EXHIBIT 10.3
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Transfer and Sale Agreement
by and among
▇▇▇▇▇▇ Financial, Inc.,
as Seller and as Servicer
▇▇▇▇▇▇ Financial Leasing, Inc.,
as Seller
and
▇▇▇▇▇▇ Funding Corporation
as Purchaser
Dated as of August [__], 1997
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS.................................................................................................... 1
ARTICLE II
TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT................................................................. 1
Section 2.01. Closing......................................................................................... 1
Section 2.02. Conditions to the Closing....................................................................... 2
Section 2.03. Assignment of Agreement......................................................................... 3
Section 2.04. Conveyance of Subsequent Contracts.............................................................. 3
Section 2.05. Release of Excluded Amounts..................................................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES................................................................................. 4
Section 3.01. Representations and Warranties Regarding the Sellers............................................ 5
Section 3.02. Representations and Warranties Regarding Each Contract.......................................... 5
Section 3.03. Representations and Warranties Regarding the Initial Contracts in the Aggregate................. 6
Section 3.04. Representations and Warranties Regarding the Contract Files..................................... 6
Section 3.05. Representations and Warranties Regarding Concentrations of Initial Contracts.................... 6
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.................................................... 7
Section 4.01. Custody of Contracts............................................................................ 7
Section 4.02. Filing.......................................................................................... 7
Section 4.03. Name Change or Relocation....................................................................... 7
Section 4.04. Chief Executive Office.......................................................................... 7
Section 4.05. Costs and Expenses.............................................................................. 7
Section 4.06. Sale Treatment.................................................................................. 7
ARTICLE V
REMEDIES UPON MISREPRESENTATION................................................................................ 8
Section 5.01. Repurchases and Substitutions of Contracts for Breach of Representations and
Warranties...................................................................................... 8
Section 5.02. Sellers' Repurchase Option...................................................................... 8
Section 5.03. Reassignment of Repurchased or Substituted Contracts............................................ 8
ARTICLE VI
INDEMNITIES.................................................................................................... 8
Section 6.01. Sellers Indemnification......................................................................... 8
Section 6.02. Liabilities to Obligors......................................................................... 9
Section 6.03. Tax Indemnification............................................................................. 9
Section 6.04. Adjustments..................................................................................... 9
Section 6.05. Operation of Indemnities........................................................................ 9
ARTICLE VII
MISCELLANEOUS................................................................................................. 9
Section 7.01. Prohibited Transactions with Respect to the Trust.............................................. 9
Section 7.02. Merger or Consolidation........................................................................ 10
Section 7.03. Termination.................................................................................... 10
Section 7.04. Assignment or Delegation by the Sellers........................................................ 10
Section 7.05. Amendment...................................................................................... 10
Section 7.06. Notices........................................................................................ 11
Section 7.07. Merger and Integration......................................................................... 12
Section 7.08. Headings....................................................................................... 12
Section 7.09. Governing Law.................................................................................. 12
Section 7.10. No Bankruptcy Petition......................................................................... 12
EXHIBITS
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Exhibit A Form of Assignment
Exhibit B Form of Subsequent Purchase Agreement
This TRANSFER AND SALE AGREEMENT, dated as of August [__], 1997, is made by
and among ▇▇▇▇▇▇ Financial, Inc., a Delaware corporation, as a seller hereunder
(together with its successors and assigns "▇▇▇▇▇▇ Financial"), ▇▇▇▇▇▇ Financial
Leasing, Inc. ("▇▇▇▇▇▇ Leasing" and together with ▇▇▇▇▇▇ Financial, the
"Sellers") and ▇▇▇▇▇▇ Funding Corporation, a Delaware corporation and wholly-
owned subsidiary of ▇▇▇▇▇▇ Financial (together with its successors and assigns,
the "Trust Depositor"), as purchaser hereunder.
WHEREAS, in the regular course of their business, the Sellers originate and
purchase Contracts.
WHEREAS, the Sellers and Trust Depositor wish to set forth the terms and
conditions pursuant to which Trust Depositor will acquire Initial Contracts on
the Closing Date, and may acquire from time to time thereafter certain
Subsequent Contracts (such Initial Contracts and Subsequent Contracts, together
with certain related property as more fully described herein, being the Contract
Assets as defined below; and
WHEREAS, Trust Depositor intends concurrently with each transfer of
Contract Assets hereunder to convey all right, title and interest in such
Contract Assets to ▇▇▇▇▇▇ Equipment Asset Receivables Trust 1997-1 (the "Trust")
pursuant to the Sale and Servicing Agreement dated as of August 1, 1997 by and
among Trust Depositor, ▇▇▇▇▇▇ Financial, as Servicer, and ▇▇▇▇▇▇ Equipment Asset
Receivables Trust 1997-1, as issuer (the "Issuer") (as amended, supplemented or
otherwise modified from time to time, the "Sale and Servicing Agreement"),
executed concurrently herewith;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Sellers and the Trust Depositor agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. General. Unless otherwise defined in this Agreement,
capitalized terms used herein (including in the preamble above) shall have the
meanings assigned to them in the Sale and Servicing Agreement.
ARTICLE II
TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT
Section 2.01. Closing. Subject to and upon the terms and conditions set
forth in this Agreement, the Sellers hereby sell, transfer, assign, set over and
otherwise convey to Trust Depositor, in consideration of Trust Depositor's
payment of $[ ] in cash as the purchase price therefor, all the right,
title and interest of the Sellers in and to (items (i)-(vi) below, being
collectively referred to herein as the "Contract Assets"):
(i) the Initial Contracts, and all monies due or to become due in
payment of such Contracts on and after the Initial Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date and
any Excluded Amounts;
(ii) the Equipment related to such Contracts, and, in the case of
any Vendor Loan, related Applicable Security, including all proceeds from
any sale or other disposition of such Equipment (but subject to the
exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Program Agreements or
Vendor Agreements with the related Seller and under any guarantee or
similar credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
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(vi) all income from and proceeds of the foregoing;
provided, that Contract Assets shall not include any Residual Investment.
The foregoing sale, transfer, assignment, set-over and conveyance does not
constitute and is not intended to result in a creation or an assumption by the
Trust Depositor of any obligation of the Sellers in connection with the Contract
Assets, or any agreement or instrument relating thereto, including, without
limitation, any obligation to any Obligor or End-User, or any other Person in
respect of services not financed by the Sellers, or (i) any taxes, fees, or
other charges imposed by any Governmental Authority and (ii) any insurance
premiums which remain owing with respect to any Contract at the time such
Contract is sold hereunder. Although the Sellers and the Trust Depositor agree
that any such transfer is intended to be a sale of ownership of the Contract
Assets, rather than the mere granting of a security interest to secure a
borrowing, in the event such transfer is deemed to be of a mere security
interest to secure indebtedness, the Sellers shall be deemed to have granted
Trust Depositor a perfected first priority security interest in such Contract
Assets and this Agreement shall constitute a security agreement under applicable
law, securing the repayment of the purchase price paid hereunder and the
obligations and/or interests represented by the Securities, in the order and
priorities, and subject to the other terms and conditions of, the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, together with such
other obligations or interests as may arise hereunder and thereunder in favor of
the parties hereto and thereto. If such transfer is deemed to be the mere
granting of a security interest to secure a borrowing, Trust Depositor may, to
secure Trust Depositor's own borrowing under the Sale and Servicing Agreement
(to the extent that the transfer of the Contract Assets thereunder is deemed to
be a mere granting of a security interest to secure a borrowing) repledge and
reassign (i) all or a portion of the Contract Assets pledged to Trust Depositor
and not released from the security interest of this Agreement at the time of
such pledge and assignment, and (ii) all proceeds thereof. Such repledge and
reassignment may be made by Trust Depositor with or without a repledge and
reassignment by Trust Depositor of its rights under this Agreement, and without
further notice to or acknowledgment from the Sellers. The Sellers waive, to the
extent permitted by applicable law, all claims, causes of action and remedies,
whether legal or equitable (including any right of setoff), against Trust
Depositor or any assignee of Trust Depositor relating to such action by Trust
Depositor in connection with the transactions contemplated by the Sale and
Servicing Agreement.
Section 2.02. Conditions to the Closing. On or before the Closing Date, the
Sellers shall deliver or cause to be delivered to Trust Depositor each of the
documents, certificates and other items as follows:
(a) The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the respective Seller together with an
Assignment substantially in the form attached as Exhibit A hereto.
(b) A certificate of an officer of each respective Seller substantially in
the form of Exhibit C-2 to the Sale and Servicing Agreement.
(c) An opinion of counsel for the Sellers substantially in the form of
Exhibit D to the Sale and Servicing Agreement.
(d) A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, or another nationally recognized
accounting firm, addressed to Trust Depositor and the Issuer and the Trustees
and stating that such firm has reviewed a sample of the Contracts and performed
specific procedures for such sample with respect to certain contract terms and
identifying those Contracts which do not so conform.
(e) Copies of resolutions of the Board of Directors of the respective
Seller or of the Executive Committee of the Board of Directors of the respective
Seller approving the execution, delivery and performance of this Agreement and
the transactions contemplated hereunder, certified in each case by the Secretary
or an Assistant Secretary of the respective Seller.
(f) Officially certified recent evidence of due incorporation and good
standing of the Sellers under the laws of Delaware.
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(g) An Officer's Certificate from the respective Seller confirming that
the respective Seller's compliance officer has reviewed the original of each
Contract and each related Contract File, that each Contract and related Contract
File conforms in all material respects with the List of Contracts and each such
Contract File is complete, that each document required be an original, and that
the face of each original Contract has been stamped with the following notation:
"This Contract is subject to a security interest granted to [ ] as
Owner Trustee for the ▇▇▇▇▇▇ Equipment Asset Receivables Trust 1997-1.
UCC-1 Financing Statements covering this Contract have been filed with
the Secretary of State of the State of Delaware and the Secretary of
State of the State of Illinois. Such lien will be released only in
connection with appropriate filings in such offices. Consequently,
potential purchasers of this Contract must refer to such filings to
determine whether such lien has been released."
(h) The documents, certificates and other items described in Section 2.02
of the Sale and Servicing Agreement, to the extent not already described above.
Section 2.03. Assignment of Agreement. Trust Depositor has the right to
assign its interest under this Agreement to the Issuer and Owner Trustee as may
be required to effect the purposes of the Sale and Servicing Agreement, without
further notice to, or consent of, the Sellers, and the Issuer and the Trustees
shall succeed to such of the rights of Trust Depositor hereunder as shall be so
assigned. The Sellers acknowledge that, pursuant to the Sale and Servicing
Agreement, Trust Depositor will assign all of its right, title and interest in
and to the Contract Assets and its right to exercise the remedies created by
Section 5.01 hereof for breaches of representations and warranties of the
Sellers contained in Sections 3.01, 3.02, 3.03, 3.04 and 3.05 hereof to the
Issuer and the Trustees for the benefit of the Noteholders and
Certificateholders. The Sellers agree that, upon such assignment to the Issuer
and the Trustees, such representations will run to and be for the benefit of the
Issuer and the Trustees and the Issuer and the Trustees may enforce directly
without joinder of Trust Depositor, the repurchase obligations of the Sellers
set forth herein with respect to breaches of such representations and warranties
as set forth herein and in Section 7.06 of the Sale and Servicing Agreement.
Section 2.04. Conveyance of Subsequent Contracts. (a) Subject to the
satisfaction of the conditions set forth in section 2.04(b) of the Sale and
Servicing Agreement, the Sellers may at their option (but shall not be obligated
to) sell, transfer, assign, set over and otherwise convey to the Trust Depositor
(by delivery of an executed Subsequent Purchase Agreement substantially in the
form attached as Exhibit B hereto), without recourse other than as expressly
provided herein and therein (and the Trust Depositor shall be required to
purchase, either through payment by delivery of a cash purchase price in the
amount of the prepayment proceeds received by the Trust and released to the
Trust Depositor on the Subsequent Transfer Date, in the case of a Subsequent
Contract which is an Additional Contract, or through payment by exchange of one
or more related Contracts released by the Trust to the Trust Depositor on the
Subsequent Transfer Date, in the case of a Subsequent Contract which is a
Substitute Contract) all the right, title and interest of the Sellers in and
to (the property in clauses (i)-(vi) below, upon such transfer, becoming part of
the "Contract Assets"):
(i) the Subsequent Contracts identified in the related Addition
Notice, and all monies due or to become due in payment of such Contracts on
and after the related Subsequent Cutoff Dates, any Prepayment Amounts, any
payments in respect of a casualty or early termination, and any Recoveries
received with respect thereto, but excluding any Scheduled Payments due
prior to the related Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loan, related Applicable Security, including all proceeds from any
sale or other disposition of such Equipment (but subject to the exclusion
and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Program Agreements or
Vendor Agreements with the related Seller and under any guarantee or
similar credit enhancement with respect to such Contracts;
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(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income from and proceeds of the foregoing;
provided, that such Contract Assets shall in no case include any Residual
Investment.
The foregoing sale, transfer, assignment, set-over and conveyance does not
constitute and is not intended to result in a creation or an assumption by the
Trust Depositor of any obligation of the Sellers in connection with the Contract
Assets, or any agreement or instrument relating thereto, including, without
limitation, any obligation to any Obligor or End-User, or any other Person in
respect of services not financed by the Sellers, or (i) any taxes, fees, or
other charges imposed by any Governmental Authority and (ii) any insurance
premiums which remain owing with respect to any Contract at the time such
Contract is sold hereunder. Although the Sellers and the Trust Depositor agree
that any such transfer is intended to be a sale of ownership of the Contract
Assets, rather than the mere granting of a security interest to secure a
borrowing, in the event such transfer is deemed to be of a mere security
interest to secure indebtedness, the Sellers shall be deemed to have granted
Trust Depositor a perfected first priority security interest in such Contract
Assets and this Agreement shall constitute a security agreement under applicable
law, securing the repayment of the purchase price paid hereunder and the
obligations and/or interests represented by the Securities, in the order and
priorities, and subject to the other terms and conditions of, the Sale and
Servicing Agreement, the Indenture and the Trust Agreement, together with such
other obligations or interests as may arise hereunder and thereunder in favor of
the parties hereto and thereto. If such transfer is deemed to be the mere
granting of a security interest to secure a borrowing, Trust Depositor may, to
secure Trust Depositor's own borrowing under the Sale and Servicing Agreement
(to the extent that the transfer of the Contract Assets thereunder is deemed to
be a mere granting of a security interest to secure a borrowing) repledge and
reassign (i) all or a portion of the Contract Assets pledged to Trust Depositor
and not released from the security interest of this Agreement at the time of
such pledge and assignment, and (ii) all proceeds thereof. Such repledge and
reassignment may be made by Trust Depositor with or without a repledge and
reassignment by Trust Depositor of its rights under this Agreement, and without
further notice to or acknowledgment from the Sellers. The Sellers waive, to the
extent permitted by applicable law, all claims, causes of action and remedies,
whether legal or equitable (including any right of setoff), against Trust
Depositor or any assignee of Trust Depositor relating to such action by Trust
Depositor in connection with the transactions contemplated by the Sale and
Servicing Agreement.
Section 2.05. Release of Excluded Amounts. Immediately upon the release to
the Trust Depositor by the Trustee, pursuant to Section 2.05 of the Sale and
Servicing Agreement, of Excluded Amounts, the Trust Depositor hereby irrevocably
agrees to release to the Sellers such Excluded Amounts, which release shall be
automatic and shall require no further act by the Trust Depositor, provided,
that the Trust Depositor shall execute and deliver such instruments of release
and assignment, or otherwise confirming the foregoing release of any Excluded
Amounts, as may be reasonably requested by the Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Sellers jointly and severally make, and upon execution of each
Subsequent Purchase Agreement are jointly and severally deemed to remake, the
following representations and warranties, on which Trust Depositor will rely in
purchasing the Contract Assets on the Closing Date (and on any Subsequent
Transfer Date) and concurrently reconveying the same to the Trust, and on which
the Trust, the Noteholders and Certificateholders will rely under the Sale and
Servicing Agreement. Such representations speak as of the execution and delivery
of this Agreement and as of the Closing Date (or Subsequent Transfer Date, as
applicable), but shall survive the sale, transfer and assignment of the
Contracts to the Trust. The repurchase obligation or substitution obligation of
the Sellers set forth in Section 5.01 below and in Section 7.06 of the Sale and
Servicing Agreement constitutes the sole remedy available for a breach of a
representation or warranty of the Sellers set forth in Sections 3.02, 3.03, 3.04
or 3.05 of this Agreement. Notwithstanding the foregoing, the Sellers shall not
be deemed to be remaking any of the representations set forth in Section 3.03 or
3.05 on a Subsequent Transfer Date with respect to the Subsequent Contracts, as
such representations
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relate solely to the composition of the Initial Contracts conveyed on the
Closing Date, provided, that any inaccurate representation as to concentrations
contained in any Addition Notice shall be subject to the same remedies hereunder
as if such representation were made under Section 3.05 on the Closing Date with
respect to an Initial Contract.
Section 3.01. Representations and Warranties Regarding the Sellers. Each
Seller jointly and severally represents and warrants, as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), that:
(a) Organization and Good Standing. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. Each Seller is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or otherwise) of each Seller or
Trust Depositor. Each Seller is properly licensed in each jurisdiction to the
extent required by the laws of such jurisdiction to service the Contracts in
accordance with the terms of the Sale and Servicing Agreement.
(b) Authorization; Binding Obligation. Each Seller has the power and
authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the respective Seller is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the respective Seller is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the respective Seller is
a party. This Agreement and the other Transaction Documents to which the
respective Seller is a party constitute the legal, valid and binding obligation
of each Seller is enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) No Consent Required. Each Seller is not required to obtain the consent
of any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the respective Seller is a party.
(d) No Violations. Each Seller's execution, delivery and performance of
this Agreement and the other Transaction Documents to which the respective
Seller is a party will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of Incorporation
or Bylaws of the respective Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the respective Seller
is a party or by which the respective Seller or any of the Seller's properties
may be bound.
(e) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of a Seller threatened, against a Seller or any of its respective
properties or with respect to this Agreement or any other Transaction Document
to which the respective Seller is a party which, if adversely determined, would
in the opinion of the respective Seller has a material adverse effect on the
business, properties, assets or condition (financial or other) of a Seller or
the transactions contemplated by this Agreement or any other Transaction
Document to which the respective Seller is a party.
(f) Place of Business; No Changes. Each Seller's sole place of business or
chief executive office (within the meaning of Article 9 of the UCC) is as set
forth in Section 7.06 below and each location where a Seller maintains custody
of Contract Files is reflected in the definition of UCC Filing Location. Each
Seller has not changed its name whether by amendment of its Certificate of
Incorporation, by reorganization or otherwise, and has not changed the location
of its place of business, within the four months preceding the Closing Date (or
Subsequent Transfer Date, as applicable).
Section 3.02. Representations and Warranties Regarding Each Contract. Each
Seller jointly and severally
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represents and warrants as to each Contract as of the execution and delivery of
this Agreement and as of the Closing Date, and as of each Subsequent Transfer
Date with respect to each Subsequent Contract, that:
(a) List of Contracts. The information set forth in the List of Contracts
is true, complete and correct as of the applicable Cutoff Date.
(b) Eligible Contract. Such Contract satisfies the criteria for the
definition of Eligible Contract set forth in the Sale and Servicing Agreement as
of the date of its conveyance hereunder.
Section 3.03. Representations and Warranties Regarding the Initial
Contracts in the Aggregate. Each Seller jointly and severally represents and
warrants, as of the execution and delivery of this Agreement and as of the
Closing Date, that:
(a) Amounts. The ADCB of the Contracts as of the Initial Cutoff Date
equals the sum of the principal balance of the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes and Class D Notes on the Closing
Date.
(b) Characteristics. The Initial Contracts have the following
characteristics: (i) no Contract has a remaining maturity of more than [__]
months; and (ii) the final scheduled Distribution Date on the Contract with the
latest maturity is not later than [________]. Approximately [___]% of the ADCB
of the Contracts as of the Initial Cutoff Date is attributable to the financing
of new Equipment and approximately [___]% of such ADCB is attributable to the
financing of used Equipment. No Contract was originated after the Initial
Cutoff Date. The first payment on each Contract is due on or before [____],
1997.
(c) No "True Leases". In the Sellers' reasonable judgment, no Initial
Contract constituting a Lease is a "true lease" as distinguished from a
financing lease.
Section 3.04. Representations and Warranties Regarding the Contract Files.
Each Seller jointly and severally represents and warrants as of the execution
and delivery of this Agreement and as of the Closing Date (or Subsequent
Transfer Date, with respect to Subsequent Contracts), that (i) immediately prior
to such date (as applicable), each Seller will have possession of each original
Contract and the related complete Contract File, and there are and there will be
no other custodial agreements relating to the same in effect; (ii) each of such
documents which is required to be signed by the Obligor has been signed by the
Obligor in the appropriate spaces; (iii) all blanks on any form have been
properly filled in and each form has otherwise been correctly prepared; and (iv)
the complete Contract File for each Contract currently is in the possession of
the Servicer.
Section 3.05. Representations and Warranties Regarding Concentrations of
Initial Contracts. Each Seller represents and warrants as of the Closing Date,
as to the composition of the Initial Contracts in the Contract Pool as of the
Initial Cutoff Date, that:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed [ ]% of the
ADCB of the Contract Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or are
related to Software will not exceed 5.46% of the ADCB of the
Contract Pool;
(iii) the ADCB of all End-User Contracts with Obligors who comprise the ten
(10) largest Obligors (measured by ADCB as of the date of
determination) does not exceed 23.09% of the ADCB of the Contract
Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise the
twenty (20) largest Obligors (measured by ADCB as of the date of
determination) does not exceed [24.59]% of the ADCB of the Contract
Pool;
(v) [the ADCB of all End-User Contracts related to a single Vendor, or
representing a Vendor Loan of such Vendor, does not exceed [ ]% of
the ADCB of the Contract Pool;] and
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(vi) the ADCB of all End-User Contracts with Obligors located in a single
State of the United States does not exceed 18.65% of the ADCB of
the Contract Pool.
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
Section 4.01. Custody of Contracts. Subject to the terms and conditions
of this Section 4.01, the contents of each Contract File shall be held in the
custody of the Servicer for the benefit of the Owner Trustee as the owner
thereof. The Sellers agree to cooperate with the Servicer in its efforts to
comply with all its obligations under the Sale and Servicing Agreement in
respect of the Contract Assets, and acknowledge and consent to the transactions
contemplated therein.
Section 4.02. Filing. On or prior to the Closing Date, the Sellers shall
cause the UCC financing statement(s) referred to in Section 2.02(g) hereof and
in Section 2.02(h) of the Sale and Servicing Agreement to be filed and from time
to time the Sellers shall take and cause to be taken such actions and execute
such documents as are necessary or desirable or as Trust Depositor or the Owner
Trustee may reasonably request to perfect and protect the Owner Trustee's
ownership interest in the Trust against all other persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
Section 4.03. Name Change or Relocation. (a) During the term of this
Agreement, no Seller shall change its name, identity or structure or relocate
its chief executive office, or relocate or establish a new location where
Contract Files are maintained, without first giving at least 30 days' prior
written notice to Trust Depositor and to the Trustees.
(b) If any change in a Seller's name, identity or structure or other action
would make any financing or continuation statement or notice of ownership
interest or lien filed under this Agreement seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the respective
Seller, no later than five days after the effective date of such change, shall
file such amendments as may be required to preserve and protect the Trustees'
interests in the Trust Assets and proceeds thereof. In addition, each Seller
shall not change its place of business or its chief executive office (within the
meaning of Article 9 of the UCC) from the location specified in Section 7.06
below, or relocate or establish a location where it maintains Contract Files
which is other than one of the UCC Filing Locations unless it has first taken
such action as is advisable or necessary to preserve and protect the Issuer's
and Trustees' interest in the Contract Assets. Promptly after taking any of the
foregoing actions, each Seller shall deliver to Trust Depositor and the Trustees
an opinion of counsel stating that, in the opinion of such counsel, all
financing statements or amendments necessary to preserve and protect the
interests of the Trustees in the Contract Assets have been filed, and reciting
the details of such filing.
Section 4.04. Chief Executive Office. During the term of this Agreement,
and subject to other terms and provisions herein relating to changes in
location, each Seller will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas, New
Mexico, Oklahoma, Utah or Wyoming.
Section 4.05. Costs and Expenses. The Sellers jointly and severally agree
to pay all reasonable costs and disbursements in connection with the perfection
and the maintenance of perfection, as against all third parties, of (i) Trust
Depositor's and the Trustees' right, title and interest in and to the Contract
Assets (including, without limitation, the security interest in the Equipment
related thereto) and (ii) the security interests provided for in the Indenture.
Section 4.06. Sale Treatment. Each Seller and Trust Depositor shall treat
the transfer of Contract Assets made hereunder for all purposes (including
financial accounting purposes) as a sale and purchase on all of its relevant
books, records, financial statements and other applicable documents. Not
withstanding the preceding sentence, for federal income tax purposes the
transfer of Contract Assets by the Trust Depositor hereunder shall not be
treated as a sale and purchase for federal income tax purposes so long as the
Trust is disregarded as a separate entity pursuant to Treasury Regulations
Sections 301.7701-3(b)(i)(ii).
7
ARTICLE V
REMEDIES UPON MISREPRESENTATION
Section 5.01. Repurchases and Substitutions of Contracts for Breach of
Representations and Warranties. Each Seller hereby jointly and severally
agrees, for the benefit of the Trustees and the Trust Depositor, that it shall
repurchase an Ineligible Contract or Excess Contract (together with all related
Contract Assets), at a repurchase price equal to the Transfer Deposit Amount,
not later than ninety (90) days following the date the Seller becomes aware of,
or receives written notice from any Trustee, the Servicer or the Trust Depositor
of, the related breach or inaccuracy or representation and which breach or
inaccuracy has not otherwise been cured; provided, however, that if the Seller
is able to effect a substitution for any such Ineligible Contract or Excess
Contract in compliance with Section 2.04, the Seller may, in lieu of
repurchasing such Contract, effect a substitution for such affected Contract
with a Substitute Contract not later than the date a repurchase of such affected
Contract would be required hereunder; provided further, that with respect to a
breach of representation or warranty relating to the Contracts in the aggregate
and not to any particular Contract, the Sellers may select Contracts (without
adverse selection) to repurchase or substitute for such that had such Contracts
not been reconveyed by Trust Depositor and included as part of the Trust there
would have been no breach of such representation or warranty.
Section 5.02. Sellers' Repurchase Option. On written notice to the Owner
Trustee and the Indenture Trustee at least 20 days prior to a Distribution
Date,, and provided that the ADCB of all Contracts in the Contract Pool is then
less than 10% of the ADCB of such Contracts as of the Initial Cutoff Date, the
Sellers, through the Trust Depositor, may (but are not required to) repurchase
from the Trust Depositor on that Distribution Date all outstanding Contracts at
a price equal to the aggregate outstanding Principal Amount of the Securities
(other than the Class D Certificates) as of the current Distribution Date
thereon, the amount of unreimbursed Servicer Advances (if any) as well as
accrued and unpaid monthly Servicing Fees to the date of such repurchase. Such
price is to be deposited in the Collection Account one Business Day before such
Distribution Date, against the Owner Trustee's and Indenture Trustee's and Trust
Depositor's release of the Contracts and the Contract Files to the Sellers.
Section 5.03. Reassignment of Repurchased or Substituted Contracts. Upon
receipt by the Indenture Trustee for deposit in the Collection Account of
the repurchase price as described in Section 5.01 or 5.02 (or upon the
Subsequent Transfer Date related to a Substitute Contract described in Section
5.01), and upon receipt of a certificate of a Servicing Officer in the form
attached hereto as Exhibit G, the Trust Depositor shall assign to the original
applicable Seller all of the Trust Depositor's right, title and interest in the
repurchased or substituted Contract and related Trust Assets, in each case
received from the Trust and the Indenture Trustee in accordance with Section
7.07 of the Sale and Servicing Agreement, without recourse, representation or
warranty.
ARTICLE VI
INDEMNITIES
Section 6.01. Sellers Indemnification. The Sellers will jointly and
severally defend and indemnify Trust Depositor, the Trust, the Trustees, any
agents of the Trustees and the Certificateholders and Noteholders against any
and all costs, expenses, losses, damages, claims and liabilities, joint or
several, including reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from (i) this Agreement or the use,
ownership or operation of any Equipment by the respective Seller or the Servicer
or any Affiliate of either, (ii) any representation or warranty or covenant made
by the respective Seller in this Agreement being untrue or incorrect (subject to
the second sentence of the preamble to Article III of this Agreement above), and
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or in any amendment thereto or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement was made in conformity with information
furnished to Trust Depositor by the Sellers specifically for use therein.
Notwithstanding any other provision of this Agreement, the obligation of the
Sellers under this Section 6.01 shall not terminate upon a Service Transfer
pursuant to Article VIII of the Sale and Servicing Agreement and shall survive
any
8
termination of that agreement or this Agreement.
Section 6.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Contracts is intended to be assumed by the
Trustees, the Trust, the Noteholders or the Certificateholders under or as a
result of this Agreement and the transactions contemplated hereby.
Section 6.03. Tax Indemnification. The Sellers jointly and severally
agree to pay, and to indemnify, defend and hold harmless the Trust Depositor,
the Trust, the Trustees, the Noteholders or the Certificateholders from, any
taxes which may at any time be asserted with respect to, and as of the date of,
the transfer of the Contracts to Trust Depositor hereunder and the concurrent
reconveyance to the Trust and the further pledge by the Trust to the Indenture
Trustee, including, without limitation, any sales, gross receipts, general
corporation, personal property, privilege or license taxes (but not including
any federal, state or other taxes arising out of the creation of the Trust and
the issuance of the Notes and Certificates) and costs, expenses and reasonable
counsel fees in defending against the same, whether arising by reason of the
acts to be performed by a Seller or the Servicer under this Agreement or the
Sale and Servicing Agreement or imposed against the Trust, a Noteholder, a
Certificateholder or otherwise. Notwithstanding any other provision of this
Agreement, the obligation of the Sellers under this Section 6.03 shall not
terminate upon a Service Transfer pursuant to Article VIII of the Sale and
Servicing Agreement and shall survive any termination of this Agreement.
Section 6.04. Adjustments. The Sellers jointly and severally agree
that, with respect to each Contract (i) which provides for a Prepayment Amount
less than the amount calculated in accordance with the definition thereof and
(ii) as to which the related Vendor has not agreed to indemnify the Trust
Depositor or any assignee of the Trust Depositor in an amount at least equal to
the excess of the "Prepayment Amount" as calculated in accordance with the
definition thereof over the amount otherwise payable upon prepayment of such
Contract, the Sellers shall indemnify the Trust depositor or the Trust as
assignee thereof, in an amount equal to the amount specified in the foregoing
clause (ii).
The Sellers hereby agree that if, with respect to any Lease with
Lessees that are governmental entities or municipalities, (i) such Lease may be
canceled in accordance with its terms and (ii) the Vendor that assigned such
Lease to the respective Seller is not unconditionally obligated to repurchase
such Lease from the Sellers for a purchase price not less than the Discounted
Contract Balance of such Lease as of the date of repurchase (assuming that the
interest rate to be applied in calculating the Discounted Contract Balance of
such Lease is the Discount Rate on the date of repurchase) plus interest at the
Discount Rate through the date of repurchase (such amount, the "Required Lease
Cancellation Payment") then the respective Seller shall indemnify the Trust
Depositor or the Trust as assignee thereof against such cancellation in an
amount equal to the difference between the amount, if any, received from the
related Vendor and the Required Lease Cancellation Payment.
Section 6.05. Operation of Indemnities. Indemnification under this
Article VI shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If a Seller has made any indemnity payments
to Trust Depositor or the Trustees pursuant to this Article VI and Trust
Depositor or the Trustees thereafter collects any of such amounts from others,
Trust Depositor or the Trustees will repay such amounts collected to the
respective Seller's, except that any payments received by Trust Depositor or the
Trustees from an insurance provider as a result of the events under which the
respective Seller's indemnity payments arose shall be repaid prior to any
repayment of the Sellers' indemnity payment.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Prohibited Transactions with Respect to the Trust. The
Sellers shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
9
(b) Purchase any Notes or Certificates in an agency or trustee capacity; or
(c) Except in its capacity as Servicer as provided in the Sale and
Servicing Agreement, lend any money to the Trust.
Section 7.02. Merger or Consolidation. (a) Except as otherwise provided
in this Section 7.02, the Sellers will keep in full force and effect its
existence, rights and franchises as Delaware corporations, and will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement and of any of the Contracts and to
perform its duties under this Agreement.
(b) Any person into which the Sellers may be merged or consolidated, or any
corporation resulting from such merger or consolidation to which the Sellers are
a party, or any person succeeding to the business of the Sellers, shall be the
successor to the Sellers hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
(c) Upon the merger or consolidation of the Sellers as described in this
Section 7.02, the Sellers shall provide Fitch and ▇▇▇▇▇'▇ notice of such merger
or consolidation within thirty (30) days after completion of the same.
Section 7.03. Termination. This Agreement shall terminate (after
distribution of all amounts distributable pursuant to Section 7.05 of the Sale
and Servicing Agreement) on the Distribution Date on which the principal balance
of the Class A-1 Notes, Class A-2 Notes, Class B Notes, Class C Notes, Class D
Notes and the Certificates is reduced to zero; provided, that the Sellers'
representations and warranties and indemnities by each respective Seller shall
survive termination.
Section 7.04. Assignment or Delegation by the Sellers. Except as
specifically authorized hereunder, the Sellers may not convey and assign or
delegate any of its rights or obligations hereunder absent the prior written
consent of Trust Depositor and the Trustees, and any attempt to do so without
such consent shall be void.
Section 7.05. Amendment. (a) This Agreement may be amended from time
to time by the Sellers and Trust Depositor, with notice to the Rating Agencies,
but without the consent of the Trustees or any of the Noteholders or
Certificateholders, to correct manifest error, to cure any ambiguity, to correct
or supplement any provisions herein or therein which may be inconsistent with
any other provisions herein or therein, as the case may be, or to add any other
provisions with respect to matters or questions arising under this Agreement
which shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an opinion of Counsel for
the Sellers acceptable to the Trustees, adversely affect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the Sellers and
Trust Depositor, with consent of the Required Holders, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Trustees for the benefit of Noteholders or Certificateholders; provided,
however, that no such amendment or waiver shall (a) reduce in any manner the
amount of, or delay the timing of, collections of payments on the Contracts or
distributions which are required to be made on any Note or Certificate or (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the holders of all affected Securities then outstanding.
(c) Promptly after the execution of any amendment or consent pursuant
to this Section 7.05, Trust Depositor shall furnish written notification of the
substance of such amendment and a copy of such amendment to each Trustee,
▇▇▇▇▇'▇ and Fitch.
(d) It shall not be necessary for the consent of Noteholders or
Certificateholders under this Section 7.05
10
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Noteholders and Certificateholders shall be subject to such
reasonable requirements as the Trustees may prescribe.
(e) Upon the execution of any amendment or consent pursuant to this
Section 7.05, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every holder of Notes and Certificates theretofore or thereafter issued
hereunder shall be bound thereby.
Section 7.06. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or (d)
on the date transmitted by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient as follows:
(i) If to the Sellers:
▇▇▇▇▇▇ Financial, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:
▇▇▇▇▇▇ Financial Leasing, Inc.
[500 West Monroe Street]
[Chicago, Illinois 60661]
Telecopier No.:
(ii) If to the Trust Depositor:
▇▇▇▇▇▇ Funding Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:
(iii) If to the Indenture Trustee:
[________________________]
[________________________]
[________________________]
[________________________]
Attention: [________________________]
Telecopier No.: [________________________]
(iv) If to the Owner Trustee:
[________________________]
[________________________]
[________________________]
[________________________]
Attention: [________________________]
Telecopier No.: [________________________]
11
(v) If to ▇▇▇▇▇'▇:
▇▇▇▇▇'▇ Investor's Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Monitoring Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(vi) If to Fitch:
Telecopier No.:
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
All communications and notices pursuant hereto to a Noteholders or
Certificateholder shall be in writing and delivered or mailed at the address
shown in the Note Register or Certificate Register, respectively.
Section 7.07. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
Section 7.08. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 7.09. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
Illinois.
Section 7.10. No Bankruptcy Petition. Each Seller covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all amounts owing in respect of all outstanding Securities, it will not
institute against the Trust Depositor, or the Trust, or join any other Person in
instituting against the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 7.10 will survive the termination of this Agreement.
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
▇▇▇▇▇▇ FUNDING CORPORATION
By: _________________________________
Printed Name:____________________
Title: __________________________
▇▇▇▇▇▇ FINANCIAL, INC.
By: _________________________________
Printed Name:____________________
Title:___________________________
▇▇▇▇▇▇ FINANCIAL LEASING, INC.
By: _________________________________
Printed Name:____________________
Title:___________________________
13
Exhibit A
Transfer and Sale
Agreement
FORM OF ASSIGNMENT
In accordance with the Transfer and Sale Agreement (the "Agreement") dated
as of August 1, 1997 made by and between the undersigned, as thereunder
("Sellers"), and [________________________], a Delaware corporation and wholly-
owned subsidiary of ▇▇▇▇▇▇ Financial, Inc. ("Trust Depositor"), as purchaser
thereunder, the undersigned does hereby sell, transfer, convey and assign, set
over and otherwise convey to Trust Depositor all its right, title and interest
in and to:
(i) the Initial Contracts, and all monies due or to become due in
payment of such Contracts on and after the Initial Cutoff Date, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date and
any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of any
Vendor Loans, related Applicable Security, including all proceeds from any
sale or other disposition of such Equipment (but subject to the exclusion
and release in the Agreement of the Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect to
such Contracts or the Obligor thereunder under any Program Agreements or
Vendor Agreements with the related Seller and under any guarantee or
similar credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract; and
(vi) all income from and proceeds of the foregoing; provided, that
the property described above shall not include any Residual Investment.
This Assignment is made pursuant to and in reliance upon the representation
and warranties on the part of the undersigned contained in Article III of the
Agreement and no others. Capitalized terms used in this Assignment and not
defined shall have the same meanings as such terms would have if used in the
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ___ day of August, 1997.
▇▇▇▇▇▇ FINANCIAL, INC.
By:_____________________________________
Printed Name:________________________
Title:_______________________________
▇▇▇▇▇▇ FINANCIAL LEASING, INC.
By:_____________________________________
Printed Name:________________________
Title:_______________________________
Exhibit B
Transfer and Sale
Agreement
FORM OF SUBSEQUENT PURCHASE AGREEMENT
(to come)