23
EXHIBIT 10.1
TRUST AND SECURITY AGREEMENT
among
GF FUNDING CORP. II
(the "Transferor")
GRANITE FINANCIAL, INC.
(the "Servicer")
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
(the "Trustee")
and
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
(the "Back-up Servicer")
Dated as of November 1, 1996
TABLE OF CONTENTS
Page
ARTICLE ONE 2
DEFINITIONS 2
Section 1.01 Definitions 2
ARTICLE TWO 28
THE CERTIFICATES 28
Section 2.01 Form Generally 28
Section 2.02 Series; Denomination 28
Section 2.03 Formation, Execution, Authentication, Delivery
and Dating 30
Section 2.04 Temporary Certificates 30
Section 2.05 Registration, Registration of Transfer and
Exchange 31
Section 2.06 Limitation on Transfer and Exchange 31
Section 2.07 Mutilated, Destroyed, Lost or Stolen Certificate 32
Section 2.08 Payment of Principal and Interest;
Principal and Interest Rights Preserved 33
Section 2.09 Persons Deemed Owner 36
Section 2.10 Cancellation 36
Section 2.11 Tax Treatment 36
Section 2.12 Dissolution upon Bankruptcy, etc. of Transferor 36
ARTICLE THREE 38
FUNDINGS; CONVERSIONS 38
Section 3.01 Fundings 38
Section 3.02 Funding Amounts 38
Section 3.03 Procedure for Fundings 38
Section 3.04 Verification of Funding Report 39
Section 3.05 Fundings by Certificateholders 40
Section 3.06 Calculation of Rates; Conversions 41
Section 3.07 Appointment of Certificate Funding Administrator 42
Section 3.08 Release of Excess Funds At Close of Funding
Period 43
ARTICLE FOUR 44
ISSUANCE OF CERTIFICATES; SUBSTITUTIONS OF COLLATERAL 44
Section 4.01 Conditions to Initial Issuance of Certificates 44
Section 4.02 Issuances of Additional Series of Certificates 45
Section 4.03 Perfection of Transfer 47
Section 4.04 Substitution, Removal and Purchase of Lease
Assets 48
Section 4.05 Releases 50
Section 4.07 Trust Estate 51
Section 4.08 Notice of Release 51
Section 4.09 Nature of Transfer 51
ARTICLE FIVE 52
SATISFACTION AND DISCHARGE 52
Section 5.01 Satisfaction and Discharge of Agreement 52
Section 5.02 Application of Trust Money 52
ARTICLE SIX 54
DEFAULTS AND REMEDIES 54
Section 6.01 Events of Default 54
Section 6.02 Acceleration of Maturity; Rescission and
Annulment 54
Section 6.03 Collection of Indebtedness and Suits for
Enforcement by Trustee 55
Section 6.04 Remedies 56
Section 6.05 Optional Preservation of Trust Estate 57
Section 6.06 Trustee May File Proofs of Claim 57
Section 6.07 Trustee May Enforce Claims Without
Possession of Certificates 58
Section 6.08 Application of Money Collected 58
Section 6.09 Limitation on Suits 59
Section 6.10 Unconditional Right of Certificateholders
to Receive Principal and Interest 60
Section 6.11 Restoration of Rights and Remedies 60
Section 6.12 Rights and Remedies Cumulative 60
Section 6.13 Delay or Omission; Not Waiver 61
Section 6.14 Control by MBIA or Certificateholders 61
Section 6.15 Waiver of Certain Events by MBIA or
Certificateholders 61
Section 6.16 Undertaking for Costs 62
Section 6.17 Waiver of Stay or Extension Laws 62
Section 6.18 Sale of Trust Estate 62
Section 6.19 Action on Certificates 63
ARTICLE SEVEN 64
THE TRUSTEE 64
Section 7.01 Certain Duties and Responsibilities 64
Section 7.02 Notice of Default and Other Events 65
Section 7.03 Certain Rights of Trustee 66
Section 7.04 Not Responsible for Recitals or Issuance
of Certificates 66
Section 7.05 May Hold Certificates 67
Section 7.06 Money Held in Trust 67
Section 7.07 Compensation and Reimbursement 68
Section 7.08 Corporate Trustee Required; Eligibility 68
Section 7.09 Resignation and Removal; Appointment of Successor 69
Section 7.10 Acceptance of Appointment by Successor 70
Section 7.11 Merger, Conversion, Consolidation or
Succession to Business of Trustee 70
Section 7.12 Co-Trustees and Separate Trustees 70
Section 7.13 Rights with Respect to the Servicer 71
Section 7.14 Appointment of Authenticating Agent 72
Section 7.15 Trustee to Hold Lease Contracts 73
Section 7.16 Money for Certificate Payments to Be Held in
Trust 73
ARTICLE EIGHT 75
THE CERTIFICATE INSURANCE POLICIES 75
Section 8.01 Payments under the Certificate Insurance Policies 75
ARTICLE NINE 76
AMENDMENTS 76
Section 9.01 Amendments without Consent of Certificateholders 76
Section 9.02 Amendments and Modifications to Agreement
with Consent of Certificateholders 77
Section 9.03 Execution of Amendments 78
Section 9.04 Effect of Amendments 78
Section 9.05 Reference in Certificates to Amendments 79
ARTICLE TEN 80
REDEMPTION OF CERTIFICATES 80
Section 10.01 Redemption at the Option of the
Transferor; Election to Redeem 80
Section 10.02 Notice to Trustee; Deposit of Redemption Price 80
Section 10.03 Notice of Redemption by the Transferor 80
Section 10.04 Certificates Payable on Redemption Date 81
Section 10.05 Release of Series Lease Contracts 81
ARTICLE ELEVEN 82
REPRESENTATIONS, WARRANTIES AND COVENANTS 82
Section 11.01 Representations and Warranties 82
Section 11.02 Covenants 84
Section 11.03 Other Matters as to the Transferor 88
ARTICLE TWELVE 90
ACCOUNTS AND ACCOUNTINGS 90
Section 12.01 Collection of Money 90
Section 12.02 Collection Account; Redemption Account 90
Section 12.03 Cash Collateral Account 93
Section 12.04 Reports by Trustee to MBIA and
Certificateholders 95
ARTICLE THIRTEEN 96
PROVISIONS OF GENERAL APPLICATION 96
Section 13.01 General Provisions 96
Section 13.02 Acts of Certificateholders 96
Section 13.03 Notices, etc., to Trustee, MBIA,
Transferor and Servicer 96
Section 13.04 Notices to Certificateholders; Waiver 97
Section 13.05 Effect of Headings and Table of Contents 97
Section 13.06 Successors and Assigns 97
Section 13.07 Separability 98
Section 13.08 Benefits of Agreement 98
Section 13.09 Legal Holidays 98
Section 13.10 Governing Law 98
Section 13.11 Counterparts 98
Section 13.12 Corporate Obligation 98
Section 13.13 Compliance Certificates and Opinions 98
Section 13.14 MBIA Default or Termination 99
EXHIBITS
A-1 Form of Class A Certificate
A-2 Form of Class B Certificate
B Form of Supplement to Trust and Security Agreement
C Form of Investment and Assumption Letter
D Form of Transferor Certificate
E Form of Funding Report
F Form of Funding Continuation Notice
G Form of Advance Rate Cure Notice
H Form of Conversion Report
I Form of Lease Sale Agreement
This TRUST AND SECURITY AGREEMENT (this "Agreement"), dated
as of November 1, 1996, is by and among GF Funding Corp. II (the
"Transferor"), Granite Financial, Inc., as servicer (the
"Servicer"), Norwest Bank Minnesota, National Association, a
national banking association, as back-up servicer (the "Back-up
Servicer"), and Norwest Bank Minnesota, National Association, a
national banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
The Transferor has duly authorized the execution and
delivery of this Agreement to provide for the issuance of the
Certificates issuable as provided in this Agreement. All
covenants and agreements made by the Transferor, the Servicer,
the Trustee and the Back-up Servicer herein are for the benefit
and security of the Holders of the Certificates and MBIA. The
Transferor, the Servicer, the Trustee and the Back-up Servicer
are entering into this Agreement, and the Trustee is accepting
the trusts created hereby, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged.
All things necessary to make this Agreement a valid
agreement of the Transferor, the Servicer, the Trustee and the
Back-up Servicer in accordance with its terms have been done.
CONVEYANCE CLAUSE
The Transferor does hereby absolutely transfer, assign, set
over, and otherwise convey to the Trustee, for the ratable
benefit of the Holders of the Certificates and MBIA, all of the
Transferor's rights, title and interest in and to the following
and any and all benefits accruing to the Transferor from (but
none of the obligations under): (a) the Lease Receivables and
Lease Contracts and all payments received on or with respect to
the Lease Contracts and Lease Receivables and due after the
applicable Cut-Off Dates or Acquisition Dates; (b) the
Transferor's rights and interests in the Equipment and any
security interest in the Equipment not owned by the Transferor;
(c) any rights of the Transferor under each Insurance Policy
related to the Lease Contracts or the Equipment and Insurance
Proceeds; (d) the Lease Acquisition Agreement, the Broker
Assignment Agreements, any Lease Sale Agreements and any other
Transaction Documents to which the Transferor is a party; (e) the
Servicing Agreement; (f) all amounts from time to time on deposit
in the Collection Account, the Cash Collateral Account, the
Lockbox Account, the Redemption Account and the ACH Account
(including any Eligible Investments and other property in such
accounts); (g) the Lease Contract Files; (h) the Certificate
Insurance Policies, except that the Holders of the Class B
Certificates shall have no right, title or interest in or to the
Certificate Insurance Policies; and (i) proceeds of the foregoing
(including, but not by way of limitation, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time
constitute all or part or are included in the proceeds of any of
the foregoing), in each case whether now owned or hereafter
acquired, except that the Holders of the Class B Certificates
shall have no right, title or interest in proceeds of the
Certificate Insurance Policies (all of the foregoing being
hereinafter referred to as the "Trust Estate"). The foregoing
transfer, assignment, set over and conveyance does not constitute
and is not intended to result in a creation or an assumption by
the Trustee, any Certificateholder or MBIA of any obligation of
the Transferor, the Company, the Servicer or any other Person in
connection with the Trust Estate or under any agreement or
instrument relating thereto. The trust created by the foregoing
assignment shall be known as the "GF Funding Corp. II Master
Trust."
The Trustee acknowledges its acceptance on behalf of the
Certificateholders and MBIA of all right, title and interest
previously held by the Transferor in and to the Trust Estate, and
declares that it shall maintain such right, title and interest in
accordance with the provisions hereof and agrees to perform the
duties herein required to the best of its ability to the end that
the interests of the Certificateholders and MBIA may be
adequately and effectively protected.
ARTICLE ONE
DEFINITIONS
Section 1.01 Definitions.
Except as otherwise expressly provided herein or in the
applicable Supplement, or unless the context otherwise requires,
the following terms have the respective meanings set forth below
for all purposes of this Agreement, and the definitions of such
terms are equally applicable both to the singular and plural
forms of such terms. Capitalized terms used herein but not
otherwise defined shall have the respective meanings assigned to
such terms in the Servicing Agreement or the Lease Acquisition
Agreement.
"Accrual Date": With respect to any Series of Certificates,
the date upon which interest begins accruing on such
Certificates, as specified in such Certificates and the
applicable Supplement.
"Accrual Period": The period beginning on the twentieth day
of each month (or, in the case of the Accrual Period that is
applicable to an Initial Payment Date, beginning on the Accrual
Date for such Certificates) and ending on the nineteenth day of
the immediately following month, provided, however, solely for
purposes of calculating interest on the Class A Certificates
pursuant to Section 2.08 hereof, in the event that a Conversion
Date falls on a day other than the nineteenth day of a month,
the Accrual Period with respect to the Outstanding Floating
Tranche Balance shall begin on the twentieth day of the month
preceding such Conversion Date (or on such Conversion Date if
such Conversion Date is the twentieth day of a month) and end on
the close of business of such Conversion Date and the Accrual
Period for the Conversion Amount relating to the Outstanding
Fixed Tranche Balance calculated with respect to such Conversion
Date shall begin on the day following such Conversion Date and
end on the nineteenth day of the month immediately following such
Conversion Date.
"ACH": The National Automated Clearinghouse System.
"ACH Account": The account, if any, established by the
Transferor for the sole benefit of the Certificateholders and
MBIA pursuant to Section 12.02(f) hereof and in compliance with
Section 3.03(d) of the Servicing Agreement, into which account
shall be deposited payments related to the Lease Receivables and
as to which account the Trustee shall have the sole ability to
withdraw funds.
"ACH Bank": The bank, if any, specified in the Servicing
Agreement so long as such bank meets the requirements of a
Trustee as set forth in Section 7.08 hereof.
"Acquisition Date": Any Delivery Date, Funding Date or date
of substitution of a Substitute Lease Contract, as applicable.
"Act": With respect to any Certificateholder, the meaning
specified in Section 13.02.
"Additional Lease Contract": Each Lease Contract acquired
by the Transferor on an Acquisition Date including pursuant to a
Funding.
"Additional Principal Amount": The meaning specified in
Section 12.02(d)(x) hereof.
"Additional Servicer Fee": The amount, if any, of the fee
payable in accordance with Section 6.02 of the Servicing
Agreement to a successor Servicer appointed pursuant to Section
6.02 of the Servicing Agreement that is in excess of the Servicer
Fee.
"Advance Rate": 81.5%; provided, however, that (i) if an
Advance Rate Decrease Event of the type described in clause (a)
of that term occurs, the Advance Rate automatically will be
reduced to 80.5% effective as of the earlier of the next Funding
Date or Calculation Date and (ii) if any other Advance Rate
Decrease Event occurs, the Advance Rate automatically will be
reduced to 79.5% effective as of the earlier of the next Funding
Date or Calculation Date. After the occurrence of an Advance
Rate Decrease Event, the Advance Rate may thereafter be increased
pursuant to the terms of the Advance Rate Cure Notice.
"Advance Rate Cure Notice": A written notice delivered by
MBIA, at its sole discretion, to the Transferor, the Trustee, the
Certificate Funding Administrator and the Servicer with the
delivery of a Funding Continuation Notice, substantially in the
form attached hereto as Exhibit G.
"Advance Rate Decrease Event": The occurrence of any one of
the following events:
(a) commencing with the fifth Determination Date after the
Initial Delivery Date, if, as of any Calculation Date,
twelve times the ratio of (i) the aggregate IPB of all
Lease Contracts that have become Defaulted Lease
Contracts during the related Due Period over (ii) the
Aggregate IPB as of the Calculation Date for the third
Due Period prior to the related Due Period, is equal to
or exceeds 4.0 %, provided, however that if this
calculation is being made with respect to any of the
first six Determination Dates after the Initial
Delivery Date, the number of Lease Contracts that have
become Defaulted Lease Contracts during the related Due
Period must equal or exceed three; or
(b) commencing with the fifth Determination Date after the
Initial Delivery Date, if, as of any Calculation Date,
twelve times the ratio of (i) the aggregate IPB of all
Lease Contracts that have become Defaulted Lease
Contracts during the related Due Period over (ii) the
Aggregate IPB as of the Calculation Date for the third
Due Period prior to the related Due Period, is equal to
or exceeds 4.25%, provided, however that if this
calculation is being made with respect to any of the
first six Determination Dates after the Initial
Delivery Date, the number of Lease Contracts that have
become Defaulted Lease Contracts during the related Due
Period must equal or exceed three; or
(c) commencing with the fourth Determination Date after the
Initial Delivery Date, for the three prior consecutive
Due Periods, the average of the 1-30 Day Delinquency
Rates is equal to or greater than 5.0%; or
(d) a Decrease Funding Termination Event occurs.
"Affiliate": With respect to any specified Person, any
other Person controlling or controlled by or under common control
with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Aggregate Initial IPB": The sum of the Aggregate Initial
Series IPB for all Outstanding Series of Certificates.
"Aggregate IPB": The aggregate of the Implicit Principal
Balances of all Series Lease Contracts for all Outstanding
Series.
"Aggregate Initial Series IPB": With respect to each Series
of Class A Certificates and any Related Series of Class B
Certificates, the sum of the Initial Pool Balance and the
cumulative of the Aggregate Interval Pools, in each case, for
such Series.
"Aggregate Interval Pool": With respect to each Floating
Interval and as of the last Determination Date occurring in such
Floating Interval, the aggregate of the then outstanding IPB of
the Interval Pool acquired during such Floating Interval.
"Aggregate Targeted Principal Distribution Amount": For any
Payment Date, the amount by which the Outstanding Principal
Amount of all Series of Class A Certificates, before giving
effect to any payments of principal expected to occur on such
Payment Date, exceeds the Aggregate IPB less the Required
Collateralization Amount.
"Agreement": This Agreement, as supplemented by
Supplements, in the form when originally executed and, if from
time to time further supplemented or amended by one or more
amendments hereto pursuant to the applicable provisions hereof,
as so supplemented or amended. All references in this Agreement
designated "Articles," "Sections," "Subsections" and other
subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of this Agreement as
originally executed, or if amended or supplemented, as so amended
and supplemented, and all references in a Supplement to the
designated "Articles," "Sections," "Subsections" and other
subdivisions are to the designated Articles, Sections,
Subsections and other subdivisions of such Supplement. The words
"herein," "hereof," "hereunder" and other words of similar import
when not related to a specific subdivision of this Agreement,
refer to this Agreement as a whole and not to any particular
Article, Section, Subsection or other subdivision of this
Agreement or any Supplement.
"Amended Lease Schedule": With respect to any Series Lease
Schedule, the list of Lease Contracts amending such Series Lease
Schedule pursuant to any substitution, repurchase, modification
or Funding of Lease Contracts in accordance with the terms hereof
and the Lease Acquisition Agreement, and accompanied by a Company
Certificate or a Transferor Certificate, as applicable.
"Amortization Period": With respect to each Series of
Certificates, the period commencing on the earlier of (i) the
applicable Expected Funding Termination Date and (ii) the first
day of the Accrual Period following the occurrence of a Funding
Termination Event and, in either case, ending on the applicable
Stated Maturity or Expected Maturity, as applicable.
"Annualized Gross Default Rate": For any Due Period, the
sum of the Implicit Principal Balances as of the Calculation Date
occurring in such Due Period of all Lease Contracts that either
(a) have become delinquent for a period of 91 or more days during
such Due Period (including any such Lease Contracts that have
been repurchased, removed or substituted during such Due Period),
or (b) the Servicer has determined in accordance with its
customary practices that it shall not make a Servicer Advance
with respect to such Lease Contract, that a prior Servicer
Advance with respect to such Lease Contract is unrecoverable, or
that the remaining Scheduled Payments under the related Lease
Contract are uncollectible during such Due Period (including any
such Lease Contracts that have been removed, repurchased or
substituted during such Due Period), divided by the Aggregate IPB
on the Calculation Date immediately preceding such Due Period
multiplied by twelve.
"Authenticating Agent": Initially, the Trustee, and
thereafter any entity appointed by the Trustee pursuant to
Section 7.14 hereof.
"Back-up Servicer": Norwest Bank Minnesota, National
Association, and all successors thereto.
"Back-up Servicer Fee": The fee payable on each Payment
Date to the Back-up Servicer in consideration for the Back-up
Servicer's performance of its duties pursuant to this Agreement
and the Servicing Agreement as Back-up Servicer, in an amount
equal to the product of one-twelfth of the Back-up Servicer Fee
Rate and the Outstanding Principal Amount of all Series of
Class A Certificates immediately following the preceding Payment
Date, provided, however, with respect to the Initial Payment
Date, the Back-up Servicer Fee shall equal $150.51.
"Back-up Servicer Fee Rate": .05% per annum.
"Benefit Plan Investor": The meaning set forth in 29 C.F.R.
2510.3-101.
"Board of Directors": Either the board of directors of the
Transferor or of the Servicer, as the context requires, or any
duly authorized committee of such board.
"Board Resolution": A copy of a resolution certified by the
Secretary or an Assistant Secretary of the Transferor or of the
Servicer to have been duly adopted by its Board of Directors and
to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Broker Assignment Agreements": The assignments by which
the Company obtains an assignment of lease contracts and the
related equipment from the originating broker.
"Business Day": Any day other than a Saturday, a Sunday or
a day on which banking institutions in New York City or in the
city in which the principal place of business of the Transferor
or the Servicer or the corporate trust office of the Trustee
under this Agreement is located are authorized or obligated by
law or executive order to close.
"Calculation Date": The last day of a Due Period, except
that (a) with respect to any calculations made regarding any
Funding for any Series of Certificates, the Calculation Date
shall mean the Calculation Date that was the basis for the most
recent Monthly Servicer's Report; and (b) with respect to any
calculations made regarding the Initial Funding Amount for a
Series or any Fundings that occur prior to delivery of the
initial Monthly Servicer's Report, the Calculation Date shall
mean the Cut-Off Date for the Initial Delivery Date.
"Cash Collateral Account": The trust account or accounts
created and maintained pursuant to Section 12.03 hereof.
"Cash Collateral Account Factor": One plus the quotient of
(a) the positive difference between (i) the sum of (x) the
weighted average of the Floating Rate for each Outstanding Series
of Class A Certificates and the Fixed Rate for each Outstanding
Series of Class A Certificates, weighted, respectively by the IPB
for the related tranche of such Class A Certificates of each
Series and (y) the MBIA Premium Rate (weighted by the Outstanding
Principal Amount of the related Series of Class A Certificates),
the Trustee Fee Rate, the Back-up Servicer Fee Rate, and
(ii) 2.5% over (b) twelve.
"Cash Collateral Account Deposit": With respect to the
issuance of any Series of Certificates, the amount to be
deposited in the Cash Collateral Account on the related Delivery
Date as set forth in the applicable Supplement.
"Cash Collateral Account Required Balance": As of any date
of determination, an amount equal to the sum of all Cash
Collateral Account Deposits for any Series of Certificates
Outstanding plus the product of (i) the Cash Collateral Account
Factor and (ii) the Required Collateralization Amount minus:
(x) if the determination date relates to a Payment Date,
the positive difference between: (A) the Aggregate
IPB, and (B) the Outstanding Principal Amount of all
Series of Class A Certificates, after giving effect to
any payments of principal expected to occur on the
related Payment Date; and
(y) if the determination date relates to a Funding, the
positive difference between: (A) the Aggregate IPB and
the Funding IPB relating to the Funding expected to
occur on the related Funding Date, and (B) the
Outstanding Principal Amount of all Series of Class A
Certificates and the Funding Amount for the Funding
expected to occur on the related Funding Date;
provided, however, if a Trigger Event has occurred, the Cash
Collateral Account Required Balance shall be an amount equal to
zero.
"Certificate" or "Certificates": Any one or collectively,
all Outstanding Series of Class A Certificates and Class B
Certificates or all Outstanding Certificates of any one Series or
any one Class, as is consistent with the context in which such
term is used.
"Certificate Funding Administration Agreement": Unless
otherwise specified in the related Supplement, with respect to
any Series of Class A Certificates, the administration agreement
executed in connection therewith between the Certificate Funding
Administrator, the Servicer and the Transferor.
"Certificate Funding Administrator": Rothschild Inc., or
any successor Certificate Funding Administrator approved in
writing by MBIA.
"Certificate Insurance Policies": The certificate guaranty
insurance policies issued by MBIA insuring each Series of Class A
Certificates in accordance with the terms thereof.
"Certificate Interest Rate": With respect to any Series of
Class A Certificates and each Floating Rate Tranche and Fixed
Rate Tranche, the applicable Floating Rate and Fixed Rate,
respectively, and with respect to any Series of Class B
Certificates, the annual rate at which interest accrues on such
Certificates of such Series, as specified as the Class B
Certificate Interest Rate in the applicable Supplement.
"Certificate Purchase Agreement": Each Certificate Purchase
Agreement between the Transferor and one or more purchasers of
Certificates.
"Certificate Register" and "Certificate Registrar": The
respective meanings specified in Section 2.05 hereof.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register.
"Class": With respect to each Series of Certificates, as so
specified in the related Supplement, a separate senior and/or
subordinated Class of Certificates issued pursuant to this
Agreement, designated as Class A Certificates and Class B
Certificates, respectively, with the specific terms identified in
this Agreement and in the applicable Supplement.
"Class A Certificates": All Series of Class A Certificates
Outstanding as of any date.
"Class A Principal Distribution Amount": As to each Series
of Class A Certificates and (a) as of each Payment Date prior to
the Stated Maturity of such Class of such Series, an amount equal
to the lesser of:
(i) the applicable Class A Targeted Principal
Distribution Amount for the Class A
Certificates of such Series for such Payment
Date, or
(ii) if the amounts available in the Collection
Account and the Cash Collateral Account
(including any Reinvestment Income in such
accounts) after payment of all amounts
required by clauses (i) through (v) of
Section 12.02(d) hereof are less than the
Class A Targeted Principal Distribution
Amounts for all Series of Class A
Certificates, an amount equal to the product
of:
(A) the total funds available for payment of
principal on the Class A Certificates, in
accordance with the priorities set forth in
Section 12.02(d) hereof, and
(B) the applicable Pro Rata Share of the Class A
Targeted Principal Distribution Amount for
such Series of Class A Certificates;
(b) as of the Stated Maturity of each Series of Class A
Certificates, an amount equal to the Outstanding
Principal Amount of the Class A Certificates of such
Series as of such date.
"Class A Targeted Principal Distribution Amount": With
respect to each Payment Date and each Series of Class A
Certificates:
(a) during the Funding Period for such Series of
Certificates, the Class A Targeted Principal
Distribution Amount shall equal zero;
(b) during the Amortization Period for any Payment Date
other than at Stated Maturity, the Aggregate Targeted
Principal Distribution Amount times a percentage
determined by dividing: (i) the decline in the Series
IPB for such Series of Class A Certificates from the
second Calculation Date preceding such Payment Date to
the Calculation Date preceding such Payment Date, by
(ii) the decline in the Aggregate IPB from the second
Calculation Date preceding such Payment Date to the
Calculation Date preceding such Payment Date;
(c) on the applicable Stated Maturity, an amount equal to
the Outstanding Principal Amount of Class A
Certificates of such Series as of such date.
"Class B Additional Return": With respect to each Series of
Class B Certificates, the amount specified in the applicable
Supplement that is payable upon the reduction of the Outstanding
Principal Amount of such Series to zero and if more than one
Outstanding Series of Class B Certificates is entitled to a Class
B Additional Return pursuant to its related Supplement, the Pro
Rata Share of such amount.
"Class B Certificates": Each Class of Certificates
designated as such in the applicable Supplement.
"Class B Interest Rate": The annual rate at which interest
accrues on the Class B Certificates of any Series, as specified
in such Certificates and in the applicable Supplement for such
Series.
"Class B Principal Distribution Amount": Unless otherwise
specified in the related Supplement, as to each Series of Class B
Certificates and as of each Payment Date, an amount equal to all
funds then available to be distributed in accordance with the
priorities set forth in Section 12.02(d) hereof and if more than
one Series of Class B Certificates are Outstanding, the Pro Rata
Share of such funds, provided, however, that no principal shall
be paid on any Series of Class B Certificates while its Related
Series is in its Funding Period.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The trust account or accounts created
and maintained pursuant to Section 12.02 hereof.
"Company": Granite Financial, Inc., and all successors
thereto in accordance with the Lease Acquisition Agreement.
"Company Certificate": An Officer's Certificate delivered
by the Company substantially in the form of Exhibit A to the
Lease Acquisition Agreement.
"Concentration Limits": The meaning specified in the Lease
Acquisition Agreement.
"Controlling Holders": If any Class A Certificates are then
Outstanding, the Holders of not less than 51% of Outstanding
Principal Amount of all Series of Class A Certificates; otherwise
the Holders of not less than 51% of Outstanding Principal Amount
of all Series of Class B Certificates.
"Conversion Amount": With respect to each Conversion Date
and any Series of Class A Certificates in its Funding Period, and
as determined on the Determination Date preceding such Conversion
Date, the lesser of (i) the product of the Advance Rate and the
Aggregate Interval Pool with respect to such Series and (ii) the
Outstanding Floating Tranche Balance for such Series; provided,
however, that with respect to the Conversion Date for the final
Floating Interval for any Series, the Conversion Amount for such
Series will equal the Outstanding Floating Tranche Balance for
such Series as of such Conversion Date.
"Conversion Date": Unless otherwise specified in the
related Supplement, the close of business on the last day of each
Floating Interval (whether or not a Business Day), provided,
however, that if a Funding Termination Event occurs during a
Floating Interval, the Conversion Date with respect to such
Floating Interval shall be the close of business on the last
Business Day of the Accrual Period in which such Funding
Termination Event has occurred.
"Conversion Rate": The lesser of (i) the Treasury Rate in
effect on the Reset Date preceding the related Conversion Date
corresponding most closely to the Weighted Average Life of the
related Interval Pool, plus the Fixed Rate Spread, converted to a
monthly interest rate and (ii) the Maximum Interest Rate.
"Conversion Report": A Conversion Report substantially in
the form of Exhibit H hereto.
"Corporate Trust Office": The principal corporate trust
office of the Trustee at ▇▇▇ ▇▇▇▇▇▇ and Marquette Avenue,
Minneapolis, Minnesota 55479-0070, or at such other address as
the Trustee may designate from time to time by notice to MBIA,
the Certificateholders and the Transferor, or the principal
corporate trust office of any successor Trustee.
"Cumulative Gross Default Rate": For any Due Period, the
sum of the Implicit Principal Balances, determined in the Due
Period during which such Lease Contracts became 91 or more days
delinquent, that either (a) are currently delinquent for a period
of 91 or more days (including any such Lease Contracts that have
been repurchased, removed or substituted during such Due Period),
or (b) the Servicer has determined in accordance with its
customary practices that it shall not make a Servicer Advance
with respect to such Lease Contract, that a prior Servicer
Advance with respect to such Lease Contract is unrecoverable, or
that the remaining Scheduled Payments under the related Lease
Contract are uncollectible (including any such Lease Contracts
that have been removed, repurchased or substituted during such
Due Period) divided by the Aggregate Initial IPB of all
Outstanding Series of Class A Certificates.
"Customer": The lessee under each related Lease Contract,
including any guarantor of such lessee and their respective
successors and assigns.
"Cut-Off Date": With respect to any Series of Certificates,
the meaning specified in the applicable Supplement.
"Decrease Funding Termination Event": With respect to any
Series in its Funding Period, the meaning set forth in the
related Supplement.
"Default": Any occurrence or circumstance which with notice
or the lapse of time or both would become an Event of Default.
"Defaulted Lease Contract": A Lease Contract shall become a
Defaulted Lease Contract at the earlier of (a) the Calculation
Date on which such Lease Contract becomes delinquent for a period
of 180 or more days, or (b) the Servicer determines in accordance
with its customary practices that it shall not make a Servicer
Advance with respect to such Lease Contract, that a prior
Servicer Advance with respect to such Lease Contract is
unrecoverable, or that the remaining Scheduled Payments under the
related Lease Contract are uncollectible.
"Delinquent Lease Contract": For any Due Period, any Lease
Contract (a) as to which a full Scheduled Payment was not
received when due by the Servicer and remains unpaid as of the
Calculation Date at the end of such Due Period and (b) which is
not a Defaulted Lease Contract.
"Delivery Date": The date on which the Certificates of a
Series are first executed, authenticated and delivered, as
specified in the applicable Supplement.
"Determination Date": The fourth Business Day preceding
each Payment Date.
"Discount Rate": With respect to any Series of Class A
Certificates, or a portion of a Series of Class A Certificates on
any date of determination, the rate equal to the sum of the
Trustee Fee Rate, the Back-up Servicer Fee Rate, the applicable
MBIA Premium Rate, and (i) with respect to any Floating Rate
Tranche, the applicable Maximum Interest Rate, (ii) with respect
to any Pool acquired on a Delivery Date, the related Initial
Fixed Rate, and (iii) with respect to computations of the
Conversion Amount , the Aggregate Interval Pool or the Net
Interval Pool, the applicable Conversion Rate.
"Dissolution Event": With respect to the Trust, the
withdrawal or expulsion of the Transferor as a beneficial
interest holder in the Trust, the termination, liquidation, or
dissolution of the Transferor, or the occurrence of an Insolvency
Event with respect to the Transferor.
"Dollar(s)": Lawful money of the United States of America.
"Due Date": With respect to each Lease Contract, each date
on which payment is due thereunder.
"Due Period": As to any Determination Date or Payment Date,
the period beginning on the first day and ending on the last day
of the calendar month preceding the month in which such
Determination Date or Payment Date occurs.
"Electronic Ledgers": The electronic master records of all
lease contracts of the Company or the Servicer similar to and
including the Lease Contracts.
"Eligible Investments": Any and all of the following:
(a) direct obligations of, and obligations fully guaranteed
by, the United States of America, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage
Association, the Federal Home Loan Banks or any agency
or instrumentality of the United States of America the
obligations of which are backed by the full faith and
credit of the United States of America;
(b) (i) demand and time deposits in, certificates of
deposit of, banker's acceptances issued by or federal
funds sold by any depository institution or trust
company (including the Trustee or its agent acting in
their respective commercial capacities) incorporated
under the laws of the United States of America or any
State thereof and subject to supervision and
examination by federal and/or state authorities, so
long as at the time of such investment or contractual
commitment providing for such investment, such
depository institution or trust company has a short
term unsecured debt rating in the highest available
rating category of S&P and ▇▇▇▇▇'▇ and provided that
each such investment has an original maturity of no
more than 365 days, and (ii) any other demand or time
deposit or deposit which is fully insured by the
Federal Deposit Insurance Corporation;
(c) repurchase obligations with a term not to exceed 30
days with respect to any security described in clause
(a) above and entered into with a depository
institution or trust company (acting as a principal)
rated "A" or higher by S&P and rated A2 or higher by
▇▇▇▇▇'▇; provided, however, that collateral transferred
pursuant to such repurchase obligation must be of the
type described in clause (a) above and must (i) be
valued weekly at current market price plus accrued
interest, (ii) pursuant to such valuation, equal, at
all times, 105% of the cash transferred by the Trustee
in exchange for such collateral and (iii) be delivered
to the Trustee or, if the Trustee is supplying the
collateral, an agent for the Trustee, in such a manner
as to accomplish perfection of a security interest in
the collateral by possession of certificated
securities.
(d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws
of the United States of America or any State thereof
which has a long term unsecured debt rating in the
highest available rating category of each of the Rating
Agencies at the time of such investment;
(e) commercial paper having an original maturity of less
than 365 days and issued by an institution having a
short term unsecured debt rating in the highest
available rating category of each of the Rating
Agencies at the time of such investment;
(f) a guaranteed investment contract approved in writing by
each of the Rating Agencies and MBIA and issued by an
insurance company or other corporation having a long
term unsecured debt rating in the highest available
rating category of each of the Rating Agencies at the
time of such investment;
(g) money market funds having ratings in the highest
available rating categories of S&P and ▇▇▇▇▇'▇ at the
time of such investment which invest only in other
Eligible Investments; any such money market funds which
provide for demand withdrawals being conclusively
deemed to satisfy any maturity requirement for Eligible
Investments set forth in this Agreement; and
(h) any investment approved in writing by each of the
Rating Agencies and MBIA.
The Trustee may purchase from or sell to itself or an affiliate,
as principal or agent, the Eligible Investments listed above.
All Eligible Investments shall be made in the name of the Trustee
for the benefit of the Certificateholders and MBIA.
"Eligible Lease Contract": A Lease Contract that satisfies
the selection criteria set forth in Section 3.01(a) of the Lease
Acquisition Agreement as of the applicable Acquisition Date.
"Equipment": The equipment leased to the Customers pursuant
to the Lease Contracts, together with any replacement parts,
additions and repairs thereof, and any accessories incorporated
therein and/or affixed thereto.
"ERISA": The Employee Retirement Income Security Act of
1974, as amended or any successor statute thereto.
"Event of Default": The meaning specified in Section 6.01
hereof.
"Existing Indebtedness": The meaning specified in the Lease
Acquisition Agreement.
"Expected Funding Termination Date": For each Series of
Class A Certificates and the related Series of Class B
Certificates, the date specified in the related Supplement for
such Series of Class A Certificates.
"Expected Maturity": With respect to any Series of Class B
Certificates, the meaning specified in the applicable Supplement.
"Final Due Date": With respect to each Lease Contract, the
final Due Date thereunder.
"Final Payment Date": With respect to any Certificate of a
Series, the date on which the final principal payment on such
Certificate is made as therein or herein provided, whether at the
Stated Maturity or Expected Maturity, as applicable, or by
acceleration or redemption.
"First Period Interest": With respect to any Funding, the
amounts, if any, of interest that will accrue on the related
Funding Amount at the applicable Floating Interest Rate as
determined on the related Reset Date, commencing on such Funding
Date and ending on the last day of the Accrual Period in which
such Funding occurs.
"Fixed Rate": With respect to each Series of Class A
Certificates, (i) until the first Conversion Date, a per annum
rate equal to the Initial Fixed Rate; (ii) thereafter during the
Funding Period for such Series and as of each Conversion Date
with respect thereto, a rate as determined on the Reset Date
immediately prior to such Conversion Date, equal to the lesser of
(A) the weighted average of the Initial Fixed Rate and the
Conversion Rates established for each Interval Pool relating to
such Series, weighted, respectively, by the Net Interval Pool for
each such Interval Pool and (B) the Maximum Interest Rate; and
(iii) during the Amortization Period, an amount equal to the
Fixed Rate set on the last Conversion Date for such Series.
"Fixed Rate Spread": With respect to each Series of Class A
Certificates, as defined in the related Supplement.
"Fixed Rate Tranche": With respect to each Series of
Class A Certificates, the tranche under the Series of
Certificates in a principal amount which is equal to the
Outstanding Fixed Tranche Balance for such Series.
"Floating Interval": With respect to each Series of Class A
Certificates, as defined in the related Supplement.
"Floating Rate": With respect to each Series of Class A
Certificates, the lesser of (i) a per annum rate equal to the
LIBOR Rate plus the applicable Floating Rate Spread and (ii) the
Maximum Interest Rate.
"Floating Rate Spread": With respect to each Series of
Class A Certificates, as defined in the related Supplement.
"Floating Rate Tranche": For a Series of Class A
Certificates in its Funding Period, the tranche under the Series
of Certificates which is equal to the Outstanding Floating
Tranche Balance for such Series.
"Floor Percentage": 5%.
"Funded Lease Contract": A Lease Contract acquired by the
Transferor on a Funding Date other than a Delivery Date.
"Funding": An extension of credit by any Class A
Certificateholder to the Transferor on a Funding Date with
respect to any Series of Class A Certificates.
"Funding Amount": As of any Funding Date for any Series of
Class A Certificates, the amount, if any, by which the sum of
(i) the Aggregate IPB as of such date (without taking into
account the Funding IPB for the current Funding Date) and
(ii) the Funding IPB for the current Funding Date, exceeds the
sum of (A) the Required Collateralization Amount and (B) the
Outstanding Principal Amount of all Series of Class A
Certificates; provided, however, that the sum of all Funding
Amounts on all Funding Dates for such Series shall not exceed the
Maximum Series Amount and no Funding Amount shall be less than
the Minimum Funding Amount.
"Funding Continuation Notice": Written notice from MBIA to
the Transferor, the Servicer and the Trustee, substantially in
the form of Exhibit F hereto, stating that the Funding Period for
a particular Series of Class A Certificates can be continued for
the period set forth in such Funding Continuation Notice on the
terms set forth in this Agreement and the applicable Supplement
for such Series.
"Funding Date": With respect to any Series of Class A
Certificates, any Business Day on which the Transferor desires to
obtain a Funding in accordance with the terms of this Agreement,
provided, however, that (a) no Fundings shall occur on any date
between and including a Determination Date and the related
Payment Date and (b) Fundings shall not occur more than one time
per week.
"Funding IPB": The sum of the Implicit Principal Balances
of the Lease Contracts to be acquired by or on behalf of the
Transferor on any Funding Date.
"Funding Period": The period of time commencing on the
initial issuance of a Series of Class A Certificates and ending
on the applicable Funding Termination Date.
"Funding Report": A Funding Report in the form of Exhibit E
hereto.
"Funding Termination Date": With respect to any Series of
Certificates, the earlier of (a) the Expected Funding Termination
Date, and (b) the day of the occurrence of a Funding Termination
Event.
"Funding Termination Event": With respect to any Series of
Class A Certificates and the Related Series of Class B
Certificates, the meaning specified in the applicable Supplement
for such Series of Class A Certificates.
"Guaranty Amounts": Any and all amounts paid by any
guarantor indicated on the applicable Lease Contract.
"Holder" or "Certificateholder": The person in whose name a
Certificate is registered in the Certificate Register.
"Implicit Principal Balance" or "IPB": As of any date of
determination, with respect to any Lease Contract, the present
value of the remaining stream of Scheduled Payments (reduced by
the applicable Servicer Fee but not reduced by any Additional
Servicer Fee) due with respect to such Lease Contract after the
applicable Calculation Date, and calculated by discounting such
Scheduled Payments (assuming such Scheduled Payments are received
on the last day of the related Due Period) to such Calculation
Date at an annual rate equal to the applicable Discount Rate, at
the same frequency as the Payment Dates; except that on the
Calculation Date, (a) on or immediately following the deposit
into the Collection Account of any Insurance Proceeds (and the
termination of the related Lease Contract) or the Removal Price,
or on or immediately following the delivery of a Substitute Lease
Contract, (b) immediately on or after the date that a Lease
Contract has become a Defaulted Lease Contract, or
(c) immediately preceding the Final Payment Date, the Implicit
Principal Balance of each such related Lease Contract shall be
zero. To the extent that the Final Due Date of any Series Lease
Contract is later than the Stated Maturity of the last maturing
Certificates of the related Series of Class A Certificates, any
Scheduled Payments due on such Lease Contract after the
Calculation Date immediately preceding such Stated Maturity shall
not be taken into account in calculating the Implicit Principal
Balance of such Lease Contract.
"Independent": When used with respect to any specified
Person means such a Person, who (a) is in fact independent of the
Transferor, (b) does not have any direct financial interest or
any material indirect financial interest in the Transferor or in
any Affiliate of the Transferor and (c) is not connected with the
Transferor as an officer, employee, promoter, underwriter,
trustee, partner, director, or person performing similar
functions. Whenever it is herein provided that any Independent
Person's opinion or certificate shall be furnished to the
Trustee, such Person shall be appointed by a Transferor Order and
approved by the Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read
this definition and that the signer is Independent within the
meaning hereof.
"Independent Accountants": Ehrhardt, Keefe, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, or any firm of independent certified public accountants
of recognized national standing and reasonably acceptable to
MBIA, or if an MBIA Default or Termination has occurred and is
continuing, the Controlling Holders.
"Initial Cash Deposit": The amount, if any, specified in
the applicable Supplement.
"Initial Delivery Date": The date on which the first Series
of Certificates are executed, authenticated and delivered.
"Initial Fixed Rate": With respect to each Series of
Class A Certificates and if so specified with respect to any
Series of Class B Certificates, as defined in the related
Supplement.
"Initial Funding Amount": With respect to each Series of
Class A Certificates, as defined in the related Supplement.
"Initial Payment Date": With respect to each Series, as
defined in the related Supplement.
"Initial Pool Balance": With respect to each Series of
Certificates, the Series IPB as of the related Delivery Date.
"Initial Series Lease Schedule": The listing of Lease
Contracts and related Equipment attached to the Company
Certificate executed on the Initial Delivery Date.
"Insolvency Event" means, with respect to a specified
Person, (a) the commencement of an involuntary case against such
Person under the Federal bankruptcy laws, as now or hereinafter
in effect, or another present or future Federal or state
bankruptcy, insolvency or similar law, and such case is not
dismissed within 60 days; or (b) the filing of a decree or entry
of an order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its
property in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs;
or (c) the commencement by such Person of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or
the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to
pay its debts as such debts become due, or the taking of action
by such Person in furtherance of any of the foregoing.
"Insurance Agreement": With respect to each Series of
Class A Certificates, the applicable Insurance Agreement related
to such Series, by and among MBIA, the Transferor, the Company,
the Servicer, the Back-up Servicer, the Trustee and the
Certificate Funding Administrator, as amended or supplemented in
accordance with the terms thereof.
"Insurance Policy": With respect to an item of Equipment
and a Lease Contract, any insurance policy maintained by the
Customer pursuant to the related Lease Contract that covers
physical damage to the Equipment or general liability (including
policies procured by the Company or the Servicer on behalf of the
Customer).
"Insurance Proceeds": With respect to an item of Equipment
and a Lease Contract, any amount received during the related Due
Period pursuant to an Insurance Policy issued with respect to
such Equipment and the related Lease Contract, net of any costs
of collecting such amounts not otherwise reimbursed.
"Insurer": Any insurance company or other insurer providing
any Insurance Policy.
"Interval Pool": With respect to each Series of Class A
Certificates (i) the Lease Contracts set forth in the Initial
Series Lease Schedule relating to such Series and (ii) for each
Floating Interval, all of the Lease Contracts acquired by the
Transferor during such Floating Interval
"Investment and Assumption Letter": The letter required to
be delivered by each transferee of a Certificate, as provided in
Section 2.06 hereof, substantially in the form of Exhibit C
hereto or, under the circumstances described in Section
2.06(a)(ii), in the form required thereby.
"Lease Acquisition Agreement": The Lease Acquisition
Agreement dated as of November 1, 1996, by and between the
Transferor and the Company, as amended or supplemented from time
to time in accordance with the terms thereof.
"Lease Assets": The meaning specified in the Lease
Acquisition Agreement.
"Lease Contract File": The meaning specified in the Lease
Acquisition Agreement.
"Lease Contracts": The lease contracts including all Loan
Contracts (and all rights with respect thereto, including all
guaranties and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any
Lease Contract and all rights with respect to any agreements or
arrangements with the vendors, dealers or manufacturers of the
Equipment to the extent specifically related to any Lease
Contract) which are identified either (i) on a Series Lease
Schedule delivered to the Trustee and MBIA on a Delivery Date, or
(ii) on an Amended Lease Schedule delivered to the Trustee and
MBIA on an Acquisition Date or on the date on which Substitute
Lease Contracts are delivered to the Trustee; provided that, from
and after the date on which a Lease Contract is repurchased,
removed or substituted by the Company or the Transferor in
accordance with Section 4.04 hereof, such repurchased, removed or
replaced Lease Contract shall no longer constitute a Lease
Contract for purposes of the Transaction Documents.
"Lease Receivables": With respect to any Lease Contract,
all of, and the right to receive all of (a) the Scheduled
Payments, (b) any prepayments made with respect of such Lease
Contract, (c) any Guaranty Amounts, (d) any Insurance Proceeds,
(e) any Residual Proceeds, (f) any Overdue Payments, and (g) any
Recoveries.
"Lease Sale Agreement": Each Lease Sale Agreement entered
into by the Transferor with a Seller and approved by MBIA in
writing, substantially in the form of Exhibit I hereto.
"LIBOR Rate": Unless otherwise specified in the related
Supplement, with respect to each Series of Class A Certificates
and each Accrual Period, an interest rate per annum equal to the
rate for London interbank offered quotations for one-month
Eurodollar deposits determined by the Trustee for such Accrual
Period as follows:
(a) On each Reset Date, the Trustee will determine the
LIBOR Rate on the basis of the rate for deposits in U.S.
Dollars for a period of one month that appears on the
Telerate Page 3750 or Bloomberg MMR2 as of 11:00 a.m.
(London time) on such Reset Date. If such rate does not
appear on Telerate Page 3750 or Bloomberg MMR2, the rate for
such Reset Date will be determined on the basis of the rates
at which deposits in U.S. Dollars are offered by the
Reference Banks at approximately 11:00 a.m. (London time) on
such date to prime banks in the London interbank market for
a period of one month commencing on that Reset Date. The
Trustee will request the principal London office of each of
the Reference Banks to provide such a quotation.
(b) If, on any Reset Date, at least two Reference Banks
provide quotations when requested, the LIBOR Rate for such
Reset Date will be the arithmetic mean of the quotations so
received.
(c) If, on any Reset Date, only one or none of the
Reference Banks provides such a quotation, the LIBOR Rate
will be the arithmetic mean of the offered rates quoted by
major banks in New York City selected by the Trustee at
approximately 11:00 a.m. (New York City time) on such Reset
Date for loans to leading European banks in U.S. Dollars for
a period of one month commencing on that Reset Date.
(d) If, on any Reset Date, the LIBOR Rate cannot be
calculated pursuant to one of the above methods, the LIBOR
Rate for such Reset Date shall be the Maximum Interest Rate.
"Lien": The meaning specified in the Lease Acquisition
Agreement.
"Liquidated Lease Receivable": A Lease Receivable that has
been liquidated pursuant to Section 3.01(b) of the Servicing
Agreement.
"Loan Contract": A Lease Contract that evidences a sale of
the related Equipment to the Customer and the retention by the
lessor of a security interest in such Equipment.
"Lockbox Account": The meaning specified in the Servicing
Agreement.
"London Banking Day": Any day on which dealings in deposits
in Dollars are transacted in the London interbank market.
"Material Affiliate": Any entity whose capital stock the
Company has majority ownership.
"Maximum Interest Rate": For each Series of Class A
Certificates, as defined in the related Supplement.
"Maximum Monthly Amount": For each Series of Class A
Certificates, as defined in the related Supplement.
"Maximum Series Amount": For each Series, as defined in the
related Supplement.
"MBIA": MBIA Insurance Corporation and any successor
thereto.
"MBIA Default or Termination": The occurrence and
continuance of any of the following events:
(a) the failure by MBIA to make a payment under a
Certificate Insurance Policy in accordance with its
terms;
(b) the occurrence of an "Insurer Insolvency," as that term
is defined in the Insurance Agreement, with respect to
MBIA; or
(c) 124 days have lapsed since all Class A Certificates
have been paid in full, MBIA has been paid all amounts
owed to it under each Insurance Agreement, all
Certificate Insurance Policies have been surrendered to
MBIA and the Insurance Agreements have been terminated.
"MBIA Premium": The sum of all MBIA Premiums specified in
each Insurance Agreement.
"MBIA Premium Rate": With respect to each Series of
Certificates, the meaning specified in the applicable Insurance
Agreement.
"Minimum Funding Amount": With respect to each Series of
Class A Certificates, the meaning specified in the related
Supplement.
"Minimum Monthly Amount": With respect to each Series of
Class A Certificates, the meaning specified in the related
Supplement.
"Monthly Servicer's Report": The report prepared by the
Servicer pursuant to Section 4.01 of the Servicing Agreement.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc. and its
successors in interest.
"Net Funding Amount": With respect to each Funding Date,
the positive difference between the Funding Amount and the First
Period Interest.
"Net Interval Pool": With respect to each Interval Pool and
as of any date of determination, the then outstanding IPB of such
Interval Pool.
"Net Worth Requirement" means, for purposes of determining
whether a Trigger Event has occurred, the Servicer's consolidated
Tangible Net Worth shall not be less than (a) during the period
from the Initial Delivery Date through the fiscal year ending
June 30, 1997, $10,189,224, (b) during the fiscal year ending
June 30, 1998, the sum of (i) $10,189,224 plus (ii) 75% of the
cumulative after tax consolidated net income from October 1, 1996
to June 30, 1997, such amount being calculated without any offset
and reduction for net losses incurred from October 1, 1996 to
June 30, 1997, and (c) during each fiscal year ending
thereafter, the sum of (i) the Net Worth Requirement established
as of the last day of the immediately preceding fiscal year, plus
(ii) 75% of the cumulative after tax consolidated net income for
each year thereafter, such amount being calculated without any
offset or reduction for net losses incurred during the fiscal
year for which such calculation is being made. For purposes of
determining whether a Funding Termination Event has occurred, the
Net Worth Requirement shall have the same meaning as set forth
above, except that $10,571,320 shall be substituted for
$10,189,224 above.
"Nonrecoverable Advance": The meaning specified in the
Servicing Agreement.
"Officer's Certificate": A certificate signed by the
Chairman of the Board, the President, a Vice President, the
Treasurer, the Controller, an Assistant Controller or the
Secretary of the company on whose behalf the certificate is
delivered, and delivered to the Trustee, which certificate shall
comply with the applicable requirements of Section 13.13 hereof.
Unless otherwise specified, any reference in this Agreement to an
Officer's Certificate shall be to an Officer's Certificate of the
Transferor.
"1-30 Day Delinquency Rate": For any Due Period, the sum of
the Implicit Principal Balances as of the Calculation Date
occurring in such Due Period of all Lease Contracts that are at
least 1 day and less than 31 days delinquent as of such
Calculation Date (including any such Lease Contracts that have
been repurchased, removed or substituted during such Due Period),
divided by the Aggregate IPB on such Calculation Date (including
any such Lease Contracts that have been repurchased, removed or
substituted during such Due Period).
"Opinion of Counsel": A written opinion of outside counsel
who shall be reasonably satisfactory to the Trustee and MBIA and
which opinion shall comply with the applicable requirements of
Section 13.13 hereof.
"Outstanding": With respect to Certificates, as of any date
of determination, all Certificates theretofore authenticated and
delivered under this Agreement except:
(a) Certificates theretofore canceled by the Certificate
Registrar or delivered to the Certificate Registrar for
cancellation; and
(b) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered
pursuant to this Agreement, unless proof satisfactory
to the Trustee is presented that any such Certificates
are held by a bona fide purchaser;
provided, however, that for purposes of disbursing payments from
the Certificate Insurance Policies and in determining whether the
Holders of the requisite Outstanding Principal Amount of
Certificates have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Certificates
owned by the Transferor or any other obligor upon the
Certificates or any Affiliate of the Transferor or the Servicer
or such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only
Certificates which the Trustee knows to be so owned shall be so
disregarded.
"Outstanding Fixed Tranche Balance": With respect to any
Series of Class A Certificates as of any date of determination, a
principal amount equal to the positive difference between (i) the
sum of (a) the Initial Funding Amount for such Series and (b) the
aggregate of all Conversion Amounts for such Series and (ii) the
sum of (a) the aggregate Class A Principal Distribution Amounts
distributed to Certificateholders of such Series pursuant to
Section 12.02(d)(vi) hereof, and (b) the aggregate Additional
Principal Amounts distributed to Certificateholders of such
Series pursuant to Section 12.02(d)(x) hereof.
"Outstanding Floating Tranche Balance": With respect to any
Series of Class A Certificates, as of the applicable Delivery
Date, zero. Thereafter, on any date of determination, an amount
equal to the aggregate amount of all Fundings made with respect
to such Series through and including such date of determination
exclusive of the Funding with respect to such Series on the
Delivery Date, minus the aggregate amount of all Conversion
Amounts for such Series through and including such date of
determination.
"Outstanding Principal Amount": With respect to any
Outstanding Class A Certificate or Series of Class A Certificates
as of any date of determination, the sum of the Outstanding
Floating Tranche Balance for such Series and the Outstanding
Fixed Tranche Balance for such Series; and with respect to any
Outstanding Class B Certificate or Series of Class B
Certificates, the unpaid principal amount of such Certificate or
Class of Certificates.
"Overdue Payment": With respect to a Due Period and a Lease
Contract that is a Delinquent Lease Contract, all payments due in
a prior Due Period that the Servicer receives from or on behalf
of a Customer during the related Due Period on such Delinquent
Lease Contract, including any Servicing Charges.
"Paying Agent": The Trustee or any other Person that meets
the eligibility standards for the Trustee specified in Section
7.08 hereof and is authorized by the Transferor pursuant to
Section 7.16 hereof to pay the principal of, or interest on, any
Certificates on behalf of the Transferor.
"Payment Date": For each Series, the twentieth day of each
calendar month (or if such day is not a Business Day, the next
succeeding Business Day) commencing on the Initial Payment Date
for such Series.
"Person": Any individual, corporation, partnership,
association, joint-stock company, limited liability company,
trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision
thereof.
"Placement Agent": Rothschild Inc.
"Pool": A pool of Eligible Lease Contracts to be funded on
a Funding Date or any Delivery Date.
"Preference Claim": The meaning given in Section 8.01
hereof.
"Private Placement Memorandum" or "Final Private Placement
Memorandum": The Private Placement Memorandum, if any, related
to any direct or indirect offering of a Series of Certificates
and having the date specified in the applicable Supplement.
"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Pro Rata Share": With respect to:
(a) any distribution of the Class A Principal Distribution
Amount on any Series of Class A Certificates on any
Payment Date, a percentage, determined by dividing:
(i) the Class A Targeted Principal Distribution Amount
scheduled to be paid on such Series of Class A
Certificates, by
(ii) the aggregate Class A Targeted Principal
Distribution Amounts in respect of all Series of
Class A Certificates on such Payment Date;
(b) any distribution of interest on any Series of Class A
Certificates on any Payment Date, a percentage,
determined by dividing the amount of interest scheduled
to be paid on such Series of Class A Certificates by
the amount of interest scheduled to be paid on all
Series of Class A Certificates on such Payment Date;
(c) any payments of Additional Principal Amounts on any
Payment Date, a percentage determined by dividing:
(i) the decline in the related Series IPB since the
Calculation Date preceding the applicable Trigger
Event, by
(ii) the decline in the Aggregate IPB since the
Calculation Date preceding the applicable Trigger
Event;
(d) any distribution of the Class B Principal Distribution
Amount and the Class B Additional Return on any Series
of Class B Certificates on any Payment Date, a
percentage, determined by dividing:
(i) the Outstanding Principal Amount of such Series of
Class B Certificates, by
(ii) the aggregate Outstanding Principal Amount of all
Series of Class B Certificates.
"PUT Payments": A provision in a Lease Contract obligating
the lessee to purchase the related Equipment upon termination.
"Rating Agencies": Moody's and S & P.
"Record Date": The close of business on the last day of the
month preceding the applicable Payment Date, whether or not a
Business Day, except with respect to an Initial Payment Date, the
Record Date shall be the related Delivery Date.
"Recoveries": For any Due Period occurring after the date
on which any Lease Contract becomes a Defaulted Lease Contract
and with respect to such Defaulted Lease Contract, all payments
that the Servicer received from or on behalf of a Customer during
such Due Period in respect of such Defaulted Lease Contract or
from liquidation or re-leasing of the related Equipment,
including but not limited to Scheduled Payments, Overdue
Payments, Guaranty Amounts, and Insurance Proceeds.
"Redemption Account": The trust account or accounts created
and maintained pursuant to Section 12.02 hereof.
"Redemption Date": A date fixed pursuant to Section 10.01
hereof.
"Redemption Price": With respect to any Class of
Certificates being redeemed pursuant to Article Ten hereof, and
as of the related Redemption Date, the Outstanding Principal
Amount of such Class of Certificates, together with interest
accrued and unpaid thereon to but excluding the related
Redemption Date at the applicable Certificate Interest Rate
(exclusive of installments of interest and principal maturing on
or prior to such date, payment of which shall have been made or
duly provided for to the Holder of such Certificate on the
applicable Record Date or as otherwise provided in this
Agreement).
"Redemption Record Date": With respect to any redemption of
Certificates, a date fixed pursuant to Section 10.01 hereof.
"Reference Banks": For each Series of Class A Certificates,
unless otherwise specified in the applicable Supplement, four
leading banks selected by the Trustee that are engaged in
transactions in eurodollar deposits in the international
Eurocurrency market, each of which shall have an established
place of business in London.
"Registered Holder": The Person whose name appears on the
Certificate Register on the applicable Record Date or Redemption
Record Date.
"Reinvestment Income": Any interest or other earnings
earned on all or part of the Trust Estate.
"Related Series": As to each Series of Class B
Certificates, the Series of Class A Certificates which shall be
designated in the Supplement for such Series of Class B
Certificates as its "Related Series"; and as to each Series of
Class A Certificates, one or more Series of Class B Certificates
which have been designated as having such Series of Class A
Certificates as a "Related Series."
"Removal Price": With respect to any Lease Contract
repurchased by the Company pursuant to Sections 2.06 or 3.03 of
the Lease Acquisition Agreement, repurchased by any Seller
pursuant to a Lease Sale Agreement or removed by the Transferor
pursuant to Section 4.04(d) hereof, the sum of (a) the Implicit
Principal Balance (computed without giving effect to clauses (b)
and (c) of the definition of "Implicit Principal Balance") of the
related Lease Receivable on the Calculation Date on or
immediately preceding the date when the Lease Contract is removed
or repurchased, (b) any Scheduled Payments with respect to the
Lease Contract due on or prior to such Calculation Date but not
received through such Calculation Date, and (c) with respect to
the related Equipment, the amount, if any, recorded in the books
and records of the Transferor as the "unguaranteed residual."
"Required Audits": With respect to each Series of Class A
Certificates, the requirements set forth in the applicable
Supplement.
"Required Collateralization Amount": As of the Initial
Delivery Date, $1,639,954.70, and as of any date of
determination thereafter, the greatest of
(a) one minus the applicable Advance Rate multiplied
by the Aggregate IPB (including any Lease Contracts to
be purchased or funded and excluding any Lease
Contracts to be released pursuant to Section 10.05
hereof on such date of determination),
(b) the aggregate Implicit Principal Balance of the Lease
Contracts (including any Lease Contracts to be purchased or
funded on such date of determination and excluding any Lease
Contracts to be released pursuant to Section 10.05 hereof on
such date of determination) relating to the three Customers
whose Lease Contracts have the greatest remaining Implicit
Principal Balances, and
(c) the Floor Percentage multiplied by the Aggregate
Initial IPB (including any Lease Contracts to be purchased
or funded on such date of determination).
"Reset Date": Unless otherwise specified in the related
Supplement, during the Funding Period for each Series, (i) with
respect to First Period Interest, the second Business Day
preceding a Funding Date, (ii) with respect to the LIBOR Rate
(other than the calculation of the LIBOR Rate with respect to
First Period Interest), the second Business Day immediately
preceding the commencement of each Accrual Period for interest
paid on any Payment Date; provided, however, that if such date is
not both a Business Day and a London Banking Day, the Reset Date
shall be the first preceding day that is both a Business Day and
a London Banking Day and (iii) with respect to the Treasury Rate,
the Conversion Rate or the Fixed Rate, the Determination Date
preceding the related Conversion Date.
"Residual Proceeds": With respect to a Lease Contract that
is not a Defaulted Lease Contract and the related Equipment, the
net proceeds (including Insurance Proceeds) of any sale, re-lease
(including any lease renewal) or other disposition of such
Equipment or any periodic payment under the Lease Contract for
use of the Equipment after the initial term thereof.
"Responsible Officer": When used with respect to the
Trustee, any officer assigned to the Corporate Trust Department
(or any successor thereto), including any Vice President, Senior
Trust Officer, Trust Officer, Assistant Trust Officer, any
Assistant Secretary, any Trust Officer or any other Officer of
the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having
direct responsibility for the administration of this Agreement,
and also, with respect to a particular matter, any other officer,
to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Sale": The meaning specified in Section 6.18 hereof.
"Scheduled Expenses": On any Determination Date, the
Servicer Fee, the Back-up Servicer Fee, the MBIA Premium and the
Trustee Fee to be due on the next succeeding Payment Date.
"Scheduled Payment": With respect to a Payment Date and a
Lease Contract, the periodic payment (exclusive of any amounts in
respect of taxes and any PUT Payments or other balloon payments)
set forth in such Lease Contract due from the Customer in the
related Due Period, calculated without regard to any modification
granted pursuant to Section 3.01(b)(v) of the Servicing
Agreement.
"Seller": Any Person that has been approved in writing by
MBIA to sell Lease Contracts to the Transferor pursuant to a
Lease Sale Agreement and as to which MBIA has received such legal
opinions, certificates and any other documentation as MBIA may
reasonably request.
"Series": A separate Series of Certificates issued pursuant
to this Agreement, with the specific terms identified in the
applicable Supplement. Each Series may be comprised of either or
both Class A Certificates and Class B Certificates.
"Series IPB": With respect to any Series of Certificates,
the sum of the Implicit Principal Balances of all related Series
Lease Contracts.
"Series Lease Contracts": For each Series of Class A
Certificates and the Related Series of Class B Certificates, the
Lease Contracts listed on the related Series Lease Schedule.
"Series Lease Schedule": For each Series of Certificates,
the list of Lease Contracts and Lease Receivables attached to the
applicable Supplement for such Series of Certificates, together
with and as amended by all related Amended Lease Schedules, each
of which shall include with respect to each Lease Contract:
(a) a number identifying the Lease Contract, (b) the Implicit
Principal Balance, (c) the number identifying the Customer,
(d) the State of the Customer's billing address, (e) the original
and remaining term, (f) the Scheduled Payment and the frequency
thereof, (g) the Equipment type, (h) the zip code of the
Customer's billing address, (i) the broker of the Lease Contract
(j) whether such Lease Contract is a "true lease" or a Loan
Contract, (k) the amount of any PUT Payment and (l) any
additional items specified in the related Supplement.
"Servicer": Initially, the Company, and thereafter any
successor Servicer appointed pursuant to Section 6.02 of the
Servicing Agreement.
"Servicer Advance": The meaning set forth in Section 3.04
of the Servicing Agreement.
"Servicing Officers": The persons listed on a certificate
of the Servicer from time to time delivered by the Servicer to
the Transferor and the Trustee.
"Servicer Fee": $8 per Lease Contract per Scheduled Payment
on such Lease Contract, the amount payable to the Servicer as the
Servicer Fee on each Payment Date. The Servicer Fee shall not
include the Additional Servicer Fee.
"Servicing Agreement": The Servicing Agreement dated as of
November 1, 1996 by and among the Servicer, the Transferor, the
Back-up Servicer and the Trustee, as amended or supplemented from
time to time in accordance with the terms thereof.
"Servicing Charges": The sum of (a) all late payment
charges paid by Customers on Lease Contracts that are Delinquent
Lease Contracts after payment in full of any Scheduled Payments
due in a prior Due Period and Scheduled Payments for the related
Due Period and (b) any other incidental charges or fees received
from a Customer, including but not limited to, late fees,
collection fees and bounced check charges.
"61-90 Day Delinquency Rate": For any Due Period, the sum
of the Implicit Principal Balances as of the Calculation Date
occurring in such Due Period of all Lease Contracts that are more
than 60 days and less than 91 days delinquent, as of such
Calculation Date (including any such Lease Contracts that have
been repurchased, removed or substituted during such Due Period),
divided by the Aggregate IPB on such Calculation Date (including
any such Lease Contracts that have been repurchased, removed or
substituted during such Due Period).
"S & P": Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc., and its successors in interest.
"State": Any state of the United States of America and, in
addition, the District of Columbia and Puerto Rico.
"Stated Maturity": With respect to any Series of Class A
Certificates, the meaning specified in the applicable Supplement.
"Substitute Lease Contract": The meaning specified in the
Lease Acquisition Agreement.
"Supplement": With respect to any Series, the supplement to
this Agreement in the form attached as Exhibit B hereto for any
Series of Class A Certificates and for any Series of Class B
Certificates and pursuant to which the terms of such Series are
specified as provided in Section 2.02 hereof.
"Tangible Net Worth": The excess of (a) the tangible assets
of the Servicer and any subsidiaries calculated in accordance
with GAAP, as reduced by adequate reserves in each case where
reserves are proper, over (b) all indebtedness (including
subordinated debt) of the Servicer and its subsidiaries;
provided, however, that (i) in no event shall there be included
in the above calculation any intangible assets such as patents,
trademarks, trade names, copyrights, licenses, goodwill,
organizational costs, advances or loans to, or receivables from,
directors, officers, employees or subsidiaries (other than
subsidiaries that are special purpose entities owned by the
Servicer or any subsidiary thereof), prepaid assets, amounts
relating to covenants not to compete, pension assets, deferred
charges or treasury stock or any securities of the Servicer or
any other securities unless the same are readily marketable in
the United States of America or entitled to be used as a credit
against federal income tax liabilities, (ii) securities included
as such intangible assets shall be taken into account at their
current market price or cost, whichever is lower, and (iii) any
write-up in the book value of any assets shall not be taken into
account.
"Transaction Documents": The Agreement, the Servicing
Agreement, the Lease Acquisition Agreement, the Certificates, the
Insurance Agreements, the Certificate Insurance Policies and the
Certificate Funding Administration Agreements.
"Transaction Documents Date": With respect to each Series
of Certificates, the meaning specified in the applicable
Supplement.
"Transferor": GF Funding Corp. II, and all successors
thereto in accordance with the terms hereof.
"Transferor Certificate": An Officer's Certificate
delivered by the Transferor substantially in the form of Exhibit
D hereto.
"Transferor Order" and "Transferor Request": A written
order or request signed in the name of the Transferor by its
President or a Vice President, and delivered to the Trustee.
"Transferor Payment Office": The account indicated in the
instructions provided by the Transferor to each Holder of a
Certificate in its Funding Period, as such instructions may be
amended from time to time upon two Business Days' written notice
from the Transferor to each such Holder.
"Transition Cost": Any documented expenses reasonably
incurred by a successor Servicer, the Trustee or MBIA in
connection with a transfer of servicing from the Servicer to a
successor Servicer as successor Servicer pursuant to Section 6.02
of the Servicing Agreement, but not to exceed $50,000.
"Treasury Rate": With respect to each Reset Date preceding
each Conversion Date, a per annum rate equal to the yield on
actively traded U.S. government securities with a maturity
corresponding most closely to the Weighted Average Life of the
related Initial Pool or related Aggregate Interval Pool, as
applicable, as set forth on page "USD" of the Bloomberg Financial
Markets Screen as set forth on page "USD" of the Bloomberg
Financial Markets Screen (or if not available, any other
nationally recognized trading screen reporting on-line intra-day
trading in United States government securities) at 11:00 a.m.
(New York time) on any date of determination, or in the event no
such nationally recognized trading screen is available, the
arithmetic mean of the yields for the two columns under the
heading "Week Ending" published in the Statistical Release under
the caption "Treasury Constant Maturities" for two year
maturities.
"Trigger Event": The occurrence of any one of the following
events, and the declaration by MBIA, or if an MBIA Default or
Termination has occurred and is continuing, by the Controlling
Holders, that such occurrence shall constitute a Trigger Event:
(a) commencing with the fourth Determination Date after the
Initial Delivery Date, the average of the Annualized
Gross Default Rates for the three consecutive prior Due
Periods was equal to or greater than 5.5%;
(b) the Cumulative Gross Default Rate exceeds 7.5%;
(c) commencing with the fourth Determination Date after the
Initial Delivery Date, the average of the 61-90 Day
Delinquency Rates for the three consecutive prior Due
Periods was equal to or greater than 2%;
(d) the Net Worth Requirement is not met;
(e) the Transferor or the Trust Estate becomes an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(f) the occurrence of a Servicer Event of Default;
(g) either ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or both of the following
employees, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇ (or the
successor chief financial officer if MBIA has consented
to such person in writing), terminate or shall have
terminated their employment with the Servicer or any of
its Affiliates or die;
(h) an Event of Default occurs or the Company or any
Material Affiliate shall be in default under, or in
violation of any covenant or obligation under any loan
agreement, such that the lender under such loan
agreement would be authorized, pursuant to the terms of
such agreement and upon the expiration of any cure
period or grace period with respect to such violation
or default, to demand immediate payment by the Company
or such Material Affiliate, as applicable, of 10% or
more of the aggregate total recourse debt of the
Company and all affiliates of the Company, and such
default or violation shall not have been cured,
remedied or waived in writing by such lender after 90
days, counting from the initial date of the violation
or default and not from the expiration of any
applicable cure or grace period;
(i) any payment by MBIA under a Certificate Insurance
Policy; or
(j) the occurrence of any other event designated as an
additional Trigger Event set forth in any Supplement.
"Trust": The GF Funding Corp. II Master Trust created
hereunder.
"Trust Estate": The meaning specified in the Conveyance
Clause of this Agreement.
"Trustee": Norwest Bank Minnesota, National Association,
until a successor Person shall have become the Trustee pursuant
to the applicable provisions of this Agreement, and thereafter
"Trustee" shall mean such successor Person.
"Trustee Fee": The fee payable on each Payment Date to the
Trustee in consideration for the Trustee's performance of its
duties pursuant to this Agreement as Trustee, in an amount equal
to the product of one-twelfth of the Trustee Fee Rate and the
Outstanding Principal Amount of all Series of Class A
Certificates immediately following the preceding Payment Date,
provided, however, with respect to the Initial Payment Date, the
Trustee Fee shall equal $150.51.
"Trustee Fee Rate": .05% per annum.
"Vice President": With respect to the Transferor or the
Trustee, any vice president, whether or not designated by a
number or a word or words added before or after the title "vice
president."
"Weighted Average Life": The weighted average life to
maturity of the Lease Contracts delivered to the Trustee on the
applicable Delivery Date or in a Floating Interval.
ARTICLE TWO
THE CERTIFICATES
Section 2.01 Form Generally.
The Class A Certificates and the certificates of
authentication shall be in substantially the form set forth in
Exhibit A-1 hereto and the Class B Certificates shall be in
substantially the form set forth in Exhibit A-2 hereto, in each
case with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this
Agreement, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon,
as may, consistently herewith, be determined by the officers
executing such Certificates, as evidenced by their execution of
the Certificates.
The definitive Certificates shall be typewritten, printed,
lithographed or engraved or produced by any combination of these
methods on steel engraved borders or may be produced in any
manner acceptable to the Trustee and the initial purchasers of
the Certificates, all as determined by the officers executing
such Certificates, as evidenced by their execution of such
Certificates.
Section 2.02 Series; Denomination.
(a) This Agreement provides for the issuance by the
Transferor from time to time of one or more Series of
Certificates consisting of one or both Class A Certificates and
Class B Certificates, all subject to and in accordance with the
terms of this Agreement and the applicable Supplement and
provided that no Series of Class A Certificates may be issued
while another Series of Class A Certificates is in its Funding
Period. Each Certificate in a Series shall bear upon the face
thereof the designation selected for the Series to which it
belongs. All Series of Certificates of each Class shall be
identical except for differences among the Series for Certificate
Interest Rates, Stated Maturities, Expected Maturity Dates and
the other items identified below.
Each Series of Class A Certificates issued under this
Agreement shall in all respects represent a fractional undivided
interest in the Trust Estate, pari passu with all other Series of
Class A Certificates (although the Certificate Insurance Policies
are issued specific to each Series of Class A Certificates), and
shall be entitled to the benefits hereof without preference,
priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and
provisions of this Agreement and the applicable Supplement.
Each Series of Class B Certificates issued under this
Agreement shall in all respects represent a fractional undivided
interest in the Trust Estate, pari passu with all other Series of
Class B Certificates and subordinate to all Series of Class A
Certificates and to certain other payments as provided herein
(although the Class B Certificates are not secured by and do not
have the benefit of any Certificate Insurance Policies or any
proceeds therefrom), and shall be entitled to the benefits hereof
without preference, priority or distinction on account of the
actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Agreement and
the applicable Supplement. One or more Series of Class B
Certificates may be issued with respect to any Related Series of
Class A Certificates with the prior written consent of MBIA and
subject to the other conditions of Section 4.02(d) hereof.
The rights of the Holders of the Class B Certificates to
receive payments of principal and interest in respect of the
Class B Certificates on any Payment Date shall be subordinated to
the rights of the Holders of Class A Certificates to receive
payments of principal and interest in respect of the Class A
Certificates on such Payment Date and certain other payments as
set forth in Section 12.02(d).
The Supplement with regard to a Series of Certificates shall
establish, without limitation, the following terms and provisions
of each Class of Certificates of such Series, each of which the
Transferor shall determine in authorizing the issuance of any
Series:
(i) designation of the Series and Class, and with
respect to each Series of Class B Certificates,
the applicable Related Series of Class A
Certificates;
(ii) the applicable Delivery Date, Initial Payment
Date, Accrual Date, the Transaction Documents
Date, the Series Lease Schedule, if applicable,
the date of the related Private Placement
Memorandum, if applicable, and, for Class A
Certificates only, the applicable Cut-Off Date,
Floating Interval, Expected Funding Termination
Date and the Initial Funding Amount, and, for
Class B Certificates only, the definition of the
applicable Class B Additional Return;
(iii) the maximum aggregate principal amount of
Certificates of each Class of such Series that may
be issued, including, without limitation, the
Maximum Series Amount and, for Class A
Certificates only, the maximum amount that can be
outstanding under the Floating Rate Tranche if
different from the Maximum Series Amount;
(iv) with respect to a Series of Class B Certificates,
the Class B Certificate Interest Rate, and with
respect to a Series of Class A Certificates, the
terms used in the definition of Fixed Rate and
Floating Rate that require further specification
in the applicable Supplement, including without
limitation, the applicable Initial Fixed Rate, the
Fixed Rate Spread and the Floating Rate Spread;
(v) any Initial Cash Deposit and any Cash Collateral
Account Deposit for such Series;
(vi) the Stated Maturity for each Series of Class A
Certificates and the Expected Maturity of each
Series of Class B Certificates; and
(vii) if applicable, the Certificate Insurance
Policy number.
The applicable Insurance Agreement for each Series of
Class A Certificates shall contain the terms relating to the MBIA
Premium and the MBIA Premium Rate for such Series of Class A
Certificates.
(b) The aggregate principal amount of Certificates of each
Class of each Series which may be authenticated and delivered
under this Agreement shall be the Maximum Series Amount, except
for Certificates authenticated and delivered upon registration of
transfer or in exchange for or in lieu of, other Certificates
pursuant to Sections 2.04, 2.05, 2.07 or 9.05 hereof. The
Certificates shall be issuable only as registered Certificates
without coupons in denominations of at least $250,000 and any
amount in excess thereof; provided, however, that, the foregoing
shall not restrict or prevent the transfer in accordance with
Sections 2.05 and 2.06 hereof of any Certificate with a remaining
Outstanding Principal Amount of less than $250,000.
Section 2.03 Formation, Execution, Authentication,
Delivery and Dating.
(a) By its conveyance of the Trust Estate to the Trustee as
set forth in the Conveyance Clause hereof, the Transferor hereby
establishes the Trust in exchange for $250,000 initial principal
amount of "Class B Lease-Backed Certificates, Series 1996-1"
which are being issued on the Initial Delivery Date pursuant to a
Supplement to this Agreement, dated as of November 1, 1996, among
the Transferor, the Servicer, the Indenture Trustee and the Back-
up Servicer, such other Class B Certificates as may be issued to
the Transferor from time to time hereafter pursuant to the terms
hereof and all other rights of the Transferor set forth herein.
On the Initial Delivery Date and from time to time thereafter,
Certificates shall be issued in accordance with the terms hereof
by the Trust and authenticated by the Trustee upon the written
order of the Transferor.
(b) The Certificates shall be executed on behalf of the
Transferor by its President or one of its Vice Presidents under
its corporate seal imprinted or otherwise reproduced thereon.
The signature of these officers on the Certificates must be
manual.
(c) Certificates bearing the manual signatures of
individuals who were at any time the proper officers of the
Transferor shall bind the Transferor, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication or delivery of such Certificates or did not
hold offices at the date of authentication or delivery of such
Certificates.
(d) Each Certificate shall bear on its face the applicable
Delivery Date and be dated as of the date of its authentication.
(e) No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose, unless
there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the
Trustee or by any Authenticating Agent by the manual signature of
one of its authorized officers, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence,
that such Certificate has been duly authenticated and delivered
hereunder.
Section 2.04 Temporary Certificates.
Pending the preparation of definitive Certificates, the
Transferor may execute, and upon Transferor Order, the Trustee
shall authenticate and deliver, temporary Certificates which are
printed, lithographed, typewritten, mimeographed or otherwise
produced, in any denomination, containing the same terms and
representing the same rights as the definitive Certificates in
lieu of which they are issued.
If temporary Certificates are issued, the Transferor will
cause definitive Certificates to be prepared without unreasonable
delay. After the preparation of definitive Certificates, the
temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of the temporary Certificates at the
office or agency of the Transferor to be maintained as provided
in Section 11.02(m) hereof, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Certificates, the Transferor shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more
definitive Certificates of any authorized denominations and of a
like initial aggregate principal amount and Stated Maturity or
Expected Maturity, as applicable. Until so exchanged, the
temporary Certificates shall in all respects be entitled to the
same benefits under this Agreement as definitive Certificates.
Section 2.05 Registration, Registration of Transfer and
Exchange.
(a) The Transferor shall cause to be kept at an office or
agency to be maintained by the Transferor in accordance with
Section 11.02(m) hereof a register (the "Certificate Register"),
in which, subject to such reasonable regulations as it may
prescribe, the Transferor shall provide for the registration of
Certificates and the registration of transfers of Certificates.
Norwest Bank Minnesota, National Association, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, is hereby
appointed "Certificate Registrar" for the purpose of registering
Certificates and transfers of Certificates as herein provided.
The Trustee shall have the right to examine the Certificate
Register at all reasonable times and to rely conclusively upon a
Certificate of the Certificate Registrar as to the names and
addresses of the Holders of the Certificates and the principal
amounts and numbers of such Certificates as held.
(b) Upon surrender for registration of transfer of any
Certificate at the office or agency of the Transferor to be
maintained as provided in Section 11.02(m) hereof and subject to
the conditions set forth in Section 2.06 hereof, the Transferor
shall execute, and the Trustee or its agent shall authenticate
and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized
denominations, and of a like aggregate principal amount, Class,
Series and Stated Maturity or Expected Maturity, as applicable.
(c) At the option of the Holder, Certificates of a Series
may be exchanged for other Certificates of such Series of any
authorized denominations and of a like aggregate principal
amount, Class and Stated Maturity or Expected Maturity, as
applicable, upon surrender of the Certificates to be exchanged at
such office or agency. Whenever any Certificates are so
surrendered for exchange, the Transferor shall execute, and the
Trustee or its agent shall authenticate and deliver, the
Certificates which the Certificateholder making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of
transfer or exchange of Certificates shall be the valid
obligations of the Transferor, evidencing the same debt and
entitled to the same benefits under this Agreement, as the
Certificates surrendered upon such registration of such transfer
or exchange.
Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Transferor
or the Certificate Registrar) be duly endorsed or be accompanied
by a written instrument of transfer in form satisfactory to the
Transferor and the Certificate Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the
Transferor may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Certificates, other than exchanges pursuant to Section 2.04 or
9.05 hereof not involving any registration of transfer.
Section 2.06 Limitation on Transfer and Exchange.
(a) The Certificates have not been registered or qualified
under the Securities Act of 1933, as amended (the "1933 Act") or
the securities laws of any state. No transfer of any Certificate
shall be made unless that transfer is made in a transaction which
does not require registration or qualification under the 1933 Act
or under applicable state securities or "Blue Sky" laws. No
transfer of a Certificate may be made while such Certificate is
in its Funding Period without the consent of the Transferor. In
the event that a transfer is to be made without registration or
qualification, such Certificateholder's prospective transferee
shall either (i) deliver to the Trustee an Investment and
Assumption Letter or (ii) deliver to the Trustee an opinion of
counsel that the transfer is exempt from such registration or
qualification (which opinion shall not be at the expense of the
Transferor, the Trustee, the Servicer or the Trust Estate) and,
in the case of Class A Certificates in their Funding Period,
together with a written agreement of such proposed transferee to
assume the Funding obligations of such Certificateholder, in a
form substantially similar to paragraph 7 of the Investment and
Assumption Letter. Neither the Transferor nor the Trustee is
obligated to register or qualify the Certificates under the 1933
Act or any other securities law. Any such Holder desiring to
effect such transfer shall, and does hereby agree to, indemnify
the Trustee, MBIA and the Transferor against any liability, cost
or expense (including attorneys' fees) that may result if the
transfer is not so exempt or is not made in accordance with such
federal and state laws. The Trustee shall promptly, after
receipt of such information as is set forth in the next
succeeding sentence, furnish to any Holder, or any Prospective
Owner designated by a Holder, the information required to be
delivered to Holders and Prospective Owners of Certificates in
connection with resales of the Certificates to permit compliance
with Rule 144A of the 1933 Act in connection with such resales.
Such information shall be provided to the Trustee by the
Servicer.
(b) No acquisition or transfer of a Certificate or any
interest therein may be made to any "Benefit Plan Investor" (as
defined in 29 C.F.R. 2510.3-101) or to any person who is
directly or indirectly purchasing such Certificates or an
interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of, such a Benefit Plan Investor unless the
Trustee is provided with evidence that establishes to the
satisfaction of the Trustee that (i) either no "prohibited
transaction" under ERISA or the Code will occur in connection
with such prospective acquiror's or transferee's acquisition and
holding of the Certificates or that the acquisition and holding
of the Certificates by such prospective acquiror or transferee is
subject to a statutory or administrative exemption, and (ii) that
the prospective acquiror's or transferee's acquisition and
holding will not subject the Transferor, the Servicer, the
Trustee or the Certificate Funding Administrator to any
obligation or liability (including obligations or liabilities
under ERISA or Section 4975 of the Code) in addition to those
explicitly undertaken in the Transaction Documents.
(c) No acquisition or transfer of a Class A Certificate or
any interest therein may be made during such Certificate's
Funding Period without the prior written consent of the
Transferor. Unless otherwise specified in the related
Supplement, no transfer of a Class B Certificate or any interest
therein may be made without the prior written consent of the
Transferor, except that any transfer of a Class B Certificate by
the Transferor shall require the consent of Holders of a majority
of the remaining Outstanding Principal Amount of the Class B
Certificates of all Series.
(d) The Trustee shall have no liability to the Trust Estate
or any Certificateholder arising from a transfer of any such
Certificate in reliance upon a certification described in this
Section 2.06.
Section 2.07 Mutilated, Destroyed, Lost or Stolen
Certificate.
If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and MBIA
such security or indemnity as may be required by the Trustee to
save the Transferor, the Trustee and MBIA or any agent of any of
them harmless, then, in the absence of notice to the Transferor
or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Transferor shall execute
and, upon its request, the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of the
same tenor, Series, initial principal amount and Stated Maturity
or Expected Maturity, as applicable, bearing a number not
contemporaneously outstanding. If after the delivery of such new
Certificate, a bona fide purchaser of the original Certificate in
lieu of which such new Certificate was issued presents for
payment such original Certificate, MBIA, the Transferor and the
Trustee shall be entitled to recover such new Certificate from
the person to whom it was delivered or any person taking
therefrom, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expenses incurred by MBIA,
the Transferor or the Trustee or any agent of any of them in
connection therewith. If any such mutilated, destroyed, lost or
stolen Certificate shall have become or shall be about to become
due and payable, or shall have become subject to redemption in
full, instead of issuing a new Certificate, the Transferor may
pay such Certificate without surrender thereof, except that any
mutilated Certificate shall be surrendered.
No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the
Transferor may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Certificates, other than exchanges pursuant to Section 2.04 or
9.05 hereof not involving any registration of transfer. Upon the
issuance of any new Certificate under this Section, the
Transferor may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Certificate issued pursuant to this Section 2.07,
in lieu of any destroyed, lost or stolen Certificate, shall
constitute an original additional contractual obligation of the
Transferor, whether or not the destroyed, lost or stolen
Certificate shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Certificates duly issued
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 2.08 Payment of Principal and Interest; Principal
and Interest Rights Preserved.
(a) For each applicable Accrual Period, the Class A
Certificates shall bear interest on the Outstanding Fixed Tranche
Balance and on the Outstanding Floating Tranche Balance, in each
case as of the first day of such Accrual Period, at the
applicable Fixed Rate and the Floating Rate, respectively. The
Fixed Rate and the Floating Rate shall be calculated on the last
applicable Reset Date preceding the Accrual Period in which the
Fixed Rate or the Floating Rate, as applicable, was last
calculated for each Series, until the last day preceding the
Final Payment Date and (to the extent that the payment of such
interest shall be legally enforceable) on any overdue installment
of interest from the date such interest became due and until
fully paid. Interest for each Accrual Period on each Fixed Rate
Tranche shall be calculated on the basis of a 360-day year
consisting of 12 months of 30 days each, and interest on each
Floating Rate Tranche shall be calculated on the basis of a 360
day year and actual days elapsed. Interest shall be due and
payable in arrears on each Payment Date, with each payment of
interest calculated as described above on the Outstanding Fixed
Tranche Balance and the Outstanding Floating Tranche Balance of
the Certificates immediately following the preceding Payment Date
or on the applicable Delivery Date, if there has not been any
preceding Payment Date. Notwithstanding the foregoing, with
respect to any Fundings under the related Floating Rate Tranche
occurring since the preceding Payment Date, interest on the
related Funding Amounts from the related Funding Date through the
end of the Accrual Period in which such Funding occurs shall be
paid in the amount of the applicable First Period Interest at the
time of such Funding as provided in Section 3.05 hereof. Such
First Period Interest on the Funding Amount shall be determined
on the Funding Date at the rate established on the applicable
Reset Date. In making any such interest payment, if the interest
calculation with respect to a Certificate shall result in a
portion of such payment being less than $0.01, then such payment
shall be decreased to the nearest whole cent, and no subsequent
adjustment shall be made in respect thereof.
(b) The Class B Certificates shall bear interest on the
Outstanding Principal Amount thereof for each applicable Accrual
Period at the Class B Certificate Interest Rate for such Series
in effect at the beginning of the related Accrual Period, until
the last day preceding the Payment Date on which its principal
balance has been reduced to zero and (to the extent provided for
in the related Supplement and to the extent that the payment of
such interest shall be legally enforceable) on any overdue
installment of interest from the date such interest became due
until fully paid and, unless otherwise specified in the related
Supplement, calculated on the basis of a 360-day year consisting
of 12 months of 30 days each. The Class B Certificates shall
also be entitled to such Class B Additional Returns as specified
in the related Supplement. Interest shall be due and payable in
arrears on each Payment Date, with each payment of interest
calculated as described above on the Outstanding Principal Amount
of the Class B Certificates immediately following the preceding
Payment Date or on the applicable Delivery Date, if there has not
been any preceding Payment Date; provided that the payment of
interest on the Class B Certificates is subordinate to the
payment of interest and principal on the Class A Certificates and
to certain other payments as specified in Section 12.02(d) and
that interest, principal and other amounts are due and payable on
the Class B Certificates only to the extent there are funds
available therefor on such Payment Date in accordance with the
priorities set forth in Section 12.02 (d). In making any such
interest payment, if the interest calculation with respect to a
Certificate shall result in a portion of such payment being less
than $0.01, then such payment shall be decreased to the nearest
whole cent, and no subsequent adjustment shall be made in respect
thereof.
(c) The principal of each Certificate shall be payable in
installments ending no later than the applicable Stated Maturity
or Expected Maturity thereof unless such Certificate becomes due
and payable at an earlier date by declaration of acceleration,
call for redemption or otherwise. All reductions in the
principal amount of a Certificate effected by payments of
installments of principal made on any Payment Date shall be
binding upon all future Holders of such Certificate and of any
Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, whether or not such
payment is noted on such Certificate. Each installment of
principal payable on the Class A Certificates shall be in an
amount equal to the Class A Principal Distribution Amount and the
Additional Principal Amount, if any, available to be paid in
accordance with the priorities of Section 12.02(d) hereof, except
that at the Stated Maturity of any Series of Class A
Certificates, the outstanding principal amount of such Class A
Certificates shall be paid in full prior to the allocation of any
other payments of principal to any other Series of Certificates
on such Payment Date. Each installment of principal payable on
the Class B Certificates shall be in an amount equal to the
Class B Principal Distribution Amount and Holders of the Class B
Certificates shall be entitled to the applicable Class B
Additional Return; provided that the payment of the Class B
Principal Distribution Amount and the Class B Additional Return
shall be subordinate to the payments of principal and interest on
the Class A Certificates and to certain other payments in
accordance with Section 12.02(d) hereof. The principal payable
on the Class A Certificates of any Series shall be paid on each
Payment Date beginning on the first Payment Date in the
applicable Amortization Period and ending on the applicable Final
Payment Date, and the principal payable on the Class B
Certificates of any Series shall be paid on each Payment Date
beginning on the first Payment Date in the Amortization Period
for the applicable Related Series of Class A Certificates, or, if
such Series of Class B Certificates is issued after such first
Payment Date, beginning on the first Payment Date after issuance
unless otherwise specified in the related Supplement and ending
on the applicable Final Payment Date. All payments of principal
with respect to all of the Certificates of any Class of a Series,
shall be made on a pro rata basis based upon the ratio that the
Outstanding Principal Amount of a Certificate bears to the
Outstanding Principal Amount of all Certificates of such Class of
such Series; provided, however, that if as a result of such
proration a portion of such principal would be less than $.01,
then such payment shall be increased to the nearest whole cent,
and such portion shall be deducted from the next succeeding
principal payment.
(d) The principal, interest and any other amounts paid on
the Certificates are payable by check mailed by first-class mail
to the Person whose name appears as the Registered Holder of such
Certificate on the Certificate Register at the address of such
Person as it appears on the Certificate Register or by wire
transfer in immediately available funds to the account specified
in writing to the Trustee by such Registered Holder at least five
Business Days prior to the Record Date for the Payment Date on
which wire transfers will commence, in such coin or currency of
the United States of America as at the time of payment is legal
tender for the payment of public and private debts. Except as
set forth in the final sentence of this Section 2.08(d), all
payments on the Certificates shall be paid without any
requirement of presentment. The Transferor shall notify the
Person in whose name a Certificate is registered at the close of
business on the Record Date next preceding the Payment Date on
which the Transferor expects that the final installment of
principal of such Certificate will be paid that the Transferor
expects that such final installment will be paid on such Payment
Date. Such notice shall be mailed no later than the tenth day
prior to such Payment Date and shall specify the place where such
Certificate may be surrendered. Funds representing any such
checks returned undeliverable shall be held in accordance with
Section 7.16 hereof. Each Certificateholder shall surrender its
Certificate to the Trustee prior to payment of the final
installment of principal of such Certificate.
(e) Notwithstanding any of the foregoing provisions with
respect to payments of principal of and interest on the
Certificates, if the Certificates have become or been declared
due and payable following an Event of Default and such
acceleration of maturity and its consequences have not been
rescinded and annulled, then payments of principal of and
interest on such Certificates shall be made in accordance with
Section 6.08 hereof.
(f) Each Holder of a Certificate, by acceptance of its
Certificate, agrees that during the term of this Agreement and
for one year and one day after the termination hereof, such
Holder or any Affiliate thereof will not file any involuntary
petition or otherwise institute any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other
proceeding under any federal or state bankruptcy or similar law
against the Transferor.
(g) The Certificates are payable only out of the Trust
Estate and do not represent recourse obligations of the
Transferor, the Servicer or any affiliate thereof or any
successor thereto.
Section 2.09 Persons Deemed Owner.
Prior to due presentment for registration of transfer of any
Certificate, the Transferor, MBIA, the Trustee and any agent of
the Transferor, MBIA or the Trustee shall treat the Person in
whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving payments of principal of
and interest on such Certificate and for all other purposes
whatsoever, whether or not such Certificate be overdue, and
neither the Transferor, MBIA, the Trustee nor any agent of the
Transferor, MBIA or the Trustee shall be affected by notice to
the contrary.
Section 2.10 Cancellation.
All Certificates surrendered to the Trustee for payment,
registration of transfer or exchange (including Certificates
surrendered to any Person other than the Trustee which shall be
delivered to the Trustee) shall be promptly canceled by the
Trustee. No Certificates shall be authenticated in lieu of or in
exchange for any Certificates canceled as provided in this
Section 2.10, except as expressly permitted by this Agreement.
All canceled Certificates held by the Trustee shall be disposed
of by the Trustee as is customary with its standard practice.
Section 2.11 Tax Treatment.
The Transferor has structured this Agreement and the
Certificates with the intention that the Class A Certificates
qualify under applicable tax laws as indebtedness secured by the
Trust Estate. The Transferor and the Class B Certificateholders
further intend that the Trust formed hereby be treated as a
partnership, with the assets of the partnership including all of
the assets comprising the Trust Estate, the partners of the
partnership being the Class B Certificateholders and the
Transferor, and the Class A Certificates being nonrecourse debt
of such partnership. The Transferor, the Trustee, the Servicer,
MBIA and each Certificateholder, by acceptance of its Certificate
(and any Person that is a beneficial owner of any interest in a
Certificate, by virtue of such Person's acquisition of a
beneficial interest therein) agree to report the transactions
contemplated hereby in accordance with such stated intentions
unless and until determined to the contrary by an applicable
taxing authority. In connection therewith, the Transferor shall
maintain capital accounts and make partnership allocations in
accordance with section 704 of the Code. In addition, the
Transferor agrees that it will hold at least 1% and not more than
80%, by Outstanding Principal Amount, of each Series of Class B
Certificates issued and outstanding at any time. The Transferor
is hereby designated as the "tax matters partner" of the Trust.
Section 2.12 Dissolution upon Bankruptcy, etc. of
Transferor.
(a) Promptly after the occurrence of any Dissolution Event
with respect to the Transferor, (i) the Transferor shall give the
Trustee, MBIA and the Certificateholders written notice of such
Dissolution Event, and (ii) if the Trustee receives notice of
such Dissolution Event other than from the Transferor, it shall
give prompt written notice to MBIA, and the Certificateholders of
the occurrence of such event; provided, however, that any failure
to give a notice required by this sentence shall not prevent or
delay, in any manner, a termination of the Trust pursuant to
subsection (b) of this Section 2.12.
(b) If a Dissolution Event shall occur, the Trustee shall
retain for the benefit of the Certificateholders and MBIA, all
remedies available at law or under this Agreement and none of the
liens or security interests granted pursuant to this Agreement
shall be extinguished, released, terminated or impaired by the
same; rather, such liens and security interests shall continue to
encumber the Trust Estate until all principal and interest on the
Certificates representing the beneficial interests in the Trust
Estate is paid in full and any other amounts required to be paid
by the Trust hereunder are so paid. In any case however, subject
to the following, if a Dissolution Event occurs with respect to
the Transferor, the Trust shall be terminated in accordance with
this Section ninety (90) days after the date of such Dissolution
Event, unless, before the end of such 90-day period, the Trustee
shall have received written instructions from MBIA (so long as
the Insurance Agreement remains in effect and there is no MBIA
Default or Termination) and the Class B Certificateholders (not
including the Transferor), to the effect that such parties
disapprove of the liquidation of the Lease Contracts and
termination of the Trust and providing for the appointment of a
successor to the Transferor. If authorization to continue the
Trust Estate is not received, and the Insurance Agreement is
still in effect, the Trust Estate shall not be sold, but the
Trustee shall adopt a plan of dissolution acceptable to MBIA that
provides for the appointment of a conservator, who shall be
acceptable to MBIA, and shall make collections on the Lease
Contracts and the other assets of the Trust Estate, for
distribution in accordance with the terms of and priority of
payment set forth in this Agreement. Otherwise, the Trustee
shall promptly sell the assets of the Trust Estate in a
commercially reasonable manner and on commercially reasonable
terms. The proceeds of such a sale shall be treated as
collections under this Agreement.
ARTICLE THREE
FUNDINGS; CONVERSIONS
Section 3.01 Fundings.
Subject to satisfaction of the conditions precedent set
forth in Section 3.03 hereof and Eligible Lease Contracts being
available to be acquired pursuant to the Lease Acquisition
Agreement or a Lease Sale Agreement, during the Funding Period
for each Series of Class A Certificates the Transferor shall
acquire additional Pools pursuant to the Lease Acquisition
Agreement or a Lease Sale Agreement with the proceeds of a
Funding.
Section 3.02 Funding Amounts.
The Funding Amount for a Pool acquired on a Funding Date
shall be determined by the Servicer on behalf of the Transferor
and confirmed by the Certificate Funding Administrator and the
Trustee and shall be reflected in the Funding Report with respect
to Lease Contracts identified on the related Amended Lease
Schedule attached to the Transferor Certificate and the Company
Certificate for such Funding. Each additional Pool shall become
subject to this Agreement pursuant to the Transferor's
Certificate and the related Lease Contract Files shall be held by
the Trustee as provided herein.
Section 3.03 Procedure for Fundings.
(a) Conditions Precedent. Each Funding is subject to the
satisfaction of the following conditions precedent on the
relevant date specified below:
(i) three Business Days advance notification by the
Servicer to the Trustee, MBIA and the Certificate Funding
Administrator (by telephone or in writing) of a request for
a Funding to occur;
(ii) no later than 11:00 a.m. (New York time) the
second Business Day immediately prior to the requested
Funding Date, the Transferor shall have delivered to the
Certificate Funding Administrator and the Trustee, by a
diskette or electronic transfer, a list of the proposed
Lease Contracts to be funded, and providing for each such
Lease Contract all information required to be provided in
the Amended Lease Schedule as provided in the definition
thereof;
(iii) the delivery by the Transferor to the Trustee
on or before the second Business Day immediately prior to
the requested Funding Date of the original executed
counterpart of the Lease Contracts relating to such Funding
and the other items comprising the related Lease Contract
Files;
(iv) the Transferor's delivery to the Trustee on or
before the Business Day immediately prior to the requested
Funding Date of the Transferor Certificate and the Company
Certificate, each accompanied by an Amended Lease Schedule,
executed by the Company or the Transferor, as appropriate;
(v) no Default, Event of Default or Funding
Termination Event shall exist or shall result from the
Funding;
(vi) the related Certificate Insurance Policy shall be
in full force and effect and no MBIA Default or Termination
shall have occurred;
(vii) (A) the Lease Contracts proposed to be funded
with such Funding shall be Eligible Lease Contracts, and
(B) after giving effect to such Funding, neither the
Concentration Limits nor the Maximum Series Amount shall be
exceeded;
(viii) as of the second Business Day immediately
prior to the requested Funding Date, a Certificate Funding
Administrator is in place in accordance with Section 3.07
hereof;
(ix) such Funding shall occur on a date prior to the
Funding Termination Date;
(x) the Funding Report shall have been delivered to
the Trustee and MBIA pursuant to clause (b) below; and
(xi) such other conditions as may be specified in the
applicable Supplement.
(b) Preparation of Funding Report. The Servicer, together
with the Certificate Funding Administrator, shall review such
diskette or electronic transfer specified in clause (a)(ii) above
and prepare a Funding Report from the information provided in
such diskette or electronic transfer, the existing information
regarding all other Lease Contracts and the existing information
used to generate the Monthly Servicer's Report. No later than
10:00 a.m. (New York time) on each Business Day immediately
preceding a proposed Funding Date, the Certificate Funding
Administrator shall fax the Funding Report, and the amount of the
Funding to be funded by Certificateholders, to the Transferor and
the Transferor shall thereupon execute such report and fax it to
MBIA and the Trustee no later than 11:00 a.m. (New York time) on
such date of receipt. In the Funding Report, the Servicer shall
calculate the First Period Interest on the related Funding
Amount. The Servicer shall forward to MBIA by overnight mail or
electronic transfer, for receipt by MBIA on the related Funding
Date, a diskette or other electronic file, containing, in a
standardized format, the same information that was delivered by
the Transferor pursuant to clause (a)(ii) above.
Section 3.04 Verification of Funding Report.
(a) Upon the Trustee's receipt of a Funding Report pursuant
to Section 3.03(b) hereof, the Trustee shall recompute all of the
calculations in such Funding Report (including without limitation
a recalculation of the Implicit Principal Balances of the related
Lease Contracts) based on the information contained in the list
of Lease Contracts forwarded to it by diskette or electronic
transfer, the existing information regarding all other Lease
Contracts and the existing information used to generate the
Monthly Servicer's Report, and if the Trustee does not discover
and is not notified of any errors in the calculations in such
Funding Report that have not been corrected by 3:00 p.m. (New
York time) on the Business Day immediately preceding the proposed
Funding Date and all of the conditions precedent set forth in
Section 3.03 hereof have been satisfied (provided, however, that
with respect to 3.03(a)(vii)(A), the Trustee may conclusively
rely on the Company Certificate), the Trustee shall notify the
Certificateholders of the Funding Amount by faxing the Funding
Report to the Certificateholders by 3:00 p.m. (New York time) on
the Business Day immediately preceding the proposed Funding Date.
If the Trustee discovers or is notified of any error in the
Funding Report that is not corrected by 3:00 p.m. (New York time)
on the Business Day immediately preceding the proposed Funding
Date or if any of the conditions precedent set forth in
Section 3.03(a) hereof have not been satisfied, the Trustee shall
notify the Certificateholders that the applicable Funding is
postponed until the next Business Day following resolution of any
such error, and the Trustee shall thereupon notify MBIA, the
Certificate Funding Administrator and the Transferor of such
error. If MBIA discovers any error in the Funding Report after a
Funding based on such report, MBIA shall notify the Trustee, the
Servicer, the Company, the Certificate Funding Administrator and
the Transferor.
(b) If a Funding occurs based upon a Funding Report with
respect to which an error has been discovered and the Certificate
Funding Administrator or the Transferor is not able to correct
such error to the satisfaction of the Certificateholders and MBIA
by the next succeeding date upon which a Funding is permitted to
occur (or, in the case of the final Funding preceding or on the
applicable Funding Termination Date, by the Payment Date
immediately following such Funding Termination Date), the
Transferor shall cause the Company or the applicable Seller to
either (i) repurchase the affected Lease Contracts at a price
equal to the Removal Price of such Lease Contracts, (ii) replace
the affected Lease Contracts with Substitute Lease Contracts, in
each case on the earlier of (x) the second succeeding date upon
which the next Funding is permitted to occur, (y) the following
Determination Date and (z) the Funding Termination Date or
(iii) deposit funds in the Collection Account in the amount, if
any, by which the Funding as recalculated based on the correct
information is less than the erroneous Funding.
(c) At the end of each Floating Interval for each Series of
Class A Certificates and on the Funding Termination Date (if such
date is not the end of a Floating Interval) for each Series of
Class A Certificates, the Transferor will forward to the
Independent Accountants by mailing computer diskettes or by
electronic transfer, the Conversion Report prepared in connection
with such Floating Interval together with the information
necessary to calculate the Implicit Principal Balance of the
Lease Contracts and the Conversion Amount included in such
Conversion Report. The Transferor shall cause the Independent
Accountants to recalculate the Implicit Principal Balances of the
Lease Contracts included in such Conversion Report and the
related Conversion Amount, in each case based solely on the
information contained in such reports or on such computer
diskettes, and to send the results of such recalculation to the
Transferor, the Servicer, the Certificate Funding Administrator
and MBIA. If any errors have been discovered by the Independent
Accountants in the course of any such review, the Funding Amount
shall be adjusted on the following Funding Date or on the date a
final Funding occurs pursuant to Section 3.08 hereof to take such
errors into account.
Section 3.05 Fundings by Certificateholders.
(a) Upon the issuance of each Series of Class A
Certificates and execution of a Certificate Purchase Agreement on
the related Delivery Date, the initial Class A Certificateholders
shall have agreed, and by their acquisition of any Class A
Certificates and execution of an Investment and Assumption Letter
after the applicable Delivery Date any subsequent Class A
Certificateholders shall have agreed, on the terms and conditions
set forth herein and in the related Certificate Purchase
Agreement, to make Fundings to the Transferor on the Delivery
Date and from time to time thereafter on any Funding Date during
the Funding Period, as specified by the Transferor in accordance
with Section 3.05(c) below. On the related Delivery Date, a
Funding shall take place under the Fixed Rate Tranche of such
Series in the amount equal to any Initial Funding Amount for such
Series. Each subsequent Funding shall take place under the
Floating Rate Tranche in an amount equal to the applicable
Funding Amount; provided, however, unless otherwise specified in
the related Supplement, for each calendar month, the aggregate of
the Fundings, including the Initial Funding Amount for such
Series, during such month shall be in a minimum amount equal to
the Minimum Monthly Amount and in a maximum amount equal to the
Maximum Monthly Amount. The aggregate amount of all Fundings
under any Series shall not exceed the Maximum Series Limit.
(b) Except for the Initial Funding on the related Delivery
Date and the Funding described in Section 3.08 hereof, the
Fundings shall be allocated to the Floating Rate Tranche of the
applicable Series until converted pursuant to clause (f) below.
Each Series of Class A Certificates shall be issued in an
aggregate principal amount equal to the Maximum Series Amount,
although at any one time the Outstanding Principal Balance may be
less than the Maximum Series Amount for such Series. The Class A
Certificateholders shall endorse on a schedule, which shall be
attached to each Class A Certificate, the date and amount of each
Funding made by such Class A Certificateholder with respect to
the related Series and the amount of each payment of principal
made by the Transferor with respect thereto; provided, however,
that the Class A Certificateholders may, at their option, record
the amount of their respective Fundings in other internal records
rather than on such a schedule. The Class A Certificateholders
are authorized and directed by the Transferor and MBIA to make
such endorsements or records but each Certificateholder's records
shall be effective only if such records are in agreement with the
applicable Certificate Register maintained by the Trustee, absent
manifest error in such Certificate Register. Failure by any
Class A Certificateholders to make, or an error by any Class A
Certificateholder in making, such endorsement or record with
respect to any Funding shall not limit or otherwise affect the
obligations of the Transferor hereunder or under any Class A
Certificate.
(c) Subject to the terms hereof, each Class A
Certificateholder will make available to the Transferor the Net
Funding Amount for such Series that is specified in the Funding
Report (which shall be an amount equal to such Class A
Certificateholder's pro rata share of the Net Funding Amount) at
the Transferor Payment Office by 3:00 p.m. (New York time) on the
applicable Funding Date in immediately available funds. Each
such Holder's pro rata share of a Funding shall be determined by
multiplying the amount of such Funding Amount by a fraction, the
numerator of which shall be equal to the maximum principal amount
of such Holder's Class A Certificate (as indicated on the face of
such Certificate), and the denominator of which shall be equal to
the Maximum Series Amount.
(d) The failure of any Class A Certificateholder to remit
its pro rata share of any Net Funding Amount for its Series on
the Delivery Date or any Funding Date shall not relieve any other
Class A Certificateholder in such Series of any obligation
hereunder to make its pro rata share of a Net Funding Amount on
such Funding Date. Any nondefaulting Class A Certificateholder
may, but is not required to, fund the portion of the Funding
Amount not funded by the defaulting Certificateholder. If the
nondefaulting Class A Certificateholder does not fund the portion
of the Funding Amount by the defaulting Certificateholder, the
Funding Amount, the Minimum Monthly Amount and the Minimum
Funding Amount with respect thereto, shall be reduced by the
defaulting Class A Certificateholder's portion of the Funding
Amount and the Transferor shall have all remedies available to it
under applicable law in respect of the defaulting Class A
Certificateholder.
(e) Immediately following each Funding or payment of
principal on any Series of Certificates, the Trustee shall make
an appropriate notation in the applicable Certificate Register
indicating the amount and date of the Funding or payment and the
unused Maximum Series Amount after giving effect to any Funding.
Section 3.06 Calculation of Rates; Conversions.
(a) On or before 2:00 p.m. (New York time) on the
Determination Date immediately preceding a Conversion Date or
such other date as specified in the applicable Supplement, the
Trustee shall determine the Treasury Rate on such Reset Date. In
addition, on or before 2:00 p.m. (New York time) on the second
Business Day immediately preceding the commencement of each
Accrual Period during the Funding Period, the Trustee shall
determine the LIBOR Rate for the next succeeding Accrual Period.
Upon each determination of the LIBOR Rate and the Treasury Rate,
the Trustee will promptly provide notice of such determination to
MBIA, the Certificate Funding Administrator, the Holders of the
Class A Certificates that are in their Funding Period and the
Servicer. On or before 2:00 p.m. (New York time) two Business
Days preceding each Funding Date, the Trustee shall determine the
appropriate LIBOR Rate on such date with respect to the Funding
Amount for the calculation of the First Period Interest thereon.
The determination of the LIBOR Rate and the Treasury Rate by the
Trustee shall (in the absence of manifest error) be final and
binding on each Holder of a Class A Certificate.
(b) On the Reset Date preceding each Conversion Date, the
Servicer shall calculate, and the Certificate Funding
Administrator shall confirm, on the Conversion Report, the
Conversion Rate, the Conversion Amount, the Outstanding Floating
Tranche Balance, the Outstanding Fixed Tranche Balance, and the
Fixed Rate, each to be in effect as of the such Conversion Date,
and notify MBIA, the Certificateholders with Certificates in a
Funding Period and the Trustee of the rate or amount determined
with respect to each such calculation. In such Conversion
Report, the Servicer shall instruct the Trustee to increase the
Outstanding Fixed Tranche Balance by the Conversion Amount
determined on the Determination Date preceding such Conversion
Date and to reduce the Outstanding Floating Tranche Balance by a
like amount. Such increases and reductions with respect to the
Certificates shall be deemed effective as of the Conversion Date
succeeding the related Reset Date. Any discrepancies shall be
worked out between the Certificate Funding Administrator and the
Trustee within two Business Days and the Certificate Funding
Administrator's judgment shall control. Notwithstanding the
foregoing, all amounts outstanding under the Floating Rate
Tranche shall be converted to the Fixed Rate Tranche on the
Conversion Date immediately following the Funding Termination
Date.
(c) If, as of any Conversion Date as determined on the
Determination Date immediately preceding such Conversion Date,
there is an Outstanding Floating Tranche Balance, the Trustee
shall, based on the most recent Conversion Report on which the
Trustee may conclusively rely, increase the Outstanding Fixed
Tranche Balance by the Conversion Amount determined on such
Determination Date and reduce the Outstanding Floating Tranche
Balance by a like amount. Such increase and reductions shall be
effective as of such Conversion Date.
Section 3.07 Appointment of Certificate Funding
Administrator.
(a) As a condition to the issuance of any Series of Class A
Certificates, the Transferor shall appoint Rothschild Inc. to act
as the Certificate Funding Administrator to perform the functions
described in this Article Three. If at any time MBIA, or upon an
MBIA Default or Termination, the Certificateholders, shall notify
the Trustee and Rothschild Inc. in writing that Rothschild Inc.
has failed to perform its duties in accordance with this Article
Three or if at any time, Rothschild Inc. shall become the subject
of a proceeding under the United States Bankruptcy Code or if
Rothschild Inc. resigns as Certificate Funding Administrator, the
Servicer shall direct the Transferor to appoint a successor
Certificate Funding Administrator of the Servicer's choosing
which shall be acceptable to MBIA and notify the Trustee of such
appointment. Upon notice of such appointment, the Trustee shall
mail written notice thereof by first-class mail, postage prepaid,
to all Class A Certificateholders. Upon the Certificate Funding
Administrator's resignation or termination pursuant to this
Section 3.07, (i) the Certificate Funding Administrator shall
comply with the provisions hereof and the Insurance Agreement
until the acceptance of the appointment of a successor
Certificate Funding Administrator and (ii) until the Trustee
receives MBIA's written consent to a successor Certificate
Funding Administrator, no Funding shall occur. Any successor
Certificate Funding Administrator upon acceptance of its
appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect
as if originally named as the Certificate Funding Administrator.
(b) The Transferor agrees to pay the Certificate Funding
Administrator compensation for its services under this Article
Three in accordance with the Certificate Administration
Agreement, which fee shall in no event be an obligation of the
Trust Estate.
Section 3.08 Release of Excess Funds At Close of Funding
Period.
On the later of (i) the last Business Day preceding the
final Conversion Date for each Series of Class A Certificates or
(ii) the delivery of the report of the Independent Accountants as
described in Section 3.04(c) hereof relating to such Conversion
Date, the Transferor shall direct the Trustee to request a final
Funding under the Fixed Rate Tranche from the Class A
Certificateholders of that Series, and such Certificateholders
shall fund on such day, an amount equal to the lesser of (i) the
Maximum Series Amount minus the Outstanding Fixed Tranche Balance
after giving effect to the Conversion on the final Conversion
Date and (ii) the excess of the Aggregate IPB over the sum of
(a) the Required Collateralization Amount and (b) the Outstanding
Principal Amount of all Series of Class A Certificates but in no
event less than zero. The proceeds of such Funding shall be
deposited in the Collection Account for application in accordance
with Section 12.02(d) hereof. The Servicer shall notify the
Trustee on the Determination Date preceding such final Conversion
Date of the amount to be funded on such last Business Day.
ARTICLE FOUR
ISSUANCE OF CERTIFICATES; SUBSTITUTIONS OF COLLATERAL
Section 4.01 Conditions to Initial Issuance of
Certificates.
Each Series of Certificates to be issued on the Initial
Delivery Date shall be executed by the Transferor and delivered
to the Trustee for authentication, and thereupon, the same shall
be authenticated and delivered by the Trustee upon Transferor
Order and upon receipt by the Trustee of the following:
(a) a Company Certificate and a Transferor Certificate with
the Series Lease Schedule related to the Class A Certificates
attached thereto;
(b) the original executed counterpart of each Lease
Contract and all other items included in the Lease Contract File,
subject to such exceptions as shall be noted in an exception
report delivered to MBIA and the Certificateholders of the
applicable Series;
(c) a Board Resolution of each of the Transferor, the
Servicer and the Company authorizing, as applicable, the
execution, delivery and performance of the Transaction Documents
and the transactions contemplated hereby and by the other
Transaction Documents, certified by the Secretary or an Assistant
Secretary of the Transferor, the Servicer or the Company, as
applicable;
(d) a copy of an officially certified document, dated not
more than 30 days prior to the Initial Delivery Date, evidencing
the due organization and good standing of each of the Transferor,
the Servicer and the Company in their respective states of
incorporation;
(e) copies of the Certificate of Incorporation and By-Laws
of each of the Transferor, the Servicer and the Company,
certified by the Secretary or an Assistant Secretary of the
Transferor, the Servicer and the Company, as applicable;
(f) (i) evidence of filing with the Secretary of State of
the State (and with the relevant county, if required by the
applicable state law) of the Company's chief executive office of
UCC-1 financing statements executed by the Company, as debtor,
and naming the Transferor as secured party, the Trustee for the
benefit of the Certificateholders and MBIA as assignee and the
Lease Assets as collateral; and (ii) evidence of filing with the
Secretary of State of the State (and with the relevant county, if
required by the applicable state law) of the Transferor's chief
executive office of UCC-1 financing statements executed by the
Transferor, as debtor, and naming the Trustee for the benefit of
the Certificateholders and MBIA as secured party, and the Trust
Estate as collateral;
(g) a certificate listing the Servicing Officers of the
Servicer as of the Initial Delivery Date;
(h) an executed copy of a Supplement for each Series of
Certificates to be issued on the Initial Delivery Date and the
Servicing Agreement and the Lease Acquisition Agreement;
(i) a Certificate Insurance Policy for the Series of
Class A Certificates being issued on such date;
(j) evidence of the deposit by the Transferor of any
applicable Initial Cash Deposit;
(k) evidence of the deposit by the Transferor into the
Collection Account of any amounts paid on the Lease Contracts
since the applicable Cut-Off Date; and
(l) such other documents as the Trustee, MBIA or the
Certificateholders of the Series being issued may reasonably
require, including such documents and opinions described in the
applicable Certificate Purchase Agreement.
Section 4.02 Issuances of Additional Series of
Certificates.
(a) Additional Series of Class A Certificates and Class B
Certificates may be issued by the Transferor in accordance with
the terms of this Agreement, provided that no new Series of
Class A Certificates shall be issued while an Outstanding Series
of Class A Certificates is in its Funding Period, provided
further that no new Series shall be issued if, after the issuance
of such new Series, the Aggregate IPB (after giving effect to the
addition of any new Lease Contracts on such date of issuance) is
not at least equal to the sum of the Outstanding Principal Amount
of all Series of Class A Certificates (including any Series of
Class A Certificates to be issued on such date) plus the Required
Collateralization Amount. All additional Series of Certificates
must be approved in writing by MBIA, provided, however, that
nothing herein shall obligate MBIA to issue any Certificate
Insurance Policy; rather such obligation shall arise only under a
written commitment issued by MBIA to issue a Certificate
Insurance Policy.
(b) On or before the Delivery Date relating to any new
Series of Certificates, the parties hereto will execute and
deliver a Supplement that will specify the terms applicable to
such new Series of Certificates. The terms set forth in such
Supplement may modify or amend, subject to Article Nine hereof,
the terms of this Agreement solely as applied to such new Series
of Certificates.
(c) Each new Series of Class A Certificates shall be
executed by the Transferor and delivered to the Trustee for
authentication, and thereupon, the same shall be authenticated
and delivered by the Trustee upon Transferor Order and upon
receipt by the Trustee of the following:
(i) evidence of the delivery of the original executed
counterpart of each Lease Contract to be delivered on the
related Delivery Date and an Officer's Certificate of the
Transferor certifying that all of the terms of the Lease
Acquisition Agreement have been complied with; and all other
items included in the Lease Contract File;
(ii) a Supplement for such Series of Class A Certificates
and if the Transferor is acquiring Lease Contracts from the
Company on the applicable Delivery Date, a Company
Certificate and a Transferor Certificate, subjecting any new
Lease Contracts to the provisions of the Transaction
Documents, and providing with respect to such new Lease
Contracts a Series Lease Schedule;
(iii) on or before the tenth Business Day immediately
preceding the Delivery Date for the Class A Certificates to
be issued (unless the parties to be notified agree to a
shorter time period), the Transferor shall have given the
Trustee, the Servicer, MBIA and each Rating Agency notice of
such issuance and the applicable Delivery Date;
(iv) the Transferor shall have delivered to the Trustee and
MBIA the related Supplement, executed by each party hereto
other than the Trustee;
(v) the Transferor shall have delivered to the Trustee and
MBIA an Officers' Certificate of the Transferor to the
effect that (A) such issuance will not result in the
occurrence of a Trigger Event or a Default under this
Agreement and the Transferor is not in Default under this
Agreement, (B) the issuance of the Class A Certificates
applied for will not result in a breach of any of the terms,
conditions or provisions of, or constitute a Default under,
any agreement or instrument to which the Transferor is a
party or by which it is bound, or any order of any court or
administrative agency entered in any proceeding to which the
Transferor is a party or by which it may be bound or to
which it may be subject, (C) all conditions precedent
provided in this Agreement relating to the authentication
and delivery of the additional Series of Class A
Certificates applied for have been complied with, and
(D) specifying the applicable Stated Maturity and the
principal amount of the Certificates to be authenticated and
delivered;
(vi) to the extent not previously filed, (A) evidence of
filing with the Secretary of State of the State (and with
the relevant county, if required by the applicable state
law) of the Company's and any applicable Seller's chief
executive office of UCC-1 financing statements executed by
the Company or such Seller, as debtor, and naming the
Transferor as secured party, and the applicable Lease Assets
as collateral; and (B) evidence of filing with the Secretary
of State of the State (and with the relevant county, if
required by the applicable state law) of the Transferor's
chief executive office of UCC-1 financing statements
executed by the Transferor, as debtor, and naming the
Trustee for the benefit of the Certificateholders and MBIA
as secured party, and the Trust Estate as collateral;
(vii) the Transferor shall have delivered to the Trustee
and MBIA an Officers' Certificate to the effect that
attached thereto are true and correct copies of letters
signed by each Rating Agency confirming that the Class A
Certificates of such Series have been rated "AAA" by S&P and
"Aaa" by Moody's and that the rating on each other Series of
Class A Certificates has not been or will not be withdrawn
or downgraded on the applicable Delivery Date as a result of
such issuance;
(viii) a certificate guaranty insurance policy issued by
MBIA with respect to the payment of principal and interest
of any new Series of Class A Certificates in form and
substance substantially the same as the Certificate
Insurance Policy issued by MBIA with respect to the Class A
Certificates issued on the Initial Delivery Date, and
evidence that MBIA shall not have been downgraded from a
"AAA" and "Aaa" rating;
(ix) an opinion of counsel to the effect that the Class A
Certificates of any Series to be issued should be
characterized as debt for tax purposes and that the issuance
of such Series will not adversely affect the
characterization of the Class A Certificates of any other
Outstanding Series as debt for tax purposes, and as to such
additional legal matters as MBIA may reasonably request;
(x) evidence of the deposit by the Transferor into the
Collection Account of any amounts paid under the Lease
Contracts of such Series since the related Cut-Off Date;
(xi) such other documents, certificates, instruments,
opinions, or other items as may be required by the terms of
the Supplement creating such Series of Certificates or as
may be required by MBIA;
(xii) no MBIA Default or Termination shall have occurred
and be continuing with respect to any outstanding Series of
Certificates; and
(xiii) an officer's certificate of the Transferor stating
that all conditions precedent to the issuance of such new
Series of Certificates have been complied with.
Upon satisfaction of the above conditions, the Trustee shall
execute the Supplement and issue and deliver to or upon the order
of the Transferor the applicable Class A Certificates, and
provide notice to all existing Certificateholders of the issuance
of such Series of Certificates.
(d) On or before the Delivery Date relating to any Series
of Class B Certificates, the parties hereto will execute and
deliver a Supplement which will specify the terms of such new
Series of Class B Certificates. The terms set forth in such
Supplement may modify or amend, subject to Article Nine hereof,
the terms of this Agreement solely as applied to such new Series
of Class B Certificates. Each new Series of Class B Certificates
may be executed by the Transferor and delivered to the Trustee
for authentication, and thereupon, the same shall be
authenticated and delivered by the Trustee upon Transferor Order
and upon receipt:
(i) by the Trustee, of an executed copy of a Supplement for
such Series of Class B Certificates;
(ii) by the Trustee and MBIA, of an Officers' Certificate of
the Transferor to the effect that (A) such issuance will not
result in the occurrence of a Trigger Event or a Default
under this Agreement and the Transferor is not in Default
under this Agreement, (B) the issuance of the Class B
Certificates applied for will not result in a breach of any
of the terms, conditions or provisions of, or constitute a
Default under, any agreement or instrument to which the
Transferor is a party or by which it is bound, or any order
of any court or administrative agency entered in any
proceeding to which the Transferor is a party or by which it
may be bound or to which it may be subject, (C) all
conditions precedent provided in this Agreement relating to
the authentication and delivery of the additional Series of
Class B Certificates applied for have been complied with,
and (D) specifying the applicable Expected Maturity, the
principal amount and Certificate Interest Rate of the
Class B Certificates to be authenticated and delivered; and
(iii) an opinion of counsel to the effect that the
issuance of such Series of Class B Certificates will not
adversely affect the characterization of the Class A
Certificates of any Outstanding Series as debt for tax
purposes, and as to such additional legal matters as MBIA
may reasonably request.
Upon satisfaction of the above conditions, the Trustee shall
execute the Supplement and issue and deliver to or upon the order
of the Transferor the applicable Class B Certificates, and
provide notice to MBIA and all existing Certificateholders of the
issuance of such Series of Certificates.
Section 4.03 Perfection of Transfer.
(a) The Transferor, the Company and each Seller shall file
UCC-1 financing statements described in Sections 4.01(f) and
4.02(c)(vi) hereof in accordance with such Sections. From time
to time, the Servicer shall take or cause to be taken such
actions and execute such documents as are necessary to perfect
and protect the Trustee's and MBIA's respective interests in the
Lease Contracts against all other Persons, including, without
limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer
instruments and the making of notations on or taking possession
of all records or documents of title.
(b) If any change in either the Company's, the Transferor's
or any Seller's name, identity, structure or the location of its
principal place of business or chief executive office occurs,
then the Transferor shall, or the Transferor shall cause the
Company or such Seller to deliver 30 days prior written notice of
such change or relocation to the Servicer, MBIA and the Trustee
and no later than the effective date of such change or
relocation, the Servicer shall file such amendments or statements
as may be required to preserve and protect the Trustee's and
MBIA's respective interests in the Trust Estate.
(c) During the term of this Agreement, the Transferor will
maintain its chief executive office and principal place of
business in one of the States of the United States.
(d) The Servicer agrees to pay all reasonable costs and
disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the
Trustee's and MBIA's respective right, title and interest in and
to the Trust Estate.
(e) The Trustee shall hold the original executed
counterparts of each Lease Contract at its office in the State of
Minnesota, and at any such new address in the State of Minnesota
as the Trustee shall inform the Servicer, the Transferor, and
MBIA in writing from time to time. The Trustee shall hold each
Lease Contract for the benefit of Certificateholders and MBIA,
and maintain accurate records pertaining to each Lease Contract
to maintain a current inventory thereof. The Trustee may, if
requested by the Servicer in writing for purposes of servicing a
Lease Contract, temporarily release to the Servicer such Lease
Contract. Any Lease Contract temporarily released from the
custody of the Trustee to the Servicer or its agents shall have
stamped on it prior to delivery a legend to the effect that the
Lease Contract is the property of Norwest Bank Minnesota,
National Association, as Trustee. The Servicer shall promptly
return the Lease Contract to the Trustee when the need therefor
no longer exists.
Section 4.04 Substitution, Removal and Purchase of Lease
Assets.
(a) If at any time the Transferor, MBIA or the Trustee
obtains knowledge (within the meaning of 7.01(e) hereof),
discovers or is notified by the Servicer that any of the
representations and warranties of the Company in the Lease
Acquisition Agreement or of any Seller in any Lease Sale
Agreement were incorrect at the time as of which such
representations and warranties were made, then the Person
discovering such defect, omission, or circumstance shall promptly
notify MBIA and the other parties to this Agreement.
(b) In the event that any representation or warranty of the
Company in the Lease Acquisition Agreement or of any Seller in
any Lease Sale Agreement is incorrect and materially and
adversely affects the interests of MBIA or the Holders of the
Certificates, or if there is any breach of any of the
representations and warranties set forth in Sections 3.01(a)(ii),
3.01(a)(v), 3.01(a)(vii), 3.01(a)(xix) or 3.01(c)(iii) of the
Lease Acquisition Agreement or the equivalent section of any
Lease Sale Agreement, the Transferor shall require the Company or
the applicable Seller pursuant to the Lease Acquisition Agreement
or such Lease Sale Agreement to eliminate or otherwise cure the
circumstance or condition which has caused such representation or
warranty to be incorrect within 30 days of discovery or notice
thereof. If the Company or such Seller fails or the Company or
the Back-up Servicer or such Seller is unable to cure such
circumstance or condition in accordance with the Lease
Acquisition Agreement or the applicable Lease Sale Agreement,
then the Transferor shall require the Company or such Seller to
substitute or purchase pursuant to the Lease Acquisition
Agreement or such Lease Sale Agreement for any Lease Asset as to
which such representation or warranty is incorrect within the
time specified in Section 3.03 of the Lease Acquisition Agreement
or the equivalent section of such Lease Sale Agreement. The
proceeds of a purchase shall be remitted by the Transferor to the
Servicer for deposit by the Servicer in the Collection Account
pursuant to Section 3.03(c) of the Servicing Agreement.
(c) If the Transferor fails to enforce the purchase or
substitution obligation of the Company or a Seller under the
Lease Acquisition Agreement or any Lease Sale Agreement, at the
direction of MBIA, or upon the occurrence of an MBIA Default or
Termination, the Controlling Holders (provided, in each case,
that the requirements of Section 7.03(e) have been satisfied) the
Trustee shall enforce such purchase or substitution obligation
for the benefit of the Certificateholders and MBIA, and the
Trustee is hereby appointed attorney-in-fact to act on behalf of
and in the name of the Transferor to require such purchase or
substitution.
(d) With respect to (i) any Lease Contract to be prepaid or
terminated early pursuant to Section 3.09 of the Servicing
Agreement and (ii) any Lease Contract that becomes a Defaulted
Lease Contract or any Lease Contract that becomes a Delinquent
Lease Contract, the Transferor shall be entitled to, upon five
Business Days notice to the Trustee, remove such Lease Contract
from the Trust Estate and deliver a Substitute Lease Contract
meeting the same requirements as those specified in Section 3.04
of the Lease Acquisition Agreement for substitutions and
purchases by the Company upon breaches of a representation or
warranty by the Company thereunder; provided, however, that the
aggregate Implicit Principal Balance of such prepaid and early
terminated Lease Contracts, Defaulted Lease Contracts and
Delinquent Lease Contracts that are substituted or removed by the
Transferor shall be subject to an overall limit of 10% of the
Aggregate Initial IPB; and, provided, further that no
substitution or repurchase shall be made if (i) such substitution
or repurchase is made with any intent to hinder, delay, or
defraud any entity to which the Company is or will become
indebted; (ii) there shall be any reason to believe that the
Company is insolvent or that such substitution or repurchase will
render the Company insolvent on the date thereof or as a result
of such substitution or repurchase; (iii) at the time of such
substitution or repurchase, the Company is engaged in business,
or about to engage in business, for which the assets remaining
with it after the substitution or repurchase will be an
unreasonably small amount of capital; or (iv) the Company intends
or believes that it will incur debts beyond its ability to pay as
such debts mature.
(e) The Transferor shall comply with the requirements
relating to Substitute Lease Contracts and Funded Lease Contracts
as set forth in the Lease Acquisition Agreement (including
compliance with the Eligibility Criteria and the Concentration
Limits) within the time periods set forth therein. In addition,
in the case of any new Lease Contracts acquired by the Transferor
pursuant to a Funding, the Transferor shall provide to the
Trustee and MBIA, as applicable, the items listed in Section
3.03(a) hereof which are required to be delivered to the Trustee
and/or MBIA pursuant to such Section. On or prior to the
Business Day preceding the Initial Delivery Date or within two
Business Days of the related Funding Date the Trustee will review
the related Lease Contract Files. The Trustee shall confirm, by
execution and delivery of a certificate of the Trustee to the
Transferor, the Certificateholders and MBIA, that: (1) the
Trustee has received the Lease Contract Files; and (2) that the
Trustee has received the originals of each Lease Contract. In
the case of any Substitute Lease Contracts acquired by the
Transferor, the Transferor shall provide to the Trustee on the
applicable date of delivery the items listed in (i) and (ii)
below, and to MBIA the item listed in (i) below. In the case of
any new Lease Contracts acquired by the Transferor pursuant to
either a Funding or a substitution of a Lease Contract, the
Transferor shall provide to the Trustee and MBIA at the end of
each calendar quarter the items listed in (iii) below with
respect to any Substitute Lease Contracts substituted or Funded
Lease Contracts acquired during such period:
(i) a Company Certificate and a Transferor
Certificate, each such certificate having attached thereto
an Amended Lease Schedule and subjecting such Substitute
Lease Contract to the provisions thereof and hereof and
providing with respect to the Substitute Lease Contract the
information required to supplement the related Series Lease
Schedule, and with respect to titled Equipment, an
application to retitle or originate title in such Equipment,
as applicable, in the name of the Transferor and naming the
Trustee as secured party;
(ii) the original executed counterpart of the Lease
Contract relating to such Substitute Lease Contract and all
other items included in the Lease Contract File; and
(iii) evidence that financing statements have been
filed with respect to such Substitute Lease Contract or
Funded Lease Contract in accordance with Sections 4.01(f),
4.02(b)(vi) and 4.03 hereof.
(f) If, upon examination of the Lease Contract Files in
accordance with Section 4.04(e) hereof, the Trustee determines
that any such Lease Contract File does not satisfy the
requirements set forth in Section 4.04(e) hereof, or is unable to
confirm that the requirements have been met, the Trustee shall
promptly notify the Transferor, the Servicer and MBIA by
telephone or telecopy. If the Transferor or the Servicer does
not satisfy the Trustee that the requirements of Section 4.04(e)
hereof have been met prior to the related Funding Date, the
Trustee shall return the applicable Lease Contract and related
files to the Transferor.
Section 4.05 Releases.
(a) The Transferor shall be entitled to obtain a release
from the lien of this Agreement for any Lease Contract and,
except in the case of a re-lease under (iii) below, the related
Equipment at any time (i) after a payment by the Company or the
Transferor of the Removal Price of the Lease Receivable,
(ii) after a Substitute Lease Contract is substituted for such
Lease Contract, or (iii) upon the termination of a Lease Contract
following the sale, lease or other disposition of the related
Equipment in accordance with Section 3.01(b)(vii) of the
Servicing Agreement, if the Transferor delivers to the Trustee
and MBIA an Officer's Certificate (A) identifying the Lease
Receivable and the related Lease Contract and Equipment to be
released, (B) requesting the release thereof, (C) setting forth
the amount deposited in the Collection Account with respect
thereto, in the event a Lease Contract and the related Equipment
are being released from the lien of this Agreement pursuant to
(i) or (iii) above, and (D) certifying that the amount deposited
in the Collection Account (x) equals the Removal Price of the
Lease Contract, in the event a Lease Contract and the related
Equipment are being released from the lien of this Agreement
pursuant to (i) above or (y) equals the entire amount of
Insurance Proceeds, Recoveries or Residual Proceeds received or
expected to be received with respect to such Lease Contract and
related Equipment in the event of a release from the lien of this
Agreement pursuant to (iii) above.
(b) Upon satisfaction of the conditions specified in
subsection (a), the Trustee shall release from the lien of this
Agreement and deliver to or upon the order of the Transferor (or
to or upon the order of the Company if it has satisfied its
obligations under Section 4.04 hereof and Section 3.04 of the
Lease Acquisition Agreement with respect to a Lease Contract) the
Lease Contract, the Lease Receivable and the Equipment described
in the Transferor's request for release.
Section 4.07 Trust Estate.
The Trustee may, and when required by the provisions of
Articles Four, Five, Six and Twelve hereof shall, execute
instruments to release property from the lien of this Agreement,
or convey the Trustee's interest in the same, in a manner and
under circumstances which are not inconsistent with the
provisions of this Agreement. No party relying upon an
instrument executed by the Trustee as provided in this Article
Four shall be bound to ascertain the Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the
application of any monies.
Section 4.08 Notice of Release.
The Trustee shall be entitled to receive at least 10 days'
notice of any action to be taken pursuant to Section 4.06(a)
hereof, accompanied by copies of any instruments involved.
Section 4.09 Nature of Transfer.
To the extent that the transfer of the Trust Estate from the
Transferor to the Trustee is deemed to be a secured financing,
the Transferor shall be deemed hereunder to have granted to the
Trustee, and the Transferor does hereby grant to the Trustee, a
security interest in all of the Transferor's right, title and
interest in, to and under the Trust Estate, whether now owned or
hereafter acquired. For purposes of such grant, this Agreement
shall constitute a security agreement under applicable law.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
Section 5.01 Satisfaction and Discharge of Agreement.
(a) Following payment in full of (i) all of the
Certificates, (ii) the fees and charges of the Trustee, (iii) all
other obligations of the Transferor under the Transaction
Documents and (iv) all amounts owing to MBIA under the Insurance
Agreement, and the release by the Trustee of the Trust Estate in
accordance with Section 5.01(b) hereof, this Agreement shall be
discharged and the Trustee shall notify the Rating Agencies
thereof.
(b) Upon payment in full of the amounts referred to in
clauses (i) through (iv) of Section 5.01(a) hereof, the
Transferor may submit to the Trustee an Officer's Certificate
requesting the release to the Transferor or its designee of a
stated amount of the funds on deposit in the Cash Collateral
Account and some or all of the other Trust Estate (collectively,
the "Withdrawn Collateral"), accompanied by an Opinion of Counsel
reasonably acceptable to MBIA or, if an MBIA Default or
Termination has occurred and is continuing, acceptable to the
Controlling Holders, to the effect that, after the release of the
Withdrawn Collateral, there will remain an amount in the Cash
Collateral Account or otherwise subject to this Agreement at
least equal to the payments of interest due on the Outstanding
Certificates and the Class A Principal Distribution Amounts and
Class B Principal Distribution Amounts that are subject to
recapture as preferential transfers pursuant to Section 547 of
the Bankruptcy Code or, alternatively, to the effect that no such
payments are subject to recapture. In rendering such Opinion of
Counsel, such counsel may rely as to factual matters, including,
without limitation, the date on which funds were received and the
source of funds, upon an Officer's Certificate. Promptly after
receipt of such Officer's Certificate, Opinion of Counsel and
authorization to release from MBIA, the Trustee shall release the
Withdrawn Collateral from the lien of this Agreement, and deliver
the Withdrawn Collateral to the Transferor or its designee. The
Transferor shall be entitled to deliver more than one such
Officer's Certificate and Opinion of Counsel until the entire
Trust Estate is released and delivered to the Transferor or its
designee. Notwithstanding the foregoing, MBIA or, if an MBIA
Default or Termination has occurred and is continuing, the
Controlling Holders, may waive the requirement that the
Transferor deliver such Officer's Certificate and/or Opinion of
Counsel and authorize the Trustee by written direction to release
all or a portion of the Cash Collateral Account or other items of
the Trust Estate from the lien of this Agreement upon payment in
full of the amounts referred to in clauses (i) through (iv) of
Section 5.01(a) hereof. Notwithstanding termination of this
Agreement, the Trustee shall remain obligated to make claims
under the applicable Certificate Insurance Policy with respect to
any Preference Claim.
(c) In connection with the discharge of this Agreement and
the release of the Trust Estate, the Trustee shall release from
the lien of this Agreement and deliver to or upon the order of
the Transferor all property remaining in the Trust Estate and
shall execute and file, at the expense of the Transferor, UCC
financing statements evidencing such discharge and release.
Section 5.02 Application of Trust Money.
Subject to the last paragraph of Section 7.16 hereof, all
monies deposited with the Trustee pursuant to Section 5.01 hereof
shall be held in trust and if invested, shall be invested in
Eligible Investments of the type described in clause (a) of the
definition thereof, and applied by the Trustee, in accordance
with the provisions of the Certificates and this Agreement, to
the payment, either directly or through any Paying Agent as the
Trustee may determine, to the Persons entitled thereto, of the
principal and interest for whose payment such money has been
deposited with the Trustee; but such money need not be segregated
from other funds except to the extent required in this Agreement
or to the extent required by law.
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
"Event of Default" wherever used herein means any one of the
following events:
(a) default in the payment of any interest or any
other amounts due and owing to the Class A
Certificateholders when the same becomes due and payable,
and if there are no Class A Certificates Outstanding,
default in the payment of any interest upon any Class B
Certificates when the same becomes due and payable; or
(b) default in the payment of any principal of any
Class A Certificate when the same becomes due and payable,
and if there are no Class A Certificates Outstanding,
default in the payment of any principal upon any Class B
Certificates when the same becomes due and payable; or
(c) default in the performance of any covenant of the
Transferor, or breach of any representation or warranty of
the Transferor which has a material adverse effect on the
Certificateholders or MBIA, in this Agreement, the Lease
Acquisition Agreement, any Lease Sale Agreement, the
Insurance Agreement, the Certificate Purchase Agreement or
the Servicing Agreement (other than a covenant or warranty
default in the performance of which or breach of which is
elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 30
days after the Transferor has actual knowledge thereof;
(d) the entry of a decree or order for relief by a
court having jurisdiction in the premises in respect of the
Transferor under the United States Bankruptcy Code or any
other applicable Federal or state bankruptcy, insolvency,
reorganization, liquidation or other similar law now or
hereafter in effect or any arrangement with creditors or
appointing a receiver, liquidator, assignee, trustee, or
sequestrator (or other similar official) for the Transferor
or for any substantial part of its property, or ordering the
winding up or liquidation of the Transferor's affairs, and
the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(e) the institution by the Transferor of proceedings
to be adjudicated a bankrupt or insolvent, or the consent by
the Transferor to the institution of bankruptcy or
insolvency proceedings against the Transferor, or the filing
by the Transferor of a petition or answer or consent seeking
reorganization or relief under the United States Bankruptcy
Code or any other applicable Federal or state bankruptcy
insolvency, reorganization, liquidation or other similar law
now or hereafter in effect, or the consent by the Transferor
to the filing of any such petition or to the appointment of
or taking possession by a receiver, liquidator, assignee,
custodian, trustee or sequestrator (or other similar
official) of the Transferor or of any substantial part of
the Transferor's property, or the making by the Transferor
of any assignment for the benefit of creditors, or the
admission by it in writing of its inability, or the failure
by it generally, to pay its debts as they become due, or
the taking of corporate action by the Transferor in
furtherance of any such action.
Section 6.02 Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default with respect to any of the
Certificates at the time Outstanding occurs and is continuing,
then, and in every such case, the Trustee shall, at the direction
of MBIA, or if there is an MBIA Default or Termination, the
Trustee shall, at the direction of the Controlling Holders,
declare the principal of all the Certificates to be immediately
due and payable, by notice given in writing to the Transferor
(and to the Trustee if given by Certificateholders); provided
that, MBIA shall not declare the Outstanding Principal Amount of
all of the Certificates immediately due and payable unless it
shall have endorsed the Certificate Insurance Policies to provide
coverage for any shortfall in the payment of accelerated
principal and any interest due on the Class A Certificates on the
date established for redemption thereof pursuant to such
acceleration, and upon any such declaration, such principal shall
become immediately due and payable without any presentment,
demand, protest or other notice of any kind (except such notices
as shall be expressly required by the provisions of this
Agreement), all of which are hereby expressly waived.
At any time after such a declaration of acceleration has
been made, but before any Sale of the Trust Estate has been made
or a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided,
MBIA, or if an MBIA Default or Termination has occurred, the
Controlling Holders, by written notice to the Transferor and the
Trustee, may rescind and annul such declaration and its
consequences (except that in the case of a payment default on the
Class A Certificates, or if no Class A Certificates are
Outstanding, the Class B Certificates, the consent of all the
Holders of such Class shall be required to rescind and annul such
a declaration and its consequences) if:
(1) the Transferor has paid or deposited with the
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all
Class A Certificates, or if no Class A Certificates are
Outstanding, the Class B Certificates;
(B) the principal of any Class A Certificates, or
if no Class A Certificates are Outstanding, the Class B
Certificates which have become due otherwise than by
such declaration of acceleration and interest thereon
at the rate borne by such Certificates from the time
such principal first became due until the date when
paid; and
(C) all sums paid or advanced, together with
interest thereon, by the Trustee, MBIA or any
Certificateholder hereunder or by MBIA under the
Insurance Agreement or any Certificate Insurance
Policy, and the reasonable compensation, expenses,
disbursements and advances of the Trustee, MBIA and the
Certificateholders, their agents and counsel incurred
in connection with the enforcement of this Agreement to
the date of such payment or deposit; and
(2) all Events of Default, other than the nonpayment
of the principal on the Class A Certificates, or if no
Class A Certificates are Outstanding, the Class B
Certificates which have become due solely by such
declaration of acceleration, have been cured or waived
as provided in Section 6.15 hereof.
No such rescission shall affect any subsequent default or impair
any right consequent thereon.
Section 6.03 Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Transferor covenants that if an Event of Default shall
occur and be continuing and any of the Certificates have been
declared due and payable and such declaration has not been
rescinded and annulled, the Transferor will, upon demand of the
Trustee and at the direction of MBIA, or if an MBIA Default or
Termination has occurred at the direction of the Controlling
Holders, pay to the Trustee, for the benefit of the Holders of
the Certificates and MBIA, the whole amount then due and payable
on the Certificates for principal and interest, with interest
upon the overdue principal at the rate borne by the Certificates
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee and MBIA, their respective agents and
counsel.
If the Transferor fails to pay such amount forthwith upon
such demand, the Trustee, in its own name and as Trustee of an
express trust shall, at the direction of MBIA, and if an MBIA
Default or Termination has occurred the Trustee may, and shall,
at the direction of the Controlling Holders, institute
Proceedings for the collection of the sums so due and unpaid, and
prosecute such Proceeding to judgment or final decree, and
enforce the same against the Transferor and collect the monies
adjudged or decreed to be payable in the manner provided by law
out of the property of the Transferor, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
shall, at the direction of MBIA, and if an MBIA Default or
Termination has occurred the Trustee may in its discretion
proceed, and shall at the direction of the Controlling Holders
proceed, to protect and enforce its rights and the rights of MBIA
by such appropriate Proceedings as the Trustee, at the direction
of MBIA, or if an MBIA Default or Termination has occurred, at
its discretion shall deem most effectual to protect and enforce
any such rights, whether for the specific enforcement of any
covenant or agreement in this Agreement or in aid of the exercise
of any power granted herein, or to enforce any other proper
remedy.
Section 6.04 Remedies.
If an Event of Default shall have occurred and be
continuing, the Trustee shall, at the direction of MBIA, and if
an MBIA Default or Termination has occurred, the Trustee shall,
at the direction of the Controlling Holders, do one or more of
the following:
(a) institute Proceedings for the collection of all
amounts then due and payable on the Certificates or under
this Agreement, whether by declaration or otherwise, enforce
any judgment obtained, and collect from the Transferor the
monies adjudged due;
(b) take possession of and sell the Trust Estate
securing the Certificates or any portion thereof or rights
or interest therein, at one or more Sales called and
conducted in any manner permitted by law;
(c) institute any Proceedings from time to time for
the complete or partial foreclosure of the lien created by
this Agreement with respect to the Trust Estate;
(d) during the continuance of a default under a Lease
Contract, exercise any of the rights of the lessor under
such Lease Contract;
(e) exercise any remedies of a secured party under the
Uniform Commercial Code or any applicable law and take any
other appropriate action to protect and enforce the rights
and remedies of the Trustee, MBIA and the Holders of the
Certificates hereunder; and
(f) institute proceedings against MBIA for the
collection of any amounts then due and payable under any
Certificate Insurance Policy, whether by declaration or
otherwise, enforce any judgment obtained, and collect from
MBIA the monies adjudged due;
provided, however, that without the consent of MBIA, or if an
MBIA Default or Termination has occurred, all the Controlling
Holders, the Trustee may not sell or otherwise liquidate any
portion of the Trust Estate unless the proceeds of such Sale or
liquidation distributable to the Certificateholders are
sufficient to discharge in full the amounts then due and unpaid
upon the Certificates of such Controlling Holders for principal
and interest together with any amounts owed to MBIA under the
Insurance Agreement.
Section 6.05 Optional Preservation of Trust Estate.
If (i) an Event of Default shall have occurred and be
continuing with respect to the Certificates and (ii) no
Certificates have been declared due and payable, or such
declaration and its consequences have been annulled and
rescinded, the Trustee shall, at the direction of MBIA, or if an
MBIA Default or Termination has occurred, the Trustee may in its
sole discretion if it determines it to be in the best interests
of the Controlling Holders and shall, upon request from the
Controlling Holders elect, by giving written notice of such
election to the Transferor, to take possession of and retain the
Trust Estate securing the Certificates intact, collect or cause
the collection of the proceeds thereof and make and apply all
payments and deposits and maintain all accounts in respect of
such Certificates in accordance with the provisions of Article
Twelve of this Agreement. If the Trustee is unable to or is
stayed from giving such notice to the Transferor for any reason
whatsoever, such election shall be effective as of the time of
such determination or request, as the case may be,
notwithstanding any failure to give such notice, and the Trustee
shall give such notice upon the removal or cure of such inability
or stay (but shall have no obligation to effect such removal or
cure). Any such election may be rescinded with respect to any
portion of the Trust Estate securing the Certificates remaining
at the time of such rescission by written notice to the Trustee
and the Transferor from MBIA or, if an MBIA Default or
Termination has occurred, from the Controlling Holders.
Section 6.06 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial Proceeding relating to the
Transferor or any other obligor upon any of the Certificates or
the property of the Transferor or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of
any of the Certificates shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Transferor
for the payment of overdue principal or interest) shall be
entitled and empowered, to intervene in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of
principal and interest owing and unpaid in respect of the
Certificates issued hereunder and to file such other papers
or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any
other amounts due the Trustee under Section 7.07 hereof) and
of MBIA and the Certificateholders allowed in such judicial
Proceeding, and
(b) to collect and receive any monies or other
property payable or deliverable on any such claims and to
distribute the same,
and any receiver, assignee, trustee, liquidator, or sequestrator
(or other similar official) in any such judicial Proceeding is
hereby authorized by MBIA and each Certificateholder to make such
payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to MBIA or the
Certificateholders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof.
Nothing contained in this Agreement shall be deemed to
authorize the Trustee to authorize or consent to or accept or
adopt on behalf of MBIA or any Certificateholder any plan of
reorganization, arrangement, adjustment or composition affecting
MBIA or any of the Certificates or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of MBIA or any Certificateholder in any such Proceeding.
Section 6.07 Trustee May Enforce Claims Without Possession
of Certificates.
(a) In all Proceedings brought by the Trustee (and also any
Proceedings involving the interpretation of any provision of this
Agreement to which the Trustee shall be a party), the Trustee
shall be held to represent all of the Certificateholders, and it
shall not be necessary to make any Certificateholder a party to
any such Proceedings.
(b) All rights of actions and claims under this Agreement
or any of the Certificates may be prosecuted and enforced by the
Trustee without the possession of any of the Certificates or the
production thereof in any Proceeding relating thereto, and any
such Proceedings instituted by the Trustee shall be brought in
its own name as Trustee of an express trust, and any recovery
whether by judgment, settlement or otherwise shall, after
provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, be for MBIA and the ratable benefit of the Holders
of the Certificates.
Section 6.08 Application of Money Collected.
If the Certificates have been declared due and payable
following an Event of Default and such declaration has not been
rescinded or annulled, any money collected by the Trustee with
respect to the Certificates pursuant to this Article Six or
otherwise and any other money that may be held thereafter by the
Trustee as security for the Certificates shall be applied in the
following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal
or interest, upon presentation of the Certificates and the
notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid; provided that proceeds of a
claim under a Certificate Insurance Policy will be used only to
pay interest and principal on the applicable Class A Certificates
of a Series in the manner set forth in clauses Fifth and Sixth
below:
FIRST: To the payment to the Trustee of the Trustee
Fee then due, and any costs and expenses incurred by it in
connection with enforcing the remedies provided for in this
Article Six;
SECOND: To the payment of all the Servicer Fee and other
amounts due the Servicer pursuant to Section 12.02(d)(i) hereof
and to pay the Servicer the amount necessary to reimburse the
Servicer for any other unrecovered Servicer Advances;
THIRD: To the payment to the Back-up Servicer of the Back-
up Servicer Fee then due;
FOURTH: To the payment to MBIA of the MBIA Premium then
due;
FIFTH: To the payment of the amounts then due and unpaid
upon the Class A Certificates of each Series for interest, with
interest (to the extent payment thereof is legally enforceable at
the respective rate or rates prescribed therefor in the
Certificates) on overdue principal, in the proportion in which
the Outstanding Principal Amount of each Series of Class A
Certificates represents of the Outstanding Principal Amount of
all Series of Class A Certificates, without preference or
priority of any kind, according to the amounts due and payable on
the Class A Certificates for interest;
SIXTH: To the payments of the remaining Outstanding
Principal Amount of the Class A Certificates, in the proportion
in which the Outstanding Principal Amount of each Series of Class
A Certificates represents of the Outstanding Principal Amount of
all Series of Class A Certificates, without preference or
priority of any kind;
SEVENTH: To the payment to MBIA of any amounts previously
paid by MBIA under any of the Certificate Insurance Policies and
not theretofore repaid, together with interest thereon and any
other amounts due under the Insurance Agreement;
EIGHTH: To reimburse MBIA, and in the event an MBIA
Default or Termination has occurred, to reimburse the
Certificateholders, for any costs or expenses incurred in
connection with any enforcement action with respect to this
Agreement or the Certificates;
TENTH: To the payment to the Servicer of any other
amounts due the Servicer as expressly provided herein and in the
Servicing Agreement;
ELEVENTH: To the payment to the Trustee and the Back-up
Servicer, any other amounts due to the Trustee or the Back-up
Servicer as expressly provided herein and in the Servicing
Agreement;
TWELFTH: To the payment of the amounts then due and unpaid
upon the Class B Certificates for interest, with interest (to
the extent such interest has been collected by the Trustee or a
sum sufficient therefor has been so collected and payment thereof
is legally enforceable at the respective rate or rates prescribed
therefor in the Class B Certificates) on overdue principal, in
the proportion in which the Outstanding Principal Amount of each
Series of Class B Certificates represents of the Outstanding
Principal Amount of all Series of Class B Certificates, without
preference or priority of any kind, according to the amounts due
and payable on the Class B Certificates for interest;
THIRTEENTH: To the payment of the remaining Outstanding
Principal Amount of the Class B Certificates, in the proportion
in which the Outstanding Principal Amount of each Series of Class
B Certificate represents of the Outstanding Principal Amount of
all Series of Class B Certificates, without preference or
priority of any kind;
FOURTEENTH: To the payment of any surplus to or at the
written direction of the Transferor or any other person legally
entitled thereto.
Section 6.09 Limitation on Suits.
No Holder of any Certificate shall have any right to
institute any Proceeding, judicial or otherwise, with respect to
this Agreement, or for the appointment of a receiver or trustee,
or for any other remedy hereunder for so long as an MBIA Default
or Termination has not occurred, and if an MBIA Default or
Termination has occurred, unless
(a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(b) the Controlling Holders shall have made
written request to the Trustee to institute Proceedings
in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in compliance
with such request;
(d) the Trustee for 30 days after its receipt of
such notice, request and offer of security or indemnity
has failed to institute any such Proceedings; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such
30-day period by the Controlling Holders; it being
understood and intended that no one or more Holders of
Certificates shall have any right in any manner
whatever by virtue of, or by availing of, any provision
of this Agreement to affect, disturb or prejudice the
rights of any other Holders of Certificates, or to
obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this
Agreement, except in the manner herein provided and for
the equal and ratable benefit of all the Holders of
Certificates.
Section 6.10 Unconditional Right of Certificateholders to
Receive Principal and Interest.
Notwithstanding any other provision in this Agreement, the
Holder of any Class A Certificate shall have the right, which is
absolute and unconditional, to receive payment of the principal
and interest on such Class A Certificate as such principal and
interest becomes due and payable and to institute any Proceeding
for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Holder.
Section 6.11 Restoration of Rights and Remedies.
If the Trustee, MBIA or any Certificateholder has instituted
any Proceeding to enforce any right or remedy under this
Agreement and such Proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to the Trustee,
MBIA or to such Certificateholder, then, and in every case, the
Transferor, the Trustee, MBIA and the Certificateholders shall,
subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder,
and thereafter all rights and remedies of the Trustee, MBIA and
the Certificateholders shall continue as though no such
Proceeding had been instituted.
Section 6.12 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates
in the last paragraph of Section 2.07 hereof, no right or remedy
herein conferred upon or reserved to the Trustee, MBIA or to the
Certificateholders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right
or remedy.
Section 6.13 Delay or Omission; Not Waiver.
No delay or omission of the Trustee, MBIA or of any Holder
of any Certificate to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this
Article Six or by law to the Trustee, MBIA or to the
Certificateholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, MBIA or by the
Certificateholders, as the case may be, subject in each case,
however, to the right of MBIA to control any such right and
remedy except as provided in Section 13.14 hereof.
Section 6.14 Control by MBIA or Certificateholders.
MBIA or, if an MBIA Default or Termination has occurred, the
Controlling Holders shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy
available to the Trustee or exercising any trust or power
conferred on the Trustee; provided that:
(a) such direction shall not be in conflict with
any rule of law or with this Agreement including,
without limitation, any provision hereof which
expressly provides for approval by a greater percentage
of Outstanding Principal Amount of all Certificates;
(b) any direction to the Trustee by the
Certificateholders of a Class to undertake a private
sale of the Trust Estate shall be by the Holders of all
Outstanding Certificates of such Class, unless the
condition set forth in Section 6.18(b)(ii) hereof is
met;
(c) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with
such direction; provided, however, that, subject to
Section 7.01 hereof, the Trustee need not take any
action which a Responsible Officer or Officers of the
Trustee in good faith determines might involve it in
personal liability or be prejudicial to the
Certificateholders of the Controlling Class not
consenting; and
(d) the Trustee has been furnished reasonable
indemnity against costs, expenses and liabilities which
it might incur in connection therewith as provided in
Section 7.01(f) hereof.
Section 6.15 Waiver of Certain Events by MBIA or
Certificateholders.
MBIA, or if an MBIA Default or Termination has occurred the
Controlling Holders, may on behalf of the Holders of all the
Certificates waive any past Default or Trigger Event hereunder
and its consequences, except:
(a) a Default in the payment of the principal of
or interest on any Certificate, or a Default described
in Sections 6.01(d) and (e) hereof, or
(b) in respect of a covenant or provision hereof
which under Article Nine hereof cannot be modified or
amended without the consent of the Holder of each
Outstanding Certificate affected.
Upon any such waiver, such Default or Trigger Event shall cease
to exist, and any Event of Default or other consequence arising
therefrom shall be deemed to have been cured for every purpose of
this Agreement; but no such waiver shall extend to any subsequent
or other Default or Trigger Event or impair any right consequent
thereon.
Section 6.16 Undertaking for Costs.
All parties to this Agreement agree, and each Holder of any
Certificate by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Agreement,
or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section 6.16 shall not apply to any suit
instituted by the Trustee or MBIA, or to any suit instituted by
the Controlling Holders, or to any suit instituted by any
Certificateholder for the enforcement of the payment of the
principal of or interest on any Certificate on or after the
Stated Maturity expressed in such Certificate.
Section 6.17 Waiver of Stay or Extension Laws.
The Transferor covenants (to the extent that it may lawfully
do so) that it will not, at any time, insist upon, or plead, or
in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law wherever enacted, now or at any
time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Transferor (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 6.18 Sale of Trust Estate.
(a) The power to effect any sale (a "Sale") of any portion
of the Trust Estate pursuant to Section 6.04 hereof shall not be
exhausted by any one or more Sales as to any portion of the Trust
Estate remaining unsold, but shall continue unimpaired until the
entire Trust Estate securing the Certificates shall have been
sold or all amounts payable on the Certificates and under this
Agreement with respect thereto shall have been paid. The Trustee
may from time to time postpone any Sale by public announcement
made at the time and place of such Sale.
(b) To the extent permitted by applicable law, the Trustee
shall not, in any private Sale, sell to a third party the Trust
Estate, or any portion thereof unless:
(i) MBIA, or if an MBIA Default or Termination
has occurred the Controlling Holders, consent in
writing to or directs the Trustee to make such Sale; or
(ii) if an MBIA Default or Termination has
occurred, the proceeds of such Sale would not be less
than the sum of all amounts due to the Trustee
hereunder and the Outstanding Principal Amount of the
Certificates of the Controlling Class and interest due
or to become due thereon on the Payment Date next
succeeding such Sale, together with any amount owing to
MBIA under the Insurance Agreement.
(c) The Trustee, MBIA or the Certificateholders may bid for
and acquire any portion of the Trust Estate in connection with a
public Sale thereof, and in lieu of paying cash therefor, any
Certificateholder may make settlement for the purchase price by
crediting against amounts owing on the Certificates of such
Holder or other amounts owing to such Holder secured by this
Agreement, that portion of the net proceeds of such Sale to which
such Holder would be entitled, after deducting the reasonable
costs, charges and expenses incurred by the Trustee, MBIA or the
Certificateholders in connection with such Sale. The Certificates
need not be produced in order to complete any such Sale, or in
order for the net proceeds of such Sale to be credited against
the Certificates. The Trustee, MBIA or the Certificateholders
may hold, lease, operate, manage or otherwise deal with any
property so acquired in any manner permitted by law.
(d) The Trustee shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion
of the Trust Estate in connection with a Sale thereof. In
addition, the Trustee is hereby irrevocably appointed the agent
and attorney-in-fact of the Transferor to transfer and convey its
interest in any portion of the Trust Estate in connection with a
Sale thereof, and to take all action necessary to effect such
Sale. No purchaser or transferee at such a sale shall be bound to
ascertain the Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of any
monies.
(e) The method, manner, time, place and terms of any Sale
of all or any portion of the Trust Estate shall be commercially
reasonable.
Section 6.19 Action on Certificates.
The Trustee's right to seek and recover judgment on the
Certificates or under this Agreement shall not be affected by the
seeking, obtaining or application of any other relief under or
with respect to this Agreement. Neither the lien of this
Agreement nor any rights or remedies of the Trustee or the
Certificateholders shall be impaired by the recovery of any
judgment by the Trustee against the Transferor or by the levy of
any execution under such judgment upon any portion of the Trust
Estate or upon any of the assets of the Transferor.
ARTICLE SEVEN
THE TRUSTEE
Section 7.01 Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default
known to the Trustee as provided in subsection (e) below:
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Agreement, and no implied covenants or obligations
shall be read into this Agreement against the Trustee;
and
(ii) in the absence of bad faith or negligence on
its part, the Trustee may conclusively rely as to the
truth of the statements and the correctness of the
opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Agreement; but in the case of any
such certificates or opinions, which by any provision
hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine
the same and to determine whether or not they conform
to the requirements of this Agreement.
(b) In case an Event of Default known to the Trustee as
provided in subsection (e) below has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested
in it by this Agreement, and shall use the same degree of care
and skill in its exercise, as a reasonable person would exercise
or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct
or bad faith, except that:
(i) this subsection (c) shall not be construed to
limit the effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer
of the Trustee, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be liable with
respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of
MBIA or the Controlling Holders (or other such
percentage as may be required by the terms hereof) in
accordance with Section 6.14 hereof relating to the
time, method and place of conducting any Proceeding for
any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this
Agreement, the Lease Acquisition Agreement or the
Servicing Agreement; and
(iv) no provision of this Agreement shall require
the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or
liability is not reasonably assured to it, provided
that nothing contained in this Agreement shall excuse
the Trustee for failure to perform its duties as
Trustee under this Agreement.
(d) Whether or not therein expressly so provided, every
provision of this Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section 7.01.
(e) For all purposes under this Agreement, the Trustee
shall not be deemed to have notice of any Event of Default
described in Section 6.01(d) or 6.01(e) hereof or any Default
described in Section 6.01(c) hereof or of any Trigger Event,
Funding Termination Event or Advance Rate Decrease Event unless a
Responsible Officer assigned to and working in the Trustee's
corporate trust department has actual knowledge thereof or unless
written notice of any event which is in fact such an Event of
Default, Default or Trigger Event, Funding Termination Event or
Advance Rate Decrease Event is received by the Trustee at the
Corporate Trust Office, and such notice references any of the
Certificates generally, the Transferor, the Trust Estate or this
Agreement.
(f) The Trustee shall be under no obligation to institute
any suit, or to take any remedial proceeding under this
Agreement, or to enter any appearance or in any way defend in any
suit in which it may be made defendant, or to take any steps in
the execution of the trusts hereby created or in the enforcement
of any rights and powers hereunder until it shall be indemnified
to its satisfaction against any and all costs and expenses,
outlays and counsel fees and other reasonable disbursements and
against all liability, except liability that is adjudicated, in
connection with any action so taken.
(g) Notwithstanding any extinguishment of all right, title
and interest of the Transferor in and to the Trust Estate
following an Event of Default and a consequent declaration of
acceleration of the maturity of any of the Certificates, whether
such extinguishment occurs through a Sale of the Trust Estate to
another person or the acquisition of the Trust Estate by the
Trustee, the rights of the Certificateholders shall continue to
be governed by the terms of this Agreement.
(h) Notwithstanding anything to the contrary contained
herein, the provisions of subsections (e) through (g), inclusive,
of this Section 7.01 shall be subject to the provisions of
subsections (a) through (c), inclusive, of this Section 7.01.
(j) The Trustee shall provide the reports and accountings
as required pursuant to Section 12.04 hereof.
Section 7.02 Notice of Default and Other Events.
Promptly after the occurrence of any Default, Trigger Event,
Funding Termination Event, Advance Rate Decrease Event or MBIA
Default or Termination known to the Trustee (within the meaning
of Section 7.01(e) hereof) which is continuing, within one
Business Day of obtaining such knowledge, the Trustee shall
transmit by telephonic or telegraphic communication confirmed by
mail to MBIA and to all Holders of Certificates, as their names
and addresses appear on the Certificate Register, notice of such
Default, Trigger Event, Funding Termination Event, Advance Rate
Decrease Event or MBIA Default or Termination known to the
Trustee, unless in the case of notice of Default or notice of any
Trigger Event to Certificateholders, such Default shall have been
promptly cured or waived or such Trigger Event shall have been
waived by MBIA in accordance with this Agreement.
Section 7.03 Certain Rights of Trustee.
Except as otherwise provided in Section 7.01,
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note or other
obligation, paper or document believed by it to be genuine
and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Transferor
mentioned herein shall be sufficiently evidenced by a
Transferor Request or Transferor Order and any resolution of
the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Agreement
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the
written advice of such counsel selected by the Trustee with
due care or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement at the request or direction of any of the
Certificateholders pursuant to this Agreement, unless such
Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance
with such request or direction;
(f) unless so directed by the Controlling Holders or
MBIA and if, in either case, the requirements of clause (e)
above have been satisfied, the Trustee shall not be bound to
make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Transferor, upon reasonable
notice and at reasonable times personally or by agent or
attorney; and
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys.
Section 7.04 Not Responsible for Recitals or Issuance of
Certificates.
(a) The recitals contained in this Agreement and in the
Certificates, except the certificates of authentication on the
Certificates, shall be taken as the statements of the Transferor,
and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or
condition of the Trust Estate or any part thereof, or as to the
title of the Transferor thereto or as to the security afforded
thereby or hereby, or as to the validity or genuineness of any
securities at any time pledged and deposited with the Trustee
hereunder or as to the validity or sufficiency of this Agreement
or any of the Certificates. The Trustee shall not be accountable
for the use or application by the Transferor of any of the
Certificates or the proceeds thereof or of any money paid to the
Transferor or upon Transferor Order under any provisions hereof.
(b) Except as otherwise expressly provided herein and in
Section 7.15 and without limiting the generality of the
foregoing, the Trustee shall have no responsibility or liability
for or with respect to the validity of any Equipment or Lease
Contract, the perfection of any security interest (whether as of
the date hereof or at any future time), the maintenance of or the
taking of any action to maintain such perfection, the validity of
the assignment of any portion of the Trust Estate to the Trustee
or of any intervening assignment, the review of any Lease
Contract (it being understood that the Trustee has not reviewed
and does not intend to review the substance or form of any such
Lease Contract), the performance or enforcement of any Lease
Contract, the validity and sufficiency of the Certificate
Insurance Policies, the compliance by the Transferor or the
Servicer with any covenant or the breach by the Transferor or the
Servicer of any warranty or representation made hereunder or in
any related document or the accuracy of any such warranty or
representation, any investment of monies in the Collection
Account or any loss resulting therefrom, the acts or omissions of
the Transferor, the Servicer, MBIA or any Customer, any action of
the Servicer taken in the name of the Trustee, or the validity of
the Servicing Agreement or the Lease Acquisition Agreement.
(c) Except as otherwise expressly provided herein, the
Trustee shall not have any obligation or liability under any
Lease Contract by reason of or arising out of this Agreement or
the assignment of such Lease Contract hereunder or the receipt by
the Trustee of any payment relating to any Lease Contract
pursuant hereto, nor shall the Trustee be required or obligated
in any manner to perform or fulfill any of the obligations of the
Transferor under or pursuant to any Lease Contract, or to make
any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it, or the sufficiency of
any performance by any party, under any Lease Contract.
Section 7.05 May Hold Certificates.
The Trustee, the Servicer, any Paying Agent, the Certificate
Registrar, any Authenticating Agent or any other agent of the
Transferor, in its individual or any other capacity, may become
the owner or pledgee of Certificates, and if operative, may
otherwise deal with the Transferor with the same rights it would
have if it were not Trustee, Servicer, Paying Agent, Certificate
Registrar, Authenticating Agent or such other agent.
Section 7.06 Money Held in Trust.
Money and investments held in trust by the Trustee or any
Paying Agent hereunder shall be held in one or more trust
accounts hereunder but need not be segregated from other funds
except to the extent required in this Agreement or required by
law. The Trustee or any Paying Agent shall be under no liability
for interest on any money received by it hereunder except as
otherwise agreed with the Transferor or otherwise specifically
provided in this Agreement.
Section 7.07 Compensation and Reimbursement.
The Transferor agrees:
(a) to pay the Trustee monthly its fee for all
services rendered by it hereunder as Trustee, in the
amount of the Trustee Fee (which compensation shall
not otherwise be limited by any provision of law in
regard to the compensation of a trustee of an express
trust), and to pay to the Back-up Servicer its fee for
all services rendered hereunder and under the Servicing
Agreement as Back-up Servicer, in the amount of the
Back-up Servicer Fee;
(b) except as otherwise expressly provided
herein, to reimburse the Trustee or the Back-up
Servicer upon its request for all reasonable
out-of-pocket expenses, disbursements and advances
incurred or made by the Trustee or the Back-up Servicer
in accordance with any provision of this Agreement or
Servicing Agreement (including the reasonable
compensation and the expenses and disbursements of the
Trustee's and Back-up Servicer's agents and counsel),
except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith; and
(c) to indemnify and hold harmless the Trust
Estate and the Trustee from and against any loss,
liability, expense, damage or injury (other than those
attributable to a Certificateholder in its capacity as
an investor in any of the Certificates) sustained or
suffered pursuant to this Agreement by reason of any
acts, omissions or alleged acts or omissions arising
out of activities of the Trust Estate or the Trustee
(including without limitation any violation of any
applicable laws by the Transferor as a result of the
transactions contemplated by this Agreement),
including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other
expenses incurred in connection with the defense of any
actual or threatened action, proceeding or claim;
provided that the Transferor shall not indemnify the
Trustee if such loss, liability, expense, damage or
injury is due to the Trustee's gross negligence or
willful misconduct, willful misfeasance or bad faith in
the performance of duties. Any indemnification pursuant
to this Section shall only be payable from the assets
of the Transferor and shall not be payable from the
assets of the Trust Estate. The provisions of this
indemnity shall run directly to and be enforceable by
an injured person subject to the limitations hereof and
this indemnification agreement shall survive the
termination of this Agreement.
Section 7.08 Corporate Trustee Required; Eligibility.
There shall at all times be a trustee hereunder which shall
be a corporation or association organized and doing business
under the laws of the United States of America or of any state,
authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 (or
a lesser amount with the approval of MBIA, the Rating Agencies
and the Controlling Certificateholders), subject to supervision
or examination by Federal or state authority and having an office
within the United States of America, and which shall have a
commercial paper or other short-term rating of the highest short
term rating categories by each of the Rating Agencies, or
otherwise acceptable to each of the Rating Agencies. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this
Article.
Section 7.09 Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 7.10 hereof.
(b) The Trustee may resign at any time by giving 30 days'
written notice thereof to the Transferor, MBIA and to each
Certificateholder. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem
proper and may prescribe, appoint a successor Trustee.
(c) The Trustee may be removed by MBIA or, if an MBIA
Default or Termination shall have occurred and is continuing, the
Controlling Holders, at any time if one of the following events
have occurred:
(i) the Trustee shall cease to be eligible under
Section 7.08 hereof and shall fail to resign after
written request therefor by the Transferor, MBIA or by
any Certificateholder, or
(ii) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation, or
(iii) the Trustee has failed to perform its
duties in this Agreement or has breached any
representation of warranty made in this Agreement.
(d) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
the Trustee for any cause with respect to any of the
Certificates, the Transferor by a Board Resolution, shall
promptly appoint a successor Trustee satisfactory to MBIA, or,
if an MBIA Default or Termination has occurred, to the
Controlling Holders. If no successor Trustee shall have been so
appointed by the Transferor within 30 days of notice of removal
or resignation and shall have accepted appointment in the manner
hereinafter provided, then MBIA may appoint a successor Trustee.
If MBIA shall fail to appoint a successor Trustee within 90 days
or in the event of an MBIA Default or Termination, then the
Controlling Holders may petition any court of competent
jurisdiction for the appointment of a successor Trustee with
respect to the Certificates.
(e) The Transferor shall give notice in the manner provided
in Section 13.04 hereof of each resignation and each removal of
the Trustee and each appointment of a successor Trustee with
respect to the Certificates to the Certificateholders and the
Rating Agencies. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
Section 7.10 Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Transferor and the retiring
Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become
effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee but, on request
of the Transferor or the successor Trustee, such retiring Trustee
shall, upon payment of its reasonable out-of-pocket costs and
expenses, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the
retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder, subject nevertheless to its lien, if
any, provided for in Section 7.07 hereof. Upon request of any
such successor Trustee, the Transferor shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be
eligible under this Article.
Section 7.11 Merger, Conversion, Consolidation or
Succession to Business of Trustee.
Any Person into which the Trustee may be merged or converted
or with which it may be consolidated, or any Person resulting
from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such
Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, and notice
thereof shall be provided by the Trustee to the
Certificateholders and the Rating Agencies. In case any
Certificates have been authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
authentication and deliver the Certificates so authenticated with
the same effect as if such successor Trustee had itself
authenticated such Certificates.
Section 7.12 Co-Trustees and Separate Trustees.
At any time or times, for the purpose of meeting the legal
requirements of any jurisdiction in which any of the Trust Estate
may at the time be located, the Transferor, MBIA and the Trustee
shall have power to appoint, and, upon the written request of the
Trustee, MBIA or, if an MBIA Default or Termination has occurred
and is continuing, of the Holders representing at least 25% in
Outstanding Principal Amount of all Certificates, the Transferor
shall for such purpose join with the Trustee in the execution,
delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by
the Trustee and meeting the requirements of Section 7.08 hereof,
either to act as co-Trustee, jointly with the Trustee of all or
any part of such Trust Estate, or to act as separate Trustee of
any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such
Person or persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the
other provisions of this Section. If the Transferor does not join
in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default has occurred and
is continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument from the Transferor be
reasonably required by any co-Trustee or separate Trustee so
appointed for more fully confirming to such co-Trustee or
separate Trustee such property, title, right or power, any and
all such instruments shall, on request, be executed, acknowledged
and delivered by the Transferor.
Every co-Trustee or separate Trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject
to the following terms:
(a) the Certificates shall be authenticated and
delivered by, and all rights, powers, duties and
obligations under this Agreement in respect of the
custody of securities, cash and other personal property
held by, or required to be deposited or pledged with,
the Trustee under this Agreement, shall be exercised
solely by the Trustee;
(b) the rights, powers, duties and obligations
conferred or imposed upon the Trustee by this Agreement
in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or
performed by the Trustee or by the Trustee and such
co-Trustee or separate Trustee jointly, as shall be
provided in the instrument appointing such co-Trustee
or separate Trustee, except to the extent that under
any law of any jurisdiction in which any particular act
is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such
rights, powers, duties and obligations shall be
exercised and performed by such co-Trustee or separate
Trustee;
(c) the Trustee at any time, by an instrument in
writing executed by it, with the concurrence of the
Transferor evidenced by a Board Resolution, may accept
the resignation of or remove any co-Trustee or separate
Trustee, appointed under this Section, and, in case an
Event of Default has occurred and is continuing, the
Trustee shall have power to accept the resignation of,
or remove, any such co-Trustee or separate Trustee
without the concurrence of the Transferor. Upon the
written request of the Trustee, the Transferor shall
join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary
or proper to effectuate such resignation or removal. A
successor to any co-Trustee or separate Trustee that
has so resigned or been removed may be appointed in the
manner provided in this Section;
(d) no co-Trustee or separate Trustee hereunder
shall be personally liable by reason of any act or
omission of the Trustee or any other such Trustee
hereunder nor shall the Trustee be liable by reason of
any act or omission of any co-Trustee or separate
Trustee selected by the Trustee with due care or
appointed in accordance with directions to the Trustee
pursuant to Section 6.14; and
(e) any Act of Certificateholders delivered to
the Trustee shall be deemed to have been delivered to
each such co-Trustee and separate Trustee.
Section 7.13 Rights with Respect to the Servicer.
The Trustee's rights and obligations with respect to the
Servicer and the Back-up Servicer shall be governed by the
Servicing Agreement.
Section 7.14 Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents
with respect to the Certificates which shall be authorized to act
on behalf of the Trustee to authenticate Certificates issued upon
original issue or upon exchange, registration of transfer or
pursuant to Section 2.05 hereof, and Certificates so
authenticated shall be entitled to the benefits of this Agreement
and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is
made in this Agreement to the authentication and delivery of
Certificates by the Trustee or the Trustee's certificate of
authentication or the delivery of Certificates to the Trustee for
authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed
on behalf of the Trustee by an Authenticating Agent and delivery
of the Certificates to the Authenticating Agent on behalf of the
Trustee. Each Authenticating Agent shall be acceptable to the
Transferor, MBIA and if an MBIA Default or Termination has
occurred and is continuing, the Certificateholders and shall at
all times be a corporation having a combined capital and surplus
of not less than the equivalent of $50,000,000 and subject to
supervision or examination by Federal or state authority or the
equivalent foreign authority, in the case of an Authenticating
Agent who is not organized and doing business under the laws of
the United States of America, any state thereof or the District
of Columbia. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of
such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of
this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a
party, or any corporation succeeding to the corporate agency or
corporate trust business of such Authenticating Agent, shall
continue to be an Authenticating Agent without the execution or
filing of any paper or any further act on the part of the Trustee
or such Authenticating Agent; provided, such corporation shall be
otherwise eligible under this Section.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee, MBIA and to the
Transferor. The Trustee may at any time terminate the agency of
an Authenticating Agent by giving written notice thereof to such
Authenticating Agent, MBIA and to the Transferor. Upon receiving
such a notice of resignation or upon such a termination, or in
case at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, the
Trustee may appoint a successor Authenticating Agent which shall
be acceptable to the Transferor and MBIA and shall mail written
notice of such appointment by first-class mail, postage prepaid,
to all Holders of Certificates, if any, with respect to which
such Authenticating Agent will serve, as their names and
addresses appear in the Certificate Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall
be appointed unless eligible under the provisions of this
Section.
The Trustee may pay to each Authenticating Agent from time
to time reasonable compensation for its services under this
Section and the Trustee shall be entitled to be reimbursed for
such payments, subject to the provisions of Section 7.07 hereof.
If an appointment is made pursuant to this Section, the
Certificates may have endorsed thereon, in addition to the
Trustee's certificate of authentication, an alternate certificate
of authentication in the following form:
This is one of the Certificates described in the
within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
As Trustee
By: As Authenticating
Agent
By: Authorized Officer
Section 7.15 Trustee to Hold Lease Contracts.
The Trustee hereby acknowledges receipt (subject to any
exceptions as may be noted by the Trustee to the Servicer, MBIA
and the Certificateholders within 10 days of the related Delivery
Date) of and shall hold each Lease Contract together with any
documents relating thereto that may from time to time be
delivered to the Trustee, until such time as such Lease Contract
is released from the Trust Estate pursuant to the terms of this
Agreement.
Upon receipt of the Lease Contracts, the Trustee shall
determine that they are listed on the applicable Series Lease
Schedule. The Trustee shall be under no duty or obligation to
inspect, review or examine the Lease Contracts and other
documents to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they
purport to be on their face.
Section 7.16 Money for Certificate Payments to Be Held in
Trust.
The Trustee agrees, and if there is any Paying Agent other
than the Trustee, the Transferor will cause each Paying Agent
other than the Trustee to execute and deliver to the Trustee and
MBIA an instrument in which such Paying Agent shall agree with
the Trustee that, subject to the provisions of this Section, such
Paying Agent will:
(a) hold all sums held by it for the payment of
principal or interest on Certificates in trust for the
benefit of the Certificateholders entitled thereto and MBIA
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee, MBIA and the
Certificateholders notice of any Default by the Transferor
(or any other obligor upon the Certificates) in the making
of any payment of principal or interest; and
(c) at any time during the continuance of any such
Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
The Transferor may at any time, for the purpose of obtaining
the satisfaction and discharge of this Agreement or for any other
purpose, pay, or by Transferor Order direct any Paying Agent to
pay, to the Trustee all sums held in trust by such Paying Agent,
such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by such Paying Agent; and, upon
such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect
to such money.
Any money deposited with the Trustee or any Paying Agent in
trust for the payment of the principal or interest on any
Certificate and remaining unclaimed for three years after such
principal or interest has become due and payable shall be paid to
the Transferor on Transferor Request or to MBIA if such payment
had been made by MBIA; and the Holder of such Certificate shall
thereafter, as an unsecured general creditor, and subject to any
applicable statute of limitations, look only to the Transferor
for payment thereof, and all liability of the Trustee, such
Paying Agent or MBIA with respect to such trust money or the
related Certificate, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to
make any such repayment, may at the expense of the Transferor
cause to be published once, in a newspaper published in the
English language, customarily published on each Business Day and
of general circulation in the city in which the Corporate Trust
Office is located, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the
Transferor; and provided, further, that any amounts held that are
proceeds of a claim made under a Certificate Insurance Policy
shall be returned to MBIA, and the Certificateholders shall look
only to MBIA for such payments. The Trustee may also adopt and
employ, at the expense of the Transferor, any other reasonable
means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to
Certificateholders whose right to or interest in monies due and
payable but not claimed is determinable from the records of any
Paying Agent, at the last address as shown on the Certificate
Register for each such Certificateholder).
ARTICLE EIGHT
THE CERTIFICATE INSURANCE POLICIES
Section 8.01 Payments under the Certificate Insurance
Policies.
If on the close of business on the second Business Day prior
to any Payment Date, the funds on deposit in the Collection
Account and available to be distributed on such Payment Date
pursuant to Section 12.02(d) hereof after any transfer from the
Cash Collateral Account in accordance with Section 12.03 hereof
are not sufficient to make the payment of any interest due on the
Outstanding Class A Certificates of the applicable Series on such
Payment Date in accordance with Section 12.02(d)(v) hereof, the
Trustee shall, no later than 10:00 a.m. New York time, on the
Business Day immediately preceding such Payment Date make a claim
under the applicable Certificate Insurance Policy in an amount
equal to such insufficiency. In addition, if on the close of
business on the second Business Day immediately prior to any
Stated Maturity the funds on deposit in the Collection Account
after any transfer from the Cash Collateral Account in accordance
with Section 12.03 hereof are not sufficient to pay the entire
Outstanding Principal Amount of all Class A Certificates of the
applicable Series (after giving effect to the application of
funds available to pay the Pro Rata Share of the Class A
Principal Distribution Amount of each Outstanding Series in
accordance with Section 12.02(d)(vi) hereof), the Trustee shall,
no later than 10:00 a.m. New York time, on the Business Day
immediately preceding such Stated Maturity, make a claim under
the applicable Certificate Insurance Policy in an amount equal to
such insufficiency. Proceeds of claims on the Certificate
Insurance Policies shall be deposited in the Collection Account
and used solely to pay amounts due in respect of interest on the
applicable Class A Certificates on each Payment Date and
principal of the applicable Certificates at the Stated Maturity.
In addition, on any day that the Trustee has actual
knowledge or receives notice that any amount previously paid to a
Holder of Class A Certificates has been subsequently recovered
from such Certificateholder pursuant to a final order of a court
of competent jurisdiction that such payment constitutes an
avoidable preference within the meaning of any applicable
bankruptcy law to such Certificateholder (a "Preference Claim"),
the Trustee shall make a claim within one Business Day upon the
relevant Certificate Insurance Policy for the full amount of such
Preference Claim in accordance with the terms of such Certificate
Insurance Policy. Any proceeds of any such Preference Claim
received by the Trustee shall be paid to the related Class A
Certificateholders.
ARTICLE NINE
AMENDMENTS
Section 9.01 Amendments without Consent of
Certificateholders.
The Transferor, the Servicer, the Back-up Servicer and the
Trustee, with the prior written consent of MBIA but without the
consent of the Holders of any Certificates, at any time and from
time to time, may enter into one or more amendments hereto, in
form satisfactory to the Trustee, for any of the following
purposes, provided that any such amendment, as evidenced by an
Opinion of Counsel if requested by the Trustee, will not have a
material adverse affect on the Controlling Holders:
(a) to correct or amplify the description of any
property at any time included in the Trust Estate, or
better to assure, convey and confirm unto the Trustee
any property included or required to be included in the
Trust Estate, or to include in the Trust Estate any
additional property; or
(b) to evidence the succession of another Person
to the Transferor, and the assumption by such successor
of the covenants of the Transferor herein and in the
Certificates contained, in accordance with Section
11.02(o) hereof; or
(c) to add to the covenants of the Transferor,
for the benefit of MBIA or the Holders of all
Certificates or to surrender any right or power herein
conferred upon the Transferor; or
(d) to convey, transfer, assign, mortgage or
pledge any property to or with the Trustee; or
(e) to cure any ambiguity, to correct or
supplement any provision herein which may be defective
or inconsistent with any other provisions with respect
to matters or questions arising under this Agreement,
which shall not be inconsistent with the provisions of
this Agreement; or
(f) to evidence the succession of the Trustee
pursuant to Article Seven hereof; or
(g) as may be necessary to effectuate the
issuance of any additional Series of Certificates in
accordance with the terms of this Agreement and the
related Supplement; provided that any such amendment
does not modify this Agreement in a manner described in
paragraphs (i) through (viii) of Section 9.02(a)
hereof.
The Trustee is hereby authorized to join in the execution of
any such amendment and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee
shall not be obligated to enter into any such amendment that
affects the Trustee's own rights, duties, liabilities or
immunities under this Agreement or otherwise.
Promptly after the execution by the Transferor, the
Servicer, the Back-up Servicer and the Trustee of any amendment
pursuant to this Section, the Transferor shall mail to the Rating
Agencies and each Certificateholder a copy of such amendment.
Notwithstanding the foregoing, provided that MBIA, in its
sole discretion, and Holders of more than 50% of Outstanding
Principal Amount of Class B Certificates (exclusive of any Class
B Certificates held by the Transferor) have given their prior
written consent, Holders of any Series of Class A Certificates,
by their acceptance of their Class A Certificates, agree that the
definitions of "Advance Rate Decrease Event" and "Advance Rate"
can be amended without the consent of any Holder of a Class A
Certificate if the Rating Agencies confirm that such amendment
will not affect the then current rating on any Outstanding Series
and, subject to the fulfillment of such conditions, the Trustee,
the Back-up Servicer, the Transferor and the Servicer may enter
into one or more amendments hereunder to effect such change.
Section 9.02 Amendments and Modifications to Agreement
with Consent of Certificateholders.
(a) With the prior written consent of MBIA and the
Controlling Holders, by Act of said Holders delivered to the
Transferor and the Trustee, the Transferor, the Servicer, the
Back-up Servicer and the Trustee may enter into an amendment or
modification of this Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the
rights of the Holders of the Certificates under this Agreement
(other than as described in Section 9.01); provided, however,
that no such amendment shall, without the consent of the Holders
of each Outstanding Certificate affected thereby:
(i) change the Stated Maturity of any Certificate
or the due date of any installment of principal of, or
any installment of interest on, any Certificate, or
change the principal amount thereof or the Certificate
Interest Rate or change any place of payment where, or
the coin or currency in which, any Certificate or the
interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment;
or
(ii) reduce the percentage in Outstanding
Principal Amount of Certificates, the consent of the
Holders of which is required for any such amendment, or
the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this
Agreement or Events of Default or their consequences;
or
(iii) impair or adversely affect the Trust
Estate; or
(iv) modify or alter the definition of the term
"Outstanding" or "Outstanding Principal Amount" or
"Controlling Holders" or "Required Collateralization
Amount"; or
(v) modify or alter the provisions of the proviso to
Section 6.04 hereof; or
(vi) modify any of the provisions of this Section
9.02, except to increase the percentage of Holders
required for any modification or waiver or to provide
that certain other provisions of this Agreement cannot
be modified or waived without the consent of each
Holder of each Outstanding Certificate affected
thereby; or
(vii) permit the creation of any lien ranking
prior to, on a parity with, or subordinate to the lien
of this Agreement with respect to any part of the Trust
Estate or terminate or release the lien of this
Agreement on any property at any time subject hereto or
deprive the Holder of any Certificate of the security
afforded by the lien of this Agreement; or
(viii) modify any of Sections 6.01, 6.02, 6.03,
6.18, or Section 12.02(d) hereof.
(b) With the prior written consent of MBIA and the Holders
of not less than 66-2/3% in Outstanding Principal Amount of a
Series of Class A Certificates that is in its Funding Period, by
Act of said Holders delivered to the Transferor and the Trustee,
the Transferor, the Servicer, the Back-up Servicer and the
Trustee may enter into amendments hereto for the purpose of
adding any provisions to or changing in any manner or eliminating
any of the provisions of Article Three hereof or the definitions
therein, provided that any such amendment does not modify the
Agreement in a manner described in clauses (i) through (viii) of
paragraph (a) of this Section 9.02.
(c) With the prior written consent of MBIA and the Holders
of not less than 66-2/3% in Outstanding Principal Amount of any
Series of Class B Certificates and provided that an Opinion of
Counsel has been rendered that such amendment will not, in any
material way, affect the tax treatment of any Series of Class B
Certificates, by Act of said Holders delivered to the Transferor
and the Trustee, the Transferor, the Servicer, the Back-up
Servicer and the Trustee may enter into amendments hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions, including definitions,
contained herein relating to such Series of Class B Certificates,
provided that any such amendment does not modify this Agreement
in a manner described in clauses (i) through (viii) of paragraph
(a) of this Section 9.02, and provided, further, that no such
amendment shall be effective until the Trustee has received an
Opinion of Counsel that such amendment will not have a material
adverse affect on the tax treatment of any Outstanding Series of
Class B Certificates.
(d) The Trustee is hereby authorized to join in the
execution of any amendments to this Agreement pursuant to clause
(a), (b) or (c) above and to make any further appropriate
agreements and stipulations that may be therein contained, but
the Trustee shall not be obligated to enter into any such
amendment that affects the Trustee's own rights, duties,
liabilities or immunities under this Agreement It shall not be
necessary for any Act of Certificateholders under this Section to
approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve
the substance thereof. Promptly after the execution by the
Transferor, the Servicer, the Back-up Servicer and the Trustee of
any amendment pursuant to this Section, the Transferor shall mail
to the Holders of the Certificates, MBIA and the Rating Agencies
a copy of such amendment, together with any consents obtained
from MBIA in connection therewith.
Section 9.03 Execution of Amendments.
In executing any amendment permitted by this Article or the
modifications thereby of the trusts created by this Agreement,
the Trustee shall be entitled to receive upon request, and
(subject to Section 7.01 hereof) shall be fully protected in
relying in good faith upon, an Opinion of Counsel reasonably
acceptable to the Trustee stating that the execution of such
amendment is authorized or permitted by this Agreement. The
Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own duties or immunities
under this Agreement or otherwise.
Section 9.04 Effect of Amendments.
Upon the execution of any amendment under this Article, this
Agreement shall be modified in accordance therewith, and such
amendment shall form a part of this Agreement for all purposes;
and every Holder of Certificates theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby.
Section 9.05 Reference in Certificates to Amendments.
Certificates authenticated and delivered after the execution
of any amendment pursuant to this Article may, and if required by
the Trustee shall, bear a notation in form approved by the
Trustee as to any matter provided for in such amendment. If the
Transferor shall so determine, new Certificates so modified as to
conform, in the opinion of the Trustee and the Transferor, to any
such amendment may be prepared and executed by the Transferor and
authenticated and delivered by the Trustee in exchange for
Outstanding Certificates.
ARTICLE TEN
REDEMPTION OF CERTIFICATES
Section 10.01 Redemption at the Option of the Transferor;
Election to Redeem.
The Transferor shall have the option to redeem (a) at any
time except as may be otherwise specified in the related
Supplement, all of the Outstanding Certificates of any Series of
Class B Certificates at any time after the Outstanding Principal
Amount of such Class of Certificates in the Series is less than
10% of the original Outstanding Principal Amount of such Class of
Certificates as of the related Delivery Date and provided that
the Outstanding Principal Amount of the Related Series of Class A
Certificates has been reduced to zero and (b) all of the
Outstanding Certificates of any Series of Class A Certificates,
at any time after the Outstanding Principal Amount of such Class
of Certificates in the Series is less than 10% of the Outstanding
Principal Amount of such Class of Certificates as of the related
Funding Termination Date, in each case at the applicable
Redemption Price plus any fees due hereunder and all amounts due
to MBIA under the Insurance Agreement. With respect to any
redemption permitted by clause (b) above, MBIA shall have the
same option to redeem any Series of Class A Certificates in the
absence of the exercise thereof by the Transferor.
The Transferor shall set the Redemption Date and the
Redemption Record Date for a Series of Certificates and give
notice thereof to the Trustee pursuant to Section 10.02 hereof.
Installments of interest and principal that are due
regarding a Series of Certificates on or prior to the related
Redemption Date shall continue to be payable to the Holders of
such Certificates called for redemption as of the relevant Record
Dates according to their terms and the provisions of Section 2.08
hereof. The election of the Transferor or MBIA to redeem any
Class A Certificates pursuant to this Section shall be evidenced
by a Board Resolution or written notice from MBIA, respectively,
directing the Trustee to make the payment of the Redemption Price
on all of the Certificates to be redeemed from monies deposited
with the Trustee pursuant to Section 10.04 hereof.
Section 10.02 Notice to Trustee; Deposit of Redemption
Price.
In the case of any redemption pursuant to Section 10.01
hereof, the Transferor or MBIA, as applicable, shall, at least 15
days prior to the related Redemption Date, notify the Trustee and
the applicable Certificateholders of such Redemption Date and
shall deposit into the Redemption Account on such notification
date an amount equal to the Redemption Price of all Certificates
to be redeemed on such Redemption Date plus any fees due
hereunder and all amounts due to MBIA under the Insurance
Agreement.
Section 10.03 Notice of Redemption by the Transferor.
Upon receipt of such notice and such deposit set forth in
Section 10.02 above, the Trustee shall provide notice of
redemption pursuant to Section 10.01 hereof by first-class mail,
postage prepaid, mailed no later than the Business Day following
the date on which such deposit was made, to each Holder of
Certificates whose Certificates are to be redeemed, at such
Holder's address in the Certificate Register.
All notices of redemption shall state:
(a) the applicable Redemption Date;
(b) the applicable Redemption Price; and
(c) that on such Redemption Date, the Redemption Price will
become due and payable upon each such Certificate in the related
Series, and that interest thereon shall cease to accrue on such
date.
Notice of redemption of a Series of Certificates shall be
given by the Trustee in the name and at the expense of the
Transferor or MBIA, as applicable. Failure to give notice of
redemption, or any defect therein, to any Holder of any
Certificate selected for redemption shall not impair or affect
the validity of the redemption of any other Certificate.
Section 10.04 Certificates Payable on Redemption Date.
Notice of redemption having been given as provided in
Section 10.03 hereof, the Series of Certificates to be redeemed
shall, on the applicable Redemption Date, become due and payable
at the Redemption Price and on such Redemption Date such
Certificates shall cease to bear interest. The Holders of such
Certificates shall be paid the Redemption Price by the Paying
Agent on behalf of the Transferor; provided, however, that
installments of principal and interest that are due regarding
such Series of Certificates on or prior to such Redemption Date
shall be payable to the Holders of such Certificates registered
as such on the relevant Record Dates according to their terms and
the provisions of Section 2.08 hereof.
If the Holders of any Certificate called for redemption
shall not be so paid, the principal and premium on such Series of
Certificates, if any, shall, until paid, bear interest from the
applicable Redemption Date at the related Certificate Interest
Rate.
Section 10.05 Release of Series Lease Contracts.
In connection with any redemption permitted under this
Article Ten, the Transferor or MBIA, as the case may be, shall be
permitted to obtain a release of the related Series Lease
Contracts to the extent that (a) after giving effect to such
release, the sum of (i) the amount of funds then held in the Cash
Collateral Account and (ii) the Aggregate IPB is equal to or
exceeds the Required Collateralization Amount plus the
Outstanding Principal Amount of all Series of Class A
Certificates and any Related Series of Class B Certificates
(after giving effect to such redemption and the issuance of any
new Series of Certificates) and (b) the applicable Redemption
Price shall have been deposited into the Redemption Account as
required by Section 10.02.
ARTICLE ELEVEN
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.01 Representations and Warranties.
The Transferor hereby makes the following representations
and warranties for the benefit of the Trustee, MBIA and the
Certificateholders on which the Trustee relies in accepting the
Trust Estate in trust and in authenticating the Certificates.
Such representations and warranties are made as of the Initial
Delivery Date and, except as specifically provided herein, each
additional Delivery Date, and shall survive the transfer,
conveyance and assignment of the Trust Estate to the Trustee.
(a) Organization and Good Standing. The Transferor is a
corporation duly organized, validly existing and in good standing
under the law of the State of Delaware and each other State where
the nature of its business requires it to qualify, except to the
extent that the failure to so qualify would not in the aggregate
materially adversely affect the ability of the Transferor to
perform its obligations under the Transaction Documents;
(b) Authorization. The Transferor has the power, authority
and legal right to execute, deliver and perform under the terms
of the Transaction Documents and the execution, delivery and
performance of the Transaction Documents have been duly
authorized by the Transferor by all necessary corporate action;
(c) Binding Obligation. Each of (i) this Agreement,
assuming due authorization, execution and delivery by the
Trustee, the Back-up Servicer and the Servicer, (ii) the
Insurance Agreement, assuming due authorization, execution and
delivery by MBIA, the Trustee, the Back-up Servicer, the Company,
the Certificate Funding Administrator and the Servicer, (iii) the
Servicing Agreement, assuming due authorization, execution and
delivery by the Transferor, the Servicer, the Trustee and the
Servicer and (iv) the applicable Certificate Purchase Agreement,
assuming due authorization, execution and delivery by the
purchaser named therein and (v) the Lease Acquisition Agreement,
assuming due authorization, execution and delivery by the
Company, constitutes, and upon execution, each Lease Sale
Agreement, assuming due authorization, execution and delivery by
all parties thereto other than the Transferor, will constitute, a
legal, valid and binding obligation of the Transferor,
enforceable against the Transferor in accordance with its terms
except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and (B) the remedy
of specific performance and injunctive and other forms of
equitable relief may be subject to certain equitable defenses and
to the discretion of the court before which any proceeding
therefor may be brought, whether a proceeding at law or in
equity;
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of the Transaction
Documents will not conflict with, result in any breach of any of
the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the organizational
documents or bylaws of the Transferor, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which
the Transferor is a party or by which it is bound, or in the
creation or imposition of any Lien upon any of its properties
pursuant to the terms of such indenture, agreement, mortgage,
deed of trust or other such instrument, other than any Lien
created or imposed pursuant to the terms of the Transaction
Documents, or violate any law, or any material order, rule or
regulation applicable to the Transferor of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Transferor or any of its properties.
(e) No Proceedings. There are no Proceedings or
investigations to which the Transferor, or any of the
Transferor's Affiliates, is a party pending, or, to the knowledge
of Transferor, threatened, before any court, regulatory body,
administrative agency or other tribunal or governmental
instrumentality (A) asserting the invalidity of the Transaction
Documents, (B) seeking to prevent the issuance of any of the
Certificates or the consummation of any of the transactions
contemplated by the Transaction Documents or (C) seeking any
determination or ruling that would materially and adversely
affect the performance by the Transferor of its obligations
under, or the validity or enforceability of, the Transaction
Documents.
(f) Approvals. All approvals, authorizations, consents,
orders or other actions of any Person, or of any court,
governmental agency or body or official, required in connection
with the execution and delivery of the Transaction Documents and
with the valid and proper authorization, issuance and sale of the
Certificates pursuant to this Agreement (except approvals of
State securities officials under the Blue Sky Laws), have been or
will be taken or obtained on or prior to the applicable Delivery
Date.
(g) Place of Business. As of the Initial Delivery Date,
the Transferor's principal place of business and chief executive
office is located at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, and the Transferor has done business only under the
name GF Funding Corp. II.
(h) Transfer and Assignment of Lease Assets. Upon the
delivery to the Trustee of the Lease Contracts and the filing of
the financing statements described in Sections 4.01(f) and
4.02(c)(vi) hereof, the Trustee for the benefit of the
Certificateholders shall have a first priority perfected security
interest in the Lease Receivables and the Lease Contracts and in
the proceeds thereof, except for Liens permitted under Section
11.02(a) and limited to the extent set forth in Section 9-306 of
the UCC as in effect in the applicable jurisdiction. All filings
(including, without limitation, UCC filings) as are necessary in
any jurisdiction to perfect the ownership or other interest of
the Trustee in the Trust Estate (other than filings with respect
to Equipment underlying Lease Contracts), including the transfer
of the Lease Contracts and the payments to become due thereunder,
have been made.
(i) Parent of the Transferor. The Company is the
registered owner of all of the issued and outstanding common
stock of the Transferor, all of which common stock has been
validly issued, is fully paid and nonassessable.
(j) Lease Acquisition Agreement As of the Initial Delivery
Date the Transferor has entered into the Lease Acquisition
Agreement with the Company relating to its acquisition of the
Lease Contracts, the Lease Receivables and the Equipment, and the
representations and warranties made by the Company relating to
the Lease Contracts, Lease Receivables and the Equipment have
been validly assigned to and are for the benefit of the
Transferor, the Trustee, MBIA and the Certificateholders and such
representations and warranties are true and correct in all
material respects.
(k) Bulk Transfer Laws. The transfer, assignment and
conveyance of the Lease Contracts, the Equipment and the Lease
Receivables by the Company to the Transferor pursuant to the
Lease Acquisition Agreement or by the Transferor pursuant to this
Agreement is not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.
(l) The Lease Contracts. The Transferor hereby restates
and makes each of the representations and warranties with respect
to the Lease Contracts, the Lease Receivables and the Equipment
that are made by the Company in Section 3.01 of the Lease
Acquisition Agreement as of the date on which such
representations and warranties were made.
(m) Investment Company Act. The Transferor is not an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended.
Section 11.02 Covenants.
The Transferor hereby makes the following covenants for the
benefit of the Trustee, MBIA and the Certificateholders, on which
the Trustee relies in accepting the Trust Estate in trust and in
authenticating the Certificates. Such covenants shall survive
the transfer, conveyance and assignment of the Trust Estate to
the Trustee.
(a) No Liens. Except for the conveyances and assignment
hereunder, the Transferor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or
suffer to exist any Lien on any Trust Estate now existing or
hereafter created, or any interest therein prior to the
termination of this Agreement pursuant to Section 5.01 hereof;
the Transferor will notify the Trustee of the existence of any
Lien on any Trust Estate immediately upon discovery thereof; and
the Transferor shall defend the right, title and interest of the
Trustee in, to and under the Trust Estate now existing or
hereafter created, against all claims of third parties claiming
through or under the Transferor; provided, however, that nothing
in this Section 11.02(a) shall prevent or be deemed to prohibit
the Transferor from suffering to exist upon any of the Equipment
any Liens for municipal or other local taxes and other
governmental charges owed by the Transferor or a Customer if
such taxes or governmental charges shall not at the time be due
and payable or if the Transferor or related Customer shall
currently be contesting the validity thereof in good faith by
appropriate proceedings and the Transferor shall have set aside
on its books adequate reserves with respect thereto.
(b) Delivery of Collections. The Transferor agrees to hold
in trust and promptly pay to the Servicer all amounts received by
the Transferor in respect of the Trust Estate (other than amounts
distributed to or for the benefit of the Transferor pursuant to
Article Twelve hereof).
(c) Obligations with Respect to Lease Contracts. The
Transferor will duly fulfill all obligations on its part to be
fulfilled under or in connection with each Lease Contract and
will do nothing to impair the rights of the Trustee (for the
benefit of the Certificateholders and MBIA) in the Lease Receiv
▇▇▇▇▇, the Lease Contracts and any other Trust Estate. As long
as there is no event of default under the applicable Lease
Contract, the Transferor will not disturb the Customer's quiet
and peaceful possession of the related Equipment and the
Customer's unrestricted use thereof for its intended purpose.
(d) Compliance with Law. The Transferor will comply, in
all material respects, with all acts, rules, regulations, orders,
decrees and directions of any governmental authority applicable
to the Lease Contracts or any part thereof. The Transferor will
comply, in all material respects, with all requirements of law
applicable to the Transferor.
(e) Preservation of Security Interest. The Transferor
shall execute and file such continuation statements and any other
documents which may be required by law to fully preserve and
protect the interest of the Trustee (for the benefit of the
Certificateholders and MBIA) in the Trust Estate.
(f) Maintenance of Office, etc. The Transferor will not,
without providing 30 days notice to the Trustee and MBIA and
without filing such amendments to any previously filed financing
statements as the Trustee or MBIA may require or as may be
required in order to maintain the Trustee's perfected security
interest in the Trust Estate, (a) change the location of its
principal executive office, or (b) change its name, identity or
corporate structure in any manner which would make any financing
statement or continuation statement filed by the Transferor in
accordance with the Servicing Agreement or this Agreement
seriously misleading within the meaning of Article 9-402(7) of
any applicable enactment of the UCC.
(g) Further Assurances. The Transferor will make, execute
or endorse, acknowledge, and file or deliver to the Trustee from
time to time such schedules, confirmatory assignments,
conveyances, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and
take such further steps relating to the Trust Estate, as the
Trustee may request and reasonably require.
(h) Notice of Liens. The Transferor shall notify the
Trustee and MBIA promptly after becoming aware of any Lien on any
Trust Estate, except for any Liens on Equipment for municipal or
other local taxes if such taxes shall not at the time be due or
payable without penalty or if the Transferor or the related
Customer shall currently be contesting the validity thereof in
good faith by appropriate proceedings and the Transferor shall
have set aside on its books adequate reserves with respect
thereto.
(i) Activities of the Transferor. The Transferor (a) shall
engage in only (1) the acquisition, ownership, leasing, selling
and pledging of the property acquired by the Transferor pursuant
to the Lease Acquisition Agreement and Lease Sale Agreement, and
causing the issuance of, receiving and selling the Certificates
issued pursuant to this Agreement and (2) the exercise of any
powers permitted to corporations under the corporate law of the
State of Delaware which are incidental to the foregoing or
necessary to accomplish the foregoing and the Transferor shall
incur no debt other than trade payables and expense accruals in
connection with its operations in the normal course of business,
and other than as contemplated by the Transaction Documents; (b)
will (1) maintain its books, records and cash management accounts
separate from the books and records of any other entity and in
accordance with generally accepted accounting principles, (2)
maintain separate bank accounts and no funds of the Transferor
shall be commingled with funds of any other entity except for a
limited period of time between receipt by the Company in its
capacity as Servicer or the Lockbox Bank of certain payments on
the Lease Contracts and the underlying proceeds as specified in
the Servicing Agreement, (3) keep in full effect its existence,
rights and franchises as a corporation under the laws of its
State of incorporation, 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, (4)
observe all corporate procedures required by its Certificate of
Incorporation, its bylaws and the laws of the state of Delaware,
(5) maintain its good standing under the laws of the state of
Delaware, (6) keep correct and complete books and records of
account and minutes of meeting and other proceedings of its Board
of Directors and shareholder meetings, (7) obtain proper
authorization from its directors or shareholders, as appropriate
and act solely in its corporate name and through its duly
authorized officers and agents in the conduct of its business,
(8) disclose in its financial statements that the Lease Assets
have been sold and assigned to the Transferor and from the
Transferor to the Trust and that the assets of the Transferor are
not available to pay the creditors of the Company, (9) maintain a
separate telephone number and stationery reflecting a separate
address and identity from that of the Company; and (c) will not
(1) dissolve or liquidate in whole or in part, (2) own any
subsidiary or lend or advance any moneys to, or make an
investment in, any Person, (3) make any capital expenditures,
(4)(A) commence any case, proceeding or other action under any
existing or future bankruptcy, insolvency or similar law seeking
to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, wind-up,
liquidation, dissolution, composition or other relief with
respect to it or its debts, (B) seek appointment of a receiver,
trustee, custodian or other similar official for it or any part
of its assets, (C) make a general assignment for the benefit of
creditors, or (D) take any action in furtherance of, or
consenting or acquiescing in, any of the foregoing, (5) guarantee
(directly or indirectly), endorse or otherwise become
contingently liable (directly or indirectly) for the obligations
of, or own or purchase any stock, obligations or securities of or
any other interest in, or make any capital contribution to, any
other Person, (6) merge or consolidate with any other Person,
(7) engage in any other action that bears on whether the separate
legal identity of the Transferor will be respected, including
without limitation (A) holding itself out as being liable for the
debts of any other party or (B) acting other than in its
corporate name and through its duly authorized officers or
agents, or (8) create, incur, assume, or in any manner become
liable in respect of any indebtedness other than as contemplated
by the Transaction Documents and other than trade payables and
expense accruals incurred in the ordinary course of business and
which are incidental to its business purpose; provided, however,
that the Transferor may take any action prohibited by this
clause (8) if (x) the Transferor shall cause, prior to the
taking of such action, an Opinion of Counsel experienced in
federal bankruptcy matters, in substance satisfactory to the
Trustee, the Certificateholders, MBIA and the Rating Agencies
confirming the non-consolidation of the Transferor and the
Company, to be delivered to the Trustee, the Certificateholders,
MBIA and the Rating Agencies, (y) the Rating Agencies shall
indicate in writing that the taking of such action will not
affect the then current rating of any Series of Certificates, and
(z) MBIA, and if an MBIA Default or Termination has occurred, the
Controlling Holders, shall have given their prior written consent
The Transferor shall not amend any article in its Certificate of
Incorporation that deals with any matter discussed above without
the prior written consent of MBIA. On or before April 15 of each
year, so long as any of the Certificates are Outstanding, the
Transferor shall furnish to each Certificateholder, the Trustee
and MBIA, an Officer's Certificate confirming that the Transferor
has complied with its obligations under this Section 11.02(i).
(j) Directors. The Transferor agrees that at all times, at
least two of the directors and one of the executive officers of
the Transferor (or two persons, one of whom is serving as both a
director and an executive officer) will not be a director,
officer or employee of any direct or ultimate parent, or
Affiliate of the parent or of the Transferor; provided, however,
that such independent directors and officers may serve in similar
capacities for other "special purpose corporations" formed by the
Company and its Affiliates. The Transferor's Certificate of
Incorporation shall at all times provide that such independent
directors shall have a fiduciary duty to the Holders of the
Certificates and will always require unanimous consent of the
board of directors to file any bankruptcy petition.
(k) Preservation of the Equipment. The Transferor warrants
that it is the lawful owner and possessor of the Equipment or
has a valid security interest therein and that it will warrant
and defend such Equipment against all Persons, claims and demands
whatsoever. The Transferor shall not assign, sell, pledge, or
exchange, or in any way encumber or otherwise dispose of the
Equipment, except as permitted under this Agreement.
(l) Tax Treatment. The Transferor shall comply with
Sections 2.11 and 2.12 of this Agreement at all times and its
financial and tax records shall reflect such treatment.
(m) Maintenance of Office or Agency. The Transferor will
maintain an office or agency within the United States of America
where Certificates may be presented or surrendered for payment,
where Certificates may be surrendered for registration of
transfer or exchange and where notices and demand to or upon the
Transferor in respect of the Certificates and this Agreement may
be served. The Transferor hereby initially appoints the Trustee
as the Paying Agent and its Corporate Trust Office as the office
for each of said purposes. The Transferor will give 30 days prior
written notice to the Trustee, MBIA and the Certificateholders of
any change in the identity of the Paying Agent or the location,
of any such office or agency. If at any time the Transferor shall
fail to maintain any such office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Trustee, and the Transferor hereby appoints the Trustee its agent
to receive all such presentations, surrenders, notices and
demands.
(n) Enforcement of Servicing Agreement and Lease
Acquisition Agreement. The Transferor will take all actions
necessary, and diligently pursue all remedies available to it, to
the extent commercially reasonable, to enforce the obligations of
the Servicer under the Servicing Agreement, the Company under the
Lease Acquisition Agreement and each Seller under each Lease Sale
Agreement and to secure its rights thereunder.
(o) Transferor May Consolidate, etc., Only on Certain
Terms. The Transferor shall not consolidate or merge with or
into any other Person or convey or transfer its properties and
assets substantially as an entirety to any Person, unless:
(i) the Person (if other than the Transferor)
formed by or surviving such consolidation or merger or
which acquires by conveyance or transfer the properties
and assets of the Transferor substantially as an
entirety shall be a Person organized and existing as a
limited purpose corporation under the laws of the
United States of America or any State thereof and
shall have expressly assumed, by an amendment hereto,
executed and delivered to the Trustee and MBIA, in form
and substance reasonably satisfactory to the Trustee
and MBIA, the obligation to make due and punctual
payments of the principal of and interest on all of the
Certificates and to perform every covenant of this
Agreement on the part of the Transferor to be performed
or observed; and
(ii) the Transferor shall have caused the Trustee
to have received a letter from the Rating Agencies to
the effect that the rating issued with respect to the
Certificates is confirmed, notwithstanding the
consummation of such merger, consolidation, transfer or
conveyance together with the consent of MBIA to such
merger, consolidation transfer or conveyance; and
(iii) immediately after giving effect to such
transaction, no Event of Default or Default shall have
occurred and be continuing; and
(iv) the Transferor shall have delivered to the
Trustee and MBIA an Officer's Certificate and an
Opinion of Counsel each stating that such
consolidation, merger, conveyance or transfer and such
Supplement comply with this Article Eleven and that all
conditions precedent herein provided for relating to
such transaction have been complied with; and
(v) such consolidation, merger, conveyance or
transfer shall be on such terms as shall fully preserve
the lien and security of this Agreement, the perfection
and priority thereof and the rights and powers of the
Trustee, MBIA and the Holders of the Certificates
under this Agreement; and
(vi) the surviving corporation shall be a "special
purpose corporation"; i.e., shall have an
organizational charter substantially similar to the
Certificate of Incorporation of the Transferor
including specific limitations on the business
purposes, and provisions for independent directors; and
(vii) MBIA shall have given its prior written
consent, which consent shall not be unreasonably
withheld or delayed.
(p) Successor Substituted. Upon any consolidation or
merger, or any conveyance or transfer of the properties and
assets of the Transferor substantially as an entirety in
accordance with Section 11.02(o) hereof, the Person formed by or
surviving such consolidation or merger (if other than the
Transferor) or the Person to which such conveyance or transfer is
made shall succeed to, and be substituted for, and may exercise
every right and power of, the Transferor under this Agreement
with the same effect as if such Person had been named as the
Transferor herein upon the execution of an assignment and
assumption agreement by such Person. In the event of any such
conveyance or transfer, the Person named as the "Transferor" in
the first paragraph of this Agreement or any successor which
shall theretofore have become such in the manner prescribed in
this Article shall be released from its liabilities as obligor
and maker on all the Certificates and from its obligations under
this Agreement and may be dissolved, wound-up and liquidated at
any time thereafter.
(q) Use of Proceeds. The proceeds from the sale of the
Certificates will be used by the Transferor (i) to pay the
Existing Indebtedness, (ii) to pay the expenses associated with
this transaction and (iii) for general corporate purposes,
including the cost of funding additional Lease Contracts. None
of the transactions contemplated in the Transaction Documents
(including the use of the proceeds from the sale of the
Certificates) will result in a violation of Section 7 of the
Securities and Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including Regulations G, T,
U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R., Chapter II. The Transferor does not own or intend to
carry or purchase any "margin security" within the meaning of
said Regulation G, including margin securities originally issued
by it or any "margin stock" within the meaning of said Regulation
U.
(r) Notice of Trigger Events, Funding Termination Events or
Advance Rate Decrease Events. Upon the Transferor's obtaining
knowledge of the occurrence of any Trigger Event, Funding
Termination Event or Advance Rate Decrease Event, the Transferor
shall within one Business Day of obtaining such knowledge notify
MBIA, the Rating Agencies and the Certificateholders of such
occurrence.
(s) Required Audits. The Transferor shall cause the
Servicer to perform the Required Audits on a timely basis.
Section 11.03 Other Matters as to the Transferor.
(a) Limitation on Liability of Directors, Officers, or
Employees of the Transferor Except as provided in subsection (b)
of this Section and elsewhere in this Agreement, the directors,
officers, or employees of the Transferor shall not be under any
personal liability to the Trust, the Trustee, the
Certificateholders, the Servicer, or any other Person hereunder
or pursuant to any documents delivered hereunder, it being
expressly understood that all such liability is expressly waived
and released as a condition of, and as consideration for, the
execution of this Agreement and the issuance of the Certificates,
except with respect to liability resulting from such person's
fraudulent or willful misconduct. The Transferor and any
director or officer or employee or agent of the Transferor may
rely in good faith on the advice of counsel or on any documents
of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
(b) Liability of Transferor. The Transferor shall be
liable directly to and will indemnify any injured party for all
losses, claims, damages, liabilities, taxes and expenses of the
Trust (to the extent not payable out of the Trust Estate) to the
extent that it would be liable if the Trust were a partnership
under the Delaware Revised Uniform Limited Partnership Act in
which it was a general partner and the Class B Certificateholders
are limited partners; provided, however, that the Transferor
shall not be liable for any losses incurred by a
Certificateholder in its capacity as an investor in the
Certificates. Third party creditors of the Trust (other than in
connection with the obligations excluded in the preceding
sentence) shall be deemed third-party beneficiaries of this
paragraph.
(c) Demand Note. The Transferor shall not sell, convey,
pledge, transfer or otherwise dispose of the Demand Note so long
as the Trust remains in existence.
(d) Parties Will Not Institute Insolvency Proceedings.
During the term of this Agreement and for one year and one day
after the termination hereof, none of the parties hereto or any
Affiliate thereof will file any involuntary petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding or other proceeding under any federal
or state bankruptcy or similar law against the Transferor.
ARTICLE TWELVE
ACCOUNTS AND ACCOUNTINGS
Section 12.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee
may demand payment or delivery of, and shall receive and collect,
all money and other property payable to or receivable by the
Trustee pursuant to this Agreement. The Trustee shall, upon
request from the Servicer, provide the Servicer with sufficient
information regarding the amount of collections with respect to
the Lease Contracts received by the Trustee in the Lockbox
Account (if such account is held by the Trustee) and the other
accounts held in the name of the Trustee to permit the Servicer
to perform its duties under the Servicing Agreement. The Trustee
shall hold all such money and property so received by it as part
of the Trust Estate and shall apply it as provided in this
Agreement. If any Lease Contract becomes a Defaulted Lease
Contract, the Trustee, upon Transferor or Servicer request may,
and upon the request of MBIA or if an MBIA Default or Termination
has occurred and is continuing, the Controlling Holders shall
take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default
under this Agreement and to proceed thereafter as provided in
Article Six hereof. If the Transferor receives any amounts
payable to or receivable by the Trustee pursuant to this
Agreement, the Transferor shall immediately, but not later than
two Business Days after receipt, remit such amounts to the
Trustee for deposit in the Collection Account.
Section 12.02 Collection Account; Redemption Account.
(a) Prior to the Initial Delivery Date, the Trustee shall
open and maintain a trust account at its Corporate Trust Office
(the "Collection Account") in the name of the Trustee for the
benefit of the Certificateholders and MBIA, for the receipt of
(i) payments remitted to the Trustee by the Servicer and ACH Bank
pursuant to Sections 3.03 and 3.04 of the Servicing Agreement,
amounts transferred from the Lockbox Account in accordance with
Section 3.03 of the Servicing Agreement and any amounts received
by the Trustee pursuant to Section 12.01 hereof, (ii) amounts
transferred from the Cash Collateral Account in accordance with
Section 12.03(d)(i), (ii) and (iii) hereof, (iii) with respect to
the Class A Certificates, proceeds of claims made under any of
the Certificate Insurance Policies, in accordance with Article
Eight hereof, upon receipt, and (iv) any Reinvestment Income.
Funds in the Collection Account shall not be commingled with any
other monies. All payments to be made from time to time by the
Transferor to the Certificateholders out of funds in the
Collection Account pursuant to the Agreement shall be made by the
Trustee or the Paying Agent of the Transferor. All monies
deposited from time to time in the Collection Account pursuant to
this Agreement shall be held by the Trustee as part of the Trust
Estate as herein provided.
(b) Upon Transferor Order, the Trustee shall invest the
funds in the Collection Account in Eligible Investments;
provided, however, that all monies on deposit in the Collection
Account pursuant to Section 12.02(a)(iii) hereof shall remain
uninvested. The Transferor Order shall specify the Eligible
Investments in which the Trustee shall invest, shall state that
the same are Eligible Investments and shall further specify the
percentage of funds to be invested in each Eligible Investment.
No such Eligible Investment shall mature later than the second
Business Day preceding the next following Payment Date and shall
not be sold or disposed of prior to its maturity; provided that,
Eligible Investments of the type described in clause (a) of the
definition of Eligible Investments may mature on such Payment
Date. In the absence of a Transferor Order, the Trustee shall
invest funds in the Collection Account in Eligible Investments
described in clause (g) of the definition thereof. Eligible
Investments shall be made in the name of the Trustee for the
benefit of the Certificateholders and MBIA. The Trustee shall
provide to the Servicer and MBIA monthly written confirmation of
such investments, describing the Eligible Investments in which
such amounts have been invested. Any funds not so invested must
be insured by the Federal Deposit Insurance Corporation.
(c) Any income or other gain from investments in Eligible
Investments as outlined in (b) above shall be credited to the
Collection Account and any loss resulting from such investments
shall be charged to such account; provided, however, that the
Transferor shall make or cause to be made no later than the
applicable Payment Date a deposit to the Collection Account to
the extent of any losses therein. Except as otherwise
specifically set forth herein, the Trustee shall not be liable
for any loss incurred on any funds invested in Eligible
Investments pursuant to the provisions of this Section 12.02
(other than in its capacity as obligor under any Eligible
Investment).
(d) On each Payment Date if either no Default or Event of
Default shall have occurred and be continuing or a Default or
Event of Default shall have occurred and be continuing but the
entire Outstanding Principal Amount of all Certificates shall not
have been declared due and payable pursuant to Section 6.02
hereof, then on such Payment Date, after making all transfers and
deposits to the Collection Account referred to in Section
12.02(a) hereof, the Trustee shall withdraw from the Collection
Account (other than amounts representing payments of Lease
Receivables due after the Calculation Date immediately preceding
such Payment Date unless such amounts are used toward Servicer
Advances pursuant to Section 3.04 of the Servicing Agreement)
including the Reinvestment Income therein, and shall make the
following disbursements in the following order in accordance with
the provisions of and instructions on the Monthly Servicer's
Report; provided, however, that (x) the proceeds of claims under
any of the Certificate Insurance Policies shall be used solely to
pay interest and principal due under paragraphs (v) and (vi) of
this Section 12.02(d) in accordance with the terms of the
applicable Certificate Insurance Policy; (y) the Trustee shall
withdraw from the Collection Account and make interest payments
based on the Outstanding Principal Amount of all Class A
Certificates even if it shall not have received the Monthly
Servicer's Report; and (z) if there are insufficient funds to
make the payments of interest or principal specified in clause
(v) or (vi) below, then the amount available to be paid pursuant
to such clause will be allocated to each Series of Certificates
based on the applicable Pro Rata Share, provided, however, that
proceeds of a claim under a Certificate Insurance Policy to pay
any Outstanding Principal Amount upon the Stated Maturity of a
Series of Class A Certificates shall be used solely to pay such
Outstanding Principal Amount after giving effect to the
application of funds available to pay the Pro Rata Share of the
Class A Principal Distribution Amount of each Outstanding Series:
(i) to pay to the Servicer: (A) the Servicer Fee
then due for all Certificates; (B) the amounts
necessary to reimburse the Servicer and any successor
Servicer and subservicer as provided in Section 3.08(a)
of the Servicing Agreement for reasonable costs and
expenses incurred by the Servicer (including reasonable
attorney's fees and out-of-pocket expenses) in
connection with the realization, attempted realization
or enforcement of rights and remedies upon Lease
Contracts that have become Defaulted Lease Contracts,
from amounts received as Recoveries from such Defaulted
Lease Contracts; (C) any amounts received from
Customers to pay the taxes described in Section 3.07 of
the Servicing Agreement, to the extent deposited in the
Collection Account; (D) the amount necessary to
reimburse the Servicer for any Nonrecoverable Advance;
and (E) all amounts received in respect of Lease
Receivables as to which the Servicer has made an
unrecovered Servicer Advance, to the extent of such
Servicer Advance;
(ii) to pay to the Trustee the Trustee Fee then
due for all Certificates;
(iii) to pay to the Back-up Servicer the Back-
up Servicer Fee then due for all Certificates;
(iv) to pay to MBIA the MBIA Premium then due for
all of the Class A Certificates;
(v) to pay the interest due on that Payment Date
on all outstanding Class A Certificates and any overdue
interest, to be applied as provided in Section 2.08
hereof;
(vi) first, to pay the Class A Principal
Distribution Amount to all outstanding Class A
Certificates of a Series at Stated Maturity of such
Series, and second, to pay the Class A Principal
Distribution Amount on all outstanding Class A
Certificates of all other Series, to be applied to the
payment of Certificate principal as provided in Section
2.08 hereof;
(vii) unless a Trigger Event has occurred, to
deposit into the Cash Collateral Account an amount
necessary to bring the balance therein to an amount
equal to the Cash Collateral Account Required Balance;
(viii) to pay to MBIA, any amounts previously
paid by MBIA under any Certificate Insurance Policy and
not heretofore repaid, together with interest thereon
in accordance with each Insurance Agreement;
(ix) to pay to a successor Servicer after a
successor Servicer has been appointed pursuant to
Section 6.02 of the Servicing Agreement, the Additional
Servicer Fee, if any, and to pay any successor
Servicer, MBIA or the Trustee, any Transition Costs
incurred by any successor Servicer, MBIA (solely
pursuant to Section 6.02(d) of the Servicing Agreement)
or the Trustee and not previously reimbursed;
(x) on and after each Payment Date following the
initial occurrence of a Trigger Event, apply any
remaining funds (the "Additional Principal Amount") to
the payment of Certificate principal on all Outstanding
Class A Certificates, in the amount of the Pro Rata
Share of any Additional Principal Amount for each such
Series of Certificates;
(xi) to pay to the Trustee and the Back-up
Servicer, any other amounts due to the Trustee or the
Back-up Servicer as expressly provided herein and in
the Servicing Agreement;
(xii) to pay to MBIA, any other amounts due
under the Insurance Agreement;
(xiii) to pay to the Servicer any other
amounts due the Servicer as expressly provided herein
and in the Servicing Agreement;
(xiv) to pay or provide adequate reserves for
payment of any current federal, state or local taxes
measured by or imposed on income or gross receipts of
the Transferor;
(xv) to pay the interest due on that Payment Date
on all Outstanding Class B Certificates and any overdue
interest and interest thereon, to be applied as
provided in Section 2.08 hereof;
(xvi) to pay the Class B Principal
Distribution Amount due on that Payment Date on all
Outstanding Class B Certificates, to be applied to the
payment of Certificate principal as provided in Section
2.08 hereof;
(xvii) upon the reduction of the Outstanding
Principal Amount of any Series of Class B Certificates
to zero, to pay any applicable Class B Additional
Return to such Series of Class B Certificates; and
(xviii) to remit any excess funds to or at the
direction of the Transferor in accordance with the
instructions on the Monthly Servicer's Report.
(e) Prior to the Initial Delivery Date, the Transferor
shall cause the Trustee to open and maintain a trust account at
the Corporate Trust Office (the "Redemption Account") in the name
of the Trustee for the benefit of Certificateholders and MBIA,
for the receipt of the Redemption Price of any Certificates to be
redeemed in accordance with Article Ten hereof. On any
Redemption Date, the Trustee shall withdraw the applicable
Redemption Price from the Redemption Account and the Paying Agent
shall remit the Redemption Price to the applicable
Certificateholders in accordance with Section 10.04 hereof.
Moneys in the Redemption Account shall be invested in Eligible
Investments that mature no later than two Business Days prior to
the relevant Redemption Date. Eligible Investments shall be made
in the name of the Trustee for the benefit of the
Certificateholders and MBIA. Any monies deposited in the
Redemption Account for purposes of redeeming Certificates
pursuant to Article Ten hereof shall, subject to Section 7.16
hereof, remain in the Redemption Account until used to redeem
such Certificates.
(f) If payments on the Lease Contracts are made by means of
electronic transfers from a Customer bank account, the Servicer
shall either remit such payments to the Collection Account in
accordance with Section 3.03(a) of the Servicing Agreement, or
the Transferor shall open and maintain an account at the ACH Bank
(the "ACH Account") in the name of the Trustee for the sole
benefit of the Certificateholders and MBIA for the receipt of
such collections in accordance with the Servicing Agreement.
Upon the opening of the ACH Account, the Transferor shall make an
initial deposit therein (the "Initial ACH Deposit") in an amount
equal to $50,000. The Trustee shall transfer moneys from the
ACH Account to the Collection Account on the applicable
Determination Date in order to comply with Section 3.03(d) of the
Servicing Agreement. Moneys in the ACH Account shall be invested
in Eligible Investments that mature no later than the relevant
Determination Date. Eligible Investments shall be made in the
name of the Trustee for the benefit of the Certificateholders and
MBIA.
Section 12.03 Cash Collateral Account.
(a) Prior to the initial Delivery Date, the Transferor
shall cause the Trustee to open and maintain a trust account at
the Corporate Trust Office (the "Cash Collateral Account") in the
name of the Trustee for the benefit of the Certificateholders and
MBIA, for the receipt of (i) any Cash Collateral Account Deposits
required to be made with respect to a Series of Certificates,
(ii) deposits pursuant to Section 12.02(d)(vii), and (iii) any
other deposits required under a Supplement. Monies received in
the Cash Collateral Account will be invested at the written
direction of the Transferor in Eligible Investments during the
term of this Agreement, and any income or other gain realized
from such investment, shall be held by the Trustee in the Cash
Collateral Account as part of the Trust Estate subject to
disbursement and withdrawal as herein provided. Eligible
Investments shall be made in the name of the Trustee for the
benefit of the Certificateholders and MBIA. No such Eligible
Investment shall mature later than the second Business Day
preceding the next following Payment Date and shall not be sold
or disposed of prior to its maturity; provided that, Eligible
Investments of the type described in clause (a) of the definition
of Eligible Investments may mature on such Payment Date. In the
absence of a Transferor Order, the Trustee shall invest funds in
the Collection Account in Eligible Investments described in
clause (g) of the definition thereof Monies shall be subject to
withdrawal in accordance with Section 12.03(d) hereof.
(b) The Trustee shall provide to the Servicer and MBIA
monthly written confirmation of investments of funds held in the
Cash Collateral Account, describing the Eligible Investments in
which such amounts have been invested. Any funds not so invested
must be insured by the Federal Deposit Insurance Corporation.
(c) If any amounts invested as provided in Section 12.03(a)
hereof shall be needed for disbursement from the Cash Collateral
Account as set forth in Section 12.03(d) hereof, the Trustee
shall cause such investments of such Cash Collateral Account to
be sold or otherwise converted to cash to the credit of such Cash
Collateral Account. The Trustee shall not be liable for any
investment loss resulting from investment of money in the Cash
Collateral Account in any Eligible Investment in accordance with
the terms hereof (other than in its capacity as obligor under any
Eligible Investment).
(d) Disbursements from the Cash Collateral Account shall be
made, to the extent funds therefore are available, only as
follows:
(i) in the event that the amount in the
Collection Account at 10:00 a.m. Minneapolis time on
the Determination Date immediately preceding any
Payment Date (other than amounts representing payments
of Lease Receivables due after the Calculation Date
immediately preceding such Payment Date unless such
amounts are used toward Servicer Advances pursuant to
Section 3.04 of the Servicing Agreement) is less than
the amounts required to be paid from the Collection
Account on such Payment Date pursuant to clauses (i)
through (vi) of Section 12.02(d) hereof (with the Class
A Principal Distribution Amount determined in
accordance with clauses (a)(i) and (b) of the
definition thereof), the Trustee shall withdraw funds
from the Cash Collateral Account on or prior to 4:00
p.m. New York time on such Determination Date to the
extent necessary to make such payments on such Payment
Date and deposit such funds into the Collection
Account;
(ii) subject to subparagraph (iii) of this Section
12.03(d), in the event that on any Delivery Date or
Payment Date the balance in the Cash Collateral Account
equals an amount greater than the Cash Collateral
Account Required Balance (after giving effect to the
distributions listed in clause (i) of this Section
12.03(d) and Section 12.02(d)(i) through (vi) hereof on
such Payment Date), the Trustee shall withdraw funds in
the Cash Collateral Account in such amount so that the
remaining amount in the Cash Collateral Account after
such withdrawal will equal the Cash Collateral Account
Required Balance, and deposit such amounts in the
Collection Account for distribution on such Payment
Date in accordance with the priorities set forth in
Section 12.02(d);
(iii) in the event that on any Payment Date a
Trigger Event has occurred, the Trustee shall withdraw
all funds from the Cash Collateral Account and deposit
such funds into the Collection Account for disbursement
in accordance with the provisions of Section 12.02(d)
hereof; and
(iv) subject to subparagraph (iii) of this Section
12.03(d), in the event that on any Funding Date the
balance in the Cash Collateral Account, after giving
effect to any Funding occurring on such Funding Date,
equals an amount greater than the Cash Collateral
Account Required Balance, the Trustee shall withdraw
funds in the Cash Collateral Account in such amount so
that the remaining amount in the Cash Collateral
Account after such withdrawal will equal the Cash
Collateral Account Required Balance, and disburse such
amounts to or at the direction of the Transferor.
Section 12.04 Reports by Trustee to MBIA and
Certificateholders.
(a) On each Payment Date the Trustee shall account to each
Holder of Certificates on which payments of principal and
interest are then being made the amount which represents
principal and the amount which represents interest, and shall
contemporaneously advise the Transferor and MBIA of all such
payments. The Trustee may satisfy its obligations under this
Section 12.04 by delivering the Monthly Servicer's Report to each
such Holder of the Certificates, MBIA, the Transferor, the Rating
Agencies and the Placement Agent. On or before the 15th day prior
to any Final Payment Date the Trustee shall provide notice to
MBIA, the Rating Agencies and the Holders of the applicable
Series of Certificates of the Final Payment Date for such
Certificates. Such notice shall include (1) a statement that
interest shall cease to accrue as of the last day preceding the
date on which the Final Payment Date occurs, and (2) shall
specify the place or places at which presentation and surrender
may be made.
(b) The Trustee shall, on a monthly basis beginning on the
first Calculation Date, confirm the credit rating or, if more
than one credit rating has been assigned, each such credit rating
of each institution in which funds are invested pursuant to
clause (g) of the definition of Eligible Investments and shall
promptly notify the Certificateholders and MBIA if any such
credit rating has been lowered.
(c) At least annually, or as otherwise required by law, the
Trustee shall distribute to Certificateholders any information
returns or other tax information or statements as are required
by applicable tax law to be distributed to the
Certificateholders. The Servicer shall prepare or cause to be
prepared all such information for distribution by the Trustee to
the Certificateholders.
ARTICLE THIRTEEN
PROVISIONS OF GENERAL APPLICATION
Section 13.01 General Provisions.
All of the provisions of this Article shall apply to this
Agreement, as supplemented by each Supplement.
Section 13.02 Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be
given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent
duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such
instrument or instruments are delivered to the Trustee, and,
where it is hereby expressly required, to the Transferor. Such
instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act"
of the Certificateholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of
this Agreement and (subject to Section 7.01 hereof) conclusive in
favor of the Trustee and the Transferor, if made in the manner
provided in this Section 13.02.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any manner which the
Trustee deems sufficient.
(c) The ownership of Certificates shall be proved by
the Certificate Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Certificate
shall bind the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to
be done by the Trustee or the Transferor in reliance thereon,
whether or not notation of such action is made upon such
Certificate.
Section 13.03 Notices, etc., to Trustee, MBIA, Transferor
and Servicer.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Certificateholders or other document
provided or permitted by this Agreement to be made upon, given or
furnished to, or filed with any party hereto shall be sufficient
for every purpose hereunder if in writing and telecopied or
mailed, first-class postage prepaid and addressed to the
appropriate address below:
(a) to the Trustee at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at any other
address previously furnished in writing to the Transferor,
MBIA, the Certificateholders and the Servicer; or
(b) to MBIA at MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Structured
Finance - Insured Portfolio Management (SF-IPM), or at any
other address previously furnished in writing by MBIA to the
Trustee, the Certificateholders, the Servicer and the
Transferor; or
(c) to the Transferor at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, or at any
other address previously furnished in writing to the
Trustee, MBIA, the Certificateholders and the Servicer by
the Transferor; or
(d) to the Servicer at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, or at any
other address previously furnished in writing to the
Trustee, MBIA, the Certificateholders and the Transferor.
(e) to each of (i) S & P at ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance Group,
and (ii) Moody's at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
Section 13.04 Notices to Certificateholders; Waiver.
Where this Agreement provides for notice to
Certificateholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each
Certificateholder affected by such event, at his address as it
appears on the Certificate Register, not later than the latest
date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case in which notice to
Certificateholders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any
particular Certificateholder shall affect the sufficiency of such
notice with respect to other Certificateholders, and any notice
which is mailed in the manner herein provided shall conclusively
be presumed to have been duly given.
Where this Agreement provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by
Certificateholders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it
shall be impractical to mail notice of any event to
Certificateholders when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of
giving such notice as shall be satisfactory to the Trustee shall
be deemed to be a sufficient giving of such notice.
Section 13.05 Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 13.06 Successors and Assigns.
All covenants and agreements in this Agreement by the
Transferor shall bind its successors and assigns, whether so
expressed or not. Notwithstanding the foregoing, no party shall
assign any of its rights under this Agreement, or delegate any of
its duties, except in accordance with the provisions of Sections
2.06, 7.10 and 11.02(o) hereof. The Transferor agrees not to
withdraw as a party hereunder so long as there has been no MBIA
Default or Termination.
Section 13.07 Separability.
In case any provision in this Agreement or in the
Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 13.08 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, express or
implied, shall give to any Person, other than the parties hereto,
the Certificateholders, and any Paying Agent which may be
appointed pursuant to the provisions hereof, and any of their
successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement or under the
Certificates, except that MBIA is an express third party
beneficiary to this Agreement.
Section 13.09 Legal Holidays.
In any case in which the date of any Payment Date or the
Stated Maturity of any Certificate shall not be a Business Day,
then (notwithstanding any other provision of a Certificate or
this Agreement) payment of principal or interest need not be made
on such date, but may be made on the next succeeding Business Day
with the same force and effect as if made on the nominal date of
any such Stated Maturity or Payment Date and, assuming such
payment is actually made on such subsequent Business Day, no
additional interest shall accrue on the amount so paid for the
period from and after any such nominal date.
Section 13.10 Governing Law.
THE AGREEMENT AND EACH CERTIFICATE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
THEREIN, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS OF ANY
STATE.
Section 13.11 Counterparts.
The Agreement may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the
same instrument.
Section 13.12 Corporate Obligation.
No recourse may be taken, directly or indirectly, against
any incorporator, subscriber to the capital stock, stockholder,
employee, officer or director of the Transferor or of any
predecessor or successor of the Transferor with respect to the
Transferor's obligations on the Certificates or under this
Agreement or any certificate or other writing delivered in
connection herewith.
Section 13.13 Compliance Certificates and Opinions.
Upon any application, order or request by the Transferor or
the Servicer to the Trustee to take any action under any
provision of this Agreement for which a specific request is
required under this Agreement, the Transferor or the Servicer, as
applicable, shall furnish to the Trustee an Officer's Certificate
of the Transferor or the Servicer, as applicable, stating that
all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except
that in the case of any such application or request as to which
the furnishing of a different certificate is specifically
required by any provision of this Agreement relating to such
particular application or request, no additional certificate need
be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Agreement shall
include:
(a) a statement that each individual signing such
certificate or opinion has read or has caused to be read
such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of each such
individual, such individual has made such examination or
investigation as is necessary to enable such individual to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 13.14 MBIA Default or Termination.
If an MBIA Default or Termination occurs and is continuing,
MBIA's right to consent hereunder and under any other Transaction
Document and to direct the Trustee shall be void and, in such
event, in all provisions of this Agreement wherein MBIA's consent
or direction is required or permitted, the consent or direction
of the Controlling Holders shall be required or permitted.
IN WITNESS WHEREOF, the Transferor, the Servicer, the Trustee
and the Back-up Servicer have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of
the date and year first above written.
GF FUNDING CORP. II, Transferor
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
GRANITE FINANCIAL, INC., Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee and Back-up
Servicer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President