Contribution of Leases and Equipment, Lease Receivables.......................2
Section 2.02 Treatment as a Sale and Contribution; Grant of Security Interest...............................3
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLER.........................................................4
Section 3.01 Corporate Organization and Authority...........................................................4
Section 3.02 Business and Property..........................................................................4
Section 3.03 Financial Statements...........................................................................4
Section 3.04 Equipment and Leases...........................................................................5
Section 3.05 Payments.......................................................................................8
Section 3.06 Full Disclosure................................................................................8
Section 3.07 Pending Litigation.............................................................................8
Section 3.08 Title to Properties............................................................................8
Section 3.09 Transactions Legal and Authorized..............................................................9
Section 3.10 Governmental Consent...........................................................................9
Section 3.11 Taxes..........................................................................................9
Section 3.12 Compliance with Law...........................................................................10
Section 3.13 Ability to Perform............................................................................10
Section 3.14 Ordinary Course; No Insolvency................................................................10
Section 3.15 Assets and Liabilities........................................................................10
Section 3.16 Fair Consideration............................................................................11
Section 3.17 Ability to Pay Debts..........................................................................11
Section 3.18 Bulk Transfer Provisions......................................................................11
Section 3.19 Transfer Taxes................................................................................11
Section 3.20 Principal Executive Office....................................................................11
Section 3.21 Sale and Contribution Treatment...............................................................12
Section 3.22 Nonconsolidation..............................................................................12
Section 3.23 Lease Repurchase..............................................................................12
ARTICLE IV. THE SELLER...........................................................................................13
Section 4.01 Merger or Consolidation of the Seller.........................................................13
Section 4.02 Control of Transferor.........................................................................13
Section 4.03 Books and Records.............................................................................13
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Section 4.04 Communications................................................................................13
ARTICLE V. SUBSTITUTION AND ADDITION OF LEASES...................................................................13
Section 5.01 Substitution and Addition.....................................................................13
Section 5.02 Procedure.....................................................................................14
Section 5.03 Seller's Subsequent Obligations...............................................................15
ARTICLE VI. ASSIGNMENT...........................................................................................16
Section 6.01 Assignment to Trustee.........................................................................16
Section 6.02 Assignment by Seller..........................................................................16
ARTICLE VII. NATURE OF OBLIGATIONS AND SECURITY THEREFOR.........................................................16
Section 7.01 Obligations Absolute..........................................................................16
Section 7.02 Further Assurances; Financing Statements......................................................17
ARTICLE VIII. MISCELLANEOUS......................................................................................17
Section 8.01 Continuing Obligations........................................................................17
Section 8.02 GOVERNING LAW.................................................................................17
Section 8.03 Successors and Assigns........................................................................17
Section 8.04 Modification..................................................................................17
Section 8.05 No Petition or Proceedings....................................................................18
Section 8.06 Notices.......................................................................................18
Section 8.07 Counterparts..................................................................................18
Schedule 1 - Schedule of Leases
ii
SELLER CONTRIBUTION AND SALE AGREEMENT
This SELLER CONTRIBUTION AND SALE AGREEMENT is made and dated as of August
1, 1999, by and between CHARTER FUNDING CORPORATION V, a New York corporation,
as purchaser hereunder (the "Transferor") and CHARTER FINANCIAL, INC., a New
York corporation, as seller of the Leases (the "Seller").
R E C I T A L S
WHEREAS, pursuant to this Seller Contribution and Sale Agreement, Charter
Financial, Inc. (the "Seller") is selling and making certain capital
contributions to Charter Funding Corporation V (the "Transferor") with respect
to the Leases, the related Equipment and other assets described therein (the
"Transferred Assets").
WHEREAS, pursuant to the Transferor Contribution and Sale Agreement, the
Transferor is selling and making certain capital contribution to Charter
Equipment Lease 1999-1 LLC (the "Issuer"), with respect to the Transferred
Assets.
WHEREAS, pursuant to the Indenture, the Issuer is pledging the Transferred
Assets thereunder for the benefit of the Holders of the Notes (as detailed
below) and is issuing one class of [ ]% Class A-1 Lease-Backed Notes, [ ] in the
aggregate principal amount of $[ ] (the "Class A-1 Notes"), one class of [ ]%
Class A-2 Lease-Backed Notes, [ ] in the aggregate principal amount of $[ ] (the
"Class A-2 Notes"), one class of [ ]% Class A-3 Lease-Backed Notes, [ ] in the
aggregate principal amount of $[ ] (the "Class A-3 Notes"), one class of [ ]%
Class A-4 Lease-Backed Notes, [ ] in the aggregate principal amount of $[ ] (the
"Class A-4 Notes"; together with the Class A-1 Notes, the Class A-2 Notes and
the Class A-3 Notes, the "Class A Notes"), one class of [ ]% Class B
Leased-Backed Notes, [ ] (the "Class B Notes"), in the aggregate principal
amount of $[ ], one class of [ ]% Class C Lease-Backed Notes, [ ], in the
aggregate principal amount of $[ ] (the "Class C Notes"), one class of [ ]%
Class D Leased-Backed Notes, [ ] in the aggregate principal amount of $[ ] (the
"Class D Notes"); together with the Class A Notes, the Class B Notes, the Class
C Notes, and the Class D Notes, are referred to collectively as the "Notes").
WHEREAS, pursuant to the Indenture, the Issuer is granting, inter alia, to
the Trustee, for the benefit of the Holders from time to time of the Notes, a
security interest in all right, title and interest of the Issuer in, to and
under the Leases, the interests in the Equipment and the other Transferred
Assets and the Servicing Agreement.
NOW, THEREFORE, the parties hereto agree, in consideration of the mutual
agreements set forth herein and other valuable consideration provided, as
follows:
A G R E E M E N T S
ARTICLE I. DEFINITIONS
As used in this Seller Contribution and Sale Agreement, the following terms
have the respective meanings set forth below or set forth in the Section hereof
or in any other agreement indicated:
Lease - at any time, each separate lease agreement and each lease schedule
or supplement (and each master lease agreement insofar as the same relates to
any such schedule or supplement) described in Schedule 1 hereto, as the same may
be amended or modified from time to time in accordance with the provisions
hereof and thereof and of the Servicing Agreement.
Predecessor Lease - as defined in Section 5.01 hereof.
Schedule of Leases - the schedule of Leases, annexed hereto as Schedule 1
as may be amended from time to time.
Servicing Agreement - the Servicing Agreement dated as of August 1, 1999
among Charter Equipment Lease 1999-1 LLC, LaSalle Bank National Association, as
Trustee and Charter Financial, Inc. as the same may be amended or modified from
time to time in accordance with the provisions hereof and thereof.
Substitute Lease - as defined in Section 5.01 hereof.
Transfer Taxes - as defined in Section 3.19 hereof.
To the extent capitalized terms are used herein which are not otherwise
defined, such terms shall have meanings defined in the Servicing Agreement.
ARTICLE II. SALE AND CAPITAL CONTRIBUTION
Section 2.01 Sale and Capital Contribution of Leases and Equipment, Lease
Receivables.
By their execution and delivery of this Seller Contribution and Sale
Agreement, the Seller hereby sells, contributes and assigns to the Transferor,
and the Transferor hereby acquires from the Seller without recourse (except to
the extent of the Seller's purchase obligations as set forth herein), all of the
Seller's right, title and interest in and to each of the Leases and the Lease
Receivables (including the right to receive all payments due or to become due
thereunder since the Cut-Off Date, or the related Transfer Date with respect to
Additional Leases or Substitute Leases), as shown on the Schedule of Leases from
time to time. The Seller and the Transferor each acknowledge and confirm that
contemporaneously with the sale and the contribution of the Leases as
hereinabove provided, the Seller, as the holder of the common stock of the
Transferor, is selling, contributing and transferring to the Transferor, and in
connection with each transfer and assignment of Additional Leases and Substitute
Leases the Seller will sell, contribute and transfer to the Transferor, without
recourse, all right, title and interest of the Seller in and to each item of
Equipment subject to each Lease, Additional Lease
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and Substitute Lease. After such sale, contribution and transfer by the Seller
to the Transferor, all right, title and interest of the Seller in and to each
item of Equipment subject to each Lease shall be vested in the Transferor. In
each instance, the transfer of the Leases, the Lease Receivables and the
Equipment shall be regarded as a sale, however to the extent that the sale price
for the Lease, the Lease Receivables and the Equipment is less than the fair
market value thereof, the difference shall be deemed to be a capital
contribution by the Seller to the Transferor.
Section 2.02 Treatment as a Sale and Contribution; Grant of Security
Interest.
It is the intention of the parties hereto that each transfer of Leases,
Additional Leases, Substitute Leases, Lease Payments and all other amounts due
or becoming due with respect thereto and Equipment (or interests therein) being
made hereunder shall constitute a sale and a capital contribution, as desired in
Section 2.01 hereof, and not a loan. The Seller shall not take any action
inconsistent with the treatment of such transfers as sales and capital
contributions, as desired in Section 2.01 hereof, or with the Transferor's
ownership of the Leases, the Lease Receivables and all other amounts due or
becoming due with respect thereto and the interests in the Equipment. The Seller
shall indicate in its records that ownership of each of the Leases, the Lease
Receivables and the interests in the Equipment is held by the Transferor, and
each shall respond to any inquiries from third parties by indicating that its
ownership in the Leases, Additional Leases, Substitute Leases, the Lease
Receivables and all other amounts due or becoming due with respect thereto and
the interests in the Equipment is held by the Transferor. In the event, however,
that a court of competent jurisdiction were to hold that any transaction
evidenced hereby constitutes a loan and not a capital contribution, it is the
intention of the parties hereto that this Agreement shall constitute a security
agreement under applicable law and that the Transferor shall be deemed to have
been granted a first priority security interest in (a) the Leases and all Lease
Payments, Casualty Payments, Termination Payments, and other amounts now due or
becoming due with respect thereto since the Cut-Off Date (other than any
prepayments of rent required pursuant to the terms of any Lease at or before the
commencement of the Lease and any payments due before the Cut-Off Date) and all
Additional Leases and Substitute Leases and all Lease Payments, Casualty
Payments, Termination Payments and other amounts due or becoming due with
respect thereto since the effective date of their respective addition or
substitution (other than any prepayments of rent required by the terms of any
Lease at or before the commencement of the Lease and any payments due before the
effective date of such addition or substitution), (b) all rights of the
Transferor to or under any guarantees of or collateral (including all rights of
the Transferor in any security deposits) for the Lessee's obligations under any
Lease, (c) all interests of the Transferor in the Equipment at any time subject
to any Lease including any security interest of the Seller in the Equipment and
(d) all proceeds of the conversion, whether voluntary or involuntary, of any of
the foregoing into cash or other property.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the accuracy and correctness
of the statements set forth in Section 3.01 through Section 3.22.
Section 3.01 Corporate Organization and Authority.
The Seller:
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation,
(b) has all requisite power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its business
as now conducted (except where the failure to have such licenses and
permits would not have a material adverse effect on the business or
condition (financial or otherwise) of the Seller or impair the
enforceability of any Lease) and to enter into and perform its
obligations under this Seller Contribution and Sale Agreement, and the
transactions contemplated hereby, including the Seller's support
obligations hereunder, and
(c) has duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each jurisdiction where the
character of its properties or the nature of its activities makes such
qualification necessary (except where the failure to be so qualified
or in good standing would not have a material adverse effect on the
Transferred Assets or the business or condition (financial or
otherwise) of the Seller or impair the enforceability of any Lease).
Section 3.02 Business and Property.
The Prospectus and the Private Placement Memoranda, accurately describe in
all material respects the general nature of the business of the Seller.
Section 3.03 Financial Statements.
Except as disclosed in the Prospectus and the Private Placement Memoranda,
there has been no change in the business, condition or prospects (financial or
otherwise) of the Seller except changes in the ordinary course of business, none
of which individually or in the aggregate has been materially adverse. Neither
the Seller nor any of its subsidiaries has any material liabilities or
obligations not incurred in the ordinary course of business other than those for
which adequate reserves are reflected in such financial statements and certain
contingent obligations of the Seller relating to other asset securitization
transactions involving the Seller.
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Section 3.04 Equipment and Leases.
(a) The transfer to the Transferor of the Leases and all of the Seller's
right, title and interest in each item of Equipment does not violate
the terms or provisions of any Lease or any other agreement to which
the Seller is a party or by which it is bound.
(b) Upon completion of the transfer described in Article II hereof, the
Transferor will (i) be the legal owner of the Leases (including the
right to receive all payments due or to become due thereunder), (ii)
have a valid security interest in each item of Equipment subject to
any Lease other than a Rent Stream Obligation. At such time, the
Leases (including the right to receive all payments due or to become
due thereunder) and the Seller's interest in the Equipment will be
free and clear of all Liens other than Permitted Encumbrances.
(c) With respect to any Lease, other than an Additional Lease or a
Substitute Lease, as of the Cut-Off Date, or with respect to any
Additional Lease or any Substitute Lease, as of the related Transfer
Date, the Seller represents and warrants that each Lease shall comply
with the following:
(i) the Lease is a valid and binding obligation of the Lessee
enforceable against such Lessee in accordance with its terms (except as may
be limited by bankruptcy laws, other laws affecting creditor's rights in
similar transactions generally, and judicial powers of equity);
(ii) the Lease constitutes a non-cancellable, "hell or high water"
obligation of the Lessee and requires the Lessee to make all Lease Payments
thereon regardless of the condition of the Equipment to which the Lease
relates;
(iii) the Lease is non-cancellable by the Lessee and does not contain
early termination options (except for a Lease which contains early
termination or prepayment clauses, which requires the Lessee to pay the
Prepayment Amount for such Lease upon such cancellation or prepayment);
(iv) all payments payable under the Lease are absolute, unconditional
obligations of the Lessee without right to offset for any reason;
(v) the Lease requires the Lessee or a third party to maintain the
Equipment in good working order, to bear all the costs of operating the
Equipment, including taxes and insurance relating thereto;
(vi) the Lease does not materially violate any U.S. or state laws;
(vii) the Lease provides for periodic payments;
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(viii) in the event of a Casualty Loss with respect to the Lease, the
Lessee, at the Lessee's expense, is required to replace the Equipment with
like equipment in good repair, acceptable to the Servicer or pay at a
minimum the outstanding principal or net book value of the Leases and any
applicable make whole premium, if any;
(ix) the Lease was originated by the Seller, or was acquired by the
Seller in a "true sale" in the ordinary course of its business and in a
manner which satisfies the underwriting practices set forth in the Credit
and Collection Policy as in effect from time to time;
(x) the Lease has been sold to the Seller free and clear of any Liens
other than Permitted Encumbrances;
(xi) the Lease is assignable without prior written consent of the
Lessee;
(xii) the Lease is denominated and payable only in U.S. dollars, the
Lessor is located in the United States and one or more Obligors who are
fully liable under the Lease are located in the United States;
(xiii) the Lease is not a "consumer lease" within the meaning of
Article 2A of the UCC in any jurisdiction where such Article 2A has been
adopted and governs the construction thereof;
(xiv) the lease, to the extent such Lease was reacquired by the Seller
from an affiliate prior to its conveyance in this transaction, was acquired
by the Seller in a "true sale";
(xv) no adverse selection was used in selecting the Lease for transfer
to the Transferor;
(xvi) the Lessee has represented to the Seller or Vendor that it has
accepted the Equipment;
(xvii) the Lessee is not a subject of an insolvency or bankruptcy
proceeding at the time of the transfer;
(xviii) the Lease is not a Defaulted Lease;
(xix) the maximum remaining term of the Lease does not exceed 84
months;
(xx) the Lease is not more than 60 days past due at time of transfer
to the Transferor;
(xxi) (A) with respect to any Lease other than a Rent Stream
Obligation, such Lease is a Finance Lease, and (B) with respect to any
Lease other than a Rent Stream Obligation or a Synthetic Lease, such Lease
provides that by the end of the lease
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term, the Lessee may elect to purchase the related Equipment upon the
exercise of a nominal purchase option;
(xxii) at least one Lease Payment has been paid by the Obligor on such
Lease;
(xxiii) at the time that the Seller conveyed its right, title and
interest in the Lease and the related Equipment, the Seller had no
knowledge that any item of such Equipment had suffered any loss or damage
which has not been repaired;
(xxiv) at the time that the Seller conveyed its right, title and
interest in the Lease and the related Equipment, such Lease shall not have
been amended, altered or modified in any respect, except in writing and all
such writings shall be contained in the Lease File in which the Lease
itself is contained;
(xxv) if a Synthetic Lease, such Lease was originated by the Seller
and not acquired by the Seller from a third party;
(xxvi) at the time that the Seller conveyed its right title and
interest in the Lease and the related Equipment, (A) except to the extent
that payments have been previously received on such Lease, the Obligor will
not have been released, in whole or in part, from any of its obligations in
respect of such Lease, (B) except as shown in the Lease File, no Equipment
related to such Lease will have been released, in whole or in part, from
such Lease, and (C) except as shown in the Lease File, neither the
operation of the Lease nor the exercise of any rights thereunder, nor the
execution of any instrument, nor the occurrence of any facts or
circumstances, has rendered or will render such Lease unenforceable, in
whole or in part, or subject such Lease or any related Equipment to any
right of rescission, setoff, counterclaim or defense (including, without
limitation, the defense of usury);
(xxvii) with respect to a Lease which had been acquired by Charter
Financial, Inc. from a third party originator, other than an affiliate of
Charter Financial, Inc., UCC filings have been filed to reflect the
assignment of the security interest from the third party originator to
Charter Financial, Inc.; and
(xxviii) with respect to a Lease which is a Financial Lease, Charter
Financial, Inc. has made all necessary UCC filings in all states where the
related Equipment is located, naming the Lessee as debtor and Charter
Financial, Inc. as secured party, to perfect the security interest of
Charter Financial, Inc. in such Equipment.
(d) the Transferor represents and warrants that as of the Cut-Off-Date:
(i) no more than 2.5% of the Leases by Discounted Lease Balance have
Equipment which is subject to certificate of title regulations in any
jurisdiction;
(ii) the information set forth in the Schedule of Leases is true and
correct;
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(iii) no less than 98% of the Leases by Discounted Lease Balance have
Lease Payments which are scheduled to be paid in monthly intervals; and
(iv) the Leases which are Rent Stream Obligations which were issued by
any individual third party issuer (including, without limitation, an
affiliate of Charter) do not represent more than 1.5% of the Aggregate
Discounted Lease Balance.
Section 3.05 Payments.
The portfolio detail delivered or to be delivered to the Trustee on or
prior to the Closing Date (i) accurately sets forth, as of the Cut-Off Date, the
amount of each Lease Payment due under each of the Leases and the month in which
such Lease Payment is to be paid in accordance with the terms of the Lease under
which the same is to be paid, (ii) accurately sets forth, as of the Cut-Off
Date, the information with respect to certain other characteristics of the
Leases and the Equipment described in such portfolio detail and (iii) is
otherwise true and correct in all respects.
Section 3.06 Full Disclosure.
The Prospectus and the Private Placement Memoranda (including, without
limitation, the statistical and descriptive information with respect to the
initial Leases, Lessees and Equipment), as of their respective dates, do not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. There is no fact
peculiar to the Seller or any Affiliate of the Seller or, to the knowledge of
the Seller, any Lease, Lessee or item of Equipment, which the Seller has not or
will not disclose in the Prospectus or the Private Placement Memoranda which
materially affects adversely nor, so far as the Seller can now reasonably
foresee, will materially affect adversely the ability of the Seller to perform
the transactions contemplated by this Seller Contribution and Sale Agreement.
Section 3.07 Pending Litigation.
There are no proceedings or investigations pending, or to the knowledge
(after due inquiry) of the Seller threatened, against or affecting the Seller or
any subsidiary in or before any court, governmental authority or agency or
arbitration board or tribunal, including, but not limited to, any such
proceeding or investigation with respect to any environmental or other liability
resulting from the ownership or use of any of the Equipment, which, individually
or in the aggregate, involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Seller and its subsidiaries, or the ability of the Seller
to perform its obligations under this Seller Contribution and Sale Agreement.
The Seller is not in default with respect to any order of any court,
governmental authority or agency or arbitration board or tribunal.
Section 3.08 Title to Properties.
Immediately following the transfer by the Seller to the Transferor of the
Leases and the Seller's interest in the Equipment, the Leases (including the
right to receive all payments
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due or to become due thereunder) and the interest in the Equipment will be free
and clear of all Liens other than Permitted Encumbrances.
Section 3.09 Transactions Legal and Authorized.
The transfer by the Seller of all of its right, title and interest in and
to each item of Equipment and each Lease (including the right to receive all
payments due or to become due thereunder) and compliance by the Seller with all
of the provisions of this Seller Contribution and Sale Agreement:
(a) have been duly authorized by all necessary corporate action on the
part of the Seller, and do not require any stockholder approval, or
approval or consent of any trustee or holders of any indebtedness or
obligations of the Seller except such as have been duly obtained;
(b) are within the corporate powers of the Seller; and
(c) are legal and will not conflict with, result in any breach in any of
the provisions of, constitute a default under, or result in the
creation of any Lien upon any property of the Seller under the
provisions of, any agreement, charter, instrument, by-law or other
instrument to which the Seller is a party or by which it or its
property may be bound or result in the violation of any law,
regulation, rule, order or judgment applicable to the Seller or its
properties, or any order to which the Seller or its properties is
subject, of or by any government or governmental agency or authority.
Section 3.10 Governmental Consent.
No consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority is necessary or required on the
part of the Seller in connection with the execution and delivery of this Seller
Contribution and Sale Agreement or the contribution of the Leases and Equipment.
Section 3.11 Taxes.
(a) All tax returns required to be filed by the Seller or any subsidiary
in any jurisdiction have in fact been filed or a valid extension
obtained, and all taxes, assessments, fees and other governmental
charges upon the Seller or any subsidiary, or upon any of their
respective properties, income or franchises, shown to be due and
payable on such returns have been paid. To the best of the Seller's
knowledge all such tax returns were true and correct and neither the
Seller nor any subsidiary knows of any proposed additional tax
assessment against it in any material amount nor of any basis
therefor.
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(b) The provisions for taxes on the books of the Seller and each of its
subsidiaries are in accordance with generally accepted accounting
principles.
Section 3.12 Compliance with Law.
The Seller:
(a) is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject;
(b) has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or to the
conduct of its business; and
(c) is not in violation in any material respect of any term of any
agreement, charter instrument, by-law or other instrument to which it is a party
or by which it may be bound, which violation or failure to obtain might
materially adversely affect the business or condition (financial or otherwise)
of the Seller and its subsidiaries.
Section 3.13 Ability to Perform.
At the date hereof, the Seller does not believe, nor does it have any
reasonable cause to believe, that it cannot perform each and every covenant
contained in this Seller Contribution and Sale Agreement.
Section 3.14 Ordinary Course; No Insolvency.
The transactions contemplated by the Notes, the Indenture and this Seller
Contribution and Sale Agreement are being consummated by the Seller in
furtherance of the Seller's ordinary business purposes and constitute a
practical and reasonable course of action by the Seller designed to improve the
financial position of the Seller, with no contemplation of insolvency and with
no intent to hinder, delay or defraud any of its present or future creditors.
The Seller will not, either as a result of the transaction contemplated by this
Seller Contribution and Sale Agreement, or immediately before or after such
transaction, be insolvent or have an unreasonably small capital for the conduct
of its business and the payment of anticipated obligations.
Section 3.15 Assets and Liabilities.
(a) Both immediately before and after any transfer of Leases (including the
right to receive all payments due or to become due thereunder) and the transfer
of the interests in the Equipment contemplated by this Seller Contribution and
Sale Agreement, the present fair salable value of the Seller's assets was or
will be in excess of the amount that will be required to pay the Seller's
probable liabilities as they then exist and as they become absolute and matured;
and
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(b) Both immediately before and after any transfer of Leases (including the
right to receive all payments due or to become due thereunder) and the transfer
of the interests in the Equipment contemplated by this Seller Contribution and
Sale Agreement, the sum of the Seller's assets was or will be greater than the
sum of the Seller's debts, valuing the Seller's assets at a fair salable value.
Section 3.16 Fair Consideration.
The consideration received by the Seller, in exchange for the Leases
(including the right to receive all payments due or to become due thereunder)
and the transfer of its interests in the Equipment, is fair consideration having
value equivalent to or in excess of the value of the assets being transferred by
the Seller.
Section 3.17 Ability to Pay Debts.
Neither as a result of the transaction contemplated by this Seller
Contribution and Sale Agreement nor otherwise does the Seller believe that it
will incur debts beyond its ability to pay or which would be prohibited by its
charter documents or by-laws. The Seller's assets and cash flow enable it to
meet its present obligations in the ordinary course of business as they become
due.
Section 3.18 Bulk Transfer Provisions.
The transfer, assignment and conveyance of the Leases and its interests in
the Equipment by the Seller pursuant to this Seller Contribution and Sale
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
Section 3.19 Transfer Taxes.
The transfer, assignment and conveyance of the Leases (including all
payments due or to become due thereunder) and its interests in the Equipment by
the Seller pursuant to this Seller Contribution and Sale Agreement is not
subject to and will not result in any tax, fee or governmental charge payable by
the Seller to any federal, state or local government ("Transfer Taxes"). In the
event that the Transferor receives actual notice of any Transfer Taxes arising
out of the transfer, assignment and conveyance of the Leases and/or its
interests in the Equipment, on written demand by the Transferor, or upon the
Seller otherwise being given notice thereof, the Seller shall pay, and otherwise
indemnify and hold the Transferor, the Trustee and the holders of the Notes
harmless, on an after-tax basis, from and against any and all such Transfer
Taxes (it being understood that the holders of the Notes and the Trustee shall
have no obligation to pay such Transfer Taxes).
Section 3.20 Principal Executive Office.
The principal executive office of the Seller is located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
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Section 3.21 Sale and Contribution Treatment.
The Seller will treat the transfer to the Transferor of the Leases and the
Lease Receivables as a sale and a capital contribution as described in Section
2.06 hereof and absolute assignment for tax reporting and accounting purposes.
Section 3.22 Nonconsolidation.
The Seller is and at all times since its incorporation has been operated in
such a manner that it would not be substantively consolidated with the
Transferor, such that the separate existence of the Seller and the Transferor
would be disregarded in the event of a bankruptcy or insolvency of the Seller or
the Transferor, and in such regard:
(a) the Seller maintains separate corporate records and books of account
from the Transferor and otherwise observes corporate formalities and has
separate business office space from the Transferor;
(b) the financial statements and books and records of the Seller prepared
after the Issuance Date will reflect the separate existence of the Transferor;
(c) the Seller maintains its assets separately from the assets of the
Transferor (including through the maintenance of a separate bank account), the
Seller's funds and assets, and records relating thereto, have not been and are
not commingled with those of the Transferor;
(d) all business correspondence of the Seller and other communications are
conducted in the Seller's own name and on its own stationery; and
(e) the Transferor does not act as an agent of the Seller in any capacity
and the Seller does not act as agent for the Transferor, other than as Servicer
pursuant to the Servicing Agreement, but instead presents itself to the public
as a corporation separate from the Transferor.
Section 3.23 Lease Repurchase
In the event that any of the representations or warranties made by the
Seller in Section 3.04 or Section 3.05 with respect to any of the Leases proves
at any time to have been inaccurate in any material respect as of the Closing
Date or the related Transfer Date, as applicable, and the event or condition
causing such inaccuracy shall not have been cured or corrected within 30 days of
the earlier of the date on which (a) the Seller is given notice thereof by the
Issuer, the Transferor, or the Trustee, or (b) on the date on which the Seller
otherwise first has notice thereof, the Seller shall, unless it has otherwise
substituted a Substitute Lease for such Lease, purchase such Lease not later
than the third Business Day after the Calculation Date next following the
expiration of such 30 day period described herein in an amount equal to the
Lease Repayment Amount for such Lease, and in addition, the Seller shall, at the
same time, reimburse to the Servicer any Servicer Advances made with respect to
such ▇▇▇▇▇.
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ARTICLE IV. THE SELLER
Section 4.01 Merger or Consolidation of the Seller.
The Seller will keep in full force and effect its existence, rights and
franchise as a corporation under the laws of its jurisdiction of incorporation
and will preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is necessary to protect the
validity and enforceability of any of the Leases or to permit performance of the
Seller's duties under this Seller Contribution and Sale Agreement.
The Seller shall not merge or consolidate with any other Person unless (i)
the entity surviving such merger or consolidation is a corporation organized
under the laws of the United States or any jurisdiction thereof and (ii) the
surviving entity, if not the Seller, shall execute and deliver to the Transferor
or the Servicer and the Trustee, in form and substance satisfactory to each of
them, (a) an instrument expressly assuming all of the obligations of the Seller
hereunder and (b) an opinion of counsel to the effect that such Person is a
corporation of the type described in the preceding clause (i) and has
effectively assumed the obligations of the Seller hereunder.
Section 4.02 Control of Transferor.
So long as any of the Notes or the other obligations secured by the
Indenture remain outstanding, the Seller will not (i) sell, pledge or otherwise
transfer any of its common stock in the Transferor held by the Seller or (ii)
vote such common stock interests in favor of any amendment to or alteration of
the articles of incorporation of the Transferor.
Section 4.03 Books and Records.
The Seller will clearly mark its books and records to reflect the sales and
contributions of Leases and Equipment pursuant to this Agreement.
Section 4.04 Communications.
The Seller will reply to all inquiries by third parties with respect to the
transactions contemplated by this Agreement by indicating that it has
contributed the Leases and its right, title and interest in the related
Equipment and that the Transferor now holds title to the Leases and such
interest in the related Equipment.
ARTICLE V. SUBSTITUTION AND ADDITION OF LEASES
Section 5.01 Substitution and Addition.
(a) Subject to the satisfaction of the requirements set forth in Section
5.01(c) hereof, the Seller will have the right (but not the obligation) at any
time to substitute one or more Eligible Leases and the Equipment subject thereto
(each, a "Substitute Lease") for a Lease (for purposes of this Article V
referred to as a "Predecessor Lease") and the Equipment subject thereto if:
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(i) the Predecessor Lease became (A) a Defaulted Lease, (B) a Lease
subject to a Warranty Event or (C) a Lease which is the subject of a
Casualty Loss, during the immediately preceding Collection Period; and
(ii) if Section 5.01(a)(i)(A) or (C) is applicable, the aggregate
Discounted Lease Balance of the Leases that are, or have been, Predecessor
Leases shall not in the aggregate exceed 10% of the Discounted Lease
Balance of the Leases on the Cut-Off Date.
(b) Subject to the satisfaction of the requirements set forth in Section
5.01(c) hereof, in the event of an Early Lease Termination which has been
prepaid in full, the Transferor will have the option to reinvest the proceeds of
such Early Termination Lease in one or more Additional Leases. The purchase
price of such Additional Lease or Leases will be an amount paid to the
Transferor equal to the proceeds of such Early Termination Lease.
(c) Each transfer of Substitute Leases and addition of Additional Leases
will be subject to the satisfaction of the following conditions precedent:
(i) the final payment on such Substitute Lease or Additional Lease
must be on or prior to the date of the final payment of the Predecessor
Lease or Early Termination Lease;
(ii) after giving effect to such additions and substitutions, the
aggregate amount of Lease Payments through the term of the Leases
(including the Substitute Leases and the Additional Leases) and the
Discounted Lease Balance of the Leases will not be materially less than the
aggregate scheduled Lease Payments of the Leases and the Discounted Lease
Balance of the Leases, respectively prior to such substitution or addition
or adjustment; and
(iii) after giving effect to such adjustments, additions, and
substitutions pursuant to Article IV, the weighted average remaining term
of the Leases must not be greater than the weighted average remaining term
of the Leases prior to such adjustment, addition, and substitution.
(d) Each addition and substitution pursuant to this Section 5.01 shall
include the right to receive all amounts due or to become due under each
Substitute Lease being substituted or Additional Leases being purchased and any
security deposits paid by the related Lessee to the Seller in connection
therewith (other than any prepayments of rent required pursuant to the terms
thereof at or before the commencement of such Lease and any payments due before
the Transfer Date as to which such substitution or addition is made). At the
time of each such substitution and addition, the Seller shall transfer to the
Trustee all Lease Payments actually received by the Seller which became due on
or after the related Transfer Date.
Section 5.02 Procedure.
(a) By 11:00 A.M. on the third Business Day following each Transfer Date,
the Seller shall give written notice to the Servicer of any substitution
pursuant to Section 5.01 of Substitute Leases for Predecessor Leases or addition
of Additional Leases for Early Termination Leases which have been prepaid in
full during the preceding Collection Period. By 11:00 A.M.
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on the fourth Business Day following each Payment Date, the Seller shall deliver
to the Servicer and the Trustee and, to the extent not included in the Monthly
Servicer Report, the Trustee shall promptly deliver to each Rating Agency (i) a
supplement to Schedule 1 hereto setting forth the information shown thereon for
each such Substitute Lease and Additional Lease, (ii) an Officer's Certificate
(A) certifying that each such Substitute Lease and Additional Lease is an
"Eligible Lease", (B) specifying each Predecessor Lease for which a substitution
has been made and each Early Termination Lease which is being replaced by an
Additional Lease and the amount of each periodic Lease Payment under each such
Predecessor Lease and the amount of each periodic Lease Payment under each
Additional Lease and 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 Additional Leases, Substitute
Leases, Early Termination Leases or Predecessor Leases as may be needed for the
Servicer to prepare its monthly reports pursuant to the Servicing Agreement and
to otherwise carry out its duties as servicer under the Servicing Agreement.
(b) Subject to the provisions of Section 5.03, the delivery of any
Officer's Certificate and supplement to Schedule 1 pursuant to Section 5.02(a)
shall be conclusive evidence, without further act or deed, that during the
immediately preceding Collection Period (i) the Seller assigned to the
Transferor, as a sale and a capital contribution in accordance with Section 2.01
hereof to the extent the assignment is made under Section 5.01(a)(i)(A) or (C)
hereof all of the Seller's right, title and interest in and to the Substitute
Leases and Additional Leases identified in such supplement and the related
rights described in Section 5.01 hereof, (ii) the Seller assigned to the
Transferor, as a sale and a capital contribution in accordance with Section 2.01
hereof to the extent the assignment is made under Section 5.01(a)(i)(A) or (C),
all of the Seller's right, title and interest in and to the Equipment subject to
such Substitute Leases and Additional Leases (to the extent of the Seller's
interest in such Equipment, including the Seller's security interest in any
Equipment which is not owned by the Seller), and (iii) the Transferor assigned
and transferred to the Seller, without representation or warranty, all of the
Transferor's right, title and interest in and to the Predecessor Leases and
Early Termination Leases identified in such Officer's Certificate and the
Equipment subject thereto (to the extent of the Transferor's interest in such
Equipment, including the Transferor's security interest in any Equipment which
is not owned by the Transferor). The Seller shall promptly cause to be delivered
to the Trustee (or a custodian on its behalf) the original executed counterpart
of each Substitute Lease and Additional Lease assigned to the Transferor
pursuant to Section 5.01 hereof and the Transferor shall promptly request the
Trustee to deliver to the Seller the original executed counterpart of each
Predecessor Lease and each Early Termination Lease for which substitution or an
addition has been made pursuant to Section 7.01 hereof.
Section 5.03 Seller's Subsequent Obligations.
Upon any substitution of Leases in accordance with the provisions of this
Article V, the Seller's obligations hereunder with respect to the Predecessor
Lease shall cease but the Seller shall 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 VI. ASSIGNMENT
Section 6.01 Assignment to Trustee.
It is understood that this Seller Contribution and Sale Agreement and all
rights of the Transferor hereunder will be assigned by the Transferor to the
Issuer pursuant to the Transferor Contribution and Sale Agreement, and thence by
the Issuer to the Trustee pursuant to the Indenture, for the benefit of the
Trustee, the holders from time to time of the Notes as provided in the
Indenture, and may be subsequently assigned by the Trustee to any successor
Trustee or as otherwise provided in the Indenture. The Seller hereby expressly
agrees to each such assignment and agrees that all of its duties, obligations,
representations and warranties hereunder shall be for the benefit of, and may be
enforced by, the Issuer, the Trustee, the holders from time to time of the
Notes, and any successor to or assignee of any thereof.
Section 6.02 Assignment by Seller.
None of the respective rights or obligations of the Seller hereunder may be
assigned without the prior written consent of the Transferor and the Trustee
(acting upon the instructions of the Holders of 66-2/3% of the then aggregate
unpaid Outstanding Principal Amount of the Notes).
ARTICLE VII. NATURE OF OBLIGATIONS AND SECURITY THEREFOR
Section 7.01 Obligations Absolute.
The obligations of the Seller hereunder, and the rights of the Trustee, as
assignee of the Transferor, in and to all amounts payable by the Seller
hereunder, shall be absolute and unconditional and shall not be subject to any
abatement, reduction, setoff, defense, counterclaim or recoupment whatsoever,
including, without limitation, abatements, reductions, setoffs, defenses,
counterclaims or recoupments due or alleged to be due to, or by reason of, any
past, present or future claims which the Seller may have against, the
Transferor, the Issuer, the Trustee, and any holder of the Notes or any other
Person for any reason whatsoever; nor, except as otherwise expressly provided
herein, shall this Seller Contribution and Sale Agreement terminate, or the
respective obligations of the Transferor or the Seller be otherwise affected, by
reason of any defect in any Lease or in any unit of Equipment or in the
respective rights and interests of the Transferor, the Issuer, the Seller and
the Trustee therein, or by reason of any Liens, encumbrances, security interests
or rights of others with respect to any Lease or any unit of Equipment, or any
failure by the Transferor to perform any of its obligations herein contained, or
by reason of any other indebtedness or liability, howsoever and whenever
arising, of the Transferor, the Trustee, the Issuer, or any Holder of the Notes
to the Seller or any other Person or by reason of any insolvency, bankruptcy, or
similar proceedings by or against the Seller, the Issuer, the Transferor, the
Trustee or any other Person or for any other cause whether similar or dissimilar
to the foregoing, any present or future law to the contrary notwithstanding, it
being the intention of the parties hereto that all obligations of the Seller
hereunder and all amounts payable by the Seller hereunder shall continue to be
due and payable in all events and in the manner and at the times herein provided
unless and until the obligation to perform or pay the same shall be terminated
or limited pursuant to the express provisions of this Seller Contribution and
Sale
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Agreement. The Seller shall provide the Rating Agencies with notice of any
assignment of any of its obligations hereunder.
Section 7.02 Further Assurances; Financing Statements.
The Seller agrees that at any time and from time to time, at its expense,
it shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable or that the
Transferor or the Trustee may request to perfect and protect the assignments and
security interests granted or purported to be granted herein with respect to the
Leases and the Lease Payments or to enable the Transferor or the Trustee to
exercise and enforce its rights and remedies under this Agreement with respect
to any Leases and the Lease Payments. Without limiting the generality of the
foregoing, the Seller shall execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices as may
be necessary or desirable or that the Transferor or the Trustee may request to
protect and preserve the assignments and security interests granted by this
Agreement with respect to the Leases.
ARTICLE VIII. MISCELLANEOUS
Section 8.01 Continuing Obligations.
This Seller Contribution and Sale Agreement shall continue in full force
and effect until each of the Notes and any other amounts due to any holder of
the Notes have been paid in full and all other obligations, if any, secured by
the Lien of the Indenture have been fully satisfied.
Section 8.02 GOVERNING LAW.
THIS SELLER CONTRIBUTION AND SALE AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS
OF THE STATE OF NEW YORK. IF ANY PROVISION OF THIS SELLER CONTRIBUTION AND SALE
AGREEMENT IS DEEMED INVALID, IT SHALL NOT AFFECT THE BALANCE OF THIS SELLER
CONTRIBUTION AND SALE AGREEMENT.
Section 8.03 Successors and Assigns.
This Seller Contribution and Sale Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Transferor, the Seller, the
Issuer and the Trustee and shall inure to the benefit of the successors and
assigns of the Holders, from time to time, of the Notes.
Section 8.04 Modification.
The terms of this Seller Contribution and Sale Agreement shall not be
waived, modified or amended without (a) the written consent of the party against
whom such waiver, modification or amendment is claimed and, in any case, the
Trustee (acting upon the instructions of the Holders of 66-2/3% of the then
aggregate unpaid Outstanding Principal Amount of the
17
Notes); and (b) confirmation from the Rating Agencies that such waiver,
modification or amendment will not cause the then existing rating of the Notes
to be decreased.
Section 8.05 No Petition or Proceedings.
So long as there shall not have elapsed one year plus one day since the
latest maturing Notes have been paid in full in cash, the Seller hereby agrees
that it will not, directly or indirectly, institute, or cause to be instituted,
against the Transferor any petition or otherwise invoke the process of any
Governmental Authority for the purpose of commencing or sustaining a case
against the Transferor or the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Transferor or
the Issuer or any substantial part of its respective property, or ordering the
winding up or liquidation of the affairs of the Transferor or the Issuer.
Section 8.06 Notices.
All notices and other communications given in connection with this Seller
Contribution and Sale Agreement shall be sufficient for every Person hereunder
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid or certified mail return receipt requested, or sent
by private courier or confirmed telecopy, in case of the Seller, the Servicer,
the Issuer and the Transferor, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer, with a copy to the General Counsel (telecopy:
212-805-1181), and in the case of the Trustee and the Holders of the Notes, to
such addresses as are provided pursuant to Sections 1.05 and 1.06 of the
Indenture or to such other address as either party may specify to the other from
time to time in accordance with this Section 8.06.
Section 8.07 Counterparts.
This Seller Contribution and Sale Agreement may be executed in any number
of counterparts, each counterpart constituting an original, but all together
constituting only one Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Seller
Contribution and Sale Agreement as of the date and year first written above.
CHARTER FINANCIAL, INC., as
Seller
By: _________________________
Name:
Title:
CHARTER FUNDING CORPORATION V
By: _________________________
Name:
Title:
The undersigned hereby acknowledges
receipt of a copy of the foregoing
Seller Contribution and Sale Agreement
and agrees to, and to be bound by, each
of the provisions thereof applicable to
the undersigned.
LASALLE BANK NATIONAL ASSOCIATION,
as Trustee
By: _________________________
Name:
Title:
[Signature Page to the Seller Contribution and Sale Agreement]
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SCHEDULE 1
SCHEDULE OF LEASES