<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1996
REGISTRATION NO. 333-08465
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
AMENDMENT NO. 2 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
(ISSUER WITH RESPECT TO THE NOTES)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
NEW YORK APPLIED FOR
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
</TABLE>
ANTIGUA FUNDING CORPORATION
(ORIGINATOR OF THE OWNER TRUST DESCRIBED HEREIN)
C/O CT CORPORATION
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(302) 658-7581
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
CT CORPORATION
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(302) 658-7581
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------
COPIES TO:
<TABLE>
<S> <C>
OWEN C. MARX RICHARD M. SCHETMAN
Dorsey & Whitney LLP Cadwalader, Wickersham & Taft
250 Park Avenue 100 Maiden Lane
New York, New York 10177 New York, New York 10038
(212) 415-9285 (212) 504-6906
</TABLE>
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earliest effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER UNIT (2) PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Receivable-Backed Notes.................... $3,000,000,000 $3,000,000,000 $3,000,000,000 1,034,482.76(3)
</TABLE>
(1) The Notes are also being registered for the purpose of market-making
transactions.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457.
(3) A total of $344.83 has been previously paid and $1,034,482.76 is being paid
herewith.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of prospectus: one to be used
in connection with an offering in the United States (the "U.S. Prospectus"),
together with certain separate pages of the U.S. Prospectus to be used in
connection with offers and sales relating to market making transactions in the
Notes by affiliates of the registrant, and one to be used in connection with a
concurrent international offering outside the United States (the "International
Prospectus"). The International Prospectus is substantially the same as the U.S.
Prospectus except for the front cover page and the pages reflecting the
"Underwriting" section. The form of the U.S. Prospectus is included herein and
is followed by the pages related to the market making U.S. Prospectus for the
Notes. All other pages of the U.S. Prospectus for the Notes are also to be used
for the market making U.S. Prospectus. The pages to be used in the International
Prospectus which differ from those in the U.S. Prospectus follow the market
making U.S. Prospectus pages. Each of the pages for the International Prospectus
is labeled "Alternate Page for International Prospectus." Each of the market
making pages for the U.S. Prospectus is labeled "Alternate Page for Market
Making U.S. Prospectus." Each of the U.S. Prospectus and the International
Prospectus will be filed with the Securities and Exchange Commission pursuant to
Rule 424(b) under the Securities Act of 1933, as amended.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER 3, 1996
$
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$ % RECEIVABLE-BACKED NOTES, CLASS A
$ % RECEIVABLE-BACKED NOTES, CLASS B
$ % RECEIVABLE-BACKED NOTES, CLASS C
ANTIGUA FUNDING CORPORATION
DEPOSITOR
AT&T CAPITAL CORPORATION
SERVICER
Capita Equipment Receivables Trust 1996-1 (the "Owner Trust") will be formed
pursuant to a Trust Agreement between Antigua Funding Corporation (the
"Depositor"), which is to be a wholly owned subsidiary of AT&T Capital
Corporation ("TCC") following the consummation of the Merger, and
, as Owner Trustee (the "Owner Trustee"). The Receivable-Backed Notes
(the "Notes") will be issued by the Owner Trust pursuant to an Indenture (the
"Indenture") between the Owner Trust and , as Indenture Trustee
(the "Indenture Trustee"). The property of the Owner Trust (collectively, the
"Trust Assets"), from the date of issuance of the Notes (the "Closing Date") to
the Merger Consummation Date, will consist of the proceeds of the Notes, plus
additional cash, which will be held (and invested in certain Eligible
Investments) in an Escrow Account, and will be sufficient to redeem the Notes at
the Special Redemption Price on the Special Redemption Date if the Merger is not
consummated on or before September , 1996. The cash in the Escrow Account,
together with the proceeds of the Equity Certificates to be issued by the Owner
Trust to the Depositor (which will thereafter be disposed of by the Depositor in
a transaction unrelated to the issuance of the Notes), will be used on the
Merger Consummation Date to acquire a pool of equipment leases (the "Lease
Contracts") and installment sale contracts, promissory notes, loan and security
agreements and similar types of receivables (the "Loan Contracts," and, together
with the Lease Contracts, the "Contracts") and the interest of the Depositor in
certain equipment related to such Contracts (the "Equipment"). TCC will service
the Contracts pursuant to a Transfer and Servicing Agreement, expected to be
entered into among the Depositor, TCC, the Indenture Trustee and the Owner
Trust. Of the Notes being offered, $ , $ and $ initial
principal amount of the Class A Notes, Class B Notes and Class C Notes,
respectively, are being offered initially in the United States by the U.S.
Underwriters and $ , $ and $ , respectively, are being
offered initially outside the United States by the International Managers. The
Initial Public Offering Price and Underwriting Discount will be identical for
both offerings.
(CONTINUED ON FOLLOWING PAGE)
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THIS OFFERING,
SEE "RISK FACTORS" ON PAGE 16 HEREIN.
-------------
THE NOTES WILL REPRESENT OBLIGATIONS OF THE OWNER TRUST AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF ANTIGUA FUNDING CORPORATION, AT&T
CAPITAL CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE (1) DISCOUNT (2) THE DEPOSITOR (1)(3)
------------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Per Class A Note.......... % % %
Per Class B Note.......... % % %
Per Class C Note.......... % % %
Total..................... $ $ $
</TABLE>
- ----------------
(1) Plus accrued interest, if any, at the applicable Interest Rate, from
, 1996.
(2) The Depositor has agreed to indemnify the U.S. Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting expenses payable by the Depositor, estimated to be
$ .
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL GOLDMAN, SACHS & CO.
The Notes are offered severally by the U.S. Underwriters, as specified
herein, subject to prior sale and subject to the U.S. Underwriters' right to
reject orders in whole or in part. It is expected that the Notes will be ready
for delivery in book-entry form through the facilities of The Depository Trust
Company in New York, New York, Cedel Bank, societe anonyme, and the Euroclear
System against payment therefor in immediately available funds on or about
September , 1996.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
GOLDMAN, SACHS & CO.
-----------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1996
<PAGE>
(CONTINUED FROM PRECEDING PAGE)
The Owner Trust will also issue two classes of certificates of beneficial
interest, the Equity Certificates and the Equipment Certificate, which are not
being offered hereby. The Equipment Certificate will represent an undivided
interest in, and be payable solely from, the Equipment and certain amounts
derived from the sale or other disposition of the Equipment upon expiration or
termination (including an early termination or liquidation) of the related
Contracts and certain other amounts as described herein. Proceeds from the sale
or other disposition of the Equipment upon expiration or termination of the
related Contracts will not be available for payment of interest and principal on
the Notes, except under the limited circumstances described herein. It is
expected that the Equity Certificates will initially represent the right to
receive principal in an amount equal to approximately 4% of the Cut-Off Date
Contract Pool Principal Balance, together with interest thereon at % per
annum.
The Notes and the Equity Certificates will be payable solely from, and
secured by, the Amount Available on each Payment Date (which will consist
primarily of the Scheduled Payments due under the Contracts, certain amounts
received upon the prepayment or purchase of Contracts or (to the extent not
payable on the Equipment Certificate) liquidation of the related Equipment,
investment earnings on amounts deposited in the Collection Account established
pursuant to the Indenture, in each case subject to prior application to pay
certain fees and expenses, and amounts permitted to be withdrawn therefor from a
Cash Collateral Account) in the order of priority described herein.
THE LIKELIHOOD OF PAYMENT OF INTEREST ON EACH CLASS OF NOTES WILL BE
ENHANCED BY THE APPLICATION OF THE AMOUNT AVAILABLE TO THE PAYMENT OF SUCH
INTEREST PRIOR TO THE PAYMENT OF PRINCIPAL ON ANY OF THE NOTES OR THE EQUITY
CERTIFICATES, AS WELL AS BY THE PREFERENTIAL RIGHT OF THE HOLDERS OF NOTES OF
EACH SUCH CLASS TO RECEIVE SUCH INTEREST (1) IN THE CASE OF THE CLASS A NOTES,
PRIOR TO THE PAYMENT OF ANY INTEREST ON THE CLASS B NOTES, THE CLASS C NOTES OR
THE EQUITY CERTIFICATES, (2) IN THE CASE OF THE CLASS B NOTES, PRIOR TO THE
PAYMENT OF ANY INTEREST ON THE CLASS C NOTES OR THE EQUITY CERTIFICATES, AND (3)
IN THE CASE OF THE CLASS C NOTES, PRIOR TO THE PAYMENT OF ANY INTEREST ON THE
EQUITY CERTIFICATES. LIKEWISE, THE LIKELIHOOD OF PAYMENT OF PRINCIPAL ON EACH
CLASS OF NOTES WILL BE ENHANCED BY THE PREFERENTIAL RIGHT OF THE HOLDERS OF
NOTES OF EACH SUCH CLASS TO RECEIVE SUCH PRINCIPAL, TO THE EXTENT OF THE AMOUNT
AVAILABLE AFTER PAYMENT OF INTEREST ON THE NOTES AND THE EQUITY CERTIFICATES AS
AFORESAID, (I) IN THE CASE OF THE CLASS A NOTES, PRIOR TO THE PAYMENT OF ANY
PRINCIPAL ON THE CLASS B NOTES, THE CLASS C NOTES OR (EXCEPT AS DESCRIBED
HEREIN) THE EQUITY CERTIFICATES, (II) IN THE CASE OF THE CLASS B NOTES, PRIOR TO
THE PAYMENT OF ANY PRINCIPAL ON THE CLASS C NOTES OR (EXCEPT AS DESCRIBED
HEREIN) THE EQUITY CERTIFICATES, AND (III) IN THE CASE OF THE CLASS C NOTES,
PRIOR TO THE PAYMENT OF ANY PRINCIPAL ON THE EQUITY CERTIFICATES, EXCEPT AS
DESCRIBED HEREIN. SEE "DESCRIPTION OF THE NOTES."
To the extent the Amount Available is sufficient therefor, interest at the
rate per annum noted above for each of the Class A, Class B and Class C Notes
(the applicable "Interest Rate") will be paid to Holders of each Class of Notes,
and principal will be paid on the applicable Class of Notes, on the day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), commencing October , 1996 (each, a "Payment Date"). The Stated
Maturity Date for the Class A Notes, the Class B Notes and the Class C Notes is
, , and , respectively, but final payment
of any Class of Notes could occur significantly earlier than the Stated Maturity
Date of such Class.
The Notes are subject to redemption in whole as described herein under
"Description of the Notes -- Special Redemption" and "-- Optional Purchase of
Contracts."
There is currently no secondary market for the Notes and there is no
assurance that one will develop. The U.S. Underwriters expect, but will not be
obligated, to make a market in the Notes in the United States. The International
Managers expect, but will not be obligated, to make a market in the Notes
outside the United States. There is no assurance that either such market will
develop, or if either such market does develop, that such market will continue.
See "Risk Factors."
It is a condition of issuance of the Notes that each of Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. (i) rate the Class A Notes in its highest
rating category, (ii) rate the Class B Notes " ," " ," " " and
" ," respectively, and (iii) rate the Class C Notes " ," " ,"
" " and " ," respectively. See "Ratings of the Notes."
IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND/OR INTERNATIONAL
MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
Upon receipt of a request by an investor who has received an electronic
Prospectus from any Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus.
The Depositor has not authorized any offer of Notes to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"). The Notes may not lawfully be offered or sold to
persons in the United Kingdom except in circumstances which do not result in an
offer to the public in the United Kingdom within the meaning of the Regulations
or otherwise in compliance with all applicable provisions of the Regulations.
The Depositor does not intend to register the Notes under the Securities and
Exchange Law of Japan (the "SEL"). Accordingly, the Notes may not be offered or
sold directly or indirectly in Japan, and this Prospectus may not be distributed
or circulated in Japan, except in circumstances that do not constitute an offer
to the public within the meaning of the SEL.
<PAGE>
INCORPORATION BY REFERENCE
All documents filed by the Servicer, on behalf of the Owner Trust, pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), after the date of this Prospectus and prior to the
termination of the offering of the Notes shall be deemed to be incorporated by
reference into this Prospectus. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Depositor will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference, except the
exhibits to such documents. Requests for such copies should be directed to
Antigua Funding Corporation, 1209 Orange Street, Wilmington, Delaware 19801,
Attention: Secretary.
AVAILABLE INFORMATION
The Depositor, as the originator of the Owner Trust, has filed a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") on behalf of the Owner Trust with respect to the Notes offered
pursuant to this Prospectus. For further information, reference is made to the
Registration Statement and amendments thereof and to the exhibits thereto, which
are available for inspection without charge at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
7 World Trade Center, 13th Floor, New York, New York 10048; and Northwest Atrium
Center, 500 Madison Street, Chicago, Illinois 60661. Copies of the Registration
Statement and amendments thereof and exhibits thereto may be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission also maintains a World Wide Web
site which provides on-line access to reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission at the address "http://www.sec.gov."
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, monthly unaudited reports
containing information concerning the Owner Trust, and prepared by the Servicer,
will be sent by the Indenture Trustee on behalf of the Owner Trust only to Cede
& Co., as nominee of The Depository Trust Company ("DTC") and registered holder
of the Notes, and to the Luxembourg Paying Agent. See "Description of the Notes
- -- Book-Entry Registration." Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting principles.
See "Description of the Notes -- Reports to Noteholders" for additional
information concerning periodic reports to Noteholders. Note Owners may receive
such reports, upon written request to the Indenture Trustee, together with a
certification that they are Note Owners, and payment of any expenses associated
with the distribution of such reports. Any such request should be made to the
Indenture Trustee at the following address:
. Neither TCC nor the Depositor intends to send any of its financial
reports to Note Owners. The Servicer, on behalf of the Owner Trust, will file
with the Commission periodic reports concerning the Owner Trust to the extent
required under the Exchange Act and the rules and regulations of the Commission
thereunder. However, in accordance with the Exchange Act and the rules and
regulations of the Commission thereunder, the Depositor expects that the Trust's
obligation to file such reports will be terminated at the end of 1996.
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
INCORPORATION BY REFERENCE................................................................................ i
AVAILABLE INFORMATION..................................................................................... i
REPORTS TO NOTEHOLDERS.................................................................................... i
PROSPECTUS SUMMARY........................................................................................ 1
RISK FACTORS.............................................................................................. 16
Limited Assets of the Trust............................................................................. 16
Subordination of the Class B and Class C Notes.......................................................... 16
Bankruptcy and Insolvency Risks......................................................................... 16
Yield and Prepayment Considerations..................................................................... 18
Certain Legal Aspects of the Contracts.................................................................. 18
No Gross-Up for Withholding Tax......................................................................... 20
Limited Liquidity....................................................................................... 20
Book-Entry Registration................................................................................. 20
THE MERGER................................................................................................ 20
THE DEPOSITOR AND THE OWNER TRUST......................................................................... 21
The Depositor........................................................................................... 21
The Owner Trust......................................................................................... 22
Capitalization of the Owner Trust....................................................................... 23
The Owner Trustee....................................................................................... 23
AT&T CAPITAL CORPORATION.................................................................................. 23
THE ORIGINATORS........................................................................................... 24
AT&T Capital Leasing Services, Inc...................................................................... 24
AT&T Credit Corporation and NCR Credit Corp............................................................. 25
AT&T Commercial Finance Corporation..................................................................... 26
Underwriting and Servicing.............................................................................. 26
THE CONTRACTS............................................................................................. 31
Description of the Contracts............................................................................ 31
Representations and Warranties Made by TCC.............................................................. 33
Certain Statistics Relating to the Preliminary Contract Pool............................................ 36
Certain Statistics Relating to Delinquencies and Defaults............................................... 41
DESCRIPTION OF THE NOTES.................................................................................. 44
General................................................................................................. 44
Distributions........................................................................................... 44
Class A Interest........................................................................................ 46
Class B Interest........................................................................................ 46
Class C Interest........................................................................................ 46
Principal............................................................................................... 47
Special Redemption of the Notes......................................................................... 47
Subordination of Class B and Class C Notes and Equity Certificates...................................... 48
Cash Collateral Account................................................................................. 48
Liquidated Contracts.................................................................................... 49
Optional Purchase of Contracts.......................................................................... 49
Trust Accounts.......................................................................................... 49
Reports to Noteholders.................................................................................. 50
Book-Entry Registration................................................................................. 51
Definitive Notes........................................................................................ 54
Modification of Indenture Without Noteholder Consent.................................................... 54
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
Modification of Indenture With Noteholder Consent....................................................... 55
Events of Default; Rights Upon Event of Default......................................................... 55
Certain Covenants....................................................................................... 56
Annual Compliance Statement............................................................................. 57
Indenture Trustee's Annual Report....................................................................... 57
Satisfaction and Discharge of Indenture................................................................. 57
The Indenture Trustee................................................................................... 57
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENT....................................................... 58
Transfer and Assignment of Contracts and Equipment...................................................... 58
Collections on Contracts................................................................................ 58
Servicing............................................................................................... 59
Amendment............................................................................................... 62
Termination of the Agreement............................................................................ 62
CERTAIN LEGAL ASPECTS OF THE CONTRACTS.................................................................... 62
Enforcement of Security Interests in the Equipment...................................................... 62
Insolvency Matters...................................................................................... 64
UNITED STATES TAXATION.................................................................................... 65
Treatment of the Notes.................................................................................. 65
Treatment of the Owner Trust............................................................................ 65
Payments of Interest.................................................................................... 65
Original Issue Discount................................................................................. 66
Market Discount......................................................................................... 66
Amortizable Bond Premium................................................................................ 66
Sale, Exchange or Retirement of Notes................................................................... 67
Tax Consequences to United States Alien Holders......................................................... 67
Backup Withholding...................................................................................... 68
ERISA CONSIDERATIONS...................................................................................... 69
RATINGS OF THE NOTES...................................................................................... 70
USE OF PROCEEDS........................................................................................... 70
UNDERWRITING.............................................................................................. 71
LEGAL MATTERS............................................................................................. 73
ADDITIONAL INFORMATION.................................................................................... 73
INDEX OF PRINCIPAL TERMS.................................................................................. 74
APPENDIX A:
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES............................................. A-1
Initial Settlement...................................................................................... A-1
Secondary Market Trading................................................................................ A-1
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS................................................ A-3
</TABLE>
iii
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain capitalized
terms used in this Prospectus Summary are defined elsewhere in this Prospectus
on the pages indicated in the "Index of Principal Terms."
<TABLE>
<S> <C>
ISSUER.............. A trust, referred to as the "Capita Equipment
Receivables Trust 1996-1" (the "Owner Trust"), will be
formed by the Depositor pursuant to a Trust Agreement
(the "Trust Agreement"), dated as of September , 1996,
among the Depositor and , as
Owner Trustee. See "The Depositor and the Owner Trust --
The Owner Trust."
DEPOSITOR........... Antigua Funding Corporation (the "Depositor"), which
will be a wholly owned subsidiary of AT&T Capital
Corporation ("TCC") following the consummation of the
Merger. The Depositor is expected to acquire the
Contracts and the Originators' interest in the related
Equipment on the Merger Consummation Date pursuant to a
Purchase and Sale Agreement (the "Purchase Agreement"),
expected to be dated as of September , 1996, among the
Depositor, TCC and the Originators, and will thereupon
transfer the Contracts and the Depositor's interest in
the related Equipment to the Owner Trust pursuant to a
Transfer and Servicing Agreement (the "Transfer and
Servicing Agreement"), expected to be dated as of
September , 1996, among the Depositor, TCC, as
Servicer, the Indenture Trustee and the Owner Trust. See
"The Depositor and the Owner Trust -- The Depositor."
SERVICER............ TCC will, pursuant to the Transfer and Servicing
Agreement, act as Servicer of the Contracts following
their transfer to the Owner Trust. See "Description of
the Transfer and Servicing Agreement -- Servicing." TCC
is a full-service, diversified equipment leasing and
finance company that operates principally in the United
States. See "AT&T Capital Corporation."
INDENTURE TRUSTEE... , in its capacity as trustee under an Indenture (the
"Indenture"), dated as of September , 1996, between
the Owner Trust and the Indenture Trustee.
OWNER TRUSTEE....... , in its capacity as trustee under the Trust Agreement.
THE NOTES........... The Owner Trust will issue $ aggregate principal
amount of % Receivable-Backed Notes, Class A (the
"Class A Notes"), $ aggregate principal amount of %
Receivable-Backed Notes, Class B (the "Class B Notes"),
and $ aggregate principal amount of %
Receivable-Backed Notes, Class C (the "Class C Notes")
(collectively, the "Notes"), pursuant to the Indenture.
The Owner Trust will also issue the Equity Certificates
and the Equipment Certificate (collectively, the
"Certificates") to the Depositor. The Certificates are
not being offered hereby. See "Description of the
Notes."
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
INTEREST............ Interest on the outstanding principal balance of the
Notes of each Class will accrue at the interest rate for
such Class specified on the cover page of this
Prospectus (the "Interest Rate" for such Class) from and
including September , 1996, to but excluding
October , 1996 (in the case of the first interest
period), and thereafter for each successive Payment Date
from and including the most recent prior Payment Date to
which interest has been paid, to but excluding such
Payment Date. To the extent the Amount Available is
sufficient therefor, the amount of interest to be paid
on the Notes on each Payment Date will equal 30 days'
interest (or, in the case of the first interest period,
interest accrued from and including September , 1996
to but excluding October , 1996). See "Description of
the Notes."
PRINCIPAL........... To the extent the Amount Available is sufficient
therefor after payment of interest on the Notes and the
Equity Certificates, the aggregate amount of principal
to be paid on the Notes and the Equity Certificates on
each Payment Date will equal the Monthly Principal
Amount. Principal payable on the Notes will be paid in
respect of the Class A Notes on each Payment Date until
the Class A Principal Balance has been reduced to zero,
then in respect of principal on the Class B Notes until
the Class B Principal Balance has been reduced to zero,
and then in respect of principal on the Class C Notes
until the Class C Principal Balance has been reduced to
zero. Commencing on the first Payment Date, however,
% of the Monthly Principal Amount will be payable on
the Equity Certificates until the aggregate amount so
paid equals $ . See "Description of the Notes --
Principal."
The "Monthly Principal Amount" for any Payment Date will
equal:
(i) the difference between (a) the aggregate of the
Contract Principal Balances of the Contracts (the
"Contract Pool Principal Balance") as of the last day
of the Collection Period relating to the prior Payment
Date (or, in the case of the first Payment Date, the
Cut-Off Date Contract Pool Principal Balance), and (b)
the Contract Pool Principal Balance as of the last day
of the Collection Period relating to such Payment
Date, plus
(ii) any portion of the Monthly Principal Amount for
the prior Payment Date that was not distributed in
respect of principal on the Notes or the Equity
Certificates, as appropriate, on such prior Payment
Date.
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The "Contract Principal Balance" of any Contract as of
the last day of any Collection Period is:
(1) in the case of a Lease Contract, the present
value of the unpaid Scheduled Payments due on such
Lease Contract after such last day of the Collection
Period (excluding all Scheduled Payments due on or
prior to, but not received as of, such last day, as
well as any Scheduled Payments due after such last day
and received on or prior thereto), discounted monthly
at the rate of % per annum (and assuming that each
Scheduled Payment is due on the last day of the
applicable Collection Period); and
(2) in the case of a Loan Contract, the outstanding
principal balance of such Loan Contract after giving
effect to Scheduled Payments due on or prior to such
last day of the Collection Period, whether or not
paid, as well as any Scheduled Payments due after such
last day and received on or prior thereto.
The Contract Principal Balance of any Contract which,
during a Collection Period, became a Liquidated Contract
or was required to be purchased by TCC as of the end of
such Collection Period due to a breach of
representations and warranties, will, for purposes of
computing the Monthly Principal Amount for the related
Payment Date, be deemed to be zero on and after the last
day of such Collection Period. A "Liquidated Contract"
is any Contract (a) with respect to which the Servicer
has repossessed and disposed of the related Equipment,
or otherwise collected all proceeds which, in the
Servicer's judgment, can be collected under such
Contract, or (b) which is delinquent 180 days or more.
See "Description of the Notes -- Principal."
The "Collection Period" for any Payment Date will be the
calendar month preceding the month in which such Payment
Date occurs.
The "Cut-Off Date Contract Pool Principal Balance" will
equal:
(I) the aggregate of the Contract Principal Balances
of the Contracts as of the Cut-Off Date, plus
(II) the aggregate amount of Scheduled Payments on
the Contracts due prior to, but not received as of,
the Cut-Off Date.
The aggregate of the initial principal balances of the
Notes and the Equity Certificates will be equal to or
less than the Cut-Off Date Contract Pool Principal
Balance.
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STATED MATURITY
DATES.............. If and to the extent not previously paid, the
outstanding principal balance of each Class of Notes
will be payable on the Stated Maturity Date of such
Class. The Class A Stated Maturity Date will be
, ; the Class B Stated Maturity
Date will be , ; and the Class C
Stated Maturity Date will be , .
DENOMINATIONS....... The Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof.
CLOSING DATE........ On or about September , 1996.
CUT-OFF DATE........ September 1, 1996.
PAYMENT DATES AND
RECORD DATES....... Interest and principal on the Notes will be paid on the
day of each month (or, if such day is not a Business
Day, the next succeeding Business Day), commencing in
October 1996, to Holders of record on the Business Day
immediately preceding such Payment Date (so long as the
Notes are held in book-entry form), or to Holders of
record on the last day of the preceding calendar month
(if Definitive Notes have been issued).
SUBORDINATION....... The likelihood of payment of interest on each Class of
Notes will be enhanced by the application of the Amount
Available to the payment of such interest prior to the
payment of principal on any of the Notes or the Equity
Certificates, as well as by the preferential right of
the Holders of Notes of each such Class to receive such
interest (1) in the case of the Class A Notes, prior to
the payment of any interest on the Class B Notes, the
Class C Notes or the Equity Certificates, (2) in the
case of the Class B Notes, prior to the payment of any
interest on the Class C Notes or the Equity
Certificates, and (3) in the case of the Class C Notes,
prior to the payment of any interest on the Equity
Certificates. Likewise, the likelihood of payment of
principal on each Class of Notes will be enhanced by the
preferential right of the Holders of Notes of each such
Class to receive such principal, to the extent of the
Amount Available after payment of interest on the Notes
and the Equity Certificates as aforesaid, (i) in the
case of the Class A Notes, prior to the payment of any
principal on the Class B Notes, the Class C Notes or
(except as described herein) the Equity Certificates,
(ii) in the case of the Class B Notes, prior to the
payment of any principal on the Class C Notes or (except
as described herein) the Equity Certificates, and (iii)
in the case of the Class C Notes, prior to the payment
of any principal on the Equity Certificates, except as
described herein. See "Description of the Notes."
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RATINGS............. It is a condition of issuance of the Notes that each of
Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Services ("S&P"), Fitch Investors
Service, L.P. ("Fitch") and Duff and Phelps Credit
Rating Co. ("Duff & Phelps" and, together with Moody's,
S&P and Fitch, the "Rating Agencies") rate (i) the Class
A Notes in its highest rating category, (ii) the Class B
Notes " ," " ," " " and
" ," respectively, and (iii) the Class C
Notes " ," " ," " " and
" ," respectively. The rating of each Class
of Notes by Moody's addresses the likelihood of the
ultimate payment of principal and interest on such Class
of Notes. The rating of each Class of Notes by S&P,
Fitch and Duff & Phelps addresses the likelihood of the
timely receipt of interest and ultimate payment of
principal on such Class of Notes. A rating is not a
recommendation to buy, sell or hold securities and may
be subject to revision or withdrawal at any time by the
assigning Rating Agency. The ratings of the Notes do not
address the possibility of the imposition of United
States withholding tax with respect to non-U.S. persons.
See "Ratings of the Notes."
USE OF PROCEEDS..... If the Merger is consummated on or prior to September
, 1996, the proceeds from the offering and sale of the
Notes, together with the proceeds derived by the
Depositor from its disposition of the Equity
Certificates, will be used by the Depositor to acquire
the Contracts and the Originators' interest in the
Equipment and to pay expenses payable by the Depositor
in connection with the issuance of the Notes and the
Equity Certificates. See "The Merger."
THE MERGER.......... It is expected that TCC will be merged with Antigua
Acquisition Corporation, a wholly owned subsidiary of
Hercules Limited, on the Merger Consummation Date. As a
result of the Merger, the Depositor (which currently is
a wholly owned subsidiary of Antigua Acquisition
Corporation) will become a wholly owned subsidiary of
TCC (which will be the surviving company in the Merger).
On the Merger Consummation Date, the Depositor will
transfer the Contracts, its interest in the Equipment
and the other Trust Assets to the Owner Trust, and the
proceeds of the Escrow Account (which will include the
proceeds of the sale of the Notes) will be released to,
or upon the order of, the Depositor. See "Use of
Proceeds" above. If the Merger is not consummated by
September , 1996, all of the Notes will be redeemed at
the Special Redemption Price on the Special Redemption
Date. See "Special Redemption" below. Consummation of
the Merger is subject to certain regulatory approvals
and other preconditions. See "The Merger."
MERGER CONSUMMATION
DATE............... The date on which the Merger is consummated, currently
anticipated to be September 17, 1996.
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SPECIAL
REDEMPTION......... If the Merger has not been consummated by September ,
1996, all of the Notes shall be redeemed and paid in
full on September , 1996, or on such earlier date as
the Depositor may elect upon giving the Indenture
Trustee written notice thereof at least five Business
Days prior to such date (the "Special Redemption Date"),
at a redemption price (the "Special Redemption Price")
which is equal to (i) in respect of any Class of Notes,
the initial offering price of such Class of Notes as
shown on the cover page of this Prospectus, plus (ii)
interest on such offering price, from (and including)
the Closing Date to (but excluding) such Special
Redemption Date, at the rate of 10% per annum
(calculated on the basis of a 360-day year comprised of
twelve 30-day months). The Special Redemption Price in
respect of the Notes will be paid from the amounts on
deposit in the Escrow Account as described under "Trust
Assets" below, which amounts will be sufficient (without
regard to any proceeds of the investment thereof) to so
pay such Special Redemption Price on the Special
Redemption Date. A public notice of the Special
Redemption, if any, will be provided by publication in
Luxembourg. See "Description of the Notes -- Special
Redemption of the Notes."
TRUST ASSETS........ From the Closing Date until the Merger Consummation
Date, the Trust Assets will consist solely of the
proceeds of the Notes, plus additional cash, which will
be deposited and held (and invested in certain Eligible
Investments at the direction of the Depositor) in the
Escrow Account maintained by the Indenture Trustee
pursuant to the Indenture until (i) applied by the
Indenture Trustee to the special redemption of the Notes
as described under "Special Redemption" above, or (ii)
paid over to the Depositor and used as described under
"Use of Proceeds" above. See "Description of the Notes
-- Special Redemption of the Notes."
The Trust Assets, from and after the Merger Consummation
Date, will consist of:
(i) a pool of equipment lease contracts (each, a
"Lease Contract") and installment sale contracts,
promissory notes, loan and security agreements and
other similar types of receivables (each, a "Loan
Contract") (all such Lease Contracts and Loan
Contracts being referred to herein as the "Contracts")
with various lessees, borrowers or other obligors
thereunder (each, an "Obligor"), including the right
to receive all Scheduled Payments and Prepayments
received thereon from and after the Cut-Off Date
(including all Scheduled Payments due prior to, but
not received as of, the Cut-Off Date, but excluding
any Scheduled Payments due on or after, but received
prior to, the Cut-Off Date);
(ii) the interest of the Depositor in the equipment
subject to such Contracts (the "Equipment"), which
interest is either an ownership interest or a security
interest;
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(iii) amounts on deposit in (and Eligible
Investments allocated to) certain accounts established
pursuant to the Indenture and the Transfer and
Servicing Agreement, including the Collection Account;
and
(iv) certain other property and assets as herein
described.
A portion of the Trust Assets will secure payment of the
Notes. See "Source of Payment and Security" below and
"The Depositor and the Owner Trust -- The Owner Trust."
SOURCE OF PAYMENT
AND SECURITY....... Principal of and interest on the Notes and the Equity
Certificates will be paid on each Payment Date solely
from, and secured by, the "Amount Available" for such
Payment Date, which is equal to:
(1) the sum of (a) those Pledged Revenues on deposit
in the Collection Account as of the last Business Day
preceding the related Determination Date (the "Deposit
Date") (i) which were received by the Servicer during
the related Collection Period or which represent
amounts paid by TCC or the Depositor to purchase
Contracts and related Equipment as of the end of such
Collection Period ("Related Collection Period Pledged
Revenues"), or (ii) to the extent necessary to pay
interest on the Notes and the Equity Certificates on
such Payment Date, which were received by the Servicer
during the current Collection Period ("Current
Collection Period Pledged Revenues"), plus (b) amounts
permitted to be withdrawn therefor from the Cash
Collateral Account, as described under "Cash
Collateral Account" below, less
(2) the related Servicing Fee as described in clause
(i) under "Priority of Payments" below.
"Pledged Revenues" will consist of:
(i) "Scheduled Payments" on the Contracts (which
will consist of all payments under the Contracts other
than those portions of such payments which, under the
Contracts, are to be (A) applied by the Servicer to
the payment of insurance premiums, maintenance, taxes
and other similar obligations, or (B) retained by the
Servicer in payment of Administrative Fees) received
on or after the Cut-Off Date and due during the term
of the Contracts, without giving effect to end-of-term
extensions or renewals thereof (including all
Scheduled Payments due prior to, but not received as
of, the Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the
Cut-Off Date);
(ii) any voluntary prepayments ("Prepayments")
received on or after the Cut-Off Date under the
Contracts, provided that the amount, if any, by which
any such Prepayment exceeds the Required Payoff Amount
of the related Contract will not constitute Pledged
Revenues;
(iii) any amounts paid by TCC to purchase Contracts
and the related Equipment due to a breach of
representations
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and warranties with respect thereto as described under
"Mandatory Purchase of Certain Contracts" below or by
the Depositor to purchase the Contracts and the
related Equipment as described under "Optional
Purchase of Contracts" below, in each case excluding
those portions thereof attributable to the Book Value
of the Equipment;
(iv) certain of the proceeds derived from the
liquidation of the Contracts and the related
Equipment, as described under "Liquidated Contracts"
below; and
(v) any earnings on the investment of amounts
credited to the Collection Account.
ORIGINATORS OF THE
CONTRACTS.......... The Contracts that are expected to be included in the
Trust Assets on and after the Merger Consummation Date
have been originated or, in some cases, acquired by four
wholly owned subsidiaries of TCC: AT&T Capital Leasing
Services, Inc. ("Leasing Services"), AT&T Credit
Corporation ("Credit Corp."), NCR Credit Corp. ("NCR
Credit"), and the Portland division of AT&T Commercial
Finance Corporation (such division is referred to herein
as "CFC") (collectively, the "Originators"). See "AT&T
Capital Corporation" and "The Originators."
THE CONTRACTS....... The aggregate of the Contracts and the related Equipment
expected to be held by the Owner Trust as part of the
Trust Assets, as of any particular date, is referred to
as the "Contract Pool," and the Contract Pool, as of the
Cut-Off Date, is referred to as the "Final Contract
Pool." The Depositor has prepared certain statistics
relating to the pool of Contracts which, subject to the
exception noted below, will constitute the Final
Contract Pool. These statistics are based on such
Contracts as of August 1, 1996 (the "Preliminary Cut-Off
Date"). The Final Contract Pool will consist of such
Contracts, less that portion of the Contract Principal
Balances which are paid or prepaid from the Preliminary
Cut-Off Date to the Cut-Off Date. Accordingly, the
statistics relating to such pool of Contracts as of the
Preliminary Cut-Off Date (the "Preliminary Contract
Pool") will differ somewhat from the Final Contract
Pool; however, the statistics relating to the Final
Contract Pool will be included in the final Prospectus.
As of the Preliminary Cut-Off Date, the Preliminary
Contract Pool had the following characteristics (unless
otherwise noted, percentages are by Contract Pool
Principal Balance as of such date (the "Preliminary
Cut-Off Date Contract Pool Principal Balance"),
determined for this purpose using an assumed discount
rate of 8.5%):
(i) the Preliminary Cut-Off Date Contract Pool
Principal Balance was $3,310,975,000.21;
(ii) there were 294,311 Contracts;
(iii) the average Contract Principal Balance was
approximately $11,250;
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(iv) of such Contracts, approximately 81% were true
leases and approximately 19% were other types of
Contracts;
(v) approximately 39.6% of such Contracts related to
telecommunications equipment; approximately 22.5% of
such Contracts related to manufacturing and
construction equipment; and approximately 18.9% of
such Contracts related to computers and point-of-sale
equipment;
(vi) the Obligors on approximately 12.8% of the
Contracts were located in California, approximately
10.8% were located in New Jersey, approximately 9.0%
were located in New York, approximately 6.6% were
located in Florida, and approximately 6.0% were
located in Texas, and no other state represented more
than 5% of the Contracts;
(vii) approximately 90.8% of the Contracts had been
originated by the Originators with the remaining 9.2%
of the Contracts having been originated by third
parties and purchased by one of the Originators;
(viii) the remaining term of the Contracts as of the
Preliminary Cut-Off Date ranged from 6 months to 97
months; and
(ix) the weighted average remaining term of the
Contracts was approximately 38 months. See "The
Contracts -- Certain Statistics Relating to the
Preliminary Contract Pool."
TCC will make certain representations and warranties
regarding each Contract, and will be obligated to
purchase any Contract in the event of a breach of any
such representation or warranty that materially and
adversely affects the value of such Contract. See
"Mandatory Purchase of Certain Contracts" below.
CONTRACT
PREPAYMENTS........ TCC will represent and warrant that none of the Lease
Contracts permit the Obligor thereunder to prepay the
amounts due under such Lease Contract or otherwise
terminate the Lease Contract prior to its scheduled
expiration date (except for a de minimis number of Lease
Contracts which allow for a prepayment or early
termination upon payment of an amount which is not less
than the Required Payoff Amount). Under the Transfer and
Servicing Agreement, the Servicer will be permitted to
allow Prepayments of any of the Lease Contracts to the
extent that the amount of the prepayment on such Lease
Contract is at least equal to the Required Payoff Amount
for such Lease Contract.
The Loan Contracts permit the Obligor thereunder to
prepay the Loan Contract, in whole or in part, at any
time at par plus accrued interest. Approximately 3.9% of
the Contracts (by Preliminary Cut-Off Date Contract Pool
Principal Balance) were Loan Contracts.
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The "Required Payoff Amount," with respect to any
Collection Period for any Contract, is equal to the sum
of:
(i) the Scheduled Payment due in such Collection
Period, together with any Scheduled Payments due in
prior Collection Periods and not yet received, plus
(ii) the Contract Principal Balance of such Contract
as of the last day of such Collection Period (after
taking into account the Scheduled Payment due in such
Collection Period).
In no event will Pledged Revenues include (nor will the
Notes or the Equity Certificates otherwise be payable
from) any portion of a Prepayment on a Contract which
exceeds the Required Payoff Amount for such Contract.
LIQUIDATED
CONTRACTS.......... Liquidation Proceeds received with respect to a
Liquidated Contract and the related Equipment (which
will be reduced by any related liquidation expenses)
will be allocated as follows: (i) with respect to any
Loan Contract, all such Liquidation Proceeds will be
allocated to the Notes and the Equity Certificates; and
(ii) with respect to any Lease Contract, such
Liquidation Proceeds will be allocated on a pro rata
basis between the Equipment Certificate, on the one
hand, and the Notes and the Equity Certificates, on the
other, based respectively on (a) the "Book Value" of the
Equipment (which is a fixed amount equal to the value of
the Equipment as shown on the accounting books and
records of TCC as of the Cut-Off Date) and (b) the
Required Payoff Amount for such Lease Contract; provided
that in no event will the amount of Liquidation Proceeds
allocated to the Notes and the Equity Certificates
exceed the Required Payoff Amount.
All Liquidation Proceeds which are so allocable to the
Notes and the Equity Certificates will be deposited in
the Collection Account and constitute Pledged Revenues
to be applied to the payment of interest and principal
on the Notes and the Equity Certificates in accordance
with the priorities described under "Priority of
Payments" below.
NO SUBSTITUTION..... Under the Trust Agreement, the Owner Trustee is not
permitted to accept (from the Depositor, TCC or any
other party) any lease, contract or other asset or
property in substitution for any part of the Trust
Assets, including any of the Contracts.
SERVICING........... The Servicer will be responsible for managing,
administering, servicing and making collections on the
Contracts. Compensation to the Servicer will include a
monthly fee (the "Servicing Fee"), which will be payable
to the Servicer from the Amount Available on each
Payment Date, in an amount equal to the product of
one-twelfth of % per annum multiplied by the Contract
Pool Principal Balance determined as of the last day of
the second preceding Collection Period (or, in the case
of the Servicing Fee with respect to the Collection
Period
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commencing on the Cut-Off Date, the Contract Pool
Principal Balance as of the Cut-Off Date), plus any late
fees, documentation fees, insurance administration
charges and other administrative charges (the
"Administrative Fees") collected with respect to the
Contracts during the related Collection Period. The
Servicer may be terminated as Servicer under certain
circumstances, in which event a successor Servicer would
be appointed to service the Contracts. See "AT&T Capital
Corporation" and "Description of the Transfer and
Servicing Agreement -- Servicing -- Events of Servicing
Termination."
MANDATORY PURCHASE
OF CERTAIN
CONTRACTS.......... TCC will make certain representations and warranties
with respect to each Contract and the related Equipment,
as more fully described in "The Contracts --
Representations and Warranties Made by TCC." The
Indenture Trustee will be entitled to require TCC to
purchase any Contract and the related Equipment, at a
price equal to (i) the Required Payoff Amount, plus (ii)
the Book Value of the related Equipment (which Book
Value amount will be allocated to the Equipment
Certificate), if the value of the Contract is materially
and adversely affected by a breach of any such
representation or warranty which is not cured within a
specified period.
EQUITY
CERTIFICATES....... The Owner Trust will issue the Equity Certificates,
representing a beneficial ownership interest in the
Owner Trust, to the Depositor. The Equity Certificates
will be transferred by the Depositor in a separate
transaction. The Equity Certificates will be payable
from Pledged Revenues in the priority described under
"Priority of Payments" below. It is expected that the
Equity Certificates initially will represent the right
to receive principal in an amount equal to approximately
4% of the Cut-Off Date Contract Pool Principal Balance,
together with interest thereon at an interest rate of
% per annum. Commencing on the first Payment Date,
% of the Monthly Principal Amount will be payable on
the Equity Certificates until the aggregate amount so
paid equals $ .
EQUIPMENT
CERTIFICATE........ The Owner Trust will issue the Equipment Certificate,
representing a beneficial ownership interest in the
Owner Trust, to the Depositor. The Equipment Certificate
will represent an undivided interest in:
(i) all related Equipment or the proceeds thereof upon
the expiration of the initial term of any Lease
Contracts;
(ii) any amount in excess of the amounts described under
"Contract Prepayments" above which are paid by a
Lessee in connection with the prepayment or early
termination of a Lease Contract and are allocated to
the Notes and the Equity Certificates, which excess is
intended to represent the value of the Equipment
related thereto;
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(iii) a portion of the Liquidation Proceeds derived from
the liquidation of the Contracts and the related
Equipment, as described under "Liquidated Contracts"
above; and
(iv) that portion of the purchase price allocable to the
Book Value of the related Equipment (a) paid by TCC to
purchase any Contract and the related Equipment due to
a breach of any of TCC's representations and
warranties with respect thereto (as described under
"Mandatory Purchase of Certain Contracts" above), or
(b) paid by the Depositor pursuant to its option to
repurchase all of the outstanding Contracts and the
related Equipment (as described under "Optional
Purchase of Contracts" below).
Amounts payable in respect of the Equipment Certificate
are not available to pay, and will not provide security
for the payment of, interest or principal on the Notes
or the Equity Certificates.
COLLECTION
ACCOUNT............ The Indenture Trustee will establish and maintain one or
more separate accounts (collectively, the "Collection
Account"). All Scheduled Payments and Prepayments from
Obligors that are received by the Servicer on behalf of
the Owner Trust will be deposited in the Collection
Account no later than five Business Days following
receipt thereof by the Servicer. The Servicer will be
permitted to use any alternative remittance schedule
which is acceptable to the Rating Agencies if the effect
thereof will not result in a qualification, reduction or
withdrawal of any of the ratings then applicable to the
Notes. See "Description of the Transfer and Servicing
Agreement -- Collections on Contracts."
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CASH COLLATERAL
ACCOUNT............ A "Cash Collateral Account" will be established on or
prior to the Merger Consummation Date and will
thereafter be available to the Indenture Trustee. The
Cash Collateral Account will initially be funded in an
amount equal to % of the Contract Pool Principal
Balance as of the Cut-Off Date (approximately $ ).
Amounts on deposit from time to time in the Cash
Collateral Account (up to, but not in excess of, the
Requisite Amount described below, and not including any
investment earnings on such funds) shall be used to fund
the amounts specified below in the following order of
priority (to the extent that amounts on deposit in the
Collection Account as of any Deposit Date are
insufficient therefor and provided that any such
insufficiency has resulted, directly or indirectly, from
delinquencies and/or defaults on the Contracts):
(i) to pay interest on the Notes and the Equity
Certificates in the following order of priority:
(a) interest on the Class A Notes (including any overdue
interest and interest thereon),
(b) interest on the Class B Notes (including any overdue
interest and interest thereon),
(c) interest on the Class C Notes (including any overdue
interest and interest thereon), and
(d) interest on the Equity Certificates (including any
overdue interest and interest thereon);
(ii) to pay any Principal Deficiency Amount (equal to
the lesser of:
(a) the Current Realized Losses on Liquidated Contracts
for the related Collection Period or
(b) the excess, if any, of (A) the aggregate principal
balance of the Notes and the Equity Certificates
(after giving effect to all other distributions of
principal on such Payment Date), over (B) the
aggregate of the Required Payoff Amounts for all
Contracts as of the last day of the related
Collection Period); and
(iii) to pay principal on the Notes and Equity
Certificates at the applicable Stated Maturity Date
thereof.
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If and to the extent that the amount on deposit in the
Cash Collateral Account as of any Payment Date is less
than the Requisite Amount (which is defined as being an
amount equal to approximately $ , subject to
certain adjustments), then such deficiency is to be
restored from the remaining Amount Available, after
payment of interest and principal on the Notes and the
Equity Certificates as described under "Priority of
Payments" below. Any amount on deposit in the Cash
Collateral Account in excess of the Requisite Amount,
and all investment earnings on funds in the Cash
Collateral Account, will be released from the Cash
Collateral Account and paid to or upon the order of the
Depositor, and will not be available to make payments on
the Notes or the Equity Certificates. See "Description
of the Notes -- Cash Collateral Account."
PRIORITY OF
PAYMENTS........... On each Payment Date, the Indenture Trustee will be
required to make the following payments, first, from the
Related Collection Period Pledged Revenues, second, to
the extent the Related Collection Period Pledged
Revenues are insufficient to pay interest on the Notes
and the Equity Certificates on such Payment Date, the
amount necessary to cure such insufficiency from the
Current Collection Period Pledged Revenues, and third
(but only as to amounts described in clause (ii) and
certain amounts included in clause (iii)), from amounts
permitted to be withdrawn from the Cash Collateral
Account as described under "Cash Collateral Account"
above, in the following order of priority:
(i) the Servicing Fee to the Servicer;
(ii) interest on the Notes and the Equity Certificates
in the following order of priority:
(a) interest on the Class A Notes (including any overdue
interest and interest thereon),
(b) interest on the Class B Notes (including any overdue
interest and interest thereon),
(c) interest on the Class C Notes (including any overdue
interest and interest thereon), and
(d) interest on the Equity Certificates (including any
overdue interest and interest thereon);
(iii) an amount equal to the Monthly Principal Amount as
of such Payment Date in respect of principal on the
Notes and the Equity Certificates in the priority
described under "Principal" above; and
(iv) the remainder, if any, to the Cash Collateral
Account, to be applied in the manner described under
"Cash Collateral Account" above.
</TABLE>
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<TABLE>
<S> <C>
OPTIONAL PURCHASE OF
CONTRACTS.......... The Depositor may purchase all of the Contracts and the
related Equipment on any Payment Date following the date
on which the unpaid principal balance of the Notes and
the Equity Certificates is equal to 10% or less of the
Cut-Off Date Contract Pool Principal Balance, subject to
certain provisions as described herein under
"Description of the Notes -- Optional Purchase of
Contracts." The purchase price to be paid in connection
with such purchase shall be at least equal to the unpaid
principal balance of the Notes and the Equity
Certificates as of such Payment Date plus interest to be
paid on the Notes and the Equity Certificates on such
Payment Date, plus the Book Value of the Equipment. The
proceeds of such purchase shall be applied on such
Payment Date (i) as to such proceeds in an amount
necessary to pay the principal and interest on the Notes
and the Equity Certificates, to the payment of the
remaining principal balance on the Notes and the Equity
Certificates, together with interest thereon, and (2) as
to the balance of such proceeds, to the payment of
amounts on the Equipment Certificate.
U.S. TAXATION....... In the opinion of counsel to the Depositor and the
opinion of counsel to the Underwriters, the Notes will
be characterized as indebtedness and the Owner Trust
will not be characterized as an "association" or
"publicly traded partnership" taxable as a corporation
for federal income tax purposes. Each Noteholder, by its
acceptance of a Note, will agree to treat the Notes as
indebtedness for federal, state and local income tax
purposes. Prospective investors are advised to consult
their own tax advisors regarding the federal income tax
consequences of the purchase, ownership and disposition
of Notes, and the tax consequences arising under the
laws of any state or other taxing jurisdiction. See
"United States Taxation."
In the opinion of counsel, under United States federal
income tax law in effect as of the date hereof, payments
of principal and interest on the Notes to a United
States Alien Holder will not be subject to United States
federal withholding tax (subject to the exceptions noted
in "United States Taxation -- Tax Consequences to United
States Alien Holders"). If such law were to change and,
as a result thereof, United States withholding tax were
imposed on such payments, a United States Alien Holder
would receive such payments net of such withholding tax,
and neither the Owner Trust, the Depositor, TCC nor any
other party would have any obligation to "gross-up" such
payments to compensate for such withholding tax.
</TABLE>
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<TABLE>
<S> <C>
ERISA
CONSIDERATIONS..... If the Notes are considered to be indebtedness without
substantial equity features under a regulation issued by
the United States Department of Labor, the acquisition
or holding of Notes by or on behalf of a Benefit Plan
will not cause the assets of the Owner Trust to become
plan assets, thereby generally preventing the
application of certain prohibited transaction rules of
the Employee Retirement Income Security Act of 1974, as
amended, and the Internal Revenue Code of 1986, as
amended, that otherwise could possibly be applicable.
The Depositor believes that the Notes should be treated
as indebtedness without substantial equity features for
purposes of such regulation. See "ERISA Considerations."
REGISTRATION,
CLEARANCE AND
SETTLEMENT OF
NOTES.............. Each of the Notes will be registered in the name of Cede
& Co., as the nominee of The Depository Trust Company
("DTC"), and will be available for purchase only in
book-entry form on the records of DTC and participating
members thereof. Notes will be issued in definitive form
only under the limited circumstances described under
"Description of the Notes -- Definitive Notes." All
references herein to "Holders" or "Noteholders" shall
reflect the rights of beneficial owners of Notes (the
"Note Owners"), as they may indirectly exercise such
rights through DTC and participating members thereof,
except as otherwise specified herein. See "Description
of the Notes -- Book-Entry Registration." Noteholders
may elect to hold their Notes through DTC (in the United
States) or Cedel Bank or Euroclear (in Europe).
Transfers will be made in accordance with the rules and
operating procedures described in Appendix A hereto.
LISTING............. Application has been made to list the Notes on the
Luxembourg Stock Exchange.
GOVERNING LAW....... The Transfer and Servicing Agreement, the Trust
Agreement, the Purchase Agreement, the Indenture and the
Notes will be governed by the laws of the State of New
York.
</TABLE>
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RISK FACTORS
Prospective Noteholders should consider the following factors in connection
with the purchase of the Notes:
LIMITED ASSETS OF THE TRUST
The Notes are secured by the payments to be derived from the Contracts but
not any payments constituting proceeds from the disposition of Equipment (except
in the case of a Liquidated Contract), which amounts will be paid solely to the
holder of the Equipment Certificate. Moreover, from and after the Merger
Consummation Date, the Owner Trust will have no assets other than the Contracts,
the Equipment, amounts on deposit from time to time in the Collection Account
and the accounts established pursuant to the Transfer and Servicing Agreement
and the right to certain amounts in the Cash Collateral Account. The Notes will
represent obligations solely of the Owner Trust, and none of the Notes will be
insured or guaranteed, directly or indirectly, by TCC, the Depositor, the
Indenture Trustee or the Owner Trustee (or any affiliate of any of them) or any
other person or entity. Consequently, Holders of the Notes must rely for payment
of interest and principal thereon on a given Payment Date on the Amount
Available for such Payment Date.
SUBORDINATION OF THE CLASS B AND CLASS C NOTES
To the extent described herein under "Description of the Notes --
Distributions" and "-- Subordination," (i) payments of interest and principal on
the Class B Notes will be subordinated in priority of payment to interest and
principal, respectively, on the Class A Notes, (ii) payments of interest and
principal on the Class C Notes will be subordinated in priority of payment to
interest and principal, respectively, on the Class A Notes and the Class B Notes
and (iii) payments of interest and principal on the Equity Certificates will be
subordinated in priority of payment to interest and principal, respectively, on
the Class A Notes, the Class B Notes and the Class C Notes. In addition,
payments of principal on the Notes will be subordinated in priority of payment
to payments of interest on the Notes and the Equity Certificates. The Equity
Certificates initially will represent the right to receive principal in an
amount equal to 4% of the Cut-Off Date Contract Pool Principal Balance, but such
amount will be reduced as a result of principal payments made on the Equity
Certificates (see "Description of the Notes -- Principal"), which will reduce
the benefit to the Notes of the subordination of the Equity Certificates.
Delinquencies and defaults on the Contracts could eliminate the protection
afforded the Class C Noteholders by the Cash Collateral Account and the
subordination of the Equity Certificates, and the Class C Noteholders could
incur losses on their investment as a result. Further delinquencies and defaults
on the Contracts could eliminate the protection offered to the Class B
Noteholders by the subordination of the Class C Notes, and could eliminate the
protection afforded the Class A Noteholders by the subordination of the Class B
Notes, and such Noteholders could also incur losses on their investment as a
result.
BANKRUPTCY AND INSOLVENCY RISKS
The Depositor believes that the transfer of the Contracts and the Equipment
from the Originators to the Depositor constitutes a sale or absolute assignment,
rather than a pledge to secure indebtedness of TCC or the Originators; and that
in the event that TCC or any of the Originators were to become bankrupt or
otherwise insolvent, a trustee in bankruptcy would be unable to successfully
challenge the transfer of the Contracts and the Equipment to the Depositor or
the Owner Trust or otherwise to interfere with the timely transfer to the
Depositor, the Owner Trust or the Indenture Trustee of payments received with
respect to the Contracts. However, if TCC or any of the Originators were to
become a debtor under the federal bankruptcy code or similar applicable state
laws (collectively, "Insolvency Laws"), a creditor or trustee in bankruptcy of
TCC or such Originator, or TCC or such Originator or either of them as
debtor-in-possession, might argue that such transfer of the Contracts and the
Equipment from the Originators to the Depositor was (or should be
recharacterized as) a pledge of such assets rather than a sale. If this position
were accepted by a court, any Lease Contracts considered to be "true" leases
under the applicable Insolvency Laws, and any other Contract considered to be
executory under such Insolvency Laws, could be rejected by such trustee in
bankruptcy or by TCC or such Originator as debtor-in-
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possession, which would result in the termination of Scheduled Payments under
any such Contracts and reductions in distributions to Noteholders, and
Noteholders could incur a loss on their investment as a result. Even if such
Contracts were not so rejected, the Owner Trust and the Indenture Trustee could
experience a delay in or reduction of collections on all of the Contracts, and
Noteholders could incur a loss on their investment as a result. In addition, in
the event of an insolvency of an originator other than one of the Originators, a
court could attempt to recharacterize the sale of the Contracts by such third-
party originator to the applicable Originator as a borrowing from the
Originator, secured by a pledge of such Contracts and the rights in the
Equipment.
A case decided by the United States Court of Appeals for the Tenth Circuit
contains language to the effect that accounts sold by an entity that
subsequently became bankrupt remained property of the debtor's bankruptcy
estate. Although the Contracts constitute chattel paper or general intangibles
rather than accounts under the Uniform Commercial Code (the "UCC"), sales of
chattel paper, like sales of accounts, are governed by Article 9 of the UCC. If
TCC or any of the Originators were to become a debtor under any Insolvency Law
and a court were to follow the reasoning of the Tenth Circuit Court of Appeals
and apply such reasoning to chattel paper, the Owner Trust (and thus the
Indenture Trustee) could experience a delay in or reduction of collections on
the Contracts, and Noteholders could incur a loss on their investment as a
result.
If any of the Originators or TCC were to become debtors in a bankruptcy case
and a creditor or trustee-in-bankruptcy or TCC itself were to request a
bankruptcy court to order that the Depositor be substantively consolidated with
TCC, delays in and reductions in the amount of distributions to Noteholders
could occur. However, the Depositor has taken steps in structuring the
transactions described herein that are intended to prevent the voluntary or
involuntary application for relief by TCC under any Insolvency Law from
resulting in the consolidation of the assets and liabilities of the Depositor
with those of TCC. Such steps include the maintenance of separate books and
records and the insistence on arm's-length terms in all agreements with TCC, the
Originators and affiliates thereof. Nevertheless, there can be no assurance
that, in the event of a bankruptcy or insolvency of TCC or any Originator, a
court would not order that the Depositor's or Owner Trust's assets and
liabilities be consolidated with those of TCC or such Originator. Any such order
would adversely affect the Owner Trust's and Noteholders' ability to receive
payments on the Contracts, and Noteholders could incur a loss on their
investment as a result.
Under federal or state fraudulent transfer laws, a court could, among other
things, subordinate the rights of the Noteholders in the Contracts and Equipment
to the rights of creditors of TCC or the Originators, if a court were to find,
among other things, that TCC or the Originators received less than reasonably
equivalent value or fair consideration for the Contracts and the Equipment and,
at the time of any transfers, was insolvent, and Noteholders could incur a loss
on their investment as a result.
While TCC is the Servicer, cash collections held by TCC may, subject to
certain conditions, be commingled and used for the benefit of TCC prior to the
date on which such collections are required to be deposited in a Collection
Account as described under "Description of the Transfer and Servicing Agreement
- -- Collections on Contracts" and, in the event of the insolvency or receivership
of TCC or, in certain circumstances, the lapse of certain time periods, the
Owner Trust may not have a perfected ownership or security interest in such
collections, and Noteholders could incur a loss on their investment as a result.
The Depositor has taken certain steps to minimize the likelihood that it
will become bankrupt or otherwise insolvent. The Depositor is prohibited by its
organizational documents and the Transfer and Servicing Agreement from engaging
in activities (including the incurrence or guaranty of debt) other than those
set forth in the Transfer and Servicing Agreement. See "The Depositor and the
Owner Trust -- The Depositor." Its certificate of incorporation also contains
restrictions on the Depositor's ability to commence a voluntary case or
proceeding under any Insolvency Law without the affirmative vote of all its
directors, including its independent directors. The Indenture Trustee, on behalf
of the Noteholders,
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will covenant not to subject the Depositor to bankruptcy proceedings until the
Notes have been paid in full and one year and one day has elapsed. The Depositor
believes that such actions substantially mitigate the risk of an involuntary
bankruptcy petition being filed against it.
TCC will make certain representations and warranties regarding the
Contracts, the Equipment and certain other matters (see "The Contracts --
Representations and Warranties Made by TCC"). In the event that any such
representation or warranty with regard to a specific Contract is breached, is
not cured within a specified period of time, and the value of such Contract is
materially and adversely affected by such breach, TCC shall be required to
purchase the Contract and the related Equipment at a price equal to (i) the
Required Payoff Amount of such Contract, plus (ii) the Book Value of such
Equipment. In the event of a bankruptcy or insolvency of TCC, the Indenture
Trustee's right to compel a purchase would both be impaired and have to be
satisfied out of the available assets, if any, of TCC's bankruptcy estate, and
Noteholders could incur a loss on their investment as a result.
From and after the Merger Consummation Date, substantially all of the equity
capital of TCC will be owned by HoldCo., and the capitalization of TCC will
differ from the capitalization of TCC prior to the Merger. See "The Merger."
YIELD AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes will be reduced by prepayments and
early terminations of the Contracts. Prepayments may result from payments by
Obligors, certain amounts received as a result of default or early termination
of a Contract, the receipt of proceeds from the physical damage to the Equipment
to the extent described herein under "The Contracts," purchases by TCC of
Contracts and the related Equipment as a result of certain uncured breaches of
the representations and warranties made by it with respect thereto (see "The
Contracts -- Representations and Warranties Made by TCC") or the Depositor
exercising its option to purchase all of the remaining Contracts and related
Equipment (see "Description of the Notes -- Optional Purchase of Contracts").
Generally, none of the Lease Contracts permit a prepayment or early termination
thereof. Nevertheless, TCC historically has permitted lessees to terminate
leases early, either in connection with the execution of a new lease of
replacement equipment or upon payment of a negotiated prepayment premium, or
both. The Transfer and Servicing Agreement will permit the Servicer to allow a
voluntary prepayment of a Lease Contract by an Obligor at any time so long as
the amount paid thereon is at least equal to the Required Payoff Amount for such
Lease Contract. Approximately % of the Contracts (by Preliminary Cut-Off-Date
Contract Pool Principal Balance) were Loan Contracts, which permit the Obligor
to prepay the Contract, in whole or in part, at any time. The amounts so
received in respect of such prepayments are to be added to the Amount Available
and applied in the priority described in "Description of the Notes --
Distributions." No assurance can be given as to the rate of prepayments or as to
whether there will be a substantial amount of prepayments, nor can any assurance
be given as to the level or timing of any prepayments that do occur. As the rate
of payment of principal of the Notes will depend on the rate of payment
(including prepayments) on the Contracts, final payment of a Class of Notes
could occur significantly earlier than the Stated Maturity Date of such Class.
The Noteholders will bear all reinvestment risk resulting from the timing of
payments of principal on the Notes.
If the Merger is not consummated (see "The Merger") by September , 1996,
all of the Notes will be redeemed on the Special Redemption Date at a price
equal to the Special Redemption Price. While the Depositor has no reason to
believe that the regulatory approvals which are a precondition to the
consummation of the Merger will not be obtained on or prior to its scheduled
date (September 17, 1996) or that any of the other conditions will not be
satisfied, there can be no assurances that the Merger will in fact be
consummated by September , 1996.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
The transfer of the Contracts by the Originators to the Depositor and by the
Depositor to the Owner Trust, the perfection of the interest of the Owner Trust
in the Contracts and the right to receive payments thereon, and the Owner
Trust's and the Indenture Trustee's interest in such Contracts and in the
Equipment are subject to the requirements of the UCC as in effect in New York
and the states where the
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various Originators are located and, with respect to certain of the Equipment,
in the various states in which the Equipment subject to the applicable Contract
is located from time to time. The Depositor will take or cause to be taken such
actions as are required to perfect the transfer to the Owner Trust of the
Depositor's rights in the Contracts and the right to receive payments thereunder
and to perfect the security interest of the Indenture Trustee in the Owner
Trust's rights in the Contracts and the right to receive payments thereunder.
It has been the general policy of TCC, depending on the dollar amount and
type of the particular Contract, the perceived credit quality of the particular
Obligor and the estimated repossession value of the particular related
Equipment, not to file or (in certain cases) not to obtain or file UCC financing
statements with respect to the Equipment relating to certain Contracts. See "The
Originators -- Underwriting and Servicing." It is estimated that approximately
% of the Contracts (by Preliminary Cut-Off-Date Contract Pool Principal
Balance) relate to Equipment as to which no UCC financing statement has been
filed. With respect to any such Contracts that were deemed to be loans or leases
intended for security, a purchaser from the applicable Obligor of the related
Equipment would acquire such Equipment free and clear of the interest of the
applicable Originator in such Equipment, and a creditor of the Obligor which has
taken a security interest in such Equipment and filed a UCC financing statement
with respect thereto or a trustee in the bankruptcy of such Obligor would have
priority over the interest of the applicable Originator in such Equipment. Any
such purchaser, creditor or trustee would have an interest superior to the
interest of the Owner Trust in such Equipment, which interest is derived from
the transfer and conveyance of a security interest in the Equipment by the
Depositor to the Owner Trust. All of the Contracts prohibit the Obligor from
selling or pledging the related Equipment to third parties.
Due to the administrative burden and expense, no assignments of the UCC
financing statements evidencing the security interest of the Originators in the
Equipment (to the extent that such financing statements have been filed against
the Obligor, as discussed above) will be filed to reflect the Depositor's, the
Owner Trust's or the Indenture Trustee's interests therein. While failure to
file such assignments does not affect the Owner Trust's interest in the
Contracts or perfection of the Indenture Trustee's interest in such Contracts
(including the related Originator's security interest in the related Equipment),
it does expose the Owner Trust (and thus Noteholders) to the risk that the
Originator could release its ownership or security interest in the Equipment of
record, and it could complicate the Owner Trust's enforcement, as assignee, of
the Originator's security interest in the Equipment. In addition, also due to
the administrative burden and expense, no UCC financing statement reflecting the
security interest of the Owner Trust or the Indenture Trustee in the related
Equipment will be filed in the jurisdictions (other than the States of
Massachusetts, New Jersey and Oregon) where the Equipment is located. In the
absence of such filings, the Owner Trust and the Indenture Trustee may not have
a perfected security interest in such Equipment. As a result, if the Originator
were to sell or grant a security interest in any Equipment to a third party,
such third party might acquire such Equipment free and clear of the interest of
the Indenture Trustee in such Equipment and a subsequent secured party or other
lienholder might obtain an interest in the Equipment superior to that of the
Indenture Trustee. While these risks should not affect the perfection or
priority of the interest of the Indenture Trustee in the Contracts or rights to
payment thereunder, they may adversely affect the right of the Indenture Trustee
to receive proceeds of disposition of the Equipment subject to a Liquidated
Contract, which are to be allocated to the payment of the Notes and the Equity
Certificates, as described under "Description of the Notes -- Contract
Defaults." Additionally, statutory liens for repairs or unpaid taxes and other
liens arising by operation of law may have priority even over prior perfected
security interests in the name of the Indenture Trustee in the Equipment.
The Servicer will hold the Contracts and certain related documents on behalf
of the Owner Trust and Indenture Trustee. To facilitate servicing and save
administrative costs, the documents will not be physically segregated from other
similar documents that are in the Servicer's possession. UCC financing
statements will be filed in the appropriate jurisdictions reflecting the sale
and assignment of the Contracts by the Originators to the Depositor, by the
transfer and assignment by the Depositor to the Owner Trust and the pledge by
the Owner Trust to the Indenture Trustee, and the Servicer's accounting records
and computer systems will also reflect such sale, assignment, transfer and
pledge. The Contracts will
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not, however, be stamped or otherwise marked to reflect that such Contracts and
Equipment have been sold to the Depositor, transferred to the Owner Trust or
pledged to the Indenture Trustee. If, through inadvertence or otherwise, any of
the Contracts were sold to another party (or a security interest therein were
granted to another party) that purchased (or took a security interest in) any of
such Contracts in the ordinary course of business and took possession of such
Contracts, the purchaser (or secured party) would acquire an interest in the
Contracts superior to the interest of the Owner Trust and Indenture Trustee if
the purchaser (or secured party) acquired (or took a security interest in) the
Contracts for new value and without actual knowledge of the Owner Trust's or
Indenture Trustee's interest.
NO GROSS-UP FOR WITHHOLDING TAX
In the opinion of counsel, under current United States federal income tax
law in effect as of the date hereof, payments of principal and interest on the
Notes to a United States Alien Holder will not be subject to United States
federal withholding tax (subject to the exceptions noted in "United States
Taxation -- Tax Consequences to United States Alien Holders"). If such law were
to change and, as a result thereof, United States withholding tax was imposed on
such payments, a United States Alien Holder would receive such payments net of
such withholding tax; and neither the Owner Trust, the Depositor, TCC nor any
other party has any obligation to gross up such payments to account for such
withholding tax.
LIMITED LIQUIDITY
There is currently no market for the Notes. The U.S. Underwriters expect,
but will not be obligated, to make a market for the Notes in the United States;
and the International Managers expect, but will not be obligated, to make a
market for the Notes outside the United States. There can be no assurance that a
secondary market for the Notes will develop or, if it does develop, that it will
provide the Holders of such Notes with liquidity of investment or will continue
for the life of such Notes. Although it is expected that the Notes will be
listed on the Luxembourg Stock Exchange, there can be no assurances that such
listing will increase the liquidity of the Notes.
BOOK ENTRY REGISTRATION
The Notes will be issued in book-entry, rather than physical, form and, as a
result, in certain circumstances, the liquidity of the Notes in the secondary
market and the ability of the Noteholders to pledge them may be adversely
affected. See "Underwriting" and "Description of the Notes -- Book-Entry
Registration." The Notes will be registered in the name of a nominee of DTC and
will not be registered in the names of the beneficial owners or their nominees.
As a result, unless and until Definitive Notes are issued in the limited
circumstances described under "Description of the Notes -- Definitive Notes,"
beneficial owners will not be recognized by the Indenture Trustee as
Noteholders, as that term is used in the Indenture. Hence, until such time,
beneficial owners will only be able to exercise the rights of Noteholders
indirectly through DTC and its participating organizations. In addition, the
laws of some states require that certain purchasers of securities take physical
delivery of such securities in certificated form. Such limits and such laws may
impair the ability to transfer beneficial interests in the Notes.
THE MERGER
On June 5, 1996, Antigua Acquisition Corporation, a newly formed Delaware
corporation ("MergerCo."), executed an Agreement and Plan of Merger (the "Merger
Agreement") with Hercules Limited, a newly formed Cayman Islands corporation
("HoldCo."), TCC and AT&T Corp. ("AT&T"), which provides for the merger (the
"Merger") of MergerCo. with and into TCC and pursuant to which each outstanding
share of common stock, par value $0.01 per share ("Common Stock"), of TCC (other
than shares owned by TCC, HoldCo., MergerCo., or their respective wholly owned
subsidiaries or by any stockholders properly exercising their appraisal rights
under Delaware law ("Excluded Shares")) will be converted into the right to
receive $45 in cash per share, without interest thereon (the "Merger
Consideration"). In addition, pursuant to the terms of the Merger Agreement,
each outstanding option on shares of Common Stock (the "Options"), other than
those management options (the "Management Options") held by certain members of
management of TCC (the "Management Offerees") which may be exchanged for new
options to purchase common stock of the surviving corporation, will be canceled
upon
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consummation of the Merger in exchange for cash in an amount equal to the excess
of the Merger Consideration over the Option exercise price per share. The Merger
is subject to certain regulatory approvals and other conditions precedent (set
out below). Upon consummation of the Merger, the current stockholders of TCC
will cease to be stockholders of TCC, except that the Management Offerees will
be offered the opportunity to maintain all or a portion of their current equity
investment in TCC and may be granted new options for common stock of the
surviving corporation. All of the outstanding equity capital of MergerCo. will,
save for the Management Offerees, be owned by HoldCo. All of the outstanding
equity capital of HoldCo. is owned by a group of companies led by GRS Holding
Company Limited. The Depositor is a wholly owned subsidiary of MergerCo. and
will, upon consummation of the Merger, be a wholly owned subsidiary of TCC (see
"The Depositor and the Owner Trust -- The Depositor").
Under the Merger Agreement, the respective obligations of HoldCo.,
MergerCo., AT&T and TCC to consummate the Merger are subject to the fulfillment
or waiver, where permissible, of the following conditions at or prior to
September 17, 1996: (i) the expiration or termination of the waiting period
applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended; (ii) the receipt of all required consents, registrations,
approvals, permits and authorizations in full force and effect; and (iii) no
court or governmental entity of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order that is in effect and restrains,
enjoins or otherwise prohibits consummation of the Merger Agreement.
The obligation of HoldCo. to consummate the Merger is further conditioned
on: (i) the truth and accuracy in all material respects of the representations
and warranties made by TCC and AT&T in the Merger Agreement; (ii) the
performance in all material respects of all obligations of TCC and AT&T under
the Merger Agreement; (iii) the receipt by TCC and AT&T of the consent or
approval of each person whose consent or approval is required, except for those
for which the failure to obtain such consent or approval is not reasonably
likely to have a material adverse effect on TCC; (iv) the receipt by HoldCo. of
the resignations of each director of TCC; and (v) AT&T and TCC having entered
into a transitional services agreement.
The obligations of TCC and AT&T to consummate the Merger are further
conditioned on: (i) the truth and accuracy in all material respects of the
representations and warranties made by HoldCo. and MergerCo.; (ii) the
performance in all material respects of all obligations of HoldCo. and
MergerCo.; and (iii) the receipt by HoldCo. of the consent or approval of each
person whose consent or approval is required, except for those consents for
which the failure to obtain such consent or approval is not reasonably likely to
have a material adverse effect on the ability of HoldCo. or MergerCo. to
consummate the Merger. HoldCo. has received an unconditional and irrevocable
undertaking from Nomura International plc to underwrite an international capital
markets issue on behalf of HoldCo. to satisfy its obligations under the Merger
Agreement.
The consummation of the Merger is currently scheduled for September 17,
1996. It is currently anticipated that all regulatory approvals will be obtained
on or around September 17, 1996. If the Merger is not consummated by September
, 1996, all of the Notes will be redeemed and prepaid on the Special
Redemption Date as described under "Description of the Notes -- Special
Redemption."
THE DEPOSITOR AND THE OWNER TRUST
THE DEPOSITOR
Antigua Funding Corporation is incorporated under the laws of the State of
Delaware. Prior to the Merger Consummation Date, all of the equity capital of
the Depositor will be owned by MergerCo. All of the initial equity capital of
MergerCo. will be owned by HoldCo. See "The Merger." On the Merger Consummation
Date, MergerCo. and TCC will merge, the corporate entity resulting from, and
surviving, such merger will be TCC, and the Depositor will then be a wholly
owned subsidiary of TCC. On the Merger Consummation Date, all of the Contracts
and the interests of the Originators in the related
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Equipment will be transferred by the Originators to the Depositor in
consideration for which the Depositor shall pay to the Originators the net
proceeds received from the offering and sale of the Notes and the Equity
Certificates.
On the Merger Consummation Date, the Depositor will transfer and convey to
the Owner Trust all of the Contracts and the Depositor's interest in the
Equipment related thereto in consideration for (i) all amounts at the time on
deposit in the Escrow Account (including any investment earnings thereon), and
(ii) the proceeds derived by the Depositor from the disposition of the Equity
Certificates. All of the Notes will be sold to third parties pursuant to this
Prospectus, the Equity Certificates will be issued to the Depositor and disposed
of by it in a separate transaction, and the Equipment Certificate will be issued
to and retained by the Depositor. On the Closing Date, the Depositor and the
Owner Trustee will execute and deliver the Trust Agreement (with effect from
such date), and the Owner Trust and the Indenture Trustee will execute and
deliver the Indenture (with effect from such date), and on the Merger
Consummation Date, the Depositor and the Servicer shall execute and deliver the
Transfer and Servicing Agreement (with effect from such date). If for any
reason, the Merger Consummation Date has not occurred by September , 1996,
then the Notes shall be redeemed at the Special Redemption Price on the Special
Redemption Date.
The Depositor has been formed solely for the purposes of the transactions
described in this Prospectus; and under its incorporation documents and the
Transfer and Servicing Agreement, the Depositor is not permitted to engage in
any activity other than (i) acquiring the Contracts and interests of the
Originators in the Equipment related thereto, (ii) transferring and conveying
such Contracts and interests in the Equipment to the Owner Trust, (iii)
executing and performing its obligations under the Purchase Agreement and the
Transfer and Servicing Agreement, (iv) holding or transferring the Equity
Certificates and the Equipment Certificate, and (v) engaging in other
transactions, including entering into agreements, that are necessary, suitable
or convenient to accomplish the foregoing or are incidental thereto or connected
therewith. The Depositor is prohibited from incurring any debt, issuing any
obligations or incurring any liabilities, except in connection with the
formation of the Owner Trust and the issuance of the Notes. The Depositor is not
liable, responsible or obligated, directly or indirectly, for payment of any
principal, interest or any other amount in respect of any of the Notes.
THE OWNER TRUST
The Owner Trust will be created pursuant to the Trust Agreement. Prior to
the Closing Date, the Owner Trust will have no assets, property or obligations.
From the Closing Date to the Merger Consummation Date, the assets of the Owner
Trust (the "Trust Assets") will consist solely of the proceeds of the Notes,
plus additional cash, which will be deposited and held (and invested in certain
Eligible Investments at the direction of the Depositor) in the Escrow Account
maintained by the Indenture Trustee pursuant to the Indenture until (i) applied
by the Indenture Trustee to the special redemption of the Notes as described
under "Description of the Notes -- Special Redemption of the Notes," or (ii)
paid over to the Depositor and used to acquire the Contracts, the Originators'
interest in the Equipment and the other property described below.
From and after the Merger Consummation Date, the Trust Assets will consist
of:
(1) a pool of equipment lease contracts (the "Lease Contracts") and
installment sale contracts, promissory notes, loan and security agreements and
other similar types of receivables (the "Loan Contracts" and, together with the
Lease Contracts, the "Contracts"), with various lessees or other obligors
thereunder (each, an "Obligor"), including, without limitation, all monies at
any time paid or payable thereon or in respect thereof from and after the
Cut-Off Date (whether in the form of (i) Scheduled Payments (including those
Scheduled Payments due prior to, but not received as of, the Cut-Off Date, but
excluding those Scheduled Payments due on or after, but received prior to, the
Cut-Off Date), (ii) Prepayments, (iii) payments made after the original term of
such Contracts, (iv) payments to be applied by the Servicer to the payment of
insurance premiums, maintenance, taxes or other similar obligations, (v)
payments to be retained by the Servicer in payment of Administrative Fees, or
otherwise), all rights of the lessor or the secured party, as the case may be,
in any insurance policies and any other
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security for the payment of amounts due under the Contracts, all items contained
in the related Contract Files, any and all other documents that are kept on file
in accordance with the applicable Originator's customary procedures relating to
the Contracts, and all proceeds of the foregoing;
(2) the interest of the Depositor in the equipment subject to each such
Contract (the "Equipment"), which interest is either an ownership interest or a
security interest,
(3) amounts on deposit in (and Eligible Investments allocated to) certain
accounts established pursuant to the Indenture and the Transfer and Servicing
Agreement, including the Collection Account,
(4) the Depositor's rights under the Purchase Agreement; and
(5) the Depositor's rights (but not its obligations) with respect to the
Cash Collateral Account.
The Owner Trust will not engage in any business activity other than (i)
issuing the Notes and the Certificates, (ii) holding and dealing with (including
disposing of) the Owner Trust Assets, (iii) making payments on the Notes and the
Certificates, (iv) entering into and performing the duties, responsibilities and
functions required under the Transfer and Servicing Agreement, the Indenture,
the Contracts, and related documents, and (v) matters related to the foregoing.
CAPITALIZATION OF THE OWNER TRUST
The following table illustrates the capitalization of the Owner Trust as of
the Cut-Off Date, as if the issuance and sale of the Notes and the Equity
Certificates offered hereby had taken place on such date:
<TABLE>
<S> <C>
Class A Receivable-Backed Notes................................. $
Class B Receivable-Backed Notes................................. $
Class C Receivable-Backed Notes................................. $
Equity Certificates............................................. $
---------
Total....................................................... $
</TABLE>
THE OWNER TRUSTEE
will be the Owner Trustee under the Trust Agreement. The
Owner Trustee is a banking corporation and its principal offices
are located at , , . The Owner Trustee's liability in
connection with the issuance and sale of the Notes and the Equity Certificates
is limited solely to the express obligations of the Owner Trustee set forth in
the Trust Agreement and the Indenture.
The Owner Trustee may resign at any time, in which event the Depositor will
be obligated to appoint a successor Owner Trustee. The Depositor may also remove
the Owner Trustee if the Owner Trustee ceases to be eligible to continue as such
under the Trust Agreement or if the Owner Trustee becomes insolvent. Any
resignation or removal of the Owner Trustee and appointment of a successor Owner
Trustee will not become effective until acceptance of the appointment of a
successor Owner Trustee.
AT&T CAPITAL CORPORATION
AT&T Capital Corporation ("TCC") is a full-service, diversified equipment
leasing and finance company that operates principally in the United States and
also has operations in Europe, Canada, the Asia/Pacific region, Mexico and South
America. TCC is one of the largest equipment leasing and finance companies in
the United States, based on the aggregate value of equipment leased or financed,
and is the largest lessor of telecommunications equipment in the United States.
TCC, through its various subsidiaries, leases and finances a wide variety of
equipment, including general office, manufacturing and medical equipment,
telecommunications equipment (such as private branch exchanges, telephone
systems and voice processing units), information technology equipment (such as
personal computers, retail point of sale systems and automatic teller machines)
and transportation equipment (primarily vehicles). In addition, TCC provides
inventory financing for equipment dealers,
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franchise financing for franchisees and financing collateralized by real estate.
TCC's leasing and financing services are marketed to (i) customers of equipment
manufacturers, distributors and dealers with which TCC has a marketing
relationship for financing services and (ii) directly to end-users of equipment.
TCC's approximately 500,000 customers include large global companies, small and
mid-sized businesses and federal, state and local governments and their
agencies.
During its 10 year history, TCC has achieved significant growth in assets,
finance volume (aggregate dollar amount of equipment and other items financed),
revenues and net income. At December 31, 1995, TCC's total assets were
approximately $9.5 billion, an increase of 18.9% over the prior year-end;
finance volume for 1995 was $4.6 billion, an increase of 7.4% over 1994; total
revenues for 1995 were $1.6 billion, an increase of 13.9% over 1994; and net
income of $127.6 million for 1995 was 27.1% greater than the net income for
1994. Total assets at the end of the second quarter of 1996 were approximately
$ billion representing a % increase over total assets at the end of the
second quarter of 1995, and net income of $31.0 million for the first six months
of 1996 represented an increase of 47.7% over the net income for the
corresponding period in 1995.
TCC's predecessor was founded in 1985 by AT&T as a captive finance company
to assist its equipment marketing and sales efforts by providing AT&T's
customers with sophisticated financing. In 1993, AT&T sold 14% of TCC's common
stock in an initial public offering. TCC's common stock has traded on the New
York Stock Exchange under the symbol "TCC." While it is anticipated that TCC's
common stock will be delisted upon the consummation of the Merger (see "The
Merger"), TCC will, from time to time, continue to issue securities in the
public market and, accordingly, will continue to be subject to the informational
requirements of the Exchange Act and, in accordance therewith, will file reports
and other information with the Commission.
On September 20, 1995, AT&T announced plans to separate itself into three
publicly traded companies (AT&T, Lucent Technologies Inc. ("Lucent") and NCR
Corporation ("NCR")) and to sell its remaining equity interest in TCC in a
public or private sale. See "The Merger."
TCC has an experienced management team; its six executive officers have been
in management positions with TCC for an average of 10 years and, on a combined
basis, have more than 100 years experience in the equipment leasing and finance
industry. At June 30, 1996, TCC and its subsidiaries had approximately 2,850
members (employees). The principal executive offices of TCC are located at 44
Whippany Road, Morristown, New Jersey 07962.
The Contracts comprising the Trust Assets have been originated or, in some
cases, purchased from third parties by four wholly owned subsidiaries of TCC:
AT&T Capital Leasing Services, Inc. ("Leasing Services"), AT&T Credit
Corporation ("Credit Corp."), NCR Credit Corp. ("NCR Credit") and the Portland
division of AT&T Commercial Finance Corporation (such division is referred to as
"CFC") (collectively, the "Originators").
THE ORIGINATORS
AT&T CAPITAL LEASING SERVICES, INC.
Leasing Services provides leasing and financing programs for manufacturers
and distributors as well as leasing and financing to existing customers. Leasing
Services (formerly known as Eaton Financial Corporation) was acquired by a
predecessor of Credit Corp. in March 1989, and became a wholly owned subsidiary
of a predecessor of TCC in connection with TCC's reorganization in March 1990.
It thereafter became a wholly owned subsidiary of TCC in connection with TCC's
restructuring in March 1993.
Leasing Services is headquartered in Framingham, Massachusetts and employed,
as of June 30, 1996, approximately 425 people in a network of four full service
offices throughout the United States and a support office in Framingham. Its
portfolio includes office automation and general-purpose business equipment such
as copiers and computers, as well as industry-specific equipment such as
printing, machine tools and medical/dental equipment. At June 30, 1996, the
Leasing Services portfolio (which
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includes both contracts owned by Leasing Services and contracts serviced on
behalf of others) was comprised of the following equipment types: computers %,
copiers %, machine tool manufacturing equipment %, medical/dental equipment
%, printing equipment %, automobile test/repair equipment % and other %.
At June 30, 1996, % of Leasing Services' portfolio consisted of leases.
Approximately % of such leases include fair market value purchase options
exercisable by the applicable lessee upon expiration of the applicable lease.
The balance of the leases contain fixed price or nominal purchase options. At
June 30, 1996, % of Leasing Services' portfolio consisted of loans, which are
prepayable, in whole or in part, at any time, and under which the obligor is
responsible for all maintenance, insurance and taxes.
Leasing Services' total portfolio, consisting of over customers as of
June 30, 1996, is comprised mainly of small and medium-sized companies. In
addition to a large customer base, the portfolio is broadly diversified; as of
June 30, 1996, the ten largest customers comprised only % of the aggregate
portfolio. As of June 30, 1996, the average exposure per customer for the entire
portfolio was approximately $ . In terms of geographical distribution, five
states (California %, Florida %, New York %, Texas % and New Jersey
%) accounted for approximately % of outstanding receivables as of June 30,
1996.
Leasing Services' credit and collections operations are decentralized within
its network of four full-service offices located in the Atlanta, Georgia;
Dallas, Texas; San Francisco, California; and Boston, Massachusetts metropolitan
areas. As of June 30, 1996, Leasing Services had members responsible for
credit and contract approval and collections activities.
AT&T CREDIT CORPORATION AND NCR CREDIT CORP.
Credit Corp. supports the sales of AT&T, Lucent and NCR equipment by
providing leasing and financing options to customers who have selected equipment
manufactured or supplied by these vendors. Credit Corp.'s predecessor was
established as a captive finance company of AT&T in 1985. The predecessor of NCR
Credit, which is a wholly owned subsidiary of Credit Corp., was established as a
captive finance company of NCR in 1980. In 1992, when AT&T acquired NCR,
ownership of NCR Credit was transferred to TCC. At that time Credit Corp. and
NCR Credit operated as separate business units of TCC. In 1995, TCC consolidated
the operations of NCR Credit and Credit Corp.; relocated the credit and
collections operations supporting NCR Credit from Dayton, Ohio, to Credit
Corp.'s executive offices in Parsippany, New Jersey; ceased using NCR Credit to
originate new financings; and began using Credit Corp. to originate business in
that market segment. As of June 30, 1996, Credit Corp. employed approximately
members.
Substantially all of Credit Corp.'s transactions are generated through
Lucent and NCR, which currently are subsidiaries of AT&T. See "AT&T Capital
Corporation". Lucent manufactures and distributes telecommunications and related
equipment, and NCR manufactures and distributes information technology
(including retail point-of sale systems, automated teller machines ("ATMs") and
computers). At June 30, 1996, the combined portfolio of Credit Corp. and NCR
Credit was comprised of the following equipment types: telecommunications
equipment %, computer equipment %, retail point-of-sale systems %, ATMs
%, and other %.
At June 30, 1996, % of Credit Corp.'s portfolio consisted of leases.
Approximately % of such leases include fair market value purchase options in
favor of the applicable lessee upon expiration of the applicable lease. The
balance of the leases contain fixed price or nominal purchase options. At June
30, 1996, % of Credit Corp.'s portfolio consisted of loans, which are
prepayable, in whole or in part, at any time, and under which the obligor is
responsible for all maintenance, insurance and taxes.
Transactions generated from the sales of Lucent equipment historically are
small ticket transactions ( customers; average transaction size of $ ;
% of the combined portfolio) and middle market transactions ( customers;
average transaction size of $ ; % of the combined portfolio).
Transactions generated from the sales of NCR equipment historically are middle
market
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transactions ( customers; average transaction size of $ ; % of the
combined portfolio). In terms of geographical distribution, the top five states
( ) accounted for approximately % of the outstanding receivables as of
June 30, 1996.
Credit Corp.'s credit and collection operations are handled on a centralized
basis through its executive offices in Parsipanny, New Jersey. As of June 30,
1996, Credit Corp. had approximately members in New Jersey responsible for
credit and contract approvals, documentation and collections. Substantially all
of these members work in teams that are focused on distinct market segments
(e.g., by vendor (Lucent or NCR), by size of transaction (small ticket or middle
market) or by geographic region). Other members provide company-wide oversight
of the credit, contract and collections processes associated with the portfolio
originated by Credit Corp. and NCR Credit. In addition, as of June 30, 1996
Credit Corp. had approximately account managers located in Lucent offices
throughout the United States to help process credit applications and
documentation packages.
AT&T COMMERCIAL FINANCE CORPORATION
CFC provides financing and leasing programs for manufacturers and
distributors of material handling and construction equipment. CFC was formed in
1990 in connection with the acquisition of substantially all the assets of two
divisions of Pacificorp Credit, Inc.
CFC is headquartered in Portland, Oregon and employed as of June 30, 1996,
members, including regionally deployed sales representatives. CFC's credit
and collection operations are located in Portland, Oregon. As of June 30, 1996,
CFC had members responsible for credit and collections activity.
At June 30, 1996, the CFC portfolio (which includes both contracts owned by
CFC and contracts serviced on behalf of others) was comprised of the following
equipment types: . At June 30, 1996, % of CFC's portfolio consisted of
lease contracts and % consisted of loan contracts. Approximately % of the
lease contracts include fair market value purchase options in favor of the
applicable lessee upon expiration of the applicable lease. The balance of the
lease contracts contain fixed price or nominal options. The loan contracts
included within CFC's portfolio are prepayable, in whole or in part, at any
time, and require the obligor to pay for all maintenance, insurance and taxes.
CFC's retail portfolio, consisting of over customers as of June 30,
1996, is comprised of businesses of varying sizes in a wide variety of
industries. As of June 30, 1996, the average exposure per end user customer was
approximately $ . The ten largest end user customers comprised % of the
aggregate portfolio. The CFC portfolio is also diversified geographically with
five states ( , , , and )
accounting for approximately % of outstanding receivables as of June 30, 1996.
UNDERWRITING AND SERVICING
CREDIT MANAGEMENT PHILOSOPHY
TCC strives to manage certain risks in connection with its business,
including credit risk and residual value risk associated with the acquisition
and holding of receivables such as the Contracts. The management of these risks
is critical to each strategic business unit within TCC (an "SBU"). As such, TCC
has in place policies, controls and procedures (including sophisticated credit
scoring systems in several of its SBUs which support the credit approval
process, credit limit assignment and collections) intended to manage and limit
such risks, promote early problem recognition and corrective action as well as
facilitate consistent portfolio performance measurements. Such policies,
controls and procedures are subject to periodic review by TCC's Risk Management
Department, which includes legal, credit and asset management personnel, by
TCC's internal auditors and TCC's Audit Committee. In addition, TCC's executive
officers, acting as a committee (the "CLT"), regularly monitors TCC's overall
risk profile.
The control of credit losses is an important element of TCC's business. TCC
seeks to minimize its credit risk through diversification of its portfolio by
customer, industry segment, equipment type, geographic location and transaction
maturity. TCC's financing activities have been spread across a wide
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range of equipment types (E.G., general equipment, telecommunications equipment,
office equipment, information technology and transportation equipment) and real
estate and a large number of end-users located throughout the United States and,
to a lesser extent, abroad.
Each SBU has a senior credit officer and a Credit Committee that together
are responsible for overseeing the quality, integrity and performance of their
respective credit portfolios. Before any transaction can be committed to, it
must first be credit approved by one of TCC's proprietary credit scoring models
or by a duly authorized credit officer. Portfolio quality is monitored regularly
to assess the overall condition of the portfolio and identify the major
exposures within the portfolio. Each SBU Credit Committee is charged with the
responsibility of establishing credit policies appropriate for its business and
periodically reviewing its credit personnel's exercise of credit authority for
adherence to the established credit policies. Credit authorities are an
important tool that TCC uses to manage and control its portfolio risk. Credit
authorities are set in order to enable individual credit officers (and SBUs) to
handle approximately 80-85% of the transactions flowing to them. This approach
results in approximately 15-20% of the transactions being reviewed by higher
credit authorities. This ensures oversight of an individual's judgment, credit
skills and compliance with credit policy by more senior credit officials. Each
SBU Credit Committee is empowered to establish credit authorities for qualified
members of their credit staff for up to $250,000. Approval of new credit
authorities up to $1,000,000 require the approval of TCC's Chief Credit Officer
or its Chief Risk Management Officer in addition to the approval of the SBU
Credit Committee. Approval of new credit authorities in excess of $1,000,000
also require the approval of the CLT or TCC's Chief Executive Officer. The
existing credit authorities allow the SBU senior credit officer to approve
transactions up to $4.5 million in the case of Credit Corp., up to $2.0 million
in the case of Leasing Services, up to $2.0 million in the case of NCR Credit
and up to $1.5 million in the case of CFC. In addition, approval by TCC's Chief
Credit Officer, Chief Risk Management Officer, Corporate Business Leader or CLT
is required for transactions in excess of the SBU's credit authority and for
certain other matters. The credit authority granted to approve transactions may
not be delegated. TCC utilizes the "one obligor concept" in computing total
credit exposure; this means that the level of credit authority required to
approve an incremental transaction must be sufficient to approve the customer's
total credit exposure. TCC tracks credit exposure in an automated fashion
aggregating all SBUs' exposure to each customer including its subsidiaries,
affiliates and commonly controlled companies. Unless otherwise specifically
approved, credit approvals are valid for up to 180 days.
UNDERWRITING -- GENERAL
TCC's underwriting standards are intended to evaluate a prospective
customer's credit standing and repayment ability. Credit decisions are made
based upon the credit characteristics of the applicant, loss experience with
comparable customers, the amount and terms and conditions of the proposed
transaction and the type of equipment to be leased or financed. For almost all
transactions under $50,000 originated by Leasing Services and Credit Corp.,
sophisticated credit scoring systems (where a computer makes the initial credit
decision after consideration of many variables from the credit application data
and credit bureau information, based on a statistical model of TCC's prior loss
experience) are utilized to make credit decisions. TCC's credit scoring system,
which was first developed in 1989 and has been subsequently upgraded with the
development of new models, is designed to improve credit decisions on new lease
applications, expedite response times to customers and increase business volume
and portfolio profitability while maintaining credit quality. With respect to
credit decisions for those transactions which are not credit scored, TCC's
credit officers conduct various credit investigations including reference
calling and the procurement and analysis of data from credit reporting agencies
such as Dun & Bradstreet, TRW and other credit bureaus. In the case of larger
sized transactions (generally over $100,000), TCC's credit officers will obtain
and analyze financial statements from the customer. Analysis will be conducted
to determine the reliability of the financial statements and to ascertain the
financial condition and operating performance of the potential customer. Asset
quality is carefully reviewed and stated liabilities are compared to the
information obtained from reference checking and credit reports. Cash flow is
checked for reliability and adequacy to service funded debt maturities and other
fixed charges. The financial analysis would typically involve a review of the
potential
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customer's leverage, profitability, liquidity and cash flow utilizing a variety
of financial ratios and comparing the company to other companies its size in
similar businesses. In this connection, various reference sources are utilized
such as Robert Morris Associates Financial Ratio Guide. Additionally,
information may be obtained from rating agencies, securities firms, Bloomberg
and numerous other sources. A written analysis is then prepared by the credit
officer summarizing the amount and terms of the credit request and setting forth
the credit officer's recommendation for disposition including detailed
supporting rationale. Alternative exit strategies including an analysis of the
value of the equipment as well as its essentiality of use are also considered in
the event the customer fails to honor its payment obligations, but TCC does not
impose rigid loan-to-value ratios in its underwriting processes. The credit
approval will also set forth any conditions of approval such as personal or
corporate guarantees, shorter lease terms, more advance payments or other credit
enhancements, and it will dictate the necessary documentation. Any subsequent
modification of approval terms or required documentation must be re-approved by
one of TCC's authorized credit officers. TCC also requires the credit personnel
of each SBU to rate the creditworthiness of each of such unit's customer
accounts over $100,000 and, in connection therewith, to take into account
certain other factors affecting the credit risk of a particular transaction,
such as collateral value, credit enhancement and duration of the credit.
UNDERWRITING -- ADVANCED CREDIT SCORING SYSTEMS
In 1992, TCC commissioned the Bell Laboratories Operations Research
Department ("Bell Labs") to design decision support systems and associated
strategies for credit risk management throughout the customer's financing life
cycle. This life cycle approach, while commonplace in the consumer credit field,
is not common in commercial leasing. Three sets of decision support systems were
developed and implemented, covering each stage of the small ticket leasing life
cycle; front-end credit decisions, credit line management, and delinquent
account collections. Leasing Services utilized this methodology initially,
followed by Credit Corp., which had previously worked with commercial credit
scoring vendors and consultants since 1989. Credit Corp. is now installing the
behavioral collection scoring technology company-wide, which it has been using
on a limited test basis in several of its operating units for most of 1996. Each
system is comprised of a suite of statistically derived risk prediction models,
a sequential decision strategy which determines the model to be used in each
instance, and a risk based strategy which determines the optimal decision based
upon the model results.
Front-end credit decisioning systems improve the accuracy, speed and cost
effectiveness of the credit evaluation of new credit applications. The system
follows a series of steps including the selection and electronic retrieval of
credit bureau information, the quantification of credit risk and the decision to
accept, reject or manually review the credit applicant. While both Leasing
Services and Credit Corp. have been using credit application scoring models
since 1991 and 1989, respectively, Leasing Services implemented an improved
decisioning system in March 1993, while Credit Corp. implemented such system in
May 1995. Separate credit line management models have been developed and
implemented within Credit Corp. in May 1995 and are currently being implemented
within Leasing Services. The credit scoring systems are monitored using various
reporting mechanisms and have been continually upgraded over time to incorporate
the value of more recent data and to take advantage of improved statistical
techniques. Overrides of credit scoring decisions by authorized credit officers
are permitted, but are discouraged unless additional information is uncovered
which materially strengthens the transaction or if sufficient credit
enhancements can be obtained to mitigate the risk. Overrides are carefully
tracked by operating unit by month, and are more common at Credit Corp. than
they are at Leasing Services. Such advanced credit scoring systems are not used
by CFC and NCR Credit because the Contracts originated by each of them have
larger original balances.
DOCUMENTATION
Prior to funding leasing and financing transactions, a complete
documentation package (including generally a credit application, signed
lease/installment sale or financing agreement, vendor invoice, initial
lease/advance payment, proof of insurance (where relevant), delivery and
acceptance acknowledgements and appropriate UCC financing statements) is
required. Filing of UCC financing statements typically is required by Leasing
Services unless the underlying equipment has a cost of less than
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$10,000 (or $30,000 in the case of a lease contract with a fair market value
purchase option); by Credit Corp. unless the underlying equipment has a cost of
less than $20,000 (or $50,000 in the case of a lease contract with a fair market
value purchase option); by NCR Credit unless the underlying equipment has a cost
of less than $25,000; and by CFC in all transactions.
BILLING
Billing for the Originators is handled by third parties, which prepare and
mail monthly invoices. All customers are assigned a billing cycle and invoices
are sent either 19 days before the due date in the case of Credit Corp., 30 days
before the due date in the case of Leasing Services, 20 days before the due date
in the case of CFC, or 25 days before the due date in the case of NCR Credit.
From time to time to facilitate customer needs, the Originators will provide
manual invoices. Monthly invoices include the scheduled payment, taxes,
insurance and late charges, if any. The vast majority of contracts provide for
level payments throughout their term. Substantially all customers forward
payments to lockboxes with certain financial institutions.
PORTFOLIO MONITORING
Delinquency is tracked and calculated monthly for each major portfolio
segment, including segmentation by classification of days past due. In addition,
non-accruals are tracked monthly, including the portion which is deemed to be at
risk by the SBU credit officials. Similarly, credit losses are monitored each
month and are compared with credit losses for the previous months and the
corresponding month in the prior years. TCC also employs sophisticated
techniques in the analysis and oversight of its portfolio. For that portion of
the portfolio assets consisting of transactions under $25,000, roll rate
analysis (a type of portfolio analysis examining the rate at which accounts in
various stages of delinquency become, or "roll" into, losses) and a type of
vintage analysis (another type of portfolio analysis in which TCC's assets are
classified by age and then compared across different years (e.g., comparing loss
experience for two-year-old portfolio in 1996 with that in 1995)) are used
together with other types of analyses (such as historical experience and various
industry indices) which are used broadly in evaluating TCC's portfolio.
In addition to providing an initial credit review, the credit review
procedures are designed to identify at an early stage those customers that may
be experiencing financial difficulty. Once identified, these customers are
monitored by credit personnel, who periodically make recommendations to the SBU
Credit Committee and/or the CLT about what remedial actions should be taken,
what portion, if any, of total credit exposures should be written off or whether
a specific allocation of TCC's loss reserves should be made.
In establishing allowances for credit losses, TCC's management reviews,
among other things, the aging of TCC's portfolio, all non-performing leases and
receivables and prior collection experience, as well as TCC's overall exposure
and changes in credit risk.
COLLECTIONS
TCC collects overdue payments using several different methods. At Credit
Corp. and Leasing Services, sophisticated computerized collection management
systems have been developed and deployed. Credit Corp. utilizes sophisticated
technology in its collection activities with the exception of behavioral
scoring, which is now being implemented company-wide following a testing period
in several of Credit Corp.'s units for most of 1996. The collection management
systems prioritize delinquent accounts into automated queues using delinquent
account scoring systems (also referred to as behavioral scoring). Telephone
calls to delinquent accounts are automatically dialed by the system eliminating
no answer and busy line calls (which are automatically rescheduled).
Accounts are ranked using a suite of statistically derived risk prediction
indicators for handling in order of risk weighted exposure. The collection
management systems will entail different account collection strategies as a
function of risk level and account balance. Accounts with low balances and/or
low risk would be assigned to a low impact collection strategy which will
involve fewer letters and telephone calls. Also, the number of days between
actions would be greater for a low risk account than
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in the case of a high risk account. A high impact collection strategy would be
assigned to accounts with high balances and/or high risk scores. In this case,
telephone calls would be commenced sooner in the collection process and
collection actions would be more closely spaced.
At NCR Credit and CFC, account collections are undertaken in a more manual
fashion with prioritization being principally driven by the number of days past
due. Accounts are typically assigned to individuals or groups who will be
responsible to ensure appropriate collection activities are undertaken to
effectuate customer payment. The collection process is undertaken using computer
generated reminder notices which are generally sent once an account is 10-15
days past due, individually tailored collection letters and telephone contact,
as appropriate.
Outside collection agencies and attorneys are frequently used to supplement
collection activity. Typically an account is placed with an outside collection
agency or attorney when it is 180 days or more past due. However, accounts past
due less than 180 days may be placed with a collection agency or attorney
depending upon the circumstances of its delinquency. Equipment may be
repossessed at any time after the contracted default but repossession typically
is not made until the account is past due between 70 and 180 days.
NON-ACCRUAL AND WRITE-OFF POLICY
TCC maintains non-accrual and write-off policies which are followed by all
SBUs. The policies require that all accounts which are 90 days past due (or
sooner in the event of a bankruptcy or other appropriate evidence of impairment)
be placed on non-accrual, and be written off or specifically reserved at 180
days past due. Smaller transactions (generally $100,000 or less) will be written
off at such time. Larger transactions (generally more than $100,000) will
utilize specific reserves to appropriately reduce the carrying value of the
equipment to an amount which may be "covered" by collateral value.
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<PAGE>
THE CONTRACTS
DESCRIPTION OF THE CONTRACTS
THE FORMS OF CONTRACTS
The Contracts which are included in the Preliminary Contract Pool (as
defined under "--Certain Statistics Relating to the Preliminary Contract Pool"),
as of the Preliminary Cut-Off Date (as defined under "--Certain Statistics
Relating to the Preliminary Contract Pool"), consist primarily of the following
types of instruments: approximately 96.1% of such instruments are Lease
Contracts, and approximately 3.9% of such instruments are Loan Contracts. All of
the Contracts are commercial, rather than consumer, leases or loans. The
following description of the Contracts generally describes the material terms of
the Contracts included in the Contract Pool, although a small number of
Contracts may differ in one or more provisions from the description below.
The Lease Contracts are generally in one of two forms: (a) a master lease
agreement containing all of the general terms and conditions of the lease
transaction or transactions, with schedules setting forth the specific terms of
each lease transaction with that particular Obligor (a "Master Form Lease"), and
(b) specific lease agreement forms containing all of the terms and conditions of
the lease transaction (a "Specific Lease Form"). Credit Corp. generally uses the
Master Form Lease for lease transactions in excess of $100,000 and in connection
with smaller transactions in which the Obligor has previously executed a Master
Form Lease; NCR Credit uses the Master Form Lease for substantially all of its
transactions; CFC uses both a Specific Lease Form and a Master Form Lease; and
Leasing Services generally uses a Specific Lease Form but uses a Master Form
Lease for certain vendor customers. In certain cases, the Lease Contract may be
written on another form which was created by one of the Originators, by a
customer or by a third-party originator. The Loan Contracts are documented on
installment sale contract, promissory note, chattel mortgage or loan and
security agreement forms.
PAYMENTS GENERALLY
Generally, the Contracts included in the Preliminary Contract Pool require
that the Obligor make periodic payments on either a monthly or a quarterly
basis, while a number of Contracts (which, in relation to the Preliminary
Cut-Off Date Contract Pool Principal Balance, is not material) provide for semi-
annual or annual payments. The payments under all of the Contracts in the
Preliminary Contract Pool are required to be made in United States dollars and
are fixed and specified payments, rather than payments which are tied to a
formula or are otherwise at a floating rate. Payments under the Contracts are
ordinarily payable in advance, although a small percentage (including most of
those originated by NCR Credit) provide for payments in arrears.
EXPENSES RELATING TO EQUIPMENT
All of the Contracts included in the Preliminary Contract Pool require the
Obligor to assume the responsibility for payment of all expenses of the
Equipment including (without limitation) any expenses in connection with the
maintenance and repair of the Equipment, the payment of any and all premiums for
casualty and liability insurance and the payment of all taxes relating to the
Equipment.
INSURANCE; REPAIR AND REPLACEMENT
Each Lease Contract (except for a small number of Contracts which, in
relation to the Preliminary Cut-Off Date Contract Pool Principal Balance, is not
material) requires the Obligor to maintain liability insurance which must name
the lessor as additional insured. Lease Contracts and Loan Contracts require
Obligors to procure property insurance against the loss, theft or destruction
of, or damage to, the Equipment for its full replacement value, naming the
lessor (or lender) as loss payee. This requirement is, from time to time, waived
by the Originator for a small number of transactions and, for some Lease
Contracts, the Obligor is permitted to self-insure the Equipment under the
Obligor's already existing self-insurance program.
For transactions involving leased Equipment with a cost of $100,000 or less,
the Lessee is generally provided with written information concerning its
property insurance obligations under the Lease Contract and the Originator's own
property insurance coverage that will be provided at the expense of the
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Lessee if the Lessee does not provide the Originator with satisfactory evidence
of its own insurance coverage. The Lessee is given a specified time period in
which to provide such evidence. Proper evidence of coverage is verified
independently and tracked by a third party tracking company and licensed broker.
If the Originator provides the insurance coverage, the Lessee is charged a
monthly fee covering the insurance premium and other related administrative
charges. If, at any time, the Lessee provides evidence of its own coverage, such
monthly charges cease. The Lessee has the ability to "opt out" of the program by
providing evidence of its own coverage.
For transactions involving Equipment with a cost of more than $100,000,
insurance coverage generally is verified and tracked by the respective
Originator and the failure to maintain such insurance constitutes an event of
default under the applicable Lease Contract. Generally, either pursuant to the
Specific Lease Form or the Master Form Lease, the Obligor also agrees to
indemnify the Originator for all liability and expenses arising from the use,
condition or ownership of the Equipment.
Under each Lease Contract, if the Equipment is damaged or destroyed, the
Obligor is required to (i) repair such Equipment, (ii) make a termination
payment to the lessor in an amount not less than the Required Payoff Amount, or
(iii) in some cases, replace such damaged or destroyed Equipment with other
equipment of comparable use and value. Under the Transfer and Servicing
Agreement, the Servicer is permitted (in the case of the destruction of the
Equipment related to a particular Lease Contract) either to allow the Lessee to
replace such Equipment (provided that the replacement equipment is, in the
judgment of the Servicer, of comparable use and at least equivalent value to the
value of the Equipment which was destroyed) or to accept the termination payment
referred to above.
ASSIGNMENT OF CONTRACTS
All of the Contracts in the Preliminary Contract Pool permit the assignment
of the Contract by the lessor or secured party without the consent of the
Obligor, except for a small number of Contracts which require notification of
the assignment to, or the consent of, the Obligor (and TCC will represent and
warrant in the Purchase Agreement that such notices have been given, or such
approvals will have been received, not more than ten days following the Merger
Consummation Date). None of the Contracts in the Preliminary Contract Pool
permit the assignment of the Contract (or the Equipment related thereto) by the
Obligor without the prior consent of the lessor or secured party, other than
Contracts which (i) may permit assignments to a parent, subsidiary or affiliate,
(ii) permit the assignment to a third party, provided the Obligor remains liable
under the Contract, or (iii) permit assignment to a third party with a credit
standing (determined by TCC in accordance with its underwriting policy and
practice at the time for an equivalent contract type, term and amount) equal to
or better than the original Obligor. Under the Transfer and Servicing Agreement,
the Servicer may permit an assignment of a particular Contract from an Obligor
to a third party only if the Servicer (utilizing the current underwriting
criteria for its contract origination activities generally) determines that such
third party is of sufficient credit quality that the Servicer would permit such
third party to become an obligor with respect to a lease or loan contract
originated by the Servicer generally.
HELL-OR-HIGH-WATER LEASE CONTRACTS
All of the Lease Contracts in the Preliminary Contract Pool are
"hell-or-high-water" contracts which require all payments thereunder to be made
regardless of the condition or suitability of the related Equipment and
notwithstanding any defense, set-off or counterclaim that the Obligor may have
against the lessor.
EVENTS OF DEFAULT AND REMEDIES
Events of default under the Contracts generally include the failure to pay
all amounts required by the Contract when due, the failure of the Obligor to
perform its agreements and covenants under the applicable Contract, material
misrepresentations made by the Obligor, the bankruptcy or insolvency of the
Obligor or the appointment of a receiver for the Obligor and, in some cases,
default by the Obligor under other contracts or agreements. Some of these
default provisions are, in some instances, subject to notice provisions and cure
periods. Remedies available to the lessor or secured party upon the occurrence
of an event of default by the Obligor include the right to cancel or terminate
in the case of a
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<PAGE>
Lease Contract, or to accelerate payments in the case of a Loan Contract, to
recover possession of the related Equipment, and to receive an amount intended
to make the lessor or secured party (as the case may be) whole plus costs and
expenses (including legal fees) incurred by the lessor or secured party as a
result of such default. Notwithstanding such events of default and remedies,
under the Transfer and Servicing Agreement, the Servicer is permitted to take
such actions, with respect to delinquent and defaulted Contracts, as a
reasonably prudent creditor would do under similar circumstances. See
"Description of the Transfer and Servicing Agreement -- Servicing." The
Originators will provide payment extensions (generally of 3 months or less) to
customers experiencing payment slowness due to cash flow shortages or other
reasons. However, it is not intended that extensions be used to provide a
temporary solution for a delinquent account. Rather, extensions are intended to
be used when, in the judgment of the relevant credit authority, it will permit
the permanent resolution of the delinquency.
PREPAYMENTS AND EARLY TERMINATION
None of the Lease Contracts permit the prepayment or early termination of
the Lease, except in a de minimis number of cases which allow for a prepayment
or early termination upon payment of an amount which is calculated in accordance
with a formula which results in an amount not less than the Required Payoff
Amount. Notwithstanding that fact, the Servicer is permitted under the Transfer
and Servicing Agreement to accept a prepayment as part of an early termination
of the applicable Lease Contract if the amount paid by or on behalf of the
Obligor is at least equal to the Required Payoff Amount for such Lease Contract.
All or substantially all of the Loan Contracts permit the Obligors, at their
option, to prepay such Loans at any time in an amount equal to the then
outstanding principal balance plus accrued interest to the date of such
prepayment plus any applicable unpaid charges. See "Description of the Notes --
Application of Prepayments."
DISCLAIMER OF WARRANTIES
Each of the Lease Contracts included in the Preliminary Contract Pool
contains provisions whereby the lessor (or the Originator, as assignee of the
lessor) disclaims all warranties with respect to the Equipment and, in the
majority of cases, the lessor assigns the manufacturer's warranties to the
Lessee for the term of the Lease. Under the Lease Contracts, the Obligor
"accepts" the Equipment under the applicable Lease Contract following delivery
and an opportunity to inspect the related Equipment.
ADDITIONAL EQUIPMENT
Some of the Lease Contracts in the Preliminary Contract Pool constitute
leases of "additional equipment" with existing Obligors. Pursuant to the terms
of the original Lease Contract between the lessor and the Obligor, these leases
for "additional equipment" (generally costing $25,000 or less) are documented on
a written form prepared by the lessor and delivered to (but not executed by) the
Obligor, which written form describes all of the terms of the lease. Under the
terms of the Lease Contract, the Obligor agrees that unless it objects in
writing within a specified period of time, it is deemed to have accepted the
lease of such "additional equipment."
REPRESENTATIONS AND WARRANTIES MADE BY TCC
Under the Purchase Agreement, TCC will make the following representations
and warranties regarding each Contract (and the related Equipment) included in
the Final Contract Pool as of the Cut-Off Date:
(A)Each Contract (i) constitutes a valid, binding and enforceable payment
obligation of the Obligor in accordance with its terms (except as may be
limited by applicable bankruptcy, insolvency or other similar laws affecting the
enforceability of creditors' rights generally and the availability of equitable
remedies), (ii) has been duly and properly sold, assigned and conveyed by the
applicable Originator under the Purchase Agreement to the Depositor and has been
duly and properly transferred and conveyed by the Depositor to the Owner Trust
pursuant to the Transfer and Servicing Agreement, (iii) was originated by one of
the Originators in the ordinary course of such Originator's business, or (in the
case of any Contract purchased by one of the Originators) was acquired by such
Originator for proper consideration and was validly assigned to such Originator
by the seller of such Contract, and
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<PAGE>
(iv) contains customary and enforceable provisions adequate to enable
realization against the Obligor and/or the related Equipment (although no
representation or warranty is made with respect to the perfection or priority of
any security interest in such related Equipment);
(B)No selection procedures adverse to the Noteholders or Equity
Certificateholders were utilized in selecting the Contracts from those
lease and loan contracts owned by the Originators on the Cut-Off Date;
(C)All requirements of applicable Federal, state and local laws, and
regulations thereunder, in respect of all of the Contracts, have been
complied with in all material respects;
(D)There is no known default, breach, violation or event permitting
cancellation or termination of the Contract by the lessor (in the case of
Lease Contracts) or by the secured party (in the case of Loan Contracts) under
the terms of any Contract (other than Scheduled Payment delinquencies (in excess
of 10% of the Scheduled Payment due) of not more than 59 days), and (except for
payment extensions and waivers of Administrative Fees in accordance with TCC's
servicing policies) there has been no waiver of any of the foregoing; and as of
the Cut-Off Date, no related Equipment had been repossessed;
(E)Immediately prior to the sale, assignment and conveyance of each Contract
by an Originator to the Depositor, such Originator had good title to such
Contract conveyed to the Depositor and was the sole owner thereof, free of any
Lien; and immediately prior to the transfer and conveyance of the Contracts to
the Owner Trust, the Depositor had good title thereto and was the sole owner
thereof, free of any Lien created by the applicable Originator;
(F)No person has a participation in or other right to receive Scheduled
Payments under any Contract, and neither the Depositor nor any of the
Originators nor TCC has taken any action to convey any right to any person that
would result in such person having a right to Scheduled Payments received with
respect to any Contract;
(G)Each Contract was originated or purchased by an Originator and was sold
by such Originator to the Depositor without any fraud or
misrepresentation on the part of such Originator;
(H)Each Obligor (i) is located in the United States, and (ii) is not (a) the
United States of America or any State or local government or any agency,
department, subdivision or instrumentality thereof or (b) the Depositor, an
Originator, TCC or any subsidiary thereof;
(I)No Contract was originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer and assignment of such Contract to the Depositor under the
Purchase Agreement or the transfer and conveyance from the Depositor to the
Owner Trust under the Transfer and Servicing Agreement;
(J)All filings and other actions required to be made, taken or performed by
any person in any jurisdiction to give the Owner Trust a first priority
perfected lien or ownership interest in the Contracts will have been made, taken
or performed;
(K)There exists a Contract File pertaining to each Contract, and such
Contract File contains the Contract or a facsimile copy thereof;
(L)There is only one original executed copy of each Contract or, if there
are multiple originals, all such originals are in the possession of the
Originator or the signed original in the possession of the Originator is noted
thereon as being the only copy that constitutes chattel paper;
(M)The Contracts constitute chattel paper within the meaning of the UCC as
in effect in the States of New Jersey, Massachusetts and Oregon (other
than those Contracts in which the lessor is financing the Obligor's software
license or maintenance contract for leased Equipment, which Contracts, in
proportion to the Cut-Off Date Contract Pool Principal Balance, are not
material);
(N)Each Contract was entered into by an Obligor who, at the Cut-Off Date,
had not been identified on the records of TCC or the Originators as being
the subject of a current bankruptcy proceeding;
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<PAGE>
(O)The computer tape containing information with respect to the Contracts
that was made available by the Depositor to the Owner Trustee and the
Indenture Trustee on the Closing Date and was used to select the Contracts (the
"Computer Tape") was complete and accurate in all material respects as of the
Cut-Off Date and includes a description of the same Contracts that are described
in the Schedule of Contracts to the Transfer and Servicing Agreement;
(P)By the Merger Consummation Date, the portions of the electronic master
record of TCC and the Depositor (the "Electronic Ledger") relating to the
Contracts will have been clearly and unambiguously marked to show that the
Contracts constitute part of the Trust Assets and are owned by the Owner Trust
in accordance with the terms of the Transfer and Servicing Agreement;
(Q)No Contract has a Scheduled Payment delinquency (in excess of 10% of the
Scheduled Payment due) of more than 59 days past due as of the Cut-Off
Date (although some Contracts may have experienced such delinquencies prior to
the Cut-Off Date);
(R)Each Contract may be sold, assigned and transferred by the Originator to
the Depositor, and may be assigned and transferred by the Depositor to
the Owner Trust without the consent of, or prior approval from, or any
notification to, the applicable Obligor, other than (i) certain Contracts
(which, in proportion to the aggregate of all of the Contracts, is not material)
that require notification of the assignment to the Obligor, which notification
will have been given by the Servicer not more than 10 days following the Merger
Consummation Date and (ii) Contracts which require the consent of the Obligor,
which consent will have been obtained not more than 10 days following the Merger
Consummation Date;
(S)Each Contract prohibits the sale, assignment or transfer of the Obligor's
interest therein, the assumption of the Contract by another person in a
manner that would release the Obligor thereof from the Obligor's obligation, or
any sale, assignment or transfer of the related Equipment, without the prior
consent of the lessor (in the case of Lease Contracts) or the secured party (in
the case of Loan Contracts), other than Contracts which may (i) permit
assignment to a subsidiary, corporate parent or other affiliate, (ii) permit the
assignment to a third party, provided the Obligor remains liable under the
Contract, or (iii) permit assignment to a third party with a credit standing
(determined by TCC in accordance with its underwriting policy and practice at
the time for an equivalent contract type, term and amount) equal to or better
than the original Obligor;
(T)The Obligor under each Contract is required to make payments thereunder
(i) in United States dollars, and (ii) in fixed amounts and on fixed and
predetermined dates;
(U)Each Contract requires the Obligor to assume responsibility for payment
of all expenses in connection with the maintenance and repair of the
related Equipment, the payment of all premiums for insurance of such Equipment
and the payment of all taxes (including sales taxes) relating to such Equipment;
(V)Each Contract requires the Obligor thereunder to make all scheduled
payments thereon under all circumstances and regardless of the condition
or suitability of the related Equipment and notwithstanding any defense, set-off
or counterclaim that the Obligor may have against the manufacturer, lessor or
lender (as the case may be);
(W)Under each Lease Contract, if the Equipment is damaged or destroyed, the
Obligor is required to either (i) repair such Equipment, (ii) make a
termination payment to the lessor in an amount not less than the Required Payoff
Amount, or (iii) in some cases, replace such damaged or destroyed Equipment with
other equipment of comparable use and value;
(X)None of the Lease Contracts permit the Lessee to terminate the Lease
Contract prior to the Final Scheduled Payment Date or to otherwise prepay
the amounts due and payable thereunder, other than certain Lease Contracts which
do permit an early termination or prepayment, but in such cases the amount to be
paid in connection with such termination or prepayment is not less than the
Required Payoff Amount;
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(Y)Each Loan Contract permits the prepayment of the amount due thereunder,
at the option of the Obligor, but any prepayment in full must be in an
amount not less than the principal amount then outstanding plus accrued interest
thereon to the date of such prepayment; and
(Z)It is not a precondition to the valid transfer or assignment of the
Depositor's interest in any of the Equipment related to any Contract that
title to such Equipment be transferred on the records of any governmental or
quasi-governmental agency, body or authority.
The above-described representations and warranties of TCC will be made as of
the Merger Consummation Date and will survive the transfer and assignment of the
related Contracts and other Trust Assets to the Owner Trust but will speak only
as of the date made.
In the event of a breach of any such representation or warranty with respect
to a Contract that materially and adversely affects the value of such Contract
(any such breach being a "Repurchase Event"), TCC, unless it cures the breach by
the 60th day after the date on which TCC or the Depositor becomes aware of or
receives written notice from the Indenture Trustee or the Servicer of such
breach, will be obligated to purchase the Contract from the Owner Trust. Any
such purchase shall be made on the Business Day preceding the Payment Date
immediately following such 60th day at a price equal to the Required Payoff
Amount applicable to such Contract. This purchase obligation may be enforced by
the Indenture Trustee on behalf of the holders of the Notes and the Equity
Certificates, and will constitute the sole remedy available to the Noteholders
and the Equity Certificateholders against TCC for any such uncured breach,
except that pursuant to the Transfer and Servicing Agreement, TCC will indemnify
the Indenture Trustee, the Owner Trustee, the Owner Trust and the
Securityholders against losses, damages, liabilities and claims which may be
asserted against any of them as a result of third-party claims arising out of
the facts giving rise to such breach.
Upon the purchase by TCC of a Contract (and related Equipment), the
Indenture Trustee will release its liens thereon and the Owner Trust will convey
such Contract and the related Equipment to TCC.
CERTAIN STATISTICS RELATING TO THE PRELIMINARY CONTRACT POOL
GENERAL
The Depositor has prepared certain statistics relating to the pool of
Contracts which, subject to the exception noted below, will constitute the Final
Contract Pool. These statistics are based on such Contracts as of August 1, 1996
(the "Preliminary Cut-Off Date"), and the Final Contract Pool will consist of
such Contracts, less that portion of the Contract Principal Balances which are
paid or prepaid from the Preliminary Cut-Off Date to September 1, 1996 (the
"Cut-Off Date"). Accordingly, the statistics relating to such pool of Contracts
as of the Preliminary Cut-Off Date (the "Preliminary Contract Pool") will differ
somewhat from the Final Contract Pool; however, the statistics relating to the
Final Contract Pool will be included in the final Prospectus.
For purpose of the tables presented below, all unpaid Scheduled Payments due
on the Contracts included in the Preliminary Contract Pool from and after the
Preliminary Cut-Off Date (including all Scheduled Payments due prior to, but not
received as of, the Preliminary Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the Preliminary Cut-Off Date)
have been discounted monthly at an assumed rate of 8.5% per annum to calculate a
"Preliminary Cut-Off Date Contract Pool Principal Balance." The Preliminary
Cut-Off Date Contract Pool Principal Balance was $3,310,975,000.21, and the
total number of Contracts in the Preliminary Contract Pool was 294,311.
Accordingly, the average Contract Pool Principal Balance of the Contracts in the
Preliminary Contract Pool, as of the Preliminary Cut-Off Date, was approximately
$11,250. Within the Preliminary Contract Pool, 90.84% of the Contracts (by
Preliminary Cut-Off Date Contract Pool Principal Balance) were originated by the
Originators (or by other affiliates of TCC) and 9.16% of such Contracts (by
Preliminary Cut-Off Date Contract Pool Principal Balance) were purchased by the
Originators (or by other affiliates of TCC) from unrelated third parties.
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COMPOSITION OF THE PRELIMINARY CONTRACT POOL
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED AVERAGE
PRELIMINARY AVERAGE AVERAGE CONTRACT
CUT-OFF DATE ORIGINAL REMAINING PRINCIPAL
CONTRACT POOL TERM TERM BALANCE
NUMBER OF CONTRACTS PRINCIPAL BALANCE (RANGE) (RANGE) (RANGE)
- ----------------------- --------------------- --------------------- ------------------- -----------------------------
<S> <C> <C> <C> <C>
294,311 $3,310,975,000.21 55.7 months 38.2 months $11,249.92
(6 to 163 months) (6 to 97 months) ($ to $12,910,860.00)
</TABLE>
TYPE OF CONTRACTS
The following table shows the distribution of the Preliminary Contract Pool
between true leases (defined for purposes of this table as a Contract under
which the Obligor has a right to purchase the related Equipment only upon
payment of the fair market value thereof) and all other Contracts (comprising
both Loan Contracts and Lease Contracts with fixed price or nominal purchase
options) by indicating the number of Contracts in each category, the aggregate
Contract Principal Balance of such Contracts, and the percentage (by number of
Contracts and by aggregate Contract Principal Balance) of such Contracts
relative to all of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF
PRELIMINARY
% OF TOTAL CUT-OFF DATE
NUMBER OF NUMBER OF AGGREGATE CONTRACT CONTRACT POOL
TYPE OF CONTRACT CONTRACTS CONTRACTS PRINCIPAL BALANCE PRINCIPAL BALANCE
- --------------------------------------------- ----------- ------------ --------------------- -----------------
<S> <C> <C> <C> <C>
True Leases.................................. 229,807 78.08% $ 2,668,915,039.09 80.61%
All Other Contracts.......................... 64,504 21.92 642,059,961.12 19.39
----------- ------------ --------------------- -------
Total.................................. 294,311 100.00% $ 3,310,975,000.21 100.00%
----------- ------------ --------------------- -------
----------- ------------ --------------------- -------
</TABLE>
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GEOGRAPHICAL DIVERSITY
The following table shows the geographical diversity of the Preliminary
Contract Pool, by indicating the number of Contracts, the aggregate Contract
Principal Balance of such Contracts and the percentage (by number of Contracts
and by aggregate Contract Principal Balance) of such Contracts relative to all
of the Contracts in the Preliminary Contract Pool by reference to the State in
which the Obligors on such Contracts are located:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
% OF TOTAL AGGREGATE CONTRACT POOL
NUMBER OF NUMBER OF CONTRACT PRINCIPAL NUMBER OF
STATE CONTRACTS CONTRACTS PRINCIPAL BALANCE BALANCE STATE CONTRACTS
- ------------------- -------------- -------------- ---------------------- ---------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Alabama 3,189 1.08% $ 37,840,335.04 1.14% Montana 553
Alaska 303 0.10 2,362,192.03 0.07 Nebraska 770
Arizona 4,836 1.64 53,870,913.73 1.63 Nevada 1,561
Arkansas 1,357 0.46 13,436,532.27 0.41 New Hampshire 1,986
California 39,053 13.27 423,927,505.30 12.80 New Jersey 20,380
Colorado 5,816 1.98 52,081,140.44 1.57 New Mexico 1,449
Connecticut 4,328 1.47 51,190,204.12 1.55 New York 25,847
Delaware 803 0.27 6,506,870.71 0.20 North Carolina 7,105
District of
Columbia 1,750 0.59 21,988,038.66 0.66 North Dakota 218
Florida 20,664 7.02 218,430,190.40 6.60 Ohio 9,951
Georgia 9,106 3.09 111,758,811.82 3.38 Oklahoma 1,954
Hawaii 415 0.14 4,096,665.33 0.12 Oregon 3,346
Idaho 926 0.31 8,490,221.17 0.26 Pennsylvania 12,464
Illinois 13,740 4.67 133,974,909.21 4.05 Puerto Rico 1
Indiana 4,044 1.37 39,843,756.45 1.20 Rhode Island 1,498
Iowa 1,707 0.58 22,285,485.77 0.67 South Carolina 3,105
Kansas 1,488 0.51 18,760,751.02 0.57 South Dakota 335
Kentucky 2,204 0.75 23,558,191.83 0.71 Tennessee 4,896
Louisiana 2,557 0.87 26,218,612.82 0.79 Texas 18,630
Maine 1,029 0.35 10,342,286.01 0.31 Utah 2,040
Maryland 5,444 1.85 55,950,849.19 1.69 Virginia 7,066
Massachusetts 12,714 4.32 138,836,841.12 4.19 Vermont 692
Michigan 10,420 3.54 107,849,190.97 3.26 Washington 6,297
Minnesota 4,002 1.36 48,234,274.29 1.46 West Virginia 1,203
Mississippi 1,615 0.55 14,224,772.74 0.43 Wisconsin 3,346
Missouri 3,739 1.27 60,741,265.72 1.83 Wyoming 370
--------------
Total. . . . 294,311
--------------
--------------
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
% OF TOTAL AGGREGATE CONTRACT POOL
NUMBER OF CONTRACT PRINCIPAL
STATE CONTRACTS PRINCIPAL BALANCE BALANCE
- ------------------- -------------- ---------------------- ----------------
<S> <C> <C> <C>
Alabama 0.19% $ 4,280,393.05 0.13%
Alaska 0.26 8,008,395.04 0.24
Arizona 0.53 16,280,805.70 0.49
Arkansas 0.67 20,005,870.94 0.60
California 6.92 357,579,979.30 10.80
Colorado 0.49 11,750,061.58 0.35
Connecticut 8.78 296,560,700.05 8.96
Delaware 2.41 71,203,945.92 2.15
District of
Columbia 0.07 1,463,222.81 0.04
Florida 3.38 103,499,709.89 3.13
Georgia 0.66 25,748,710.88 0.78
Hawaii 1.14 30,469,875.00 0.92
Idaho 4.23 118,625,124.18 3.58
Illinois 0.00 1,393.79 0.00
Indiana 0.51 15,773,617.62 0.48
Iowa 1.06 35,505,438.53 1.07
Kansas 0.11 10,231,937.42 0.31
Kentucky 1.66 51,319,221.46 1.55
Louisiana 6.33 197,915,291.85 5.98
Maine 0.69 28,932,925.83 0.87
Maryland 2.40 61,675,603.65 1.86
Massachusetts 0.24 5,765,002.27 0.17
Michigan 2.14 59,586,859.78 1.80
Minnesota 0.41 9,628,106.38 0.29
Mississippi 1.14 60,002,347.19 1.81
Missouri 0.13 2,359,651.96 0.07
------- ---------------------- -------
100.00% $ 3,310,975,000.21 100.00%
------- ---------------------- -------
------- ---------------------- -------
</TABLE>
Adverse economic conditions in states where a substantial number of Obligors
are located, such as California and New Jersey, may adversely affect such
Obligors' ability to make payments on the related Contracts, and the Noteholders
could suffer a loss on their investment as a result.
39
<PAGE>
PAYMENT STATUS
The following table shows the payment status of the Preliminary Contract
Pool, by indicating the number of Contracts, the aggregate Contract Principal
Balance of such Contracts and the percentage (by number of Contracts and by
aggregate Contract Principal Balance) of such Contracts relative to all of the
Contracts in the Preliminary Contract Pool by reference to whether such
Contracts were current as of the Preliminary Cut-Off Date or were 30-59 days
delinquent:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
CONTRACT
% OF TOTAL AGGREGATE CONTRACT PRINCIPAL
PAYMENT STATUS NUMBER OF CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- -------------------------- --------------------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
Current 285,101 96.87% $ 3,192,015,821.49 96.41%
30-59 Days Delinquent 9,210 3.13 118,959,178.72 3.59
-------- ------- --------------------- -------
Total 294,311 100.00% $ 3,310,975,000.21 100.00%
-------- ------- --------------------- -------
-------- ------- --------------------- -------
</TABLE>
CONTRACTS BY EQUIPMENT TYPE
The following table shows the type of Equipment securing or otherwise
related to the Contracts in the Preliminary Contract Pool, by the number of
Contracts, the aggregate Contract Principal Balance of such Contracts, and the
percentage (by number of Contracts and by aggregate Contract Principal Balance)
of such Contracts relative to all of the Contracts in the Preliminary Contract
Pool:
<TABLE>
<CAPTION>
% OF
PRELIMINARY
CUT-OFF DATE
CONTRACT POOL
% OF TOTAL AGGREGATE CONTRACT PRINCIPAL
TYPE OF EQUIPMENT NUMBER OF CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- --------------------------- --------------------- --------------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Telecommunications 128,484 43.66% $ 1,310,111,959.74 39.57%
Manufacturing and
Construction 43,538 14.79 744,712,984.71 22.49
Computers and Point-of-Sale 67,526 22.94 625,720,305.12 18.90
General Office 36,735 12.48 328,736,751.57 9.93
Medical 10,049 3.41 173,840,191.45 5.25
Printing 7,950 2.70 126,121,325.33 3.81
Other 29 0.01 1,731,482.29 0.05
-------- ------- --------------------- -------
Total................ 294,311 100.00% $ 3,310,975,000.21 100.00%
-------- ------- --------------------- -------
-------- ------- --------------------- -------
</TABLE>
CONTRACT PRINCIPAL BALANCES
The following table shows the distribution of the Preliminary Contract Pool
by Contract Principal Balance by indicating the number of Contracts which have a
Contract Principal Balance within a defined range and the aggregate Contract
Principal Balance of such Contracts, and the percentage (by number of Contracts
and by aggregate Contract Principal Balance) of such Contracts relative to all
of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
CONTRACT
NUMBER OF % OF TOTAL AGGREGATE CONTRACT POOL PRINCIPAL
CONTRACT PRINCIPAL BALANCE CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- ------------------------------------ ----------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
$ 0 to $ 5,000.00.......... 176,117 59.84% $ 348,786,182.38 10.53%
$ 5,000.01 to $ 25,000.00......... 92,252 31.35 1,011,460,786.87 30.55
$ 25,000.01 to $ 50,000.00......... 15,059 5.12 522,629,509.41 15.78
$ 50,000.01 to $ 100,000.00......... 7,048 2.39 482,385,816.25 14.57
$100,000.01 to $ 500,000.00......... 3,517 1.19 598,162,427.77 18.07
$500,000.01 to $1,000,000.00........ 225 0.08 155,131,575.66 4.69
Over $1,000,000.00.................. 93 0.03 192,418,701.88 5.81
----------- ------- --------------------- -------
Total......................... 294,311 100.00% $ 3,310,975,000.21 100.00%
----------- ------- --------------------- -------
----------- ------- --------------------- -------
</TABLE>
40
<PAGE>
REMAINING TERMS OF CONTRACTS
The following table shows the remaining term of the Contracts in the
Preliminary Contract Pool from the Preliminary Cut-Off Date to the scheduled
expiration date of such Contracts, by indicating the number of Contracts, the
aggregate Contract Principal Balance of such Contracts, and the percentage (by
number of Contracts and by aggregate Contract Principal Balance) of such
Contracts relative to all of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
NUMBER CONTRACT POOL
OF % OF TOTAL AGGREGATE CONTRACT PRINCIPAL
REMAINING TERM OF CONTRACTS CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- ------------------------------------ ----------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
One Month to 12 Months.............. 70,885 24.09% $ 175,445,061.79 5.30%
13 Months to 24 Months.............. 78,652 26.72 550,771,159.36 16.63
25 Months to 36 Months.............. 72,859 24.76 804,458,557.21 24.30
37 Months to 48 Months.............. 40,854 13.88 798,723,214.33 24.12
49 Months to 60 Months.............. 29,701 10.09 846,896,321.41 25.58
Over 60 Months...................... 1,360 0.46 134,680,686.10 4.07
----------- ------- --------------------- -------
Total......................... 294,311 100.00% $ 3,310,975,000.21 100.00%
----------- ------- --------------------- -------
----------- ------- --------------------- -------
</TABLE>
TYPES OF OBLIGOR
The Contracts with a single Obligor (or group of affiliated Obligors) having
the largest aggregate Contract Principal Balance as of the Preliminary Cut-Off
Date represented no more than 2% of the Preliminary Cut-Off Date Contract Pool
Principal Balance. The following table shows the types of Obligor on Contracts
within the Preliminary Contract Pool, by the number of Contracts, the aggregate
Contract Principal Balance of such Contracts, and the percentage (by number of
Contracts and by aggregate Contract Principal Balance) of such Contracts
relative to all of the Contracts in the Preliminary Contract Pool:
<TABLE>
<CAPTION>
% OF PRELIMINARY
CUT-OFF DATE
CONTRACT POOL
% OF TOTAL AGGREGATE CONTRACT PRINCIPAL
TYPE OF OBLIGOR NUMBER OF CONTRACTS NUMBER OF CONTRACTS PRINCIPAL BALANCE BALANCE
- -------------------------- --------------------- --------------------- --------------------- -----------------
<S> <C> <C> <C> <C>
Service Organizations..... 148,704 50.53% $ 1,407,599,130.06 42.51%
Manufacturing and
Construction............. 41,579 14.13 765,851,997.24 23.13
Printing and Copy
Centers.................. 6,418 2.18 93,430,691.95 2.82
Professionals............. 20,059 6.82 114,896,447.70 3.47
Retail and Wholesale
Trade.................... 39,280 13.35 425,781,161.67 12.86
Medical................... 7,560 2.57 88,608,199.79 2.68
Financial Services........ 15,646 5.32 195,886,215.23 5.92
Other..................... 15,065 5.12 218,921,156.57 6.61
-------- ------- --------------------- -------
Total............... 294,311 100.00% $ 3,310,975,000.21 100.00%
-------- ------- --------------------- -------
-------- ------- --------------------- -------
</TABLE>
41
<PAGE>
CERTAIN STATISTICS RELATING TO DELINQUENCIES AND DEFAULTS
DELINQUENCIES
The following table sets forth statistics relating to Delinquencies on lease
and/or loan contracts within the Originators' portfolios (on an aggregate basis)
as of December 31, 1991, December 31, 1992, December 31, 1993, December 31,
1994, December 31, 1995 and June 30, 1996. For these purposes, a "Delinquency"
means that the obligor on the lease or loan contract has failed to make a
required Scheduled Payment in an amount equal to at least 90% of the required
Scheduled Payment on the date required and for a specified period thereafter
(which period is set forth below under "Defaults"). For these purposes, any
payment made by the obligor on a lease or loan contract subsequent to the
required payment date is applied to the earliest payment which was unpaid. The
statistics set forth below relate to the entire portfolio of lease and loan
contracts serviced by the Originators as of the date specified, and not to the
Contracts in either the Preliminary Contract Pool or the Final Contract Pool;
and, accordingly, such statistics should not necessarily be considered
indicative of the future performance of the Contracts in the Final Contract
Pool. The following table is based, where indicated, on the book value of the
lease and loan contracts, as it appears on the accounting records of TCC as of
the date set forth below.
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE BOOK VALUE OF CONTRACTS WHICH
WERE DELINQUENT
AGGREGATE BOOK ------------------------------------------------------
VALUE OF 31 TO 60 61 TO 90 91 TO 120 OVER 120
DATE OF CALCULATION CONTRACTS DAYS DAYS DAYS DAYS TOTAL
- ---------------------------------- ---------------- ------------ ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
12/31/91.......................... $ % % % %
12/31/92.......................... $ % % % %
12/31/93.......................... $ % % % %
12/31/94.......................... $ % % % %
12/31/95.......................... $ % % % %
6/30/96.......................... $ % % % %
</TABLE>
DEFAULTS
The following table sets forth statistics relating to Defaults on lease
and/or loan contracts within the Originators' portfolios (on an aggregate basis)
as of, and for the 12-month periods ending, December 31, 1991, December 31,
1992, December 31, 1993, December 31, 1994, December 31, 1995 and as of, and for
the six-month period ending, June 30, 1996. For these purposes, a "Default"
means that, (i) during such 12-month period, the obligor on the relevant lease
or loan contract failed to make payments in an amount at least equal to 90% of
the required Scheduled Payment for at least 90 days beyond the date required, or
commenced a bankruptcy or insolvency proceeding, and (ii) in either event that
the applicable Originator or TCC declared a default under such lease or loan
contract and pursued one or more remedies thereunder. The statistics set forth
below relate to the portfolio of lease and/or loan contracts serviced by the
Originators for the period specified and not to the Contracts in either the
Preliminary Contract Pool or the Final Contract Pool; and, accordingly, such
statistics should not necessarily be considered as indicative of the future
performance of the Contracts in the Final Contract Pool. The following table is
based, where indicated, on the book value of the lease and loan contracts as it
appears on the records of TCC as of the date specified below:
<TABLE>
<CAPTION>
AGGREGATE BOOK PERCENTAGE OF
VALUE OF CONTRACTS IN AGGREGATE BOOK VALUE OF
ORIGINATORS' CONTRACTS WHICH WERE
DATE OF CALCULATION PORTFOLIO DEFAULTED
- ------------------------------------------------------------------- --------------------- -----------------------
<S> <C> <C>
12/31/91........................................................... $ %
12/31/92........................................................... $ %
12/31/93........................................................... $ %
12/31/94........................................................... $ %
12/31/95........................................................... $ %
6/30/96........................................................... $ %
</TABLE>
42
<PAGE>
LOSSES AND RECOVERIES
The following table sets forth statistics relating to gross losses and
losses net of recoveries on Defaulted lease and loan contracts within the
Originators' portfolios (on an aggregate basis) during the 12-month period
ending December 31, 1991, December 31, 1992, December 31, 1993, December 31,
1994 and December 31, 1995 and during the six-month period ending June 30, 1996.
For these purposes, "gross losses" means , and "losses net of
recoveries" means . The statistics set forth below relate to the
portfolio of lease and loan contracts serviced by the Originators during the
period indicated and not to the Contracts in either the Preliminary Contract
Pool or the Final Contract Pool; and, accordingly, such statistics should not
necessarily be considered indicative of the future performance of the Contracts
in the Final Contract Pool.
[TABLE TO FOLLOW]
43
<PAGE>
It has been the Originators' experience that, unlike consumer receivables,
collections from the obligors constitute a significant portion of recoveries on
defaulted receivables, in addition to the proceeds from liquidation of the
related equipment. The resale value of individual items of Equipment, which
would be collected by the Servicer in the event of a default under the related
Contract, will vary substantially, depending on such factors as the expected
remaining useful life of the Equipment at the time of the default and the
obsolescence of the Equipment. It is possible that the resale values for some
Equipment would be negligible or insufficient to justify repossession and
resale.
44
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the Notes.
The following summary describes certain terms of the Notes and the Indenture.
The summary does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, all the provisions of the Notes and the
Indenture. , a national banking association headquartered in
, will be the Indenture Trustee.
The Owner Trust will issue $ aggregate principal amount of %
Receivable-Backed Notes, Class A (the "Class A Notes"), $ aggregate
principal amount of % Receivable-Backed Notes, Class B (the "Class B Notes"),
and $ aggregate principal amount of % Receivable-Backed Notes, Class C
(the "Class C Notes"), pursuant to the Indenture. The Class A Notes will be
senior in right of payment to the Class B and Class C Notes, and the Class B
Notes will be senior in right of payment to the Class C Notes. The Owner Trust
will also issue two classes of certificates of beneficial interest, the Equity
Certificates and the Equipment Certificate, which are not being offered hereby.
The Equipment Certificate will represent an undivided interest in, and be
payable solely from, the Equipment and certain amounts derived from the sale or
other disposition of the Equipment upon expiration or termination (including an
early termination or liquidation) of the related Contracts and certain other
amounts as described herein. Amounts payable on the Equipment Certificate will
not be available for payment of interest and principal on the Notes. It is
expected that the Equity Certificates will initially represent the right to
receive principal in an amount equal to approximately 4% of the Cut-Off Date
Contract Pool Principal Balance, together with interest thereon at % per
annum, payable from Pledged Revenues in the priority described under "--
Distributions" below.
Payments on the Notes will be made by the Indenture Trustee on each Payment
Date to persons in whose names the Notes are registered as of the related Record
Date (the "Holders" or "Noteholders"). The Payment Date for the Notes will be
the day of each month (or if such day is not a Business Day, the next
succeeding Business Day), commencing in October 1996. The Record Date for any
Payment Date will be the Business Day immediately preceding the Payment Date (so
long as the Notes are held in the book-entry form), or the last day of the prior
calendar month (if Definitive Notes have been issued).
A "Business Day" is any day (other than a Saturday and Sunday) on which
commercial banks in New York City and are open for regular business.
Each Class of Notes initially will be represented by one or more global
Notes (the "Global Notes") registered in the name of the nominee of DTC
(together with any successor depository selected by the Indenture Trustee, the
"Depository"), except as set forth below. Beneficial interests in each Class of
Notes will be available for purchase in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof in book-entry form only. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co.
Accordingly, Cede & Co. is expected to be the Holder of record of the Notes.
Unless and until Definitive Notes are issued under the limited circumstances
described herein, no Note Owner acquiring an interest in any Class of Notes will
be entitled to receive a certificate representing such Note Owner's interest in
such Notes. Until such time, all references herein to actions by Noteholders of
any Class of Notes will refer to actions taken by the Depository upon
instructions from its participating organizations and all references herein to
distributions, notices, reports and statements to Noteholders of any Class of
Notes will refer to distributions, notices, reports and statements to the
Depository or its nominee, as the registered Holder of the Notes of such Class,
for distribution to Note Owners of such Class in accordance with the
Depository's procedures. See "-- Book-Entry Registration" and "-- Definitive
Notes."
DISTRIBUTIONS
Principal of and interest on the Notes and the Equity Certificates will be
paid on each Payment Date solely from, and secured by, the Amount Available for
such Payment Date, which is equal to: (1) the sum
45
<PAGE>
of (a) those Pledged Revenues on deposit in the Collection Account as of the
last Business Day preceding the related Determination Date (the "Deposit Date")
(i) which were received by the Servicer during the preceding calendar month (the
"Collection Period") or which represent amounts paid by TCC or the Depositor to
purchase Contracts and related Equipment as of the end of such Collection Period
("Related Collection Period Pledged Revenues"), or (ii) to the extent necessary
to pay interest on the Notes and the Equity Certificates on such Payment Date,
which were received by the Servicer after such Collection Period ("Current
Collection Period Pledged Revenues" and, together with the Related Collection
Period Pledged Revenues, the "Available Pledged Revenues"), plus (b) amounts
permitted to be withdrawn therefor from the Cash Collateral Account, as
described under "-- Cash Collateral Account" below, less (2) the related
Servicing Fee as described in clause (i) of the second succeeding paragraph.
"Pledged Revenues" will consist of (i) "Scheduled Payments" on the Contracts
(which will consist of all payments under the Contracts other than those
portions of such payments which, under the Contracts, are to be (A) applied by
the Servicer to the payment of insurance premiums, maintenance, taxes and other
similar obligations, or (B) retained by the Servicer in payment of
Administrative Fees) received on or after the Cut-Off Date and due during the
term of the Contracts, without giving effect to end-of-term extensions or
renewals thereof (including all Scheduled Payments due prior to, but not
received as of, the Cut-Off Date, but excluding any Scheduled Payments due on or
after, but received prior to, the Cut-Off Date); (ii) any voluntary prepayments
("Prepayments") received on or after the Cut-Off Date under the Contracts,
provided that the amount, if any, by which any such Prepayment exceeds the
Required Payoff Amount of the related Contract will not constitute Pledged
Revenues; (iii) any amounts paid by TCC to purchase Contracts and the related
Equipment due to a breach of representations and warranties with respect
thereto, as described under "The Contracts -- Representations and Warranties
Made by TCC," or by the Depositor to purchase the Contracts and the related
Equipment, as described under "-- Optional Purchase of Contracts" below, in each
case excluding those portions thereof attributable to the Book Value of the
Equipment, (iv) certain of the proceeds derived from the liquidation of the
Contracts and the related Equipment, as described under "-- Liquidated
Contracts" below; and (v) any earnings on the investment of amounts credited to
the Collection Account.
On each Payment Date, the Indenture Trustee will be required to make the
following payments, first, from Related Collection Period Pledged Revenues,
second, to the extent the Related Collection Period Pledged Revenues are
insufficient to pay interest on the Notes and the Equity Certificiates on such
Payment Date, the amount necessary to cure such insufficiency from Current
Collection Period Pledged Revenues and third (but only as to amounts described
in clause (ii) and certain amounts included in clause (iii)), from amounts
permitted to be withdrawn from the Cash Collateral Account as described under
"-- Cash Collateral Account" below, in the following order of priority:
(i)
the Servicing Fee to the Servicer;
(ii)
interest on the Notes and the Equity Certificates in the following order
of priority:
(a) interest on the Class A Notes (including any overdue interest and
interest thereon),
(b) interest on the Class B Notes (including any overdue interest and
interest thereon),
(c) interest on the Class C Notes (including any overdue interest and
interest thereon), and
(d) interest on the Equity Certificates (including any overdue interest
and interest thereon);
(iii)
an amount equal to the Monthly Principal Amount, as of such Payment Date,
in respect of principal on the Notes and the Equity Certificates in the
priority described under "-- Principal" below; and
(iv)
the remainder, if any, to the Cash Collateral Account, to be applied in
the manner described under "-- Cash Collateral Account" below.
46
<PAGE>
CLASS A INTEREST
Interest will be paid to the Holders of the Class A Notes on each Payment
Date, to the extent the Amount Available is sufficient therefor, at the Class A
Interest Rate on the then outstanding Class A Principal Balance, and will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Such interest so paid on such Payment Date will be equal to one-twelfth of the
product of (i) the Class A Interest Rate and (ii) the related Class A Principal
Balance as of the immediately preceding Payment Date (after giving effect to
reductions in the related Class A Principal Balance on such immediately
preceding Payment Date). Interest on the Class A Notes will accrue from and
including September , 1996, to but excluding October , 1996 (in the case of
the first interest period), and thereafter for each successive Payment Date from
and including the most recent prior Payment Date to which interest has been
paid, to but excluding such Payment Date.
In the event that, on a particular Payment Date, the Amount Available is not
sufficient to make a full distribution of interest to the Holders of the Class A
Notes, the amount of such deficiency, together with interest thereon at the
Class A Interest Rate, to the extent permitted by law, will be added to the
amount such Holders will be entitled to receive as interest on the next Payment
Date.
CLASS B INTEREST
Interest will be paid to the Holders of the Class B Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
any prior applications described under "-- Distributions" above) is sufficient
therefor, at the Class B Interest Rate on the then outstanding Class B Principal
Balance, and will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Such interest so paid on such Payment Date will be equal
to one-twelfth of the product of (i) the Class B Interest Rate and (ii) the
Class B Principal Balance as of the immediately preceding Payment Date (after
giving effect to reductions in the Class B Principal Balance on such immediately
preceding Payment Date). Interest on the Class B Notes will accrue from and
including September , 1996, to but excluding October , 1996 (in the case of
the first interest period), and thereafter for each successive Payment Date from
and including the most recent prior Payment Date to which interest has been
paid, to but excluding such Payment Date.
In the event that, on a particular Payment Date, the remaining Amount
Available is not sufficient to make a full distribution of interest to the
Holders of Class B Notes, the amount of such deficiency, together with interest
thereon at the Class B Interest Rate, to the extent permitted by law, will be
carried forward and added to the amount such Holders will be entitled to receive
as interest on the next Payment Date.
CLASS C INTEREST
Interest will be paid to the Holders of the Class C Notes on each Payment
Date, to the extent the remaining Amount Available (after taking into account
any prior applications described under "-- Distributions" above) is sufficient
therefor, at the Class C Interest Rate on the then outstanding Class C Principal
Balance, and will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. Such interest so paid on such Payment Date will be equal
to one-twelfth of the product of (i) the Class C Interest Rate, and (ii) the
Class C Principal Balance as of the immediately preceding Payment Date (after
giving effect to reductions in the Class C Principal Balance on such immediately
preceding Payment Date). Interest on the Class C Notes will accrue from and
including September , 1996 to but excluding October , 1996 (in the case of the
first interest period), and thereafter for each successive Payment Date from and
including the most recent prior Payment Date to which interest has been paid, to
but excluding such Payment Date.
In the event that, on a particular Payment Date, the remaining Amount
Available is not sufficient to make a full distribution of interest to the
Holders of Class C Notes, the amount of such deficiency, together with interest
thereon at the Class C Interest Rate, to the extent permitted by law, will be
carried forward and added to the amount such Holders will be entitled to receive
as interest on the next Payment Date.
47
<PAGE>
PRINCIPAL
To the extent the remaining Amount Available (after taking into account any
prior applications described under "-- Distributions" above) is sufficient
therefor, the amount of principal to be paid on the Notes and the Equity
Certificates on each Payment Date will equal the Monthly Principal Amount.
Principal payable on the Notes will be paid in respect of the Class A Notes on
each Payment Date until the Class A Principal Balance has been reduced to zero,
then in respect of principal on the Class B Notes until the Class B Principal
Balance has been reduced to zero, and then in respect of principal on the Class
C Notes until the Class C Principal Balance has been reduced to zero. Commencing
on the first Payment Date, however, % of the Monthly Principal Amount will be
payable on the Equity Certificates until the aggregate amount so paid equals
$ .
The "Monthly Principal Amount" for any Payment Date will equal (i) the
difference between (a) the aggregate of the Contract Principal Balances of the
Contracts (the "Contract Pool Principal Balance") as of the last day of the
Collection Period relating to the prior Payment Date (or, in the case of the
first Payment Date, the Cut-Off Date Contract Pool Principal Balance), and (b)
the Contract Pool Principal Balance as of the last day of the Collection Period
relating to such Payment Date, plus (ii) any portion of the Monthly Principal
Amount for the prior Payment Date that was not distributed in respect of
principal on the Notes or the Equity Certificates, as appropriate, on such prior
Payment Date.
The "Contract Principal Balance" of any Contract as of the last day of any
Collection Period is (1) in the case of a Lease Contract, the present value of
the unpaid Scheduled Payments due on such Lease Contract after such last day of
the Collection Period (excluding all Scheduled Payments due on or prior to, but
not received as of, such last day, as well as any Scheduled Payments due after
such last day and received on or prior thereto) discounted monthly at the rate
of % per annum (and assuming that each Scheduled Payment is due on the last
day of the applicable Collection Period), and (2) in the case of a Loan
Contract, the remaining scheduled principal balance of such Loan Contract after
giving effect to Scheduled Payments due on or prior to such last day of the
Collection Period, whether or not paid, as well as any Scheduled Payments due
after such last day and received on or prior thereto. The Contract Principal
Balance of any Contract which, during a Collection Period, became a Liquidated
Contract or was required to be purchased by TCC as of the end of such Collection
Period due to a breach of representations and warranties, will, for purposes of
computing the Monthly Principal Amount for the related Payment Date, be deemed
to be zero on and after the last day of such Collection Period.
A "Liquidated Contract" is any Contract (a) with respect to which the
Servicer has repossessed and disposed of the related Equipment, or otherwise
collected all proceeds which, in the Servicer's judgment, can be collected under
such Contract, or (b) which is delinquent 180 days or more.
The "Collection Period" for any Payment Date will be the calendar month
preceding the month in which such Payment Date occurs.
The "Cut-Off Date Contract Pool Principal Balance" will equal: (I) the
aggregate of the Contract Principal Balances of the Contracts as of the Cut-Off
Date, plus (II) the aggregate amount of Scheduled Payments on the Contracts due
prior to, but not received as of, the Cut-Off Date. The aggregate of the initial
principal balances of the Notes and the Equity Certificates will be equal to or
less than the Cut-Off Date Contract Pool Principal Balance.
SPECIAL REDEMPTION OF THE NOTES
If the Merger has not been consummated by September , 1996, all of the
Notes shall be redeemed and paid in full on September , 1996, or on such
earlier date as the Depositor may elect upon giving the Indenture Trustee
written notice thereof at least five Business Days prior to such date (the
"Special Redemption Date"), at a redemption price (the "Special Redemption
Price") which is equal to (i) in respect of any Class of Notes, the initial
offering price of such Class of Notes as shown on the cover page of this
Prospectus plus (ii) interest on such initial offering price from (and
including) the Closing Date to (but excluding) the Special Redemption Date, at
the rate of 10% per annum (calculated on the basis of a 360-day year comprised
of twelve 30-day months). The Special Redemption Price in
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respect of the Notes will be paid from the amounts on deposit in the Escrow
Account as described under "The Depositor and the Owner Trust -- The Owner
Trust," which amounts will be sufficient (without regard to any proceeds of the
investment thereof) to so pay the Special Redemption Price on the Special
Redemption Date.
If the Merger is consummated on or prior to September , 1996, the
Contracts, the Depositor's interest in the related Equipment and the other Trust
Assets will be transferred by the Depositor to the Owner Trust on the Merger
Consummation Date and the amounts on deposit in the Escrow Account will be paid
over to the Depositor as described under "Use of Proceeds."
In the event of a Special Redemption, for so long as the Notes are listed on
the Luxembourg Stock Exchange, the Servicer shall provide public notice of such
redemption in Luxembourg by publication in a newspaper of general publication in
Luxembourg, expected to be the "Luxembourg Wort," as soon as practicable
following the Special Redemption Date but in no event more than five Business
Days thereafter.
SUBORDINATION OF CLASS B AND CLASS C NOTES AND EQUITY CERTIFICATES
The likelihood of payment of interest on each Class of Notes will be
enhanced by the application of the Amount Available to the payment of such
interest prior to the payment of principal on any of the Notes or the Equity
Certificates, as well as by the preferential right of the Holders of Notes of
each such Class to receive such interest (1) in the case of the Class A Notes,
prior to the payment of any interest on the Class B Notes, the Class C Notes or
the Equity Certificates, (2) in the case of the Class B Notes, prior to the
payment of any interest on the Class C Notes or the Equity Certificates, and (3)
in the case of the Class C Notes, prior to the payment of any interest on the
Equity Certificates. Likewise, the likelihood of payment of principal on each
Class of Notes will be enhanced by the preferential right of the Holders of
Notes of each such Class to receive such principal, to the extent of the Amount
Available after payment of interest on the Notes and the Equity Certificates as
aforesaid, (i) in the case of the Class A Notes, prior to the payment of any
principal on the Class B Notes, the Class C Notes or (except as described under
"-- Principal" above) the Equity Certificates, (ii) in the case of the Class B
Notes, prior to the payment of any principal on the Class C Notes or (except as
described under "-- Principal" above) the Equity Certificates, and (iii) in the
case of the Class C Notes, prior to the payment of any principal on the Equity
Certificates, except as described under "-- Principal" above.
CASH COLLATERAL ACCOUNT
The Cash Collateral Account will be established on or prior to the Merger
Consummation Date and will thereafter be available to the Indenture Trustee. The
Cash Collateral Account will initially be funded in an amount equal to % of
the Contract Pool Principal Balance as of the Cut-Off Date (approximately
$ ). Amounts on deposit from time to time in the Cash Collateral Account
(up to, but not in excess of, the Requisite Amount described below, and not
including any investment earnings on such funds) shall be used to fund the
following amounts in the following order of priority (to the extent that amounts
on deposit in the Collection Account as of any Deposit Date are insufficient
therefor and provided that any such insufficiency has resulted, directly or
indirectly, from delinquencies and/or defaults on the Contracts): (i) to pay
interest on the Notes and the Equity Certificates in the following order of
priority: (a) interest on the Class A Notes (including any overdue interest and
interest thereon), (b) interest on the Class B Notes (including any overdue
interest and interest thereon), (c) interest on the Class C Notes (including any
overdue interest and interest thereon), and (d) interest on the Equity
Certificates (including any overdue interest and interest thereon); (ii) to pay
any Principal Deficiency Amount (equal to the lesser of (a) the Current Realized
Losses on Liquidated Contracts for the related Collection Period or (b) the
excess, if any, of (A) the aggregate principal balance of the Notes and the
Equity Certificates (after giving effect to all other distributions of principal
on such Payment Date), over (B) the aggregate of the Required Payoff Amounts for
all Contracts as of the last day of the related Collection Period), and (iii) to
pay principal on the Notes and Equity Certificates at the applicable Stated
Maturity Date thereof.
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"Current Realized Losses" means, as to any Liquidated Contract, the excess,
if any, of (1) the Required Payoff Amount of such Contract as of the month in
which such Contract became a Liquidated Contract, over (2) that portion of the
Liquidation Proceeds for such Liquidated Contract allocated to the Notes and the
Equity Certificates as described under "-- Liquidated Contracts" below).
The "Required Payoff Amount," with respect to any Collection Period for any
Contract, is equal to the sum of: (i) the Scheduled Payment due in such
Collection Period, together with any Scheduled Payments due in prior Collection
Periods and not yet received, plus (ii) the Contract Principal Balance of such
Contract as of the last day of such Collection Period (after taking into account
the Scheduled Payment due in such Collection Period).
If and to the extent that the amount on deposit in the Cash Collateral
Account as of any Payment Date is less than the Requisite Amount (which is
defined as being an amount equal to approximately $ , subject to certain
adjustments), then such deficiency is to be restored from the remaining Amount
Available, after payment of interest and principal on the Notes and the Equity
Certificates as described under "-- Distributions" above. Any amount on deposit
in the Cash Collateral Account in excess of the Requisite Amount, and all
investment earnings on funds in the Cash Collateral Account, will be released
from the Cash Collateral Account and paid to or upon the order of the Depositor,
and will not be available to make payments on the Notes or the Equity
Certificates.
The Cash Collateral Account must be an Eligible Account, and funds on
deposit in the Cash Collateral Account will be invested in Eligible Investments
(each as defined under "-- Trust Accounts" below).
LIQUIDATED CONTRACTS
Liquidation Proceeds received with respect to a Liquidated Contract and the
related Equipment (which will be reduced by any related liquidation expenses)
will be allocated as follows: (i) with respect to any Loan Contract, all such
Liquidation Proceeds will be allocated to the Notes and the Equity Certificates;
and (ii) with respect to any Lease Contract, such Liquidation Proceeds will be
allocated on a pro rata basis between the Equipment Certificate, on the one
hand, and the Notes and the Equity Certificates, on the other, based
respectively on (a) the "Book Value" of the Equipment (which is a fixed amount
equal to the value of the Equipment as shown on the accounting books and records
of TCC as of the Cut-Off Date) and (b) the Required Payoff Amount for such Lease
Contract; provided that in no event will the amount of Liquidation Proceeds
allocated to the Notes and the Equity Certificates exceed the Required Payoff
Amount. All Liquidation Proceeds which are so allocable to the Notes and the
Equity Certificates will be deposited in the Collection Account and constitute
Pledged Revenues to be applied to the payment of interest and principal on the
Notes and the Equity Certificates in accordance with the priorities described
under "-- Distributions" above.
OPTIONAL PURCHASE OF CONTRACTS
The Depositor may purchase all of the Contracts and the related Equipment on
any Payment Date following the date on which the unpaid principal balance of the
Notes and the Equity Certificates is equal to 10% or less of the Cut-Off Date
Contract Pool Principal Balance. The purchase price to be paid in connection
with such purchase shall be at least equal to the unpaid principal balance of
the Notes and the Equity Certificates as of such Payment Date plus interest to
be paid on the Notes and the Equity Certificates on such Payment Date, plus the
Book Value of the Equipment. The proceeds of such purchase shall be applied on
such Payment Date (1) as to such proceeds in an amount necessary to pay the
principal and interest on the Notes and the Equity Certificates, to the payment
of the remaining principal balance on the Notes and the Equity Certificates,
together with interest thereon, and (2) as to the balance of such proceeds, to
the payment of amounts on the Equipment Certificate.
TRUST ACCOUNTS
The Indenture Trustee will establish and maintain under the Indenture
segregated trust accounts (which need not be deposit accounts, but which shall
constitute "Eligible Accounts"), consisting of the
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"Collection Account" and the "Escrow Account" (collectively, the "Trust
Accounts"). An "Eligible Account" means any account which is (i) an account
maintained with an Eligible Institution (as defined below); (ii) an account or
accounts the deposits in which are fully insured by either the Bank Insurance
Fund or the Savings Association Insurance Fund of the FDIC; (iii) a "segregated
trust account" maintained with the corporate trust department of a federal or
state chartered depository institution or trust company with trust powers and
acting in its fiduciary capacity for the benefit of the Indenture Trustee, which
depository institution or trust company has capital and surplus (or, if such
depository institution or trust company is a subsidiary of a bank holding
company system, the bank holding company has capital and surplus) of not less
than $50,000,000 and the securities of such depository institution or trust
company (or, if such depository institution or trust company is a subsidiary of
a bank holding company system and such depository institution's or trust
company's securities are not rated, the securities of the bank holding company)
have an acceptable credit rating from each of the Rating Agencies (if rated by
such Rating Agency); or (iv) an account that will not cause any Rating Agency to
downgrade or withdraw its then-current rating assigned to the Notes or Equity
Certificates, as confirmed in writing by such Rating Agency. "Eligible
Institution" means any depository institution organized under the laws of the
United States or any state, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently administered by the
Federal Deposit Insurance Corporation), whose short-term deposits or unsecured
long-term debt have an acceptable credit rating from each of the Rating Agencies
(if rated by such Rating Agency), and which is subject to supervision and
examination by federal or state authorities.
The Servicer, as agent for the Indenture Trustee, may designate, or
otherwise arrange for the purchase by the Indenture Trustee of, investments to
be made with funds in the Trust Accounts, which investments shall be Eligible
Investments (as defined in the Indenture) that will mature not later than the
business day preceding the applicable monthly Payment Date. "Eligible
Investments" include, among other investments, obligations of the United States
or of any agency thereof backed by the full faith and credit of the United
States; federal funds, certificates of deposit, time deposits and bankers'
acceptances sold by eligible financial institutions; certain repurchase
agreements with eligible institutions and other investments which would not
result in the downgrading or withdrawal of any rating of the Notes or Equity
Certificates by any Rating Agency.
REPORTS TO NOTEHOLDERS
The Servicer will furnish to the Indenture Trustee, and the Indenture
Trustee will include with each distribution to a Noteholder, a statement in
respect of the related Payment Date setting forth, among other things:
(i)
the amount of interest paid on the Class A Notes, including any
unpaid interest from the prior Payment Date, and any remaining unpaid
interest on the Class A Notes;
(ii)
the amount of interest paid on the Class B Notes, including any
unpaid interest from the prior Payment Date, and any remaining unpaid
interest on the Class B Notes;
(iii)
the amount of interest paid on the Class C Notes, including any
unpaid interest from the prior Payment Date, and any remaining unpaid
interest on the Class C Notes;
(iv)
the amount of principal paid on the Class A Notes;
(v)
the amount of principal paid on the Class B Notes;
(vi)
the amount of principal paid on the Class C Notes;
(vii)
the Principal Deficiency Amount, if any, for such Payment Date;
(viii)
the amount of interest and principal (if any) paid on the Equity
Certificates; and
(ix)
the Requisite Amount of the Cash Collateral Account and the amount on
deposit in the Cash Collateral Account (after giving effect to any
deposits and withdrawals to be made on the Payment Date).
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The Notes will be registered in the name of a nominee of DTC and will not be
registered in the names of the beneficial owners or their nominees. As a result,
unless and until Definitive Notes are issued in the limited circumstances
described under "-- Definitive Notes" below, beneficial owners will not be
recognized by the Indenture Trustee as Noteholders, as that term is used in the
Indenture. Hence, until such time, beneficial owners will receive reports and
other information provided for under the Indenture only if, when and to the
extent provided by DTC and its participating organizations. The Servicer will
file a copy of each such report with the Commission on Form 8-K. However, in
accordance with the Exchange Act and the rules and regulations of the Commission
thereunder, the Depositor expects that the Trust's obligation to file such
reports will be terminated at the end of 1996.
BOOK-ENTRY REGISTRATION
Each Class of Notes will initially be represented by one or more Global
Notes registered in the name of the nominee of DTC. The Depositor has been
informed by DTC that DTC's nominee will be Cede & Co. Noteholders may hold their
Notes through DTC (in the United States) or Cedel Bank or Euroclear (in Europe),
which in turn hold through DTC, if they are participants of such systems
("Participants"), or indirectly through organizations that are participants in
such systems. Cedel Bank and Euroclear will hold omnibus positions on behalf of
the Cedel Bank Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel Bank's and Euroclear's names on
the books of their respective depositories (collectively, the "Depositories")
which in turn will hold such positions in customers' securities accounts in the
Depositories' names on the books of DTC.
DTC is a New York-chartered limited-purpose trust company, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the UCC
in effect in the State of New York, and a "clearing agency" registered pursuant
to the provisions of Section 17A of the Exchange Act. DTC holds securities for
its Participants ("DTC Participants") and facilitates the clearance and
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. Indirect
access to the DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Bank Participants and Euroclear Participants will occur
in the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Bank Participants or Euroclear Participants on the other hand,
will be effected through DTC in accordance with DTC rules on behalf of the
relevant European international clearing system by its Depository; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
Depository to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Bank Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of securities received in Cedel
Bank or Euroclear as a result of a transaction with a DTC Participant will be
made during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing will be reported to the relevant
Cedel Bank Participant or Euroclear Participant on such business day. Cash
received in Cedel Bank or Euroclear as a result of sales of securities by or
through a Cedel Bank Participant or a Euroclear Participant to a DTC
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Participant will be received with value on the DTC settlement date but will be
available in the relevant Cedel Bank or Euroclear cash account only as of the
business day following settlement in DTC. For additional information regarding
clearance and settlement procedures and with respect to tax documentation
procedures, see "Global Clearance, Settlement and Tax Documentation Procedures"
and "Certain U.S. Federal Income Tax Documentation Requirements" in Appendix A.
Note Owners that are not Participants or Indirect Participants but desire to
purchase, sell or otherwise transfer ownership of, or other interests in, Notes
may do so only through Participants and Indirect Participants. Note Owners will
receive all distributions from the Indenture Trustee through Participants and
Indirect Participants. Note Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the Indenture Trustee to
DTC's nominee. DTC will forward such payments to its Participants, which
thereafter will forward them to Indirect Participants or Note Owners. Note
Owners will not be recognized by the Indenture Trustee as Noteholders and Note
Owners will be permitted to exercise the rights of Noteholders only indirectly
through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Notes among Participants on whose behalf it acts with respect to the Notes and
to receive and transmit distributions of amounts payable on the Notes.
Participants and Indirect Participants with which Note Owners have accounts
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Note Owners. Accordingly, although
Note Owners will not possess Notes, the Rules provide a mechanism by which
Participants will receive payments and will be able to transfer their interests.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Note Owner
to pledge Notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Notes, may be limited due to
the lack of a physical certificate for such Notes.
DTC has advised the Depositor that it will take any action permitted to be
taken by a Noteholder under the Indenture, only at the direction of one or more
Participants to whose accounts with DTC the Notes are credited. DTC may take
conflicting actions with respect to other undivided interests to the extent that
such actions are taken on behalf of Participants whose holdings include such
undivided interests.
Except as required by law, the Depositor, the Owner Trust, and the Indenture
Trustee will not have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interest of the Notes held by
DTC's nominee, or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to the Indenture
Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, Definitive Notes are required to be printed and
delivered. See "-- Definitive Notes."
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Depositor believes to be reliable, but
the Depositor takes no responsibility for the accuracy or completeness thereof.
Cedel Bank, societe anonyme ("Cedel Bank") is incorporated under the laws of
Luxembourg as a professional depository. Cedel Bank holds securities for its
Participants ("Cedel Bank Participants") and facilitates the clearance and
settlement of securities transactions between Cedel Bank Participants through
electronic book-entry changes in accounts of Cedel Bank Participants, thereby
eliminating the need for physical movement of securities. Transactions may be
settled by Cedel Bank in numerous currencies, including United States dollars.
Cedel Bank provides to its Cedel Bank Participants, among other things, services
for safekeeping, administration, clearance and settlement of internationally
traded securities and securities lending and borrowing. Cedel Bank interfaces
with domestic markets in several
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countries. As a professional depository, Cedel Bank is subject to regulations by
the Luxembourg Monetary Institute. Cedel Bank Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Underwriters of the Notes. Indirect
access to Cedel Bank is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Cedel Bank Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of securities and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in numerous currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear system on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific securities
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Notes held through Cedel Bank or Euroclear
will be credited to the cash accounts of Cedel Bank Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depository. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Cedel Bank or the Euroclear Operator, as the case may be, will take any other
action permitted to be taken by a Noteholder under the Indenture on behalf of a
Cedel Bank Participant or a Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depository's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel Bank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Notes among participants of DTC,
Cedel Bank and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.
A paying agent shall be maintained in respect of the Notes in Luxembourg
(the "Luxembourg Paying Agent") for so long as the Notes are listed on the
Luxembourg Stock Exchange.
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has been appointed as the initial Luxembourg Paying Agent. shall be
appointed transfer agent in Luxembourg, with respect to the Notes, in case the
Global Notes are replaced by Definitive Notes.
DEFINITIVE NOTES
The Notes of each Class will be issued in registered, certificated form to
the Note Owners of such Class or their nominees ("Definitive Notes"), rather
than to the Depository or its nominee, only if (i) the Depository advises the
Indenture Trustee in writing that it is no longer willing or able to discharge
properly its responsibilities as Depository with respect to the Notes of such
Class, and the Indenture Trustee is unable to locate a qualified successor, or
(ii) Note Owners representing not less than 50% of the principal balance of such
Class advise the Indenture Trustee and the Depository through Participants in
writing that the continuation of a book-entry system through the Depository is
no longer in the best interest of the Note Owners of such Class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Notes. Upon surrender by
the Depository of the definitive certificate representing the Notes of the
affected Class and instructions for registration, the Indenture Trustee will
issue the Notes of such Class as Definitive Notes, and thereafter the Indenture
Trustee will recognize the Note Owners of such Definitive Notes as Noteholders
under the Indenture.
Distributions of principal and interest on the Notes will be made by the
Indenture Trustee directly to Noteholders in accordance with the procedures set
forth herein and in the Indenture. Interest payments and any principal payments
on each Payment Date will be made to Noteholders in whose names the Definitive
Notes were registered at the close of business on the related Record Date.
Distributions will be made by check mailed to the address of such Noteholder as
it appears on the register maintained by the Indenture Trustee. The final
payment on any Note, however, will be made only upon presentation and surrender
of such Note at the office or agency specified in the notice of final
distribution to Noteholders. The Indenture Trustee will provide such notice to
registered Noteholders mailed not later than the fifth day of the month of such
final distributions.
Definitive Notes will be transferable and exchangeable at the offices of the
transfer agent and registrar, which initially will be the Indenture Trustee (in
such capacity, the "Transfer Agent and Registrar") and the offices of
which shall be appointed as transfer agent in Luxembourg in respect
of such Definitive Notes (the "Luxembourg Transfer Agent"). No service charge
will be imposed for any registration of transfer or exchange, but the Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or
other governmental charge imposed in connection therewith. The Transfer Agent
and Registrar will not be required to register the transfer or exchange of
Definitive Notes for the period from the Record Date preceding the due date for
any payment to the Payment Date with respect to such Definitive Notes.
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT
The Owner Trust and the Indenture Trustee may, without consent of the
Noteholders, enter into one or more supplemental indentures for any of the
following purposes: (i) to correct or amplify the description of the collateral
or add additional collateral; (ii) to provide for the assumption of the Notes
and the Indenture obligations by a permitted successor to the Owner Trust (as
described under "-- Certain Covenants"); (iii) to add additional covenants for
the benefit of the Noteholders, or to surrender any rights or power conferred
upon the Owner Trust; (iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee; (v) to cure any ambiguity or correct
or supplement any provision in the Indenture or in any supplemental indenture
which may be inconsistent with any other provision of the Indenture; (vi) to
provide for the acceptance of the appointment of a successor Indenture Trustee
or to add to or change any of the provisions of the Indenture or in any
supplemental indenture as shall be necessary and permitted to facilitate the
administration by more than one trustee; (vii) to modify, eliminate or add to
the provisions of the Indenture in order to comply with the Trust Indenture Act
of 1939, as amended; and (viii) to avoid a reduction or withdrawal of any rating
of the Notes.
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MODIFICATION OF INDENTURE WITH NOTEHOLDER CONSENT
With the consent of the Holders representing a majority of the principal
balance of each Class of the Notes then outstanding (a "Note Majority"), the
Owner Trustee and the Indenture Trustee may execute a supplemental indenture to
add provisions to change in any manner or eliminate any provisions of, the
Indenture, or modify in any manner the rights of the Noteholders.
Without the consent of the Holder of each outstanding Note affected thereby,
however, no supplemental indenture may: (i) change the due date of any
installment of principal of or interest on any Note or reduce the principal
amount thereof, the interest rate specified thereon or the redemption price with
respect thereto or change the manner of calculating any such payment or any
place of payment where, or the coin or currency in which, any Note or any
interest thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment; (iii)
reduce the percentage of each Class of the Notes then outstanding the consent of
the Holders of which is required for any such supplemental indenture or for any
waiver of compliance with certain provisions of the Indenture or of certain
defaults thereunder and their consequences; (iv) modify or alter the provisions
of the Indenture regarding the voting of Notes held by the Owner Trust, any
other obligor on the Notes, the Depositor or an affiliate of any of them; (v)
reduce the percentage of the Notes the consent of the Holders of which is
required to direct the Indenture Trustee to sell or liquidate the Pledged
Revenues if the proceeds of such sale would be insufficient to pay the principal
amount and accrued but unpaid interest on the outstanding Notes; (vi) reduce the
percentage of each Class of the Notes then outstanding required to amend the
sections of the Indenture which specify the applicable percentage of each Class
of the Notes then outstanding necessary to amend the Indenture or certain other
related agreements; (vii) permit the creation of any lien ranking prior to or on
a parity with the lien of the Indenture with respect to any of the collateral
for the Notes or, except as otherwise permitted or contemplated in the
Indenture, terminate the lien of the Indenture on any such collateral or deprive
the Holder of any Note of the security afforded by the lien of the Indenture; or
(viii) result in a reduction or withdrawal of the rating of any Class of Notes
by a Rating Agency, as confirmed in writing by each Rating Agency.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT
"Events of Default" under the Indenture will consist of: (i) a default for
five days or more in the payment of interest due on any Note; (ii) failure to
pay the unpaid principal amount of any Class of Notes on the Stated Maturity
Date for such Class; (iii) a default in the observance or performance in any
material respect of any covenant or agreement of the Owner Trust made in the
Indenture, or any representation or warranty made by the Owner Trust in the
Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect as of the time made, and the continuation of any
such default or the failure to cure such breach of a representation or warranty
for a period of 30 days after notice thereof is given to the Owner Trust by the
Indenture Trustee or to the Owner Trust and the Indenture Trustee by the Holders
of at least 25% in principal amount of the Notes then outstanding; or (iv)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Owner Trust.
If an Event of Default should occur and be continuing with respect to the
Notes, the Indenture Trustee or a Note Majority may declare the principal of the
Notes to be immediately due and payable. Such declaration may, under certain
circumstances, be rescinded by a Note Majority.
If the Notes have been declared due and payable following an Event of
Default, the Indenture Trustee may institute proceedings to collect amounts due
or foreclose on Pledged Revenues, exercise remedies as a secured party, sell the
related Pledged Revenues or elect to have the Owner Trust maintain possession of
the Pledged Revenues and continue to apply collections on the Pledged Revenues
as if there had been no declaration of acceleration. The Indenture Trustee,
however, will be prohibited from selling the Pledged Revenues following an Event
of Default, unless (i) the Holders of all the outstanding Notes consent to such
sale; (ii) the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on all the outstanding Notes at the date of such
sale; or (iii) the Indenture Trustee determines that the proceeds of the Pledged
Revenues would not be sufficient on an
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ongoing basis to make all payments on the Notes as such payments would have
become due if such obligations had not been declared due and payable, and the
Indenture Trustee obtains the consent of the Holders of 66 2/3% of the aggregate
outstanding amount of the Notes. Following a declaration upon an Event of
Default that the Notes are immediately due and payable, (i) Class A Noteholders
will be entitled to payment of all outstanding principal and accrued but unpaid
interest from any proceeds of liquidation of the Pledged Revenues, followed by
(ii) payment of interest and principal on the Class B Notes, followed by (iii)
payment of interest and principal on the Class C Notes, followed by (iv) payment
of interest and principal on the Equity Certificates.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing, the
Indenture Trustee will be under no obligation to exercise any of the rights or
powers under the Indenture at the request or direction of any of the Holders of
the Notes, if the Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and liabilities which might
be incurred by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the Indenture, a Note
Majority will have the right to direct the time, method and place of conducting
any proceeding or any remedy available to the Indenture Trustee, and a Note
Majority may, in certain cases, waive any default with respect thereto, except a
default in the payment of principal or interest or a default in respect of a
covenant or provision of the Indenture that cannot be modified without the
waiver or consent of all of the Holders of such outstanding Notes.
No Holder of a Note will have the right to institute any proceeding with
respect to the Indenture, unless (i) such Holder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
Holders of not less than 25% in principal amount of the outstanding Notes have
made written request of the Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such Holder or Holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding, and (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by the Holders of a majority in principal amount of such outstanding
Notes.
If an Event of Default occurs and is continuing and if it is known to the
Indenture Trustee, the Indenture Trustee will mail to each Noteholder notice of
the Event of Default within 90 days after it occurs. Except in the case of a
failure to pay principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as it determines in good faith that
withholding the notice is in the interests of the Noteholders.
In addition, the Indenture Trustee and the Noteholders, by accepting the
Notes, will covenant that they will not at any time institute against the
Depositor or the Owner Trust any bankruptcy, reorganization or other proceeding
under any federal or state bankruptcy or similar law.
Neither the Indenture Trustee nor the Owner Trustee in its individual
capacity, nor any Holder of a Note including, without limitation, the Depositor,
nor any of their respective owners, beneficiaries, agents, officers, directors,
employees, affiliates, successors or assigns will, in the absence of an express
agreement to the contrary, be personally liable for the payment of the Notes or
for any agreement or covenant of the Owner Trust contained in the Indenture.
CERTAIN COVENANTS
The Indenture will provide that the Owner Trust may not consolidate with or
merge into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States or any
state, (ii) such entity expressly assumes the Trust's obligation to make due and
punctual payments upon the Notes and the performance or observance of every
agreement and covenant of the Owner Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) the Owner Trustee has been advised that the rating of the
Notes and the Equity Certificates then in effect would not be reduced or
withdrawn by
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the Rating Agencies as a result of such merger or consolidation, (v) the Owner
Trustee has received an opinion of counsel to the effect that such consolidation
or merger would have no material adverse tax consequence to the Owner Trust or
to any Noteholder or Equity Certificateholder.
The Owner Trust will not, among other things, (i) except as expressly
permitted by the Indenture or the Trust Agreement, sell, transfer, exchange or
otherwise dispose of any of the assets of the Owner Trust, (ii) claim any credit
on or make any deduction from the principal and interest payable in respect of
the related Notes (other than amounts withheld under the Code or applicable
state law) or assert any claim against any present or former Holder of such
Notes because of the payment of taxes levied or assessed upon the Owner Trust,
(iii) dissolve or liquidate in whole or in part, (iv) permit the validity or
effectiveness of the Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to the Notes under the
Indenture except as may be expressly permitted thereby, or (v) except as
expressly permitted by the Indenture, the Transfer and Servicing Agreement or
the Trust Agreement, permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise arise
upon or burden the assets of the Owner Trust or any part thereof, or any
interest therein or proceeds thereof.
The Owner Trust may not engage in any activity other than as specified under
"The Depositor and the Owner Trust -- The Owner Trust." The Owner Trust will not
incur, assume or guarantee any indebtedness other than indebtedness incurred
pursuant to the Notes and the Indenture or otherwise in accordance with the
Indenture, the Trust Agreement and the Transfer and Servicing Agreement.
ANNUAL COMPLIANCE STATEMENT
The Owner Trust will be required to file annually with the Indenture Trustee
a written statement as to the fulfillment of its obligations under the
Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT
The Indenture Trustee will be required to mail each year to all Noteholders
a brief report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it under
the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by the Owner Trust to the Indenture Trustee in its individual
capacity, the property and funds physically held by the Indenture Trustee as
such and any action taken by it that materially affects the Notes and that has
not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE
The Indenture will be discharged with respect to the collateral securing the
Notes upon the delivery to the related Indenture Trustee for cancellation of all
such Notes or, with certain limitations, upon deposit with the Indenture Trustee
of funds sufficient for the payment in full of all of such Notes.
THE INDENTURE TRUSTEE
will be the Indenture Trustee. The Indenture Trustee may resign at
any time, in which event the Depositor will be obligated to appoint a successor
trustee. The Depositor may also remove the Indenture Trustee if the Indenture
Trustee ceases to be eligible to continue as such under the Indenture or if the
Indenture Trustee becomes insolvent. In such circumstances, the Depositor will
be obligated to appoint a successor trustee. Any resignation or removal of the
Indenture Trustee and appointment of a successor trustee will not become
effective until acceptance of the appointment by a successor trustee.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENT
TRANSFER AND ASSIGNMENT OF CONTRACTS AND EQUIPMENT
On the Merger Consummation Date, the Originators will transfer to the
Depositor pursuant to the Purchase Agreement all of their right, title and
interest in the Contracts and the related Equipment, including all security
interests created thereby and therein, the right to receive all Scheduled
Payments and Prepayments received on the Contracts on or after the Cut-Off Date
(including all Scheduled Payments due prior to, but not received as of, the
Cut-Off Date, but excluding any Scheduled Payments due on or after, but received
prior to, the Cut-Off Date), all rights under insurance policies maintained on
the Equipment pursuant to the Contracts, all documents contained in the Contract
Files and all proceeds derived from any of the foregoing. Pursuant to the
Transfer and Servicing Agreement, on the Merger Consummation Date, the Depositor
will transfer all of the foregoing, together with all its rights under the
Purchase Agreement, to the Owner Trust.
The Transfer and Servicing Agreement will designate the Servicer as
custodian to maintain possession, as the Owner Trustee's agent, of the Contracts
and all documents related thereto. To facilitate servicing and save
administrative costs, the documents will not be physically segregated from other
similar documents that are in TCC's possession. UCC financing statements will be
filed on the Merger Consummation Date in the applicable jurisdictions reflecting
the assignment of the Contracts by the Originators to the Depositor, the
transfer by the Depositor to the Owner Trust, and the pledge by the Owner Trust
to the Indenture Trustee, and the Originators' accounting records and computer
systems will also reflect such assignments and pledge. The Contracts will not,
however, be stamped or otherwise physically marked to reflect their assignment
to the Owner Trust. If, through fraud, negligence or otherwise, a subsequent
purchaser were able to take physical possession of the Contracts without
knowledge of the assignment, the Trust's interest in the Contracts could be
defeated. See "Risk Factors -- Certain Legal Aspects" and "Certain Legal Aspects
of the Contracts."
COLLECTIONS ON CONTRACTS
The Servicer will deposit in the Collection Account on a daily basis, no
later than the fifth Business Day after receipt thereof, the following payments
or collections received by it after the Cut-Off Date:
(i) all Scheduled Payments made by on or behalf of Obligors under the
Contracts;
(ii)all amounts paid by an Obligor in connection with the prepayment or
early termination of a Contract in respect of the Required Payoff
Amount thereof;
(iii)
all amounts constituting Liquidation Proceeds on Liquidated Contracts
to the extent allocable to the Notes and the Equity Certificates as
described under "Description of the Notes -- Liquidated Contracts";
(iv)any and all payments made by TCC pursuant to the Transfer and
Servicing Agreement in connection with the purchase of any Contracts
and the related Equipment as a result of a breach of a representation or
warranty with respect thereto, as described under "The Contracts --
Representations and Warranties Made by TCC," excluding those portions
thereof allocable to the Book Value of the related Equipment; and
(v) the amount paid by the Depositor to purchase the Contracts and the
related Equipment, as described under "Description of the Notes --
Optional Purchase of Contracts," excluding that portion thereof allocable to
the Book Value of Equipment.
The Servicer will be entitled to withdraw from the Collection Account any
amounts deposited therein in error or required to be repaid to an Obligor, based
on the Servicer's good-faith determination that such amount was deposited in
error or must be returned to the Obligor.
Under the Transfer and Servicing Agreement, the Servicer is required to
establish in its own name one or more "Insurance and Tax Accounts," into which
are to be deposited any payments made by or on behalf of Obligors which
constitute (a) insurance premiums paid by an Obligor to the lessor or secured
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party under a Contract (unless such payments are made directly by the Obligor to
the applicable insurance company, or TCC or the Originator has previously paid
such premiums), (b) any insurance payments or recoveries paid by an insurance
company or comparable third party and related to the damage to, or destruction
of, the Equipment related to such Contract (unless paid directly by such
insurance company or comparable third party directly to the Obligor), and (c)
taxes paid by the Obligor and related to the applicable Contract or the
Equipment related thereto (unless such payment is made directly by the Obligor
to the applicable taxing authority or authorities, or TCC or the Originator has
previously paid such taxes). The Servicer is required to withdraw amounts from
the Insurance and Tax Accounts, when and if appropriate, to pay when due (1) all
insurance premiums in the amounts received under clause (a) above, and (2) all
taxes in the amounts received under clause (c) above. Amounts on deposit in the
Insurance and Tax Accounts which represent amounts received by the Servicer
pursuant to clause (b) above shall be applied by the Servicer as follows: if the
Obligor purchases equipment to replace the Equipment that was damaged or
destroyed, and such replacement equipment is (in the reasonable opinion of the
Servicer) of comparable use and equivalent value to the Equipment that was
damaged or destroyed, the Servicer shall release such amount so received from
the insurance company or comparable third party to or at the instructions of the
Obligor; and if this replacement option is not to be exercised by the Obligor,
then the Servicer shall treat such amount as Liquidation Proceeds and transfer
that portion thereof which would be allocable to the Notes and the Equity
Certificates (as described in "Description of the Notes -- Liquidated
Contracts") from the Insurance and Tax Account to the Collection Account.
The Servicer will deposit in the Equipment Account, no later than the fifth
business day after receipt, all proceeds from the disposition of Equipment, to
the extent allocable to the Equipment Certificate, including amounts paid by
Obligors to exercise purchase options under Lease Contracts and the allocable
portion of Liquidation Proceeds (as described under "Description of the Notes --
Liquidated Contracts").
On or before the Business Day of each month (the "Determination Date"),
the Servicer is required to determine the amount of Related Collection Period
Pledged Revenues for the Payment Date occurring in such month, the amount of
interest payable on the Notes and the Equity Certificates on such Payment Date,
the Monthly Principal Amount for such Payment Date, the Principal Deficiency
Amount (if any) for such Payment Date, and the amount, if any, by which such
Related Collection Period Pledged Revenues, when applied in accordance with the
priorities described under "Description of the Notes -- Distributions," are
insufficient to pay the interest payable on the Notes and the Equity
Certificates on such Payment Date (an "Interest Shortfall"). If the Servicer
determines that there is an Interest Shortfall for such Payment Date, the
Servicer shall instruct the Indenture Trustee to determine the total amount of
Current Collection Period Pledged Revenues and to apply such Current Collection
Period Pledged Revenues to the payment of interest on the Notes and the Equity
Certificates to the extent necessary to cure such Interest Shortfall. The
Servicer shall further instruct the Indenture Trustee to withdraw from the Cash
Collateral Account (1) any remaining Interest Shortfall (after giving effect to
the previous application of Available Pledged Revenues as aforesaid), (2) the
Principal Deficiency Amount (if any), and (3) if such Payment Date is the Stated
Maturity Date for any Class of Notes or the Equity Certificates, the remaining
unpaid principal balance of such Class of Notes or the Equity Certificates
(after giving effect to previous application of Available Pledged Revenues as
aforesaid).
SERVICING
Pursuant to the Transfer and Servicing Agreement, TCC will be engaged to act
as Servicer on behalf of the Owner Trust. The Servicer is generally obligated
under the Transfer and Servicing Agreement to take such actions with respect to
enforcement of the Contracts as a reasonably prudent creditor would take. The
Servicer is further obligated to service the Contracts in a manner consistent
with its servicing of other similar receivables which it owns or services for
third parties (which current servicing and collection
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policies are described under "The Originators--Underwriting and Servicing"). The
Servicer may delegate certain of its servicing responsibilities with respect to
the Contracts to third parties, provided that the Servicer will remain obligated
to the Owner Trust for the proper performance of all such servicing
responsibilities.
The Servicer is generally obligated to act in a commercially reasonable
manner with respect to the disposition of Equipment following a Contract default
with a view to realizing proceeds at least equal to the fair market value
thereof. The Servicer may, in its discretion, choose to dispose of Equipment
through a new lease or in some other manner which does not result in the
immediate receipt of Liquidation Proceeds equal to the fair market value
thereof. However, in the event that the Liquidation Proceeds (together with
liquidation expenses retained by the Servicer) derived by the Servicer with
respect to any Equipment, as of the last day of the Collection Period in which
the related Contract became a Liquidated Contract, is less than the fair market
value thereof, the Servicer will be required to pay an amount equal to such
deficiency from its own funds. Any such amounts so paid by the Servicer will be
deemed to constitute additional Liquidation Proceeds with respect to the related
Contract and Equipment and will be allocated as described under "Description of
the Notes -- Liquidated Contracts."
Under the Transfer and Servicing Agreement, the Servicer is responsible for,
among other things: reviewing and certifying that the Contract Files are
complete; monitoring and tracking any property and sales taxes to be paid by
Obligors; billing, collection and recording of payments from Obligors;
communicating with and providing billing records to Obligors; deposit of funds
into the Collection Account; receiving payments as the Owner Trust's agent on
the insurance policies maintained by the Obligors and communicating with
insurers with respect thereto; issuance of reports to the Indenture Trustee
specified in the Indenture and in the Transfer and Servicing Agreement;
repossession and remarketing of Equipment following Obligor defaults; and paying
the fees and ordinary expenses of the Indenture Trustee and the Owner Trustee.
Under the Transfer and Servicing Agreement, the Servicer, subject to certain
limitations, is permitted to grant payment extensions on a Contract in
accordance with its credit and collection policies and procedures if the
Servicer believes in good faith that such extension is necessary to avoid a
default on such Contract, will maximize the amount to be received by the Owner
Trust with respect to such Contract, and is otherwise in the best interests of
the Owner Trust. Under the Transfer and Servicing Agreement, the Servicer,
subject to certain limitations, is permitted to grant modifications or
amendments to a Contract in accordance with its credit and collection policies
and procedures.
PREPAYMENTS. In the case of any Lease Contract, a Prepayment may only be
allowed by the Servicer if the amount paid by or on behalf of the Obligor is at
least equal to the Required Payoff Amount of such Contract.
EVIDENCE AS TO COMPLIANCE. On or before March 31 of each year, the Servicer
must deliver to the Indenture Trustee a report of a nationally recognized
accounting firm stating that such firm has examined certain documents and
records relating to the servicing of equipment leases and loans serviced by the
Servicer and stating that, on the basis of such procedures, such servicing has
been conducted in compliance with the Transfer and Servicing Agreement, except
for any exceptions set forth in such report.
CERTAIN MATTERS REGARDING THE SERVICER. The Servicer may not resign from
its obligations under the Transfer and Servicing Agreement except upon a
determination that its duties thereunder are no longer permissible under
applicable law. No such resignation will become effective until a successor
servicer has assumed the Servicer's obligations and duties under the Transfer
and Servicing Agreement. The Servicer can be removed as Servicer only upon the
occurrence of an Event of Termination as discussed below.
The Servicer must keep in place throughout the term of the Transfer and
Servicing Agreement (i) a policy or policies of insurance covering errors and
omissions by the Servicer, and (ii) a fidelity bond.
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Such policy or policies and such fidelity bond shall be in such form and amount
as is generally customary among persons that service a portfolio of equipment
leases having an unpaid balance of at least $100 million and which are generally
regarded as servicers acceptable to institutional investors.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES. Compensation to the
Servicer will include a monthly fee (the "Servicing Fee"), which will be payable
to the Servicer from the Amount Available on each Payment Date, in an amount
equal to the product of one-twelfth of % per annum multiplied by the Contract
Pool Principal Balance as of the last day of the second preceding Collection
Period (or, in the case of the Servicing Fee with respect to the Collection
Period commencing on the Cut-Off Date, the Contract Pool Principal Balance as of
the Cut-Off Date), plus any late fees, documentation fees, insurance
administration charges and other administrative fees and charges
("Administrative Fees") and other expenses or similar charges collected with
respect to the Contracts during the prior Collection Period. Up to % of such
% Servicing Fee will be used by the Servicer to pay certain expenses relating
to the Contracts and the Owner Trust.
EVENTS OF TERMINATION. An Event of Termination under the Transfer and
Servicing Agreement will occur if (a) the Servicer fails to make any payment or
deposit required under the Transfer and Servicing Agreement and such failure
continues for four business days after notice from the Indenture Trustee or
after discovery by the Servicer; (b) the Servicer fails to deliver to the
Indenture Trustee and the Owner Trustee the Servicer's Certificate by the
Business Day prior to the related Payment Date; (c) the Servicer fails to
observe or perform in any material respect any other covenants or agreements of
the Servicer set forth in the Transfer and Servicing Agreement (and, if TCC is
the Servicer, the Purchase Agreement), and such failure (i) materially and
adversely affects the rights of the Owner Trust, Noteholders or Equity
Certificateholders, and (ii) continues unremedied for 30 days after written
notice thereof has been given to the Servicer by the Owner Trustee, the
Indenture Trustee or any Equity Certificateholder or Noteholder; (d) certain
events of bankruptcy or insolvency occur with respect to the Servicer; or (e)
any representation, warranty or statement of the Servicer made in the Transfer
and Servicing Agreement or any certificate, report or other writing delivered
pursuant thereto proves to be incorrect in any material respect, and such
incorrectness (i) has a material adverse effect on the Owner Trust, Noteholders
or Equity Certificateholders, and (ii) continues uncured for 30 days after
written notice thereof has been given to the Servicer by the Owner Trustee, the
Indenture Trustee or any Equity Certificateholder or Noteholder. The Servicer is
required under the Transfer and Servicing Agreement to give the Indenture
Trustee, the Owner Trustee and each Rating Agency notice of an Event of
Termination promptly after having obtained knowledge of such event.
Federal bankruptcy laws limit the termination of contracts solely by reason
of the fact that the party obligated to provide such performance is subject to
federal bankruptcy proceedings. In such a circumstance, the bankruptcy trustee
of the Servicer might successfully object to the exercise of a right to
terminate the Servicer unless the Indenture Trustee could demonstrate that
independent grounds (whether or not arising from the same facts causing the
Servicer to be subject to bankruptcy proceedings) exist to declare an Event of
Termination.
RIGHTS UPON EVENT OF TERMINATION. So long as an Event of Termination
remains unremedied, the Indenture Trustee may, and at the written direction of
(i) Noteholders representing a majority of the aggregate principal balance of
the Notes (a "Note Majority"), or (ii) at such time as the Notes are no longer
Outstanding, Equity Certificateholders representing a majority of the aggregate
principal balance of the Equity Certificates (an "Equity Certificate Majority"),
shall, terminate all of the rights and obligations of the Servicer under the
Transfer and Servicing Agreement in and to the Contracts, whereupon a successor
servicer (which, unless and until the Indenture Trustee appoints a new servicer,
will be the Indenture Trustee) will succeed to all the responsibilities, duties
and liabilities of the Servicer under the Transfer and Servicing Agreement and
will be entitled to similar compensation arrangements; provided, however, that
any successor servicer will not assume any obligation of TCC to repurchase
Contracts for breaches of representations and warranties, and any successor
servicer will not be liable for any acts or
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omissions of the prior Servicer occurring prior to a transfer of the Servicer's
servicing and related functions or for any breach by such Servicer of any of its
obligations contained in the Transfer and Servicing Agreement.
AMENDMENT
The Transfer and Servicing Agreement may be amended by the parties thereto
(i) to cure any ambiguity, (ii) to correct or supplement any provision therein
that may be inconsistent with any other provision therein, or (iii) to make any
other provisions with respect to matters or questions arising under the Transfer
and Servicing Agreement that are not inconsistent with the provisions thereof,
provided that such action will not adversely affect in any material respect the
interests of the Noteholders or the Equity Certificateholders. The Transfer and
Servicing Agreement may also be amended by the parties thereto with the consent
of a Note Majority and an Equity Certificate Majority for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Transfer and Servicing Agreement or of modifying in any manner the rights
of the Noteholders or the holders of the Equity Certificates; provided, however,
that no such amendment (a) that reduces in any manner the amount of, or delays
the timing of, any payment received on or with respect to Contracts that are
required to be distributed on any Note or Equity Certificate may be effective
without the consent of the Holder of each such Note and Equity Certificate, or
(b) will be effective unless each Rating Agency confirms that such amendment
will not result in a withdrawal or reduction of the ratings on the Notes and the
Equity Certificates.
TERMINATION OF THE TRANSFER AND SERVICING AGREEMENT
The obligations created by the Transfer and Servicing Agreement will
terminate (after distribution of all interest and principal then due to
Noteholders and the holders of the Certificates) on the earlier of (i) the
Payment Date next succeeding the later of the final payment or other liquidation
of the last Contract or the disposition of all Equipment acquired upon
termination of any Contract; or (b) the Payment Date on which the Depositor
repurchases the Contracts as described under "Description of the Notes --
Repurchase Option." However, TCC's representations, warranties and indemnities
will survive any termination of the Transfer and Servicing Agreement.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
ENFORCEMENT OF SECURITY INTERESTS IN THE EQUIPMENT
Due to the administrative burden and expense, no assignments of the UCC
financing statements evidencing the interest of the Originators in the Equipment
(to the extent that such financing statements have been filed against the
Obligor, as discussed above) will be filed to reflect the Depositor's, the Owner
Trust's and the Indenture Trustee's interests therein. While failure to file
such assignments does not affect the Owner Trust's interest in the Contracts
(including the related Originator's interest in the related Equipment), it does
expose the Owner Trust and the Noteholders to the risk that the Originator could
release its ownership or security interest in the Equipment of record, and it
could complicate the Owner Trust's enforcement, as assignee, of the Originator's
security interest in the Equipment. In addition, also due to the administrative
burden and expense, no UCC financing statement reflecting the security interest
of the Owner Trust in the related Equipment will be filed in the jurisdictions
(other than the States of Massachusetts, New Jersey and Oregon) where the
Equipment is located. In the absence of such filings, the Owner Trust and the
Indenture Trustee may not have a perfected security interest in such Equipment.
As a result, a third party purchaser of the Equipment for value from the
Originator may purchase such Equipment free and clear of the interest of the
Owner Trust in such Equipment and a subsequent secured party or other lienholder
may obtain an interest in the Equipment superior to that of the Owner Trust or
the Indenture Trustee. While these risks should not affect the perfection or
priority of the interest of the Indenture Trustee in the Contracts or rights to
payment thereunder, they may adversely affect the right of the Indenture Trustee
to receive proceeds of disposition of the Equipment subject to a Liquidated
Contract, which are to be allocated to the payment of the Notes and the Equity
Certificates, as
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described under "Description of the Notes--Liquidated Contracts." Additionally,
statutory liens for repairs or unpaid taxes and other liens arising by operation
of law may have priority even over prior perfected security interests in the
name of the Indenture Trustee in the Equipment.
In the event of a default by the Obligor under a Contract, the Servicer on
behalf of the Owner Trust may take action to enforce the Originator's interest
in the related Equipment by repossession and resale or re-lease of the
Equipment. Under the UCC in most states, a creditor can, without prior notice to
the debtor, repossess assets securing a defaulted contract by the Obligor's
voluntary surrender, or by "self-help" repossession that does not involve a
breach of the peace and by judicial process. In the event of bankruptcy or
insolvency of the Obligor these remedies may require the permission of a
bankruptcy court or may otherwise not be immediately available.
In the event of a default by the Obligor, some jurisdictions require that
the Obligor be notified of the default and be given a time period within which
it may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party provide the debtor with reasonable
notice of the date, time and place of any public sale and/or the date after
which any private sale of the collateral may be held and that any such sale be
conducted in a commercially reasonable manner.
Under most state laws, an Obligor has the right to redeem collateral for its
obligations prior to actual sale by paying the lessor or secured party the
unpaid balance of the obligation plus reasonable expenses for repossessing,
holding and preparing the collateral for disposition and arranging for its sale,
plus, to the extent provided for in the written agreement of the parties,
reasonable attorneys' fees.
In addition, because the market value of equipment of the type subject to
the Contracts generally declines with age, because of obsolescence, the net
disposition proceeds of Equipment at any time during the term of the Contracts
may not equal or exceed the Contract Principal Balance on the related Contract.
Because of this, and because other creditors may in certain cases have rights in
the related Equipment superior to those of the Owner Trust, the Servicer may not
be able to recover the entire amount due on a defaulted Contract in the event
that the Servicer elects to repossess and dispose of such Equipment at any time.
Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an Obligor for any deficiency on repossession
and resale of the asset securing the unpaid balance of such Obligor's Contract.
However, some states impose prohibitions or limitations on deficiency judgments.
In most jurisdictions, the courts, in interpreting the UCC, would impose upon a
creditor an obligation to repossess the equipment in a commercially reasonable
manner and to "mitigate damages" in the event of an Obligor's failure to cure a
default. The creditor would be required to exercise reasonable judgment and
follow acceptable commercial practice in seizing, selling or re-leasing the
equipment and to offset the net proceeds of such disposition against its claim.
In addition, an Obligor may successfully invoke an election of remedies defense
to a deficiency claim in the event that the Servicer's repossession and sale of
the Equipment is found to be a retention discharging the Obligor from all
further obligations under the UCC. If a deficiency judgment were granted, the
judgment would be a personal judgment against the Obligor for the shortfall, but
a defaulting Obligor may have limited assets or sources of income available
following repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount.
Many states have adopted a version of Article 2A of the UCC ("Article 2A").
Article 2A purports to codify many provisions of existing common law. Although
there is little precedental authority regarding how Article 2A will be
interpreted, it may, among other things, limit enforceability of any
"unconscionable" provision in a Lease Contract, provide a Lessee with remedies
including the right to cancel the Lease Contract for any lessor breach or
default, and may add to or modify the terms of "consumer leases" and leases
where the Lessee is a "merchant lessee." However, each Lease Contract contains
an acknowledgement by the Lessee that the Equipment was acquired for business
purposes. Article 2A,
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moreover, recognizes typical commercial lease "hell or high water" rental
payment clauses and validates reasonable liquidated damages provisions in the
event of lessor or Lessee defaults. Article 2A also recognizes the concept of
freedom of contract and permits the parties in a commercial context a wide
latitude to vary provisions of the law.
INSOLVENCY MATTERS
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws, may also limit the ability of the Servicer to repossess and
resell or re-lease Equipment or obtain a deficiency judgment. In the event of
the bankruptcy or reorganization of an Obligor, various provisions of the
Bankruptcy Code of 1978 (the "Bankruptcy Code") and related laws may interfere
with or eliminate the ability of the Servicer to enforce the Owner Trust's
rights under the Contracts. For example, although the bankruptcy or
reorganization of an Obligor would constitute an event of default under such
Contract, the Bankruptcy Code provides generally that rights and obligations
under an unexpired lease or an executory contract may not be terminated or
modified solely because of a provision in the lease or executory contract
conditioned upon the commencement of a case under the Bankruptcy Code. If
bankruptcy proceedings were instituted in respect of an Obligor under such a
Contract, the Owner Trust could be prevented from continuing to collect payments
due from or on behalf of such Obligor or exercising any remedies assigned to the
Owner Trust without the approval of the bankruptcy court, and, with respect to a
Loan Contract or a Lease Contract intended as security, the bankruptcy court
could permit the Obligor, as owner of the Equipment, to use or dispose of the
Equipment and provide the Owner Trust with a lien on substitute collateral, so
long as the court held that such substitute collateral constituted "adequate
protection" within the meaning of the Bankruptcy Code.
In the case of a Lease Contract that is deemed not to be intended as
security, the Bankruptcy Code grants to the bankruptcy trustee or the
debtor-in-possession a right to elect to assume or reject any executory contract
or unexpired lease. Any rejection of such a lease or contract constitutes a
breach of such lease or contract, entitling the non-breaching party to a claim
for breach of contract. The net proceeds from any resulting judgment would be
deposited by the Servicer into the Collection Account and allocated to the
Noteholders and Equity Certificateholders as described under "Description of the
Notes -- Liquidated Contracts."
In the event that, as a result of the bankruptcy or reorganization of an
Obligor, the related Contract becomes a defaulted Contract, the amount available
to be withdrawn from, or drawn on, the Cash Collateral Account has been reduced
to zero and the Contract has become a defaulted Contract without breach of any
representation or warranty of TCC or the Depositor, no recourse would be
available against TCC or the Depositor and the Noteholders and Equity
Certificateholders could suffer a loss with respect to such Contract.
These UCC and bankruptcy provisions, in addition to the possible decrease in
the value of a repossessed item of Equipment, may limit the amount realized on
the sale of Equipment securing the Contracts to less than the amount due
thereunder.
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UNITED STATES TAXATION
The following discussion is a summary of certain United States federal
income tax considerations relevant to the purchase, ownership and disposition of
the Notes by the holders thereof. Dorsey & Whitney LLP, counsel to the
Depositor, and Cadwalader, Wickersham & Taft, counsel to the Underwriters
(collectively, "Counsel"), are each delivering their opinion regarding certain
federal income tax matters discussed below. The opinions of Counsel address only
those issues specifically identified below as being covered by such opinions;
however, the opinions of Counsel also state that the additional discussion set
forth below accurately sets forth Counsel's advice with respect to material tax
issues. The opinions of Counsel are not binding on the Internal Revenue Service
(the "IRS"). There can be no assurance that the IRS will take a similar view of
such issues, and no assurance can be given that the opinions of Counsel would be
sustained if challenged by the IRS. No ruling on any of the issues discussed
below will be sought from the IRS.
This summary does not purport to be a complete analysis of all the potential
federal income tax consequences relating to the purchase, ownership and
disposition of the Notes. Moreover, the discussion does not address all aspects
of taxation that may be relevant to particular purchasers in light of their
individual circumstances (including the effect of any foreign, state or local
tax laws) or to certain types of purchasers (including dealers in securities,
insurance companies, financial institutions and tax-exempt entities) subject to
special treatment under United States federal income tax laws. The discussion
below assumes that the Notes are held as capital assets.
The discussion of the United States federal income tax consequences set
forth below is based upon currently existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), judicial decisions, and administrative
interpretations. Because individual circumstances may differ, each prospective
purchaser of the Notes is strongly urged to consult its own tax advisor with
respect to its particular tax situation and the tax effects of any state, local,
foreign, or other tax laws and possible changes in the tax laws.
As used herein, the term "United States Holder" means a beneficial owner of
a Note who or which is for United States federal income tax purposes either (i)
a citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source. The term also includes certain former citizens of the United States
whose income and gain on the Notes will be subject to United States taxation. As
used herein, the term "United States Alien Holder" means a beneficial owner of a
Note that is not a United States Holder.
TREATMENT OF THE NOTES
In the opinion of Counsel, the Notes will be treated as indebtedness for
United States federal income tax purposes. Under the terms of the Notes and the
Indenture, each Noteholder agrees and acknowledges upon its purchase of the
Notes and by acceptance of the Notes that it will also treat the Notes as
indebtedness for such purposes.
TREATMENT OF THE OWNER TRUST
In the opinion of Counsel, the Owner Trust will not be characterized as an
"association" or "publicly traded partnership" taxable as a corporation. If the
Owner Trust were treated as either an association or a publicly traded
partnership taxable as a corporation, the resulting entity would be subject to
federal income taxes at corporate tax rates on its taxable income generated by
ownership of the Contracts, and certain distributions by the entity would not be
deductible in computing the entity's taxable income. Such an entity-level tax
could result in reduced distributions to Noteholders.
PAYMENTS OF INTEREST
Interest paid on a Note will generally be taxable to a United States Holder
as ordinary interest income at the time it accrues or is received in accordance
with the United States Holder's method of accounting for federal income tax
purposes.
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ORIGINAL ISSUE DISCOUNT
Under applicable regulations, a Note will be considered issued with original
issue discount ("OID") if the "stated redemption price at maturity" of the Note
(generally equal to its principal amount as of the date of issuance plus all
interest other than "qualified stated interest" payable prior to or at maturity)
exceeds the original issue price (in this case, the initial offering price at
which a substantial amount of the Notes are sold to the public). Any OID would
be considered DE MINIMIS under the regulations if it does not exceed .25% of the
stated redemption price at maturity of a Note multiplied by the number of full
years until its maturity date. It is anticipated that the Notes will not be
considered issued with more than DE MINIMIS OID. Under the OID regulations, a
holder of a Note issued with a DE MINIMIS amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Note.
While it is not anticipated that the Notes will be issued with more than DE
MINIMIS OID, it is possible that they will be so issued. If the Notes are issued
with more than DE MINIMIS OID, such OID would be includible in the income of
Noteholders as interest over the term of the Notes under a constant yield
method. Any amount included in income as OID would not, however, be includible
again when the amount is actually received. If the yield on a class of Notes is
not materially different from its coupon, this treatment will have no
significant effect on Noteholders using the accrual method of accounting. Cash
method Noteholders, however, may be required to report income with respect to
Notes issued with OID in advance of the receipt of cash attributable to such
income. Each Noteholder should consult its own tax advisor regarding the impact
of the OID rules if the Notes are issued with OID.
MARKET DISCOUNT
If a United States Holder that acquires a Note has a tax basis in the Note
that is less than its "stated redemption price at maturity," the amount of the
difference will be treated as "market discount" for United States federal income
tax purposes, unless such difference is less than a specified DE MINIMIS amount.
Under the market discount rules of the Code, a United States Holder will be
required to treat any principal payment on, and any gain on the sale, exchange,
retirement or other disposition of, a Note as ordinary income to the extent of
any accrued market discount that has not previously been included in income.
Market discount generally accrues on a straight-line basis over the remaining
term of a Note except that, at the election of the United States Holder, market
discount may accrue on a constant yield basis. A United States Holder may not be
allowed to deduct immediately all or a portion of the interest expense on any
indebtedness incurred or continued to purchase or to carry such Note. A United
States Holder may elect to include market discount in income currently as it
accrues (either on a straight-line basis or, if the United States Holder so
elects, on a constant yield basis), in which case the interest deferral rule set
forth in the preceding sentence will not apply. Such an election will apply to
all bonds acquired by the United States Holder on or after the first day of the
first taxable year to which such election applies and may be revoked only with
the consent of the IRS.
AMORTIZABLE BOND PREMIUM
If a United States Holder purchases a Note for an amount that is greater
than the amount payable at maturity, such holder will be considered to have
purchased such Note with "amortizable bond premium" equal in amount to such
excess, and may elect (in accordance with applicable Code provisions) to
amortize such premium using a constant yield method over the remaining term of
the Note (where such Note is not callable prior to its maturity date). If such
Note may be called prior to maturity after the United States Holder has acquired
it, the amount of amortizable bond premium is determined with reference to
either the amount payable on maturity or, if it results in a smaller premium,
attributable to the period through the earlier call date with reference to the
amount payable on the earlier call date. The amount amortized in any year will
be treated as a reduction of the United States Holder's interest income from the
Note in such year. A United States Holder that elects to amortize bond premium
must reduce its tax basis in the Note by the amount of the premium amortized in
any year. An election to amortize bond premium applies to all taxable debt
obligations then owned or thereafter acquired by the United States Holder and
may be revoked only with the consent of the IRS.
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SALE, EXCHANGE OR RETIREMENT OF NOTES
Upon the sale, exchange or retirement of a Note, a United States Holder will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement (not including any amount
attributable to accrued but unpaid interest) and such holder's adjusted tax
basis in the Note. A United States Holder's adjusted tax basis in a Note will
equal the cost of the Note to such holder, increased by the amount of any market
discount previously included in income by such holder with respect to such Note
and reduced by any amortized bond premium and any principal payments received by
such holder.
Subject to the discussion of market discount above, gain or loss realized on
the sale, exchange or retirement of a Note by a United States Holder will be
capital gain or loss, and will be long-term capital gain or loss if at the time
of the sale, exchange or retirement the Note has been held for more than one
year. The excess of net long-term capital gains over net short-term capital
losses is taxed at a lower rate than ordinary income for certain non-corporate
taxpayers, but not for corporate taxpayers. The distinction between capital gain
or loss and ordinary income or loss is also relevant for purposes of, among
other things, limitations on the deductibility of capital losses.
TAX CONSEQUENCES TO UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) payments of principal of and interest on the Notes by the Trustee or
any paying agent to a beneficial owner of a Note that is a United
States Alien Holder, as defined above, will not be subject to United States
federal withholding tax, provided that, in the case of interest, (i) such
holder does not own, actually or constructively, 10 percent or more of the
total combined voting power of all classes of stock of the Depositor or TCC
entitled to vote, (ii) such holder is not, for United States federal income
tax purposes, a controlled foreign corporation related, directly or
indirectly, to the Depositor or TCC through stock ownership, (iii) such
holder is not a bank receiving interest described in Section 881(c)(3)(A) of
the Code, and (iv) the certification requirements under Section 871(h) or
Section 881(c) of the Code and Treasury regulations thereunder (summarized
below) are met;
(b) a United States Alien Holder of a Note will not be subject to United
States federal income tax on gain realized on the sale, exchange or
other disposition of such Note, unless (i) such holder is an individual who
is present in the United States for 183 days or more in the taxable year of
sale, exchange or other disposition, and certain conditions are met or (ii)
such gain is effectively connected with the conduct by such holder of a
trade or business in the United States; and
(c) a Note held by an individual who is not a citizen or resident of the
United States at the time of his death will not be subject to United
States federal estate tax as a result of such individual's death, provided
that, at the time of such individual's death, the individual does not own,
actually or constructively, 10 percent or more of the total combined voting
power of all classes of stock of the Depositor entitled to vote and payments
with respect to such Note would not have been effectively connected to the
conduct by such individual of a trade or business in the United States.
Sections 871(h) and 881(c) of the Code and Treasury Regulations thereunder
require that, in order to obtain the exemption from withholding tax described in
paragraph (a) above, either (i) the beneficial owner of a Note must certify
under penalties of perjury to the Indenture Trustee or the paying agent, as the
case may be, that such owner is a United States Alien Holder and must provide
such owner's name and address, and United States taxpayer identification number,
if any, or (ii) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and holds the Note on behalf of the
beneficial owner thereof must certify under penalties of perjury to the
Indenture Trustee or the paying agent, as the case may be, that such certificate
has been received from the beneficial owner by it or by a Financial Institution
between it and the beneficial owner and must furnish the payor with copy
thereof. A certificate
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described in this paragraph is effective only with respect to payments of
interest made to the certifying United States Alien Holder after issuance of the
Notes in the calendar year of its issuance and the two immediately succeeding
calendar years. Under temporary United States Treasury Regulations, such
requirement will be fulfilled if the beneficial owner of a Note certifies on IRS
Form W-8, under penalties of perjury, that it is a United States Alien Holder
and provides its name and address, and any Financial Institution holding the
Note on behalf of the beneficial owner files a statement with the withholding
agent to the effect that it has received such a statement from the beneficial
owner (and furnishes the withholding agent with a copy thereof).
If a United States Alien Holder of a Note is engaged in a trade or business
in the United States, and if interest on the Note, or gain realized on the sale,
exchange or other disposition of the Note, is effectively connected with the
conduct of such trade or business, the United States Alien Holder, although
exempt from United States withholding tax, will generally be subject to regular
United States income tax on such interest or gain in the same manner as if it
were a United States Holder. In lieu of the certificate described in the
preceding paragraph, such a holder will be required to provide to the Trustee or
the paying agent, as the case may be, a properly executed IRS Form 4224 in order
to claim an exemption from withholding tax. In addition, if such United States
Alien Holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate provided by an applicable treaty) of its
effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest on and any
gain recognized on the sale, exchange or other disposition of a Note will be
included in the earnings and profits of such United States Alien Holder if such
interest or gain is effectively connected with the conduct by the United States
Alien Holder of a trade or business in the United States.
BACKUP WITHHOLDING
Under current United States federal income tax law, a 31% backup withholding
tax requirement applies to certain payments of interest on, and the proceeds of
a sale, exchange or redemption of, the Notes.
Backup withholding will generally not apply with respect to payments made to
certain exempt recipients such as corporations or other tax-exempt entities. In
the case of a non-corporate United States Holder, backup withholding will apply
only if such holder (i) fails to furnish its taxpayer identification number
("TIN") which, for an individual, would be his social security number, (ii)
furnishes an incorrect TIN, (iii) is notified by the IRS that it has failed to
report properly payments of interest and dividends or (iv) under certain
circumstances, fails to certify under penalties of perjury that it has furnished
a correct TIN and has not been notified by the IRS that it is subject to backup
withholding for failure to report interest and dividend payments.
In the case of a United States Alien Holder, under current Treasury
Regulations, backup withholding will not apply to payments made by the Trustee
or any paying agent thereof on a Note if such holder has provided the required
certificate under penalties of perjury that it is not a United States Holder (as
defined above) or has otherwise established an exemption, provided in each case
that the Indenture Trustee or such paying agent, as the case may be, does not
have actual knowledge that the payee is a United States Holder.
Under current Treasury Regulations, if payments on a Note are made to or
through a foreign office of a custodian, nominee or other agent acting on behalf
of a beneficial owner of a Note, such custodian, nominee or other agent will not
be required to apply backup withholding to such payments made to such beneficial
owner.
Under current Treasury Regulations, payments on the sale, exchange or other
disposition of a Note made to or through a foreign office of a broker generally
will not be subject to backup withholding. Payments to or through the United
States office of a broker will be subject to backup withholding and information
reporting unless the holder certifies under penalties of perjury that it is not
a United States Holder and that certain other conditions are met or otherwise
establishes an exemption.
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Holders of Notes should consult their tax advisors regarding the application
of backup withholding in their particular situations, the availability of an
exemption therefrom and the procedure for obtaining such an exemption, if
available. Any amounts withheld from payment under the backup withholding rules
will be allowed as a credit against a holder's United States federal income tax
liability and may entitle such holder to a refund, provided that the required
information is furnished to the IRS.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE NOTEHOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE NOTEHOLDER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME TAX LAWS AND ANY
RECENT OR POSSIBLE CHANGES IN APPLICABLE TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act ("ERISA"), and/or
Section 4975 of the Code, prohibits a pension, profit-sharing or other employee
benefit plan, as well as individual retirement accounts and certain types of
Keogh Plans (each a "Benefit Plan") from engaging in certain transactions with
persons that are "parties in interest" under ERISA or "disqualified persons"
under the Code with respect to such Benefit Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Code for such persons. Title I of ERISA also
requires that fiduciaries of a Benefit Plan subject to ERISA make investments
that are prudent, diversified (except if prudent not to do so) and in accordance
with governing plan documents.
Certain transactions involving the purchase, holding or transfer of the
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Owner Trust were deemed to be assets of a Benefit Plan.
Under a regulation issued by the United States Department of Labor (the "Plan
Assets Regulation"), the assets of the Owner Trust would be treated as plan
assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquires an "equity interest" in the Owner Trust and none of the
exceptions contained in the Plan Assets Regulation is applicable. An equity
interest is defined under the Plan Assets Regulation as an interest in an entity
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The Plan Assets Regulation
also provides that a beneficial interest in a trust is an equity interest. The
Depositor believes that the Notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. The
Depositor also believes that the Notes do not constitute beneficial interests in
the Owner Trust for purposes of the Plan Assets Regulation. However, without
regard to whether the Notes are treated as an equity interest for such purposes,
the acquisition or holding of Notes by or on behalf of a Benefit Plan could be
considered to give rise to a prohibited transaction if the Owner Trust, the
Owner Trustee or the Indenture Trustee, an Obligor, or any of their respective
affiliates is or becomes a party in interest or a disqualified person with
respect to such Benefit Plan. In such case, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a Note.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38 regarding investments by bank collective investment funds;
and PTCE 84-14, regarding transactions effected by "qualified professional asset
managers."
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A PLAN FIDUCIARY CONSIDERING THE PURCHASE OF ANY OF THE NOTES SHOULD CONSULT
ITS TAX AND/OR LEGAL ADVISORS REGARDING WHETHER THE ASSETS OF THE OWNER TRUST
WOULD BE CONSIDERED PLAN ASSETS, THE POSSIBILITY OF EXEMPTIVE RELIEF FROM THE
PROHIBITED TRANSACTION RULES AND OTHER ISSUES AND THEIR POTENTIAL CONSEQUENCES.
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RATINGS OF THE NOTES
It is a condition of issuance that each of Duff & Phelps, Fitch, Moody's and
S&P (i) rate the Class A Notes in its highest rating category, (ii) rate the
Class B Notes " ," " ,"
" " and " ," respectively, and
(iii) rate the Class C Notes " ,"
" ," " " and
" ," respectively. The rating of each Class of Notes by
Moody's addresses the likelihood of the ultimate payment of principal and
interest on such Class of Notes. The rating of each Class of Notes by S&P, Fitch
and Duff & Phelps addresses the likelihood of the timely receipt of interest and
ultimate payment of principal on such Class of Notes. The rating of the Notes
will be based primarily upon the Pledged Revenues, the Cash Collateral Account
and the subordination provided by (1) the Class B Notes, the Class C Notes and
the Equity Certificates, in the case of the Class A Notes, (2) the Class C Notes
and the Equity Certificates, in the case of the Class B Notes, and (3) the
Equity Certificates, in the case of the Class C Notes. There is no assurance
that any such rating will not be lowered or withdrawn by the assigning Rating
Agency if, in its judgment, circumstances so warrant. In the event that a rating
or ratings with respect to the Notes is qualified, reduced or withdrawn, no
person or entity will be obligated to provide any additional credit enhancement
with respect to the Notes so qualified, reduced or withdrawn.
The rating of the Notes should be evaluated independently from similar
ratings on other types of securities. A rating is not a recommendation to buy,
sell or hold the Notes, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. The ratings of the Notes do not
address the possibility of the imposition of United States withholding tax with
respect to non-U.S. persons.
USE OF PROCEEDS
If the Merger is consummated on or prior to September , 1996, the proceeds
from the offering and sale of the Notes, together with the proceeds derived by
the Depositor from its disposition of the Equity Certificates, will be used by
the Depositor to acquire the Contracts and the Originators' interests in the
Equipment and to pay expenses payable by the Depositor in connection with the
issuance of the Notes and the Equity Certificates. See "The Merger."
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UNDERWRITING
Subject to the terms and conditions of the United States underwriting
agreement (the "U.S. Underwriting Agreement"), the underwriters named below (the
"U.S. Underwriters"), through their representatives, Goldman, Sachs & Co. and
Nomura Securities International, Inc. (the "U.S. Representatives"), have
severally agreed to purchase from the Depositor the following respective Initial
Principal Amount of Notes (the "U.S. Notes") at the initial public offering
price less the underwriting discounts set forth on the cover page of this
Prospectus:
<TABLE>
<CAPTION>
INITIAL INITIAL INITIAL
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF CLASS AMOUNT OF CLASS AMOUNT OF CLASS
U.S. UNDERWRITERS A NOTES B NOTES C NOTES
- --------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
--------------- --------------- ---------------
Total
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
In the U.S. Underwriting Agreement, the U.S. Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
U.S. Notes offered hereby if any of such U.S. Notes are purchased. The Depositor
has been advised by the U.S. Representatives that the U.S. Underwriters propose
initially to offer the U.S. Notes to the public at the respective public
offering prices set forth on the cover page of this Prospectus, and to certain
dealers at such price, less a concession not in excess of 0. % per Class A
Note, 0. % per Class B Note and 0. % per Class C Note. The U.S. Underwriters
may allow and such dealers may reallow to other dealers a discount not in excess
of 0. % per Class A Note, 0. % per Class B Note and 0. % per Class C Note.
After the Notes are released for sale to the public, the offering prices and
other selling terms may be varied by the U.S. Representatives.
The Depositor has agreed to indemnify the U.S. Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Notes are new issues of securities with no established trading market.
The Depositor has been advised by the U.S. Representatives that the U.S.
Underwriters intend to make a market in the Notes in the United States but are
not obligated to do so and may discontinue market making at any time without
notice. The Depositor has been advised by the International Managers that the
International Managers intend to make a market in the Notes outside of the
United States but are not obligated to do so and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
Funds in the Cash Collateral Account and the Trust Accounts may, from time
to time, be invested in Eligible Investments acquired from the U.S.
Underwriters.
Each U.S. Underwriter and International Manager has represented and agreed
that (a) it has not offered or sold and will not offer or sell any Notes to any
person in the United Kingdom prior to the expiration of the period of six months
from the issue date of the Notes except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (b) it has complied and will comply with all
applicable provisions of the
72
<PAGE>
Financial Services Act 1986 with respect to anything done by it in relation to
the Notes in, from or otherwise involving the United Kingdom; and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the Notes to a
person who is of a kind described in article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 or who is a person to
whom such document may otherwise lawfully be issued or passed on.
Each U.S. Underwriter and each International Manager has agreed that the
Notes may not be offered or sold directly or indirectly in Japan, and this
Prospectus may not be distributed or circulated in Japan, except in
circumstances that do not constitute an offer to the public within the meaning
of the SEL.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Notes to persons located in the United Sates.
The Depositor and the Owner Trustee (on behalf of the Owner Trust) have
entered into an underwriting agreement (the "International Underwriting
Agreement") with certain managers (the "International Managers," and
collectively with the U.S. Underwriters, the "Underwriters") through their
representatives, Nomura International plc and Goldman, Sachs International (the
"International Representatives"), providing for the concurrent offer and sale of
an aggregate of $ , $ and $ principal amount of Class A
Notes, Class B Notes and Class C Notes, respectively (the "International Notes")
outside the United States. The offering price and aggregate underwriting
discounts and commissions per Note for the U.S. Notes and the International
Notes are identical.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement between U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the International
Managers may purchase and sell among each other such number of Notes as is
mutually agreed upon among the U.S. Representatives and the International
Representatives and as approved by Nomura International plc and Goldman, Sachs &
Co., as Global Coordinators. To the extent there are sales among the U.S.
Underwriters and the International Managers pursuant to the Intersyndicate
Agreement and as approved by the Global Coordinators, the number of U.S. Notes
initially available for sale by the U.S. Underwriters and the number of
International Notes initially available for sale by the International Managers
may be more or less than the numbers appearing on the cover page of this
Prospectus. Except as permitted by the Intersyndicate Agreement and as approved
by the Global Coordinators, the price of any Notes so sold will be the
respective initial public offering price, less an amount not greater than the
selling concession.
Pursuant to the Intersyndicate Agreement, as part of the distribution of the
Notes and subject to certain exceptions, (a) the U.S. Underwriters will offer
and sell U.S. Notes only (i) in the United States (ii) to U.S. Persons (as
defined below) and (b) the International Managers will offer and sell
International Notes only outside the United States to non-U.S. Persons
(including any entity constituting an investment advisor located outside the
United States acting with discretionary authority for a U.S. Person). For these
purposes, U.S. Person means individual residents in the United States or
corporations, partnerships, or other entities organized in or under the laws of
the United States or any political subdivision thereof (including any such
entity constituting an investment advisor acting with discretionary authority
for a non-U.S. Person) whose office most directly involved with the purchase is
located in such country. "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.
Nomura International plc has provided acquisition financing and advisory
services to HoldCo. and MergerCo. in connection with the Merger and will, after
the Merger Consummation Date, hold warrants to acquire an indirect majority
interest in the common stock of TCC. See "The Merger."
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
73
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the Notes will be passed upon for the
Depositor by Dorsey & Whitney LLP. Cadwalader, Wickersham & Taft will act as
counsel to the U.S. Underwriters and the International Managers. The Indenture,
the Transfer and Servicing Agreement, the Trust Agreement, the Purchase
Agreement and the Notes will be governed by the laws of the State of New York.
ADDITIONAL INFORMATION
1. The issue of the Notes has been authorized pursuant to the Indenture and
a resolution dated , 1996 of the Board of Directors of the
Depositor.
2. An application has been made to list the Notes on the Luxembourg Stock
Exchange. In connection with such application, a legal notice of the
issuance of the Notes and copies of the Indenture and a copy of the Registration
Statement will be deposited with the Chief Registrar of the District of
Luxembourg (Greffier en Chef du Tribunal d'Arrondissement a Luxembourg) where
such documents may be examined and copies obtained.
3. As long as the Notes are outstanding, copies of the Registration
Statement, all amendments and exhibits thereto, the Indenture and any
reports containing information on the Owner Trust prepared by the Servicer will
be available free of charge at the offices of the Indenture Trustee and
, as the listing agent in Luxembourg at the following
address: , and notices of their availability will be
published in a leading newspaper having general circulation in Luxembourg (which
is expected to be Luxemburger Wort).
4. There is no litigation, arbitration or administrative proceeding, actual
or pending, which relates to the Owner Trust and to which the Owner Trust
is a party or of which the Owner Trust has been notified, or threatened that it
will be made a party, which is material in the context of the issue of the
Notes.
5. Upon issuance, the Notes will be accepted for deposit and clearance
through DTC, Euroclear and Cedel Bank, as applicable.
<TABLE>
<CAPTION>
COMMON CODE ISIN CUSIP
--------------- ----------- -----------
<S> <C> <C> <C>
Class A Notes..........................................................
Class B Notes..........................................................
Class C Notes..........................................................
</TABLE>
74
<PAGE>
INDEX OF PRINCIPAL TERMS
[TO COME]
75
<PAGE>
APPENDIX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the Notes will be available only in
book-entry form (the "Global Notes"). Investors in the Global Notes may hold
such Global Notes through DTC or, if applicable, Cedel Bank or Euroclear. The
Global Notes will be tradeable as home-market instruments in both the European
and United States domestic markets. Initial settlement and all secondary trades
will settle in same-day funds.
Secondary market trading between investors holding Global Notes through
Cedel Bank and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice.
Secondary market trading between investors holding Global Notes through DTC
will be conducted according to the rules and procedures applicable to United
States corporate debt obligations.
Secondary cross-market trading between Cedel Bank or Euroclear participants
and DTC participants holding Notes will be effected on a
delivery-against-payment basis through the respective depositaries of Cedel Bank
and Euroclear and as participants in DTC.
Non-United States holders of Global Notes will be exempt from United States
withholding taxes, provided that such holders meet certain requirements and
deliver appropriate United States tax documents to the securities clearing
organizations or their participants. See "United States Taxation" in the
Prospectus.
INITIAL SETTLEMENT
All Global Notes will be held in book-entry form by DTC in the name of Cede
& Co. as nominee of DTC. Investors' interests in the Global Notes will be
represented through financial institutions acting on their behalf as direct and
indirect participants in DTC. As a result, Cedel Bank and Euroclear will hold
positions on behalf of their participants through their respective depositaries,
which in turn will hold such positions in accounts as participants of DTC.
Investors electing to hold their Global Notes through DTC will follow the
settlement practices applicable to United States corporate debt obligations.
Investor securities custody accounts will be credited with their holdings
against payment in same-day funds on the settlement date.
Investors electing to hold their Global Notes through Cedel Bank or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Notes will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Because the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and the seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the procedures applicable to United States
corporate debt issues in same-day funds.
TRADING BETWEEN CEDEL BANK AND/OR EUROCLEAR PARTICIPANTS. Secondary market
trading between Cedel Bank participants and/or Euroclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND CEDEL BANK OR EUROCLEAR PURCHASER. When
Global Notes are to be transferred from the account of a DTC participant to the
account of a Cedel Bank participant or a
A-1
<PAGE>
Euroclear participant, the purchaser will send instructions to Cedel Bank or
Euroclear through a participant at least one business day prior to settlement.
Cedel Bank or Euroclear will instruct the respective depositary to receive the
Global Notes against payment. Payment will include interest accrued on the
Global Notes from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by the respective depositary to
the DTC participant's account against delivery of the Global Notes. After
settlement has been completed, the Global Notes will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Bank participant's or Euroclear participant's
account. The Global Notes credit will appear the next day (European time) and
the cash debit will be back-valued to, and the interest on the Global Notes will
accrue from, the value date (which would be the preceding day when settlement
occurred in New York). If settlement is not completed on the intended value date
(i.e., the trade fails), the Cedel Bank or Euroclear cash debit will be valued
instead as of the actual settlement date.
Cedel Bank participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Cedel Bank or Euroclear. Under
this approach, they may take on credit exposure to Cedel Bank or Euroclear until
the Global Notes are credited to their accounts one day later.
As an alternative, if Cedel Bank or Euroclear has extended a line of credit
to them, participants can elect not to preposition funds and allow that credit
line to be drawn upon to finance settlement. Under this procedure, Cedel Bank
participants or Euroclear participants purchasing Global Notes would incur
overdraft charges for one day, assuming they cleared the overdraft when the
Global Notes were credited to their accounts. However, interest on the Global
Notes would accrue from the value date. Therefore, in many cases the investment
income on the Global Notes earned during the one-day period may substantially
reduce or offset the amount of such overdraft charges, although this result will
depend on each participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending Global Notes to the
respective depositary for the benefit of Cedel Bank participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participant a cross-market transaction will
settle no differently than a trade between two DTC participants.
TRADING BETWEEN CEDEL BANK OR EUROCLEAR SELLER AND DTC PURCHASER. Due to
time-zone differences in their favor, Cedel Bank participants and Euroclear
participants may employ their customary procedures for transactions in which
Global Notes are to be transferred by the respective clearing system, through
the respective depositary, to a DTC participant. The seller will send
instructions to Cedel Bank or Euroclear through a participant at least one
business day prior to settlement. In this case, Cedel Bank or Euroclear will
instruct the respective depositary to deliver the Notes to the DTC participant's
account against payment. Payment will include interest accrued on the Global
Notes from and including the last coupon payment date to and excluding the
settlement date. The payment will then be reflected in the account of the Cedel
Bank participant or Euroclear participant the following day, and receipt of the
cash proceeds in the Cedel Bank participant's or Euroclear participant's account
would be back-valued to the value date (which would be the preceding day, when
settlement occurred in New York). Should the Cedel Bank participant or Euroclear
participant have a line of credit with its respective clearing system and elect
to be in debit in anticipation of receipt of the sale proceeds in its account,
the back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date (i.e.,
the trade fails), receipt of the cash proceeds in the Cedel Bank or Euroclear
participant's account would instead be valued as of the actual settlement date.
A-2
<PAGE>
Finally, day traders that use Cedel Bank or Euroclear and that purchase
Global Notes from DTC participants for delivery to Cedel Bank participants or
Euroclear participants should note that these trades would automatically fail on
the sale side unless affirmative action were taken. At least three techniques
should be readily available to eliminate this potential problem:
1. borrowing through Cedel Bank or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel Bank or Euroclear
accounts) in accordance with the clearing system's customary procedures;
2. borrowing the Global Notes in the United States from a DTC participant no
later than one day prior to settlement, which would give the Global Notes
sufficient time to be reflected in their Cedel Bank or Euroclear account
in order to settle the sale side of the trade; or
3. staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC participant is at least
one day prior to the value date for the sale to the Cedel Bank
participant or Euroclear participant.
CERTAIN U.S. FEDERAL INCOME TAX
DOCUMENTATION REQUIREMENTS
A holder of Global Notes holding securities through Cedel Bank or Euroclear
(or through DTC if the holder has an address outside the United States) will be
subject to 30% United States withholding tax that generally applies to payments
of interest (including original interest discount) on registered debt issued by
United States Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business in the chain of intermediaries between such beneficial owner and the
United States entity required to withhold tax complies with applicable
certification requirements and (ii) such holder takes one of the following steps
to obtain an exemption or reduced tax rate:
EXEMPTION FOR NON-U.S. PERSON (FORM W-8). Non-United States Persons that
are beneficial owners can obtain a complete exemption from the withholding tax
by filing a signed Form W-8 (Certificate of Foreign Status).
If the information shown on Form W-8 changes, a new Form W-8 must be filed
within 30 days of such change.
EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224). A non-United States Person, including a non-United States corporation or
bank with a United States branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States, can
obtain an exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States).
EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES
(FORM 1001). Non-United States Persons that are beneficial owners residing in a
country that has a tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the terms of the treaty) by filing Form 1001
(Ownership, Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the beneficial
owner or his agent.
EXEMPTION FOR U.S. PERSONS (FORM W-9). United States Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's Request
for Taxpayer Identification Number and Certification).
U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. A holder of Global Notes or,
in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting
the appropriate form to the person through which he holds (the clearing agency,
in the case of persons holding directly on the books of the clearing agency).
Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year. See "United States Taxation" in the Prospectus.
A-3
<PAGE>
The term "United States Person" means (i) a citizen or resident of the
United States, (ii) a corporation or partnership organized in or under the laws
of the United States or any political subdivision thereof or (iii) an estate or
trust the income of which is includible in gross income for United States
federal income tax purposes, regardless of its source.
THIS SUMMARY DOES NOT DEAL WITH ALL ASPECTS OF UNITED STATES FEDERAL INCOME
TAX WITHHOLDING THAT MAY BE RELEVANT TO FOREIGN HOLDERS OF THE GLOBAL NOTES.
INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS FOR SPECIFIC TAX ADVICE
CONCERNING THEIR HOLDING AND DISPOSING OF THE GLOBAL NOTES.
A-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR, THE SERVICER, THE OWNER TRUST, THE OWNER TRUSTEE,
THE INDENTURE TRUSTEE, THE U.S. UNDERWRITERS OR THE INTERNATIONAL MANAGERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Incorporation by Reference.....................
Available Information..........................
Reports to Noteholders.........................
Table of Contents..............................
Prospectus Summary............................. 1
Risk Factors................................... 17
The Merger..................................... 21
The Depositor and the Owner Trust.............. 22
AT&T Capital Corporation....................... 24
The Originators................................ 25
The Contracts.................................. 32
Description of the Notes....................... 45
Description of the Transfer and Servicing
Agreement..................................... 59
Certain Legal Aspects of the Contracts......... 63
United States Taxation......................... 66
ERISA Considerations........................... 70
Ratings of the Notes........................... 71
Use of Proceeds................................ 71
Underwriting................................... 72
Legal Matters.................................. 74
Additional Information......................... 74
Index of Principal Terms....................... 75
Appendix A: Global Clearance, Settlement and
Tax Documentation Procedures.................. A-1
</TABLE>
----------------
UNTIL , 1996 (NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$
% RECEIVABLE-BACKED NOTES,
CLASS A
$
% RECEIVABLE-BACKED NOTES, CLASS B
$
% RECEIVABLE-BACKED NOTES, CLASS C
ANTIGUA FUNDING
CORPORATION
DEPOSITOR
AT&T CAPITAL
CORPORATION
SERVICER
---------------------
PROSPECTUS
---------------------
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL
GOLDMAN, SACHS & CO.
-----------
GOLDMAN, SACHS & CO.
U.S. UNDERWRITERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[ALTERNATE PAGE FOR MARKET MAKING U.S. PROSPECTUS]
(CONTINUED FROM PRECEDING PAGE)
The Owner Trust will also issue two classes of certificates of beneficial
interest, the Equity Certificates and the Equipment Certificate, which are not
being offered hereby. The Equipment Certificate will represent an undivided
interest in, and be payable solely from, the Equipment and certain amounts
derived from the sale or other disposition of the Equipment upon expiration or
termination (including an early termination or liquidation) of the related
Contracts and certain other amounts as described herein. Proceeds from the sale
or other disposition of the Equipment upon expiration or termination of the
related Contracts will not be available for payment of interest and principal on
the Notes, except under the limited circumstances described herein. It is
expected that the Equity Certificates will initially represent the right to
receive principal in an amount equal to approximately 4% of the Cut-Off Date
Contract Pool Principal Balance, together with interest thereon at % per
annum.
The Notes and the Equity Certificates will be payable solely from, and
secured by, the Amount Available on each Payment Date (which will consist
primarily of the Scheduled Payments due under the Contracts, certain amounts
received upon the prepayment or purchase of Contracts or (to the extent not
payable on the Equipment Certificate) liquidation of the related Equipment,
investment earnings on amounts deposited in the Collection Account established
pursuant to the Indenture, in each case subject to prior application to pay
certain fees and expenses, and amounts permitted to be withdrawn therefor from a
Cash Collateral Account) in the order of priority described herein.
THE LIKELIHOOD OF PAYMENT OF INTEREST ON EACH CLASS OF NOTES WILL BE
ENHANCED BY THE APPLICATION OF THE AMOUNT AVAILABLE TO THE PAYMENT OF SUCH
INTEREST PRIOR TO THE PAYMENT OF PRINCIPAL ON ANY OF THE NOTES OR THE EQUITY
CERTIFICATES, AS WELL AS BY THE PREFERENTIAL RIGHT OF THE HOLDERS OF NOTES OF
EACH SUCH CLASS TO RECEIVE SUCH INTEREST (1) IN THE CASE OF THE CLASS A NOTES,
PRIOR TO THE PAYMENT OF ANY INTEREST ON THE CLASS B NOTES, THE CLASS C NOTES OR
THE EQUITY CERTIFICATES, (2) IN THE CASE OF THE CLASS B NOTES, PRIOR TO THE
PAYMENT OF ANY INTEREST ON THE CLASS C NOTES OR THE EQUITY CERTIFICATES, AND (3)
IN THE CASE OF THE CLASS C NOTES, PRIOR TO THE PAYMENT OF ANY INTEREST ON THE
EQUITY CERTIFICATES. LIKEWISE, THE LIKELIHOOD OF PAYMENT OF PRINCIPAL ON EACH
CLASS OF NOTES WILL BE ENHANCED BY THE PREFERENTIAL RIGHT OF THE HOLDERS OF
NOTES OF EACH SUCH CLASS TO RECEIVE SUCH PRINCIPAL, TO THE EXTENT OF THE AMOUNT
AVAILABLE AFTER PAYMENT OF INTEREST ON THE NOTES AND THE EQUITY CERTIFICATES AS
AFORESAID, (I) IN THE CASE OF THE CLASS A NOTES, PRIOR TO THE PAYMENT OF ANY
PRINCIPAL ON THE CLASS B NOTES, THE CLASS C NOTES OR (EXCEPT AS DESCRIBED
HEREIN) THE EQUITY CERTIFICATES, (II) IN THE CASE OF THE CLASS B NOTES, PRIOR TO
THE PAYMENT OF ANY PRINCIPAL ON THE CLASS C NOTES OR (EXCEPT AS DESCRIBED
HEREIN) THE EQUITY CERTIFICATES, AND (III) IN THE CASE OF THE CLASS C NOTES,
PRIOR TO THE PAYMENT OF ANY PRINCIPAL ON THE EQUITY CERTIFICATES, EXCEPT AS
DESCRIBED HEREIN. SEE "DESCRIPTION OF THE NOTES."
To the extent the Amount Available is sufficient therefor, interest at the
rate per annum noted above for each of the Class A, Class B and Class C Notes
(the applicable "Interest Rate") will be paid to Holders of each Class of Notes,
and principal will be paid on the applicable Class of Notes, on the day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), commencing October , 1996 (each, a "Payment Date"). The Stated
Maturity Date for the Class A Notes, the Class B Notes and the Class C Notes is
, , and , respectively, but final
payment of any Class of Notes could occur significantly earlier than the Stated
Maturity Date of such Class.
The Notes are subject to redemption in whole as described herein under
"Description of the Notes -- Special Redemption" and "-- Optional Purchase of
Contracts."
There is currently no secondary market for the Notes and there is no
assurance that one will develop. The U.S. Underwriters expect, but will not be
obligated, to make a market in the Notes in the United States. The International
Managers expect, but will not be obligated, to make a market in the Notes
outside the United States. There is no assurance that either such market will
develop, or if either such market does develop, that such market will continue.
See "Risk Factors."
It is a condition of issuance of the Notes that each of Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. (i) rate the Class A Notes in its highest
rating category, (ii) rate the Class B Notes " ," " ," " " and
" ," respectively, and (iii) rate the Class C Notes " ," " ,"
" " and " ," respectively. See "Ratings of the Notes."
If and to the extent required by applicable law or regulation, this
Prospectus will also be used by Nomura Securities International, Inc. after the
completion of the offering in connection with offers and sales related to
market-making transactions in the Notes in which Nomura Securities
International, Inc. acts as principal. Nomura Securities International, Inc. may
also act as agent in such transactions. Sales will be made at negotiated prices
determined at the time of sale.
IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND/OR INTERNATIONAL
MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
Upon receipt of a request by an investor who has received an electronic
Prospectus from any Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus.
The Depositor has not authorized any offer of Notes to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"). The Notes may not lawfully be offered or sold to
persons in the United Kingdom except in circumstances which do not result in an
offer to the public in the United Kingdom within the meaning of the Regulations
or otherwise in compliance with all applicable provisions of the Regulations.
<PAGE>
The Depositor does not intend to register the Notes under the Securities and
Exchange Law of Japan (the "SEL"). Accordingly, the Notes may not be offered or
sold directly or indirectly in Japan, and this Prospectus may not be distributed
or circulated in Japan, except in circumstances that do not constitute an offer
to the public within the meaning of the SEL.
<PAGE>
[ALTERNATE PAGE FOR MARKET MAKING U.S. PROSPECTUS]
Financial Services Act of 1986 with respect to anything done by it in relation
to the Notes in, from or otherwise involving the United Kingdom; and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the Notes to a
person who is of a kind described in article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1995 or who is a person to
whom such document may otherwise lawfully be issued or passed on.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Notes to persons located in the United Sates.
The Depositor and the Owner Trustee (on behalf of the Owner Trust) have
entered into an underwriting agreement (the "International Underwriting
Agreement") with certain managers (the "International Managers," and
collectively with the U.S. Underwriters, the "Underwriters") through their
representatives, Nomura International plc and Goldman, Sachs International (the
"International Representatives"), providing for the concurrent offer and sale of
an aggregate of $ , $ and $ principal amount of Class A
Notes, Class B Notes and Class C Notes, respectively (the "International Notes")
outside the United States. The offering price and aggregate underwriting
discounts and commissions per Note for the U.S. Notes and the International
Notes are identical.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement between U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the International
Managers may purchase and sell among each other such number of Notes as is
mutually agreed upon among the U.S. Representatives and the International
Representatives and as approved by Nomura International plc and Goldman, Sachs &
Co., as Global Coordinators. To the extent there are sales among the U.S.
Underwriters and the International Managers pursuant to the Intersyndicate
Agreement and as approved by the Global Coordinators, the number of U.S. Notes
initially available for sale by the U.S. Underwriters and the number of
International Notes initially available for sale by the International Managers
may be more or less than the numbers appearing on the cover page of this
Prospectus. Except as permitted by the Intersyndicate Agreement and as approved
by the Global Coordinators, the price of any Notes so sold will be the
respective initial public offering price, less an amount not greater than the
selling concession.
Pursuant to the Intersyndicate Agreement, as part of the distribution of the
Notes and subject to certain exceptions, (a) the U.S. Underwriters will offer
and sell U.S. Notes only (i) in the United States (ii) to U.S. Persons (as
defined below) and (b) the International Managers will offer and sell
International Notes only outside the United States to non-U.S. Persons
(including any entity constituting an investment advisor located outside the
United States acting with discretionary authority for a U.S. Person). For these
purposes, U.S. Person means individual residents in the United States or
corporations, partnerships, or other entities organized in or under the laws of
the United States or any political subdivision thereof (including any such
entity constituting an investment advisor acting with discretionary authority
for a non-U.S. Person) whose office most directly involved with the purchase is
located in such country. "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.
Nomura International plc has provided acquisition financing and advisory
services to HoldCo. and MergerCo. in connection with the Merger and will, after
the Merger Consummation Date, hold warrants to acquire an indirect majority
interest in the common stock of TCC. See "The Merger."
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Nomura Securities International, Inc. in connection
with offers and sales related to market making transactions in the Notes in
which Nomura Securities International, Inc. acts as a principal. Nomura
Securities International, Inc. may also act as agent in such transactions. Sales
may be made at negotiated prices determined at the time of sale.
68
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER 3, 1996
$
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$ % RECEIVABLE-BACKED NOTES, CLASS A, DUE ; ISSUE
PRICE: %
$ % RECEIVABLE-BACKED NOTES, CLASS B, DUE ; ISSUE
PRICE: %
$ % RECEIVABLE-BACKED NOTES, CLASS C, DUE ; ISSUE
PRICE: %
<TABLE>
<S> <C>
ANTIGUA FUNDING CORPORATION AT&T CAPITAL CORPORATION
DEPOSITOR SERVICER
</TABLE>
Capita Equipment Receivables Trust 1996-1 (the "Owner Trust") will be formed
pursuant to a Trust Agreement between Antigua Funding Corporation (the
"Depositor"), which is to be a wholly owned subsidiary of AT&T Capital
Corporation ("TCC") following the consummation of the Merger, and
, as Owner Trustee (the "Owner Trustee"). The Receivable-Backed
Notes (the "Notes") will be issued by the Owner Trust pursuant to an Indenture
(the "Indenture") between the Owner Trust and , as
Indenture Trustee (the "Indenture Trustee"). The property of the Owner Trust
(collectively, the "Trust Assets"), from the date of issuance of the Notes (the
"Closing Date") to the Merger Consummation Date, will consist of the proceeds of
the Notes, plus additional cash, which will be held (and invested in certain
Eligible Investments) in an Escrow Account and will be sufficient to redeem the
Notes at the Special Redemption Price on the Special Redemption Date if the
Merger is not consummated on or before September , 1996. The cash in the
Escrow Account, together with the proceeds of the Equity Certificates to be
issued by the Owner Trust to the Depositor (which will thereafter be disposed of
by the Depositor in a transaction unrelated to the issuance of the Notes), will
be used on the Merger Consummation Date to acquire a pool of equipment leases
(the "Lease Contracts") and installment sale contracts, promissory notes, loan
and security agreements and similar types of receivables (the "Loan Contracts,"
and, together with the Lease Contracts, the "Contracts") and the interest of the
Depositor in certain equipment related to such Contracts (the "Equipment"). TCC
will service the Contracts pursuant to a Transfer and Servicing Agreement,
expected to be entered into among the Depositor, TCC, the Indenture Trustee and
the Owner Trust. Of the Notes being offered, $ , $ and
$ initial principal amount of the Class A Notes, Class B Notes and Class
C Notes, respectively, are being offered initially in the United States by the
U.S. Underwriters and $ , $ and $ , respectively, are
being offered initially outside the United States by the International Managers.
The Initial Public Offering Price and Underwriting Discount will be identical
for both offerings.
(CONTINUED ON FOLLOWING PAGE)
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THIS OFFERING, SEE "RISK
FACTORS" ON PAGE 16 HEREIN.
THE NOTES WILL REPRESENT OBLIGATIONS OF THE OWNER TRUST AND WILL NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF ANTIGUA FUNDING CORPORATION, AT&T
CAPITAL CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC OFFERING UNDERWRITING PROCEEDS TO THE
PRICE (1) DISCOUNT (2) DEPOSITOR (1)(3)
------------------------ ------------------------ ------------------------
<S> <C> <C> <C>
Per Class A Note........ % % %
Per Class B Note........ % % %
Per Class C Note........ % % %
Total................... $ $ $
</TABLE>
- ----------------
(1) Plus accrued interest, if any, at the applicable Interest Rate, from
, 1996.
(2) The Depositor has agreed to indemnify the International Managers against
certain liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting."
(3) Before deducting expenses payable by the Depositor, estimated to be
$ .
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL GOLDMAN, SACHS & CO.
The Notes are offered severally by the International Managers, as specified
herein, subject to prior sale and subject to the International Managers' right
to reject orders in whole or in part. It is expected that the Notes will be
ready for delivery in book-entry form through the facilities of The Depository
Trust Company in New York, New York, Cedel Bank, societe anonyme, and the
Euroclear System against payment therefor in immediately available funds on or
about September , 1996.
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
----------------
NOMURA INTERNATIONAL
-----------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER , 1996
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
The Owner Trust will also issue two classes of certificates of beneficial
interest, the Equity Certificates and the Equipment Certificate, which are not
being offered hereby. The Equipment Certificate will represent an undivided
interest in, and be payable solely from the Equipment and certain amounts
derived from the sale or other disposition of the Equipment upon expiration or
termination (including an early termination or liquidation) of the related
Contracts and certain other amounts as described herein. Proceeds from the sale
or other disposition of the Equipment upon expiration or termination of the
related Contracts will not be available for payment of interest and principal on
the Notes, except under the limited circumstances described herein. It is
expected that the Equity Certificates will initially represent the right to
receive principal in an amount equal to approximately 4% of the Cut-Off Date
Contract Pool Principal Balance, together with interest thereon at % per
annum.
The Notes and the Equity Certificates will be payable solely from, and
secured by, the Amount Available on each Payment Date (which will consist
primarily of the Scheduled Payments due under the Contracts, certain amounts
received upon the prepayment or purchase of Contracts or (to the extent not
payable on the Equipment Certificate) liquidation of the related Equipment,
investment earnings on amounts deposited in the Collection Account established
pursuant to the Indenture, in each case subject to prior application to pay
certain fees and expenses, and amounts permitted to be withdrawn therefor from a
Cash Collateral Account) in the order of priority described herein.
THE LIKELIHOOD OF PAYMENT OF INTEREST ON EACH CLASS OF NOTES WILL BE
ENHANCED BY THE APPLICATION OF THE AMOUNT AVAILABLE TO THE PAYMENT OF SUCH
INTEREST PRIOR TO THE PAYMENT OF PRINCIPAL ON ANY OF THE NOTES OR THE EQUITY
CERTIFICATES, AS WELL AS BY THE PREFERENTIAL RIGHT OF THE HOLDERS OF NOTES OF
EACH SUCH CLASS TO RECEIVE SUCH INTEREST (1) IN THE CASE OF THE CLASS A NOTES,
PRIOR TO THE PAYMENT OF ANY INTEREST ON THE CLASS B NOTES, THE CLASS C NOTES OR
THE EQUITY CERTIFICATES, (2) IN THE CASE OF THE CLASS B NOTES, PRIOR TO THE
PAYMENT OF ANY INTEREST ON THE CLASS C NOTES OR THE EQUITY CERTIFICATES, AND (3)
IN THE CASE OF THE CLASS C NOTES, PRIOR TO THE PAYMENT OF ANY INTEREST ON THE
EQUITY CERTIFICATES. LIKEWISE, THE LIKELIHOOD OF PAYMENT OF PRINCIPAL ON EACH
CLASS OF NOTES WILL BE ENHANCED BY THE PREFERENTIAL RIGHT OF THE HOLDERS OF
NOTES OF EACH SUCH CLASS TO RECEIVE SUCH PRINCIPAL, TO THE EXTENT OF THE AMOUNT
AVAILABLE AFTER PAYMENT OF INTEREST ON THE NOTES AND THE EQUITY CERTIFICATES AS
AFORESAID, (I) IN THE CASE OF THE CLASS A NOTES, PRIOR TO THE PAYMENT OF ANY
PRINCIPAL ON THE CLASS B NOTES, THE CLASS C NOTES OR (EXCEPT AS DESCRIBED
HEREIN) THE EQUITY CERTIFICATES, (II) IN THE CASE OF THE CLASS B NOTES, PRIOR TO
THE PAYMENT OF ANY PRINCIPAL ON THE CLASS C NOTES OR (EXCEPT AS DESCRIBED
HEREIN) THE EQUITY CERTIFICATES, AND (III) IN THE CASE OF THE CLASS C NOTES,
PRIOR TO THE PAYMENT OF ANY PRINCIPAL ON THE EQUITY CERTIFICATES, EXCEPT AS
DESCRIBED HEREIN. SEE "DESCRIPTION OF THE NOTES."
To the extent the Amount Available is sufficient therefor, interest at the
rate per annum noted above for each of the Class A, Class B and Class C Notes
(the applicable "Interest Rate") will be paid to Holders of each Class of Notes,
and principal will be paid on the applicable Class of Notes, on the day of
each month (or, if such day is not a Business Day, on the next succeeding
Business Day), commencing October , 1996 (each, a "Payment Date"). The Stated
Maturity Date for each Class of Notes is as set forth above, but final payment
of any Class of Notes could occur significantly earlier than the Stated Maturity
Date of such Class.
The Notes are subject to redemption in whole as described herein under
"Description of the Notes -- Special Redemption" and "-- Optional Purchase of
Contracts."
There is currently no secondary market for the Notes and there is no
assurance that one will develop. The U.S. Underwriters expect, but will not be
obligated, to make a market in the Notes in the United States. The International
Managers expect, but will not be obligated, to make a market in the Notes
outside the United States. There is no assurance that either such market will
develop, or if either such market does develop, that such market will continue.
See "Risk Factors."
Each prospective purchaser of the Notes must comply with all applicable laws
and regulations in any jurisdiction in which it purchases or sells the Notes or
possesses or distributes this Prospectus and must obtain any consent, approval
or permission required by it for the purchase, offer or sale by it of the Notes
under the laws and regulations in force in any jurisdiction to which it makes
such purchase, offer or sale, and neither the Owner Trust nor any Underwriter
shall have any responsibility therefor.
The distribution of this Prospectus and the offer or sale of Notes may be
restricted by law in certain jurisdictions. Persons to whom possession of this
Prospectus and any of the Notes may come must inform themselves about, and
observe, any such restrictions. See "Underwriting." In particular, there are
restrictions on the distribution of this Prospectus and the offer and sale of
the Notes in the United Kingdom and Japan. None of the Owner Trust, the
Underwriters or any of their respective representatives is making any
representation to any offeree or purchaser of the Notes regarding the legality
of or investment therein by such offeree or purchaser under applicable legal
investment or similar laws.
For so long as the Notes are listed on the Luxembourg Stock Exchange and the
rules of such exchange so require, the notices to Noteholders will be published
in a leading newspaper having general circulation in Luxembourg (which is
expected to be the Luxemburger Wort) and will be made available at the offices
of the Luxembourg Listing Agent). See "Additional Information."
It is a condition of issuance of the Notes that each of Standard & Poor's
Ratings Services, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. and Fitch Investors Service, L.P. (i) rate the Class A Notes in its highest
rating category, (ii) rate the Class B Notes " ," " ," " " and
" ," respectively, and (iii) rate the Class C Notes " ," " ,"
" " and " ," respectively. See "Ratings of the Notes."
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
(CONTINUED FROM PRECEDING PAGE)
IN CONNECTION WITH THIS OFFERING, THE U.S. UNDERWRITERS AND/OR INTERNATIONAL
MANAGERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE NOTES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
The Depositor has taken all reasonable care to ensure that the information
stated herein is true and accurate in all material respects and is not
misleading as of the date hereof and that there are no material facts omission
of which would make the information contained herein misleading in any material
respect. The Depositor accepts responsibility accordingly.
Upon receipt of a request by an investor who has received an electronic
Prospectus from any Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
such Underwriter will promptly deliver, or cause to be delivered, without
charge, to such investor a paper copy of the Prospectus.
The Depositor has not authorized any offer of Notes to the public in the
United Kingdom within the meaning of the Public Offers of Securities Regulations
1995 (the "Regulations"). The Notes may not lawfully be offered or sold to
persons in the United Kingdom except in circumstances which do not result in an
offer to the public in the United Kingdom within the meaning of the Regulations
or otherwise in compliance with all applicable provisions of the Regulations.
The Depositor does not intend to register the Notes under the Securities and
Exchange Law of Japan (the "SEL"). Accordingly, the Notes may not be offered or
sold directly or indirectly in Japan, and this Prospectus may not be distributed
or circulated in Japan, except in circumstances that do not constitute an offer
to the public within the meaning of the SEL.
In making an investment decision, investors must rely on their own
examination of the Notes, including the merits and risks involved. The contents
of this Prospectus are not to be construed as legal, business or tax advice.
Each prospective purchaser must consult its own accountant, legal advisor and
other advisors as to the business, legal, tax and related aspects of the
purchase of the Notes. As used herein, references to "dollars" or "$" are to
United States dollars.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions of the international underwriting
agreement (the "International Underwriting Agreement"), the managers named below
(the "International Managers"), through their representatives, Nomura
International plc and Goldman, Sachs International (the "International
Representatives"), have severally agreed to purchase from the Depositor the
following respective initial principal amount of Notes (the "International
Notes") at the initial public offering price less the underwriting discounts set
forth on the cover page of this Prospectus:
<TABLE>
<CAPTION>
INITIAL INITIAL INITIAL
PRINCIPAL PRINCIPAL PRINCIPAL
AMOUNT OF CLASS AMOUNT OF CLASS AMOUNT OF CLASS
INTERNATIONAL MANAGERS A NOTES B NOTES C NOTES
- --------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
--------------- --------------- ---------------
Total....................................................
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
In the International Underwriting Agreement, the International Managers have
agreed, subject to the terms and conditions set forth therein, to purchase all
of the International Notes offered hereby if any of the International Notes are
purchased. The Depositor has been advised by the International Representatives
that the International Managers propose to offer the International Notes to the
public at the respective public offering prices set forth on the cover page of
this Prospectus, and to certain dealers at such price, less a concession not in
excess of 0. % per Class A Note, 0. % per Class B Note and 0. % per Class C
Note. The International Managers may allow and such dealers may reallow to other
dealers a discount not in excess of 0. % per Class A Note, 0. % per Class B
Note and 0. % per Class C Note. After the Notes are released for sale to the
public, the offering price and other selling terms may be varied by the
International Representatives.
The Notes are new issues of securities with no established trading market.
The Depositor has been advised by the International Managers that the
International Managers intend to make a market in the Notes outside of the
United States but are not obligated to do so and may discontinue market making
at any time without notice. The Depositor has been advised by the U.S.
Representatives that the U.S. Underwriters intend to make a market in the Notes
in the United States but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
Funds in the Cash Collateral Account and the Trust Accounts may, from time
to time, be invested in Eligible Investments acquired from the U.S.
Underwriters.
Each U.S. Underwriter and International Manager has represented and agreed
that (a) it has not offered or sold and will not offer or sell any Notes to any
person in the United Kingdom prior to the expiration of the period of six months
from the issue date of the Notes except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and
67
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (b) it has complied
and will comply with all applicable provisions of the Financial Services Act
1986 with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom; and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issuance of the Notes to a person who is of a kind
described in article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or who is a person to whom such document
may otherwise lawfully be issued or passed on.
Each International Manager and each U.S. Underwriter has agreed that the
Notes may not be offered or sold directly or indirectly in Japan, and this
Prospectus may not be distributed or circulated in Japan, except in
circumstances that do not constitute an offer to the public within the meaning
of the SEL.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Notes to persons located outside the United Sates.
The Depositor has agreed to indemnify the International Managers against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Depositor has entered into an underwriting agreement (the "U.S.
Underwriting Agreement") with certain underwriters (the "U.S. Underwriters," and
collectively with the International Managers, the "Underwriters") through their
representatives, Goldman, Sachs & Co. and Nomura Securities International, Inc.
(the "U.S. Representatives"), providing for the concurrent offer and sale of an
aggregate of $ , $ and $ principal amount of Class A
Notes, Class B Notes and Class C Notes, respectively (the "U.S. Notes") in the
United States. The offering price and aggregate underwriting discounts and
commissions per Note for the U.S. Notes and the International Notes are
identical.
To provide for the coordination of their activities, the U.S. Underwriters
and the International Managers have entered into an Agreement between U.S.
Underwriters and International Managers (the "Intersyndicate Agreement") which
provides, among other things, that the U.S. Underwriters and the International
Managers may purchase and sell among each other such number of Notes as is
mutually agreed upon among the U.S. Representatives and the International
Representatives. To the extent there are sales among the U.S. Underwriters and
the International Managers pursuant to the Intersyndicate Agreement and as
approved by the Global Coordinators, the number of U.S. Notes initially
available for sale by the U.S. Underwriters and the number of International
Notes initially available for sale by the International Managers may be more or
less than the numbers appearing on the cover page of this Prospectus. Except as
permitted by the Intersyndicate Agreement, the price of any Notes so sold will
be the respective initial public offering price, less an amount not greater than
the selling concession.
Pursuant to the Intersyndicate Agreement, as part of the distribution of the
Notes and subject to certain exceptions, (a) the U.S. Underwriters will offer
and sell U.S. Notes only (i) in the United States (ii) to U.S. Persons (as
defined below) and (b) the International Managers will offer and sell
International Notes only outside the United States to non-U.S. Persons
(including any entity constituting an investment advisor located outside the
United States acting with discretionary authority for a U.S. Person). For these
purposes, U.S. Person means individual residents in the United States or
Corporations, Partnerships, or other entities organized in or under the laws of
the United States or any political subdivision thereof (including any such
entity constituting an investment advisor acting with discretionary authority
for a non-U.S. Person) whose office most directly involved with the purchase is
located in such country. "United States" means the United States of America, its
territories, its possessions and all areas subject to its jurisdiction.
Nomura International plc has provided acquisition financing and advisory
services to HoldCo. and MergerCo. in connection with the Merger and will, after
the Merger Consummation Date, hold warrants to acquire an indirect majority
interest in the common stock of TCC. See "The Merger."
Application has been made to list the Notes on the Luxembourg Stock
Exchange.
68
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE DEPOSITOR, THE SERVICER, THE OWNER TRUST, THE OWNER TRUSTEE,
THE INDENTURE TRUSTEE, THE U.S. UNDERWRITERS OR THE INTERNATIONAL MANAGERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER, SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Incorporation by Reference.....................
Available Information..........................
Reports to Noteholders.........................
Table of Contents..............................
Prospectus Summary.............................
Risk Factors...................................
The Merger.....................................
The Depositor and the Owner Trust..............
AT&T Capital Corporation.......................
The Originators................................
The Contracts..................................
Description of the Notes.......................
Description of the Transfer and Servicing
Agreement.....................................
Certain Legal Aspects of the Contracts.........
United States Taxation.........................
ERISA Considerations...........................
Ratings of the Notes...........................
Use of Proceeds................................
Underwriting...................................
Legal Matters..................................
Additional Information.........................
Index of Principal Terms.......................
Appendix A: Global Clearance, Settlement and
Tax Documentation Procedures.................. A-1
</TABLE>
----------------
UNTIL , 1996 (NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS ACTING AS UNDERWRITERS TO DELIVER A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
$
% RECEIVABLE-BACKED NOTES,
CLASS A
$
% RECEIVABLE-BACKED NOTES, CLASS B
$
% RECEIVABLE-BACKED NOTES, CLASS C
ANTIGUA FUNDING
CORPORATION
DEPOSITOR
AT&T CAPITAL
CORPORATION
SERVICER
---------------------
PROSPECTUS
---------------------
GLOBAL COORDINATORS:
NOMURA INTERNATIONAL
GOLDMAN, SACHS & CO.
-----------
NOMURA INTERNATIONAL
INTERNATIONAL MANAGERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be incurred in connection
with the offering of the Notes, other than underwriting discounts and
commissions, described in this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.................. $1,034,482.76
Printing and Engraving............................................... *
Legal Fees and Expenses.............................................. *
Blue Sky Filing and Counsel Fees..................................... *
Accounting Fees and Expenses......................................... *
Trustee Fees and Expenses............................................ *
Rating Agencies' Fees................................................ *
Miscellaneous Expenses............................................... *
-------------
Total............................................................ $ *
-------------
-------------
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Antigua Funding Corporation is incorporated under the laws of Delaware.
Section 145 of the Delaware General Corporation Law provides that a Delaware
corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation, by
reason of the fact that such person was an officer, director, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise).
The indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceedings, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the corporation's best interests and, for criminal proceedings, had no
reasonable cause to believe that his conduct was illegal. A Delaware corporation
may identify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.
The Certificate of Incorporation and Bylaws of Antigua Funding Corporation
provide, in effect, that, subject to certain limited exceptions, such
corporation will indemnify its officers and directors to the extent permitted by
the Delaware General Corporation Law.
ITEM 16. EXHIBITS.
The Exhibits filed as part of this Registration Statement are:
<TABLE>
<C> <C> <S>
* 1.1 -- Form of Underwriting Agreement.
* *3.1 -- Certificate of Incorporation of Depositor.
* *3.2 -- By-Laws of Depositor.
4.1 -- Form of Transfer and Servicing Agreement.
4.2 -- Form of Indenture.
4.3 -- Form of Trust Agreement.
4.4 -- Form of Purchase Agreement.
* 5.1 -- Opinion and consent of Dorsey & Whitney LLP with respect to legality.
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
* 8.1 -- Opinion and consent of Dorsey & Whitney LLP with respect to tax matters.
* 8.2 -- Opinion and consent of Cadwalader, Wickersham & Taft with respect to tax matters.
* 23.1 -- Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
* 23.2 -- Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
* 23.3 -- Consent of Cadwalader, Wickersham & Taft (included as part of Exhibit 8.2).
* *24.1 -- Power of Attorney.
* 25.1 -- Statement of eligibility of Indenture Trustee.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
3rd day of September, 1996.
ANTIGUA FUNDING CORPORATION
By ___________/s/ GUY HANDS___________
Guy Hands
PRESIDENT
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------------------- -------------------------------------------- ----------------------
<C> <S> <C>
/s/ GUY HANDS President (Principal Executive Officer) and September 3, 1996
Guy Hands Director
/s/ JEFF NASH Vice President (Principal Financial and September 3, 1996
Jeff Nash Accounting Officer) and Director
</TABLE>
II-3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------
<C> <S> <C>
* 1.1 Form of Underwriting Agreement.
**3.1 Certificate of Incorporation of Depositor.
**3.2 By-laws of Depositor.
4.1 Form of Transfer and Servicing Agreement.
4.2 Form of Indenture.
4.3 Form of Trust Agreement.
4.4 Form of Purchase Agreement.
* 5.1 Opinion and consent of Dorsey & Whitney LLP with respect to legality.
* 8.1 Opinion and consent of Dorsey & Whitney LLP with respect to tax matters.
* 8.2 Opinion and consent of Cadwalader, Wickersham & Taft with respect to tax matters.
* 23.1 Consent of Dorsey & Whitney LLP (included as part of Exhibit 5.1).
* 23.2 Consent of Dorsey & Whitney LLP (included as part of Exhibit 8.1).
* 23.3 Consent of Cadwalader, Wickersham & Taft (included as part of Exhibit 8.2).
**24.1 Power of Attorney.
* 25.1 Statement of eligibility of Indenture Trustee.
</TABLE>
- ------------------------
* To be filed by amendment.
** Previously filed.
<PAGE>
Exhibit 4.1
----------------------------------------------------------------------
TRANSFER AND SERVICING AGREEMENT
AMONG
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
ISSUER
ANTIGUA FUNDING CORPORATION
DEPOSITOR
AT&T CAPITAL CORPORATION
IN ITS INDIVIDUAL CAPACITY AND AS SERVICER
---------------------------------------------------------------
INDENTURE TRUSTEE
-------------------------------------------------
DATED AS OF SEPTEMBER 1, 1996
-------------------------------------------------
----------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Usage of Terms. . . . . . . . . . . . . . . . . . . . 9
SECTION 1.3. Calculations . . . . . . . . . . . . . . . . . . . . 9
SECTION 1.4. Section References . . . . . . . . . . . . . . . . . 10
SECTION 1.5. No Recourse . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II CONVEYANCE OF CONTRACTS . . . . . . . . . . . . . . . . . . 11
SECTION 2.1. Conveyance of Contracts and Related Assets . . . . . 11
SECTION 2.2. Custody of Contract Files . . . . . . . . . . . . . . 11
SECTION 2.3. Transfer of Funds in Escrow Account . . . . . . . . . 13
SECTION 2.4. Representations and Warranties of Depositor . . . . . 13
SECTION 2.5. Nonpetition Covenant . . . . . . . . . . . . . . . . 15
SECTION 2.6. Purchase of Contracts Upon Breach of Representations
and Warranties . . . . . . . . . . . . . . . . . . 16
SECTION 2.7. Further Assurances. . . . . . . . . . . . . . . . . . 16
ARTICLE III ADMINISTRATION AND SERVICING OF CONTRACTS . . . . . . . . . 17
SECTION 3.1. Duties of the Servicer . . . . . . . . . . . . . . . 17
SECTION 3.2. Collection of Contract Payments; Modifications of
Contracts . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3. Realization Upon Contracts . . . . . . . . . . . . . 19
SECTION 3.4. Insurance, Maintenance and Taxes . . . . . . . . . . 21
SECTION 3.5. Maintenance of Security Interests in Equipment . . . 23
SECTION 3.6. Covenants, Representations, and Warranties of
Servicer . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.7. Sub-Servicers . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.8. Total Servicing Fee; Payment of Expenses by
Servicer . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.9. Servicer's Certificate . . . . . . . . . . . . . . . 26
SECTION 3.10. Annual Statement as to Compliance; Notice of
Servicer Termination Event . . . . . . . . . . . . 26
SECTION 3.11. Annual Independent Accountants' Report . . . . . . . 27
SECTION 3.12. Access to Certain Documentation and Information
Regarding Contracts . . . . . . . . . . . . . . . . 28
SECTION 3.13. Certain Duties of the Servicer under the Trust
Agreement . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.14. Duties of the Servicer under the Indenture . . . . . 28
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<PAGE>
SECTION 3.15. Fidelity Bond . . . . . . . . . . . . . . . . . . . . 30
-3-
<PAGE>
ARTICLE IV COLLECTIONS AND DEPOSITS . . . . . . . . . . . . . . . . . 31
SECTION 4.1. Initial Deposit . . . . . . . . . . . . . . . . . . . 31
SECTION 4.3. Application of Collections . . . . . . . . . . . . . 32
SECTION 4.4. Net Deposits . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.5. Expiration of Lease Contracts . . . . . . . . . . . . 33
ARTICLE V TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.1. Optional Purchase of All Contracts;
Liquidation of Trust Estate . . . . . . . . . . . . 34
ARTICLE VI THE DEPOSITOR . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.1. Liability of Depositor . . . . . . . . . . . . . . . 35
SECTION 6.2. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor; Amendment of
Certificate of Incorporation . . . . . . . . . . . 35
SECTION 6.3. Limitation on Liability of Depositor and Others . . . 36
SECTION 6.4. Depositor May Own Certificates or Notes . . . . . . . 36
ARTICLE VII THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 7.1. Liability of Servicer; Indemnities . . . . . . . . . 37
SECTION 7.2. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer . . . . . . . . . . . 38
SECTION 7.3. Limitation on Liability of Servicer and Others . . . 38
SECTION 7.4. Servicer Not to Resign . . . . . . . . . . . . . . . 39
SECTION 7.5. Corporate Existence . . . . . . . . . . . . . . . . . 39
ARTICLE VIII SERVICER TERMINATION EVENTS . . . . . . . . . . . . . . . . 40
SECTION 8.1. Servicer Termination Event . . . . . . . . . . . . . 40
SECTION 8.2. Consequences of a Servicer Termination Event . . . . 41
SECTION 8.3. Indenture Trustee to Act; Appointment of Successor . 42
SECTION 8.4. Notification to Certificateholders and Noteholders . 43
SECTION 8.5. Waiver of Past Defaults . . . . . . . . . . . . . . . 43
ARTICLE IX MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . 44
SECTION 9.1. Amendment . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.2. Protection of Title to Trust Property . . . . . . . . 45
SECTION 9.3. Governing Law . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.4. Severability of Provisions . . . . . . . . . . . . . 47
SECTION 9.5. Assignment . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.6. Third-Party Beneficiaries . . . . . . . . . . . . . . 47
SECTION 9.7. Counterparts . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.8. Intention of Parties . . . . . . . . . . . . . . . . 48
SECTION 9.9. Notices . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.10. Limitation of Liability . . . . . . . . . . . . . . . 48
-4-
<PAGE>
EXHIBITS
Exhibit A-1 -- Schedule of Lease Contracts
Exhibit A-2 -- Schedule of Loan Contracts
Exhibit B -- Form of Servicer's Certificate
-5-
<PAGE>
THIS TRANSFER AND SERVICING AGREEMENT, dated as of September 1, 1996,
is made among Capita Equipment Receivables Trust 1996-1 (the "Issuer"), Antigua
Funding Corporation, a Delaware corporation, as Depositor (the "Depositor"),
AT&T Capital Corporation, a Delaware corporation, in its individual capacity and
as Servicer (in its individual capacity, "TCC"; in its capacity as Servicer, the
"Servicer"), and , a
, as trustee under the Indenture hereinafter referred to (the
"Indenture Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All terms defined in the Indenture, the
Trust Agreement or the Cash Collateral Account Agreement (each as defined below)
shall have the same meaning in this Agreement. Whenever capitalized and used in
this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
ACCOUNTANTS' REPORT: The report of a firm of nationally recognized
independent accountants described in Section 3.11.
ACCOUNTING DATE: With respect to a Payment Date, the last day of the
related Collection Period.
ADMINISTRATIVE FEE: With respect to any Collection Period, all
administrative fees, expenses and charges collected on the Contracts during such
Collection Period, including late fees, documentation fees and insurance
administration charges.
AFFILIATE: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGREEMENT OR "THIS AGREEMENT": This Transfer and Servicing Agreement,
all amendments and supplements thereto and all exhibits and schedules to any of
the foregoing.
-6-
<PAGE>
BOOK VALUE: With respect to any Equipment, the value of such
Equipment as shown on the accounting books and records of TCC as of the Cut-Off
Date.
BUSINESS DAY: Any day other than a Saturday, Sunday, legal holiday or
other day on which commercial banking institutions in ,
, or any other location of any successor Servicer, successor Owner
Trustee or successor Indenture Trustee are authorized or obligated by law,
executive order or governmental decree to be closed.
COLLECTION ACCOUNT: The account designated as such in, and
established and maintained pursuant to, Section 8.02 of the Indenture.
COLLECTION PERIOD: With respect to a Payment Date, the calendar month
preceding the month in which such Payment Date occurs (such calendar month being
referred to as the "related" Collection Period with respect to such Payment
Date). With respect to an Accounting Date, the calendar month in which such
Accounting Date occurs is referred to herein as the "related" Collection Period
to such Accounting Date.
COLLECTION RECORDS: All manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Contracts.
CONTRACT FILE: The documents, electronic entries, instruments and
writings listed in Section 2.2 pertaining to a particular Contract.
CONTRACT POOL PRINCIPAL BALANCE: With respect to any Payment Date,
the sum of the Contract Principal Balances (computed as of the related
Accounting Date) for all Contracts.
CONTRACT PRINCIPAL BALANCE: As of any Accounting Date:
(i) in the case of a Lease Contract, the present value of the unpaid
Scheduled Payments due on such Lease Contract after such Accounting Date
(excluding all Scheduled Payments due on or prior to, but not received as
of, such Accounting Date, as well as any Scheduled Payments due after, but
received as of, such Accounting Date) discounted monthly at the rate of
% per annum (assuming, for purposes of such calculation, that each
Scheduled Payment is due on the last day of the applicable Collection
Period), and
(ii) in the case of a Loan Contract, the unpaid principal balance of
such Loan Contract as of such Accounting Date (after giving effect to any
Scheduled Payments due on or prior to such Accounting Date, whether or not
received, as well as any Prepayments, and any Scheduled Payments due after
such Accounting Date, received as of such Accounting Date);
PROVIDED that (a) for purposes of computing the Monthly Principal Amount for a
given Payment Date (as well as all Payment Dates thereafter), the Contract
Principal Balance of
-7-
<PAGE>
any Contract which became a Liquidated Contract during the related Collection
Period or was required to be purchased by TCC as of the last day of the related
Collection Period in accordance with Section 2.6, will be deemed to be zero on
and after the last day of such Collection Period, and (b) for purposes of
computing the Requisite Cash Collateral Amount for a given Payment Date (as well
as all Payment Dates thereafter), the Contract Principal Balance of any Contract
which became a Liquidated Contract (other than by virtue of clause (ii) of the
definition thereof) during the related Collection Period or became a Purchased
Contract as of the related Deposit Date, will be deemed to be zero on and after
the last day of the related Collection Period.
CONTRACT REPRESENTATIONS AND WARRANTIES: As defined in Section 2.6.
CONTRACTS: The Lease Contracts and the Loan Contracts.
CORPORATE TRUST OFFICE: With respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office on the date of
execution and delivery of this Agreement is located at ,
Attention: ; the telecopy number for the Corporate
Trust Office of the Owner Trustee on the date of execution and delivery of this
Agreement is ; with respect to the Indenture Trustee, the
principal office of the Indenture Trustee at which at any particular time its
corporate trust business shall be administered, which office is located at
, Attention: ; the telecopy number
for the Corporate Trust Office of the Indenture Trustee on the date of execution
and delivery of this Agreement is .
CUT-OFF DATE: September 1, 1996.
CUT-OFF DATE CONTRACT POOL PRINCIPAL BALANCE: $ .
Deposit Date: With respect to any Collection Period, the Business Day
immediately preceding the related Determination Date.
DEPOSITOR: Antigua Funding Corporation, a Delaware corporation, or
its successor in interest pursuant to Section 6.2.
DETERMINATION DATE: With respect to any Collection Period, the
Business Day immediately preceding the related Payment Date.
ELIGIBLE SERVICER: TCC, the Indenture Trustee or another Person which
at the time of its appointment as Servicer (i) is servicing a portfolio of
equipment lease contracts, installment sale contracts, promissory notes, loan
and security agreements and/or other similar types of receivables comparable to
the Contracts, (ii) is legally qualified and has the capacity to service the
Contracts, (iii) has demonstrated the ability professionally and competently to
service a portfolio of equipment lease contracts, installment sale contracts,
promissory notes, loan and security agreements and other similar types of
-8-
<PAGE>
receivables comparable to the Contracts with reasonable skill and care, and (iv)
has available software which is adequate to perform its duties and
responsibilities under this Agreement.
EQUIPMENT: With respect to any Contract, the property which is leased
or purchased pursuant to such Contract, or which otherwise provides security for
the payment of amounts payable thereunder.
EQUIPMENT ACCOUNT: The account designated as such in, and established
and maintained pursuant to, Section 5.1 of the Trust Agreement.
EQUITY CERTIFICATE MAJORITY: Holders of Equity Certificates
representing more than 50% of the Principal Balance of the Equity Certificates.
INDENTURE: The Indenture, dated as of September 1, 1996, between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
INDENTURE TRUSTEE: The Person acting as Trustee under the Indenture,
its successors in interest and any successor Trustee under the Indenture.
INDEPENDENT ACCOUNTANTS: As defined in Section 3.11(a).
INSURANCE, MAINTENANCE AND TAX ACCOUNTS: The accounts which are
established and maintained pursuant to Section 3.4(a).
INSURANCE POLICY: With respect to a Contract, any insurance policy
benefiting the lessor or secured party under the Contract providing loss or
physical damage, theft, mechanical breakdown or similar coverage with respect to
the Equipment or the Obligor.
ISSUER: Capita Equipment Receivables Trust 1996-1.
LEASE CONTRACTS: The lease contracts listed on Exhibit A-1 hereto and
all rights and obligations under such contracts, including, without limitation,
all monies at any time paid or payable thereon or in respect thereof from and
after the Cut-Off Date (whether in the form of (i) Scheduled Payments (including
those Scheduled Payments due prior to, but not received as of, the Cut-Off Date,
but excluding those Scheduled Payments due on or after, but received prior to,
the CutOff Date), (ii) Prepayments, (iii) payments made after the original term
of such contracts, (iv) payments to be applied by the Servicer to the payment of
insurance premiums, maintenance, taxes or other similar obligations, (v)
payments to be retained by the Servicer in payment of Administrative Fees, or
otherwise), and all rights of the lessor in the related Equipment, Insurance
Policies and any other security for the payment of amounts due under such
contracts.
LIEN: Any security interest, lien, charge, pledge, preference, equity
or
-9-
<PAGE>
encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
LIQUIDATED CONTRACT: With respect to any Collection Period, a
Contract as to which, during such Collection Period, (i) the Servicer has
repossessed and disposed of the related Equipment, or otherwise collected all
proceeds (including any proceeds of insurance to be applied as described in
Section 3.4(c)(ii)) which, in the Servicer's reasonable judgment, can be
collected under such Contract, following a default thereunder or upon damage to
or destruction of such Equipment (if such Equipment is not to be replaced in
accordance with Section 3.4(c)(i)), or (ii) 10% or more of a Scheduled Payment
shall have become 180 days delinquent.
LIQUIDATION PROCEEDS: With respect to a Liquidated Contract, all
amounts realized with respect to such Contract (including any insurance proceeds
received with respect to damaged or destroyed Equipment which are not to be
applied to the repair, restoration or replacement of such Equipment) net of (i)
reasonable expenses incurred by or on behalf of the Servicer in connection with
the collection of such Contract and the maintenance, repossession and
disposition of the Equipment (including taxes and insurance premiums, to the
extent in excess of amounts available therefor in the Insurance, Maintenance and
Tax Accounts, as well as attorneys' fees) and (ii) amounts that are required to
be refunded to the Obligor on such Contract; PROVIDED, HOWEVER, that the
Liquidation Proceeds with respect to any Contract shall in no event be less than
zero. The Liquidation Proceeds in respect of any Contract shall be allocated as
follows: (1) with respect to any Loan Contract, all such Liquidation Proceeds
shall be allocated to the Notes and the Equity Certificates; and (2) with
respect to any Lease Contract, such Liquidation Proceeds shall be allocated pro
rata between the Notes and the Equity Certificates, on the one hand, and the
Equipment Certificate, on the other, based upon the Required Payoff Amount for
such Contract and the Book Value of the related Equipment, respectively;
PROVIDED that, in the event the Liquidation Proceeds in respect of any Lease
Contract exceed the sum of the Required Payoff Amount for such Contract and the
Book Value of the related Equipment, any such excess shall be allocated solely
to the Equipment Certificate.
LOAN CONTRACTS: The installment sale contracts, promissory notes,
loan and security agreements and other similar types of receivables listed on
Exhibit A-2 hereto and all rights and obligations under such contracts,
including, without limitation, all monies at any time paid or payable thereon or
in respect thereof from and after the Cut-Off Date (whether in the form of (i)
Scheduled Payments (including those Scheduled Payments due prior to, but not
received as of, the Cut-Off Date, but excluding those Scheduled Payments due on
or after, but received prior to, the Cut-Off Date), (ii) Prepayments, (iii)
payments made after the original term of such contracts, (iv) payments to be
applied by the Servicer to the payment of insurance premiums, maintenance, taxes
or other similar obligations, (v) payments to be retained by the Servicer in
payment of Administrative Fees, or otherwise), and all rights of the secured
party in the related Equipment, Insurance Policies and any other security for
the payment of amounts due under such contracts.
-10-
<PAGE>
MONTHLY RECORDS: All records and data maintained by the Servicer with
respect to the Contracts, including the following with respect to each Contract:
the account number; Obligor name; Obligor address; Obligor phone number;
original term; current remaining term; number of remaining Scheduled Payments:
origination date; first payment date; final scheduled payment date; next payment
due date; date of most recent payment; collateral description; days currently
delinquent; contract extensions to date; amount, if any, of insurance premium
and premium reimbursement collected; amount of the Scheduled Payment; and past
due late charges, if any.
NOTE DISTRIBUTION ACCOUNT: The account designated as such in, and
established and maintained pursuant to, Section 8.04 of the Indenture.
NOTE MAJORITY: As to each class of Notes, Holders of Notes
representing a majority of the Principal Balance of such Class of Notes.
OBLIGOR: The lessee, borrower, purchaser or any other Person or
Persons who are obligated to make payments under a Contract.
OPINION OF COUNSEL: A written opinion of counsel acceptable in form
and substance and from counsel acceptable to the Owner Trustee and, if such
opinion or a copy thereof is required to be delivered to the Indenture Trustee,
to the Indenture Trustee.
ORIGINATORS: AT&T Capital Leasing Services, Inc., AT&T Credit
Corporation, NCR Credit Corp. and AT&T Commercial Finance Corporation (Portland
Division).
OWNER TRUSTEE: , acting not
individually but solely as trustee, or its successor in interest, and any
successor Owner Trustee appointed as provided in the Trust Agreement.
PAYMENT DATE: The day of each calendar month, or if such
day is not a Business Day, the next succeeding Business Day, commencing October
, 1996.
PERSON: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
PLEDGED REVENUES: (i) All Scheduled Payments on the Contracts
received on or after the Cut-Off Date (including all Scheduled Payments due
prior to, but not received as of, the Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the Cut-Off Date); (ii) any
Prepayments received on the Contracts on or after the Cut-Off Date; (iii) the
Purchase Amount of any Contracts purchased by TCC in accordance with Section 2.6
(other than any portion thereof attributable to the Book Value of the
Equipment); (iv) the amount paid by the Depositor to purchase the Contracts
pursuant to Section 5.1 (other than any portion thereof attributable to the Book
Value of the Equipment); (v) that portion of the Liquidation Proceeds received
in respect of any
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Contracts on or after the Cut-Off Date and allocated to the Notes and the Equity
Certificates; and (vi) any earnings on the investment of amounts credited to the
Collection Account and the Note Distribution Account.
PREPAYMENT: With respect to any Collection Period for any Contract, a
voluntary prepayment during such Collection Period of amounts due and owing
under such Contract; PROVIDED that the amount, if any, by which any such
Prepayment exceeds the Required Payoff Amount for such Contract shall not
constitute Pledged Revenues but shall be allocated to the Equipment
Certificateholder.
PRINCIPAL BALANCE: As of any date, (i) when used with respect to a
Class of Notes, the original principal balance of such Class, less all
distributions previously made to such Class in respect of principal, and (ii)
when used with respect to the Equity Certificates, the original principal
balance of such Certificates, less all distributions previously made to such
Certificates in respect of principal.
PURCHASE AGREEMENT: The Purchase and Sale Agreement, dated as of
September 1, 1996, among TCC, the Originators and the Depositor.
PURCHASE AMOUNT: With respect to a Contract required to be purchased
by TCC in accordance with Section 2.6, the sum of (i) the Required Payoff Amount
for such Contract as of the Accounting Date on which such obligation to so
purchase arises, plus (ii) the Book Value of the related Equipment.
PURCHASED CONTRACT: As of any Deposit Date, any Contract which TCC
has purchased as of the related Accounting Date, as required by Section 2.6, and
as to which the Purchase Amount has been deposited in the Collection Account (as
to that portion thereof relating to the Required Payoff Amount for such
Contract) and the Equipment Account (as to that portion thereof, if any,
relating to the Book Value of the related Equipment), as appropriate, by the
Servicer on or before such Deposit Date.
RELATED DOCUMENTS: The Trust Agreement, the Indenture, the
Certificates, the Notes, the Purchase Agreement and the Cash Collateral Account
Agreement. The Related Documents executed by any party are referred to herein
as "such party's Related Documents," "its Related Documents" or by a similar
expression.
REQUIRED PAYOFF AMOUNT: With respect to any Collection Period for any
Contract, the sum of (i) the Scheduled Payment due in such Collection Period,
together with any Scheduled Payments due in prior Collection Periods but not yet
received, plus (ii) the Contract Principal Balance of such Contract (after
taking into account the Scheduled Payment due in such Collection Period).
RESPONSIBLE OFFICER: When used with respect to the Servicer, the
President, any Vice-President or Assistant Vice-President or the Controller of
such Person, or any other officer or employee having similar functions.
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SCHEDULE OF CONTRACTS: Collectively, the schedules of Lease Contracts
and Loan Contracts (which shall be made available to the parties hereto on a
computer disk or other data storage medium) attached hereto as (or described in)
Exhibit A-1 and Exhibit A-2, respectively.
SCHEDULED PAYMENT: With respect to any Collection Period for any
Contract during the term of such Contract (without giving effect to any
end-of-term extensions or renewals thereof), the scheduled payment or payments
due under such Contract in such Collection Period other than those portions of
such payments which, under such Contract, are to be (i) applied by the Servicer
to the payment of insurance premiums, maintenance, taxes and other similar
obligations, or (ii) retained by the Servicer in payment of Administrative Fees.
SERVICER: AT&T Capital Corporation, its successor in interest
pursuant to Section 8.2 or, after any termination of the Servicer upon a
Servicer Termination Event, any successor Servicer.
SERVICER TERMINATION EVENT: An event described in Section 8.1.
SERVICER'S CERTIFICATE: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached hereto as Exhibit B.
SERVICING ACCOUNT: The account established pursuant to Section
4.2(a).
SERVICING FEE: With respect to any Collection Period, the fee payable
to the Servicer for services rendered during such Collection Period, which shall
be equal to one-twelfth of the Servicing Fee Rate multiplied by the Contract
Pool Principal Balance determined as of the last day of the preceding Collection
Period (or, in the case of the Servicing Fee with respect to the Collection
Period commencing on the Cut-Off Date, the Contract Pool Principal Balance as of
the Cut-Off Date).
SERVICING FEE RATE: % per annum.
SUB-SERVICER: The Person named as servicer or sub-servicer in any
agreement between the Servicer and such Person by which such Person is
contractually obligated to perform on the Servicer's behalf all or a part of the
servicing obligations described herein.
TCC: AT&T Capital Corporation, a Delaware corporation.
TOTAL SERVICING FEE: The sum of the Servicing Fee, the Administrative
Fees and any earnings on the investment of amounts in the Servicing Account.
TRUST ACCOUNTS: The Escrow Account, the Collection Account, the Note
Distribution Account, the Servicing Account, the Insurance, Maintenance and Tax
Accounts and such other accounts as may be established in the name of the Issuer
or the
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Trustee pursuant to the Trust Agreement or this Agreement.
TRUST AGREEMENT: The Trust Agreement, dated as of September 1, 1996,
between the Depositor and the Owner Trustee, as the same may be amended and
supplemented from time to time in accordance with the terms thereof.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
SECTION 1.2. USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.3. CALCULATIONS. All calculations of the amount of the
Servicing Fee shall be made on the basis of a 360-day year consisting of twelve
30-day months. All references to the Contract Principal Balance of a Contract
as of any date shall refer to the close of business on such date.
SECTION 1.4. SECTION REFERENCES. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.
SECTION 1.5. NO RECOURSE. No recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or therewith, against any stockholder, officer or
director, as such, of the Depositor, TCC, the Servicer, the Indenture Trustee or
the Owner Trustee or of any predecessor or successor of the Depositor, TCC, the
Servicer, the Indenture Trustee or the Owner Trustee.
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ARTICLE II
CONVEYANCE OF CONTRACTS
SECTION 2.1. CONVEYANCE OF CONTRACTS AND RELATED ASSETS. Subject to
the terms and conditions of this Agreement, the Depositor, pursuant to the
mutually agreed upon terms contained herein, hereby transfers, assigns, and
otherwise conveys to the Issuer, without recourse (but without limitation of its
obligations in this Agreement), all of the right, title and interest of the
Depositor in and to (1) the Contracts, including, without limitation, all monies
at any time paid or payable thereon or in respect thereof from and after the
Cut-Off Date (whether in the form of (i) Scheduled Payments (including those
Scheduled Payments due prior to, but not received as of, the Cut-Off Date, but
excluding those Scheduled Payments due on or after, but received prior to, the
Cut-Off Date), (ii) Prepayments, (iii) payments made after the original term of
such Contracts, (iv) payments to be applied by the Servicer to the payment of
insurance premiums, maintenance, taxes or other similar obligations, (v)
payments to be retained by the Servicer in payment of Administrative Fees, or
otherwise), all rights of the lessor or the secured party, as the case may be,
in the related Equipment (including all rights, if any, the lessor or the
secured party may have against the vendor of the Equipment), Insurance Policies
and any other security for the payment of amounts due under the Contracts, all
funds on deposit from time to time in the Trust Accounts and all investments
therein and proceeds thereof, all items contained in the related Contract Files,
any and all other documents that are kept on file in accordance with the
applicable Originator's customary procedures relating to the Contracts, and all
proceeds of the foregoing, (2) the Purchase Agreement, and (3) the Depositor's
rights (but not its obligations) under the Cash Collateral Account Agreement.
SECTION 2.2. CUSTODY OF CONTRACT FILES.
(a) The Owner Trustee, on behalf of the Issuer, hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Issuer as custodian of the following documents or instruments (with
respect to each Contract), which are, as of the date of execution and delivery
of this Agreement, in the possession of the Servicer or its agents:
(i) The fully executed original of the Contract or a facsimile
copy thereof (together with any agreements modifying the Contract,
including, without limitation, any extension agreements);
(ii) Documents evidencing or related to any Insurance Policy,
or copies thereof; and
(iii) Such documents, if any, that the applicable Originator
keeps on file in accordance with its customary procedures indicating that
the Equipment is owned or leased by the Obligor and subject to the interest
of the lessor or secured party.
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(b) The Servicer agrees to maintain the Contract Files at the
locations where they are currently maintained, or at such other locations as
shall from time to time be identified to the Trustee by written notice. The
Servicer may temporarily move individual Contract Files or any portion thereof
without notice as necessary to conduct collection and other servicing activities
in accordance with its customary practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Equity
Certificateholders, the Equipment Certificateholder, the Owner Trustee, the
Noteholders and the Indenture Trustee, maintain accurate records pertaining
to each Contract to enable it to comply with the terms and conditions of
this Agreement, maintain a current inventory thereof and certify to the
Trustee annually that it continues to maintain possession of such Contract
Files;
(ii) implement written policies and procedures with respect to
persons authorized to have access to the Contract Files and the receipting
for Contract Files taken from their storage area by an employee of the
Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Equity Certificateholders,
the Equipment Certificateholder, the Owner Trustee, the Noteholders and the
Indenture Trustee.
(d) In performing its duties under this Section, the Servicer agrees
to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts owned and/or serviced by it. The
Servicer shall promptly report to the Trustee any failure by it to hold the
Contract Files as herein provided and shall promptly take appropriate action to
remedy any such failure. In acting as custodian of the Contract Files, the
Servicer agrees further not to assert any beneficial ownership interests in the
Contracts or the Contract Files. The Servicer agrees to indemnify the Equity
Certificateholders, the Equipment Certificateholder, the Owner Trustee, the
Noteholders and the Indenture Trustee for any and all liabilities, obligations,
losses, damages, payments, costs or expenses of any kind whatsoever which may be
imposed on, incurred or asserted against the Equity Certificateholders, the
Equipment Certificateholder, the Owner Trustee, the Noteholders or the Indenture
Trustee as the result of any act or omission by the Servicer relating to the
maintenance and custody of the Contract Files; PROVIDED, HOWEVER, that the
Servicer will not be liable for any portion of any such amount resulting from
the negligence or willful misconduct of any Equity Certificateholder, the
Equipment Certificateholder, the Owner Trustee, any Noteholder or the Indenture
Trustee.
SECTION 2.3. TRANSFER OF FUNDS IN ESCROW ACCOUNT. The Indenture
Trustee is hereby directed, upon conveyance of the Contracts and other Trust
Property in accordance with Section 2.1 and satisfaction of the other conditions
contained in Section
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8.05(b) of the Indenture, to transfer all amounts on deposit in the Escrow
Account created under the Indenture to or upon the order of the Depositor.
SECTION 2.4. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. By its
execution of this Agreement, the Depositor makes the following representations
and warranties. Unless otherwise specified, such representations and warranties
speak as of the date of execution and delivery of this Agreement.
(a) ORGANIZATION AND GOOD STANDING. The Depositor has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
transfer the Contracts and the other property transferred to the Issuer.
(b) DUE QUALIFICATION. The Depositor is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property, the conduct of its business and the
performance of its obligations under this Agreement and the Related
Documents requires such qualification.
(c) POWER AND AUTHORITY. The Depositor has the power and
authority to execute and deliver this Agreement and the Depositor's Related
Documents and to carry out the terms hereof and thereof; the Depositor has
full power and authority to transfer and assign the Trust Property to be
transferred and assigned to and deposited with the Issuer by it and has
duly authorized such transfer and assignment to the Issuer by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the Depositor's Related Documents have been duly authorized
by the Depositor by all necessary corporate action.
(d) NO CONSENT REQUIRED. No consent, license, approval or
authorization of, or registration or declaration with, any Person or any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made.
(e) VALID TRANSFER; BINDING OBLIGATIONS. This Agreement effects
a valid transfer and assignment of the Contracts and the other Trust
Property, enforceable against the Depositor and creditors of and purchasers
from the Depositor; and this Agreement and the Depositor's Related
Documents, when duly executed and delivered, shall constitute legal, valid
and binding obligations of the Depositor enforceable in accordance with
their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
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enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The execution and delivery of this Agreement
and the Related Documents, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents shall
not conflict with, result in any breach of any of the terms and provisions
of or constitute (with or without notice or lapse of time, or both) a
default under the certificate of incorporation or by-laws of the Depositor,
or any indenture, agreement, mortgage, deed of trust or other instrument to
which the Depositor is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or
other instrument, other than this Agreement, or violate any law, order,
rule or regulation applicable to the Depositor of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or any
of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Depositor's knowledge, threatened against the Depositor,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Depositor or
its properties (A) asserting the invalidity of this Agreement or any of the
Related Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement or any of the
Related Documents, or (D) seeking to adversely affect the federal income
tax or other federal, state or local tax attributes of the Equity
Certificates or the Notes.
(h) PLACE OF BUSINESS. The principal executive offices of the
Depositor are in __________, and the offices where the Depositor keeps its
records concerning the Contracts and related documents are in _______.
(i) REGISTRATION STATEMENT. No stop order suspending the
effectiveness of the Registration Statement relating to the Notes has been
issued, and no proceeding for that purpose has been instituted or is
threatened, by the Securities and Exchange Commission.
(j) FILINGS. Since the effective date of the Registration
Statement relating to the Notes, there has occurred no event required to be
set forth in an amendment or supplement to the Registration Statement or
Prospectus that has not been so set forth, and there has been no document
required to be filed under the Securities Exchange Act of 1934 and the
rules and regulations of the Securities and Exchange Commission thereunder
that upon such filing would be deemed to be incorporated by reference in
the Prospectus that has not been so filed.
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(k) GOOD TITLE. Immediately prior to the transfer and
assignment of the Contracts to the Issuer pursuant to Section 2.1, the
Depositor had good title thereto and was the sole owner thereof, free of
any Lien.
(l) NO IMPAIRMENT. No person has a participation in or other
right to receive Scheduled Payments under any Contract, and the Depositor
has taken no action to convey any right to any Person that would result in
such Person having a right to Scheduled Payments received with respect to
any Contract.
(m) LAWFUL ASSIGNMENT. No Contract was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the transfer and assignment of such Contract
from the Depositor to the Issuer under this Agreement. Each Contract may
be sold, assigned and transferred by the Depositor to the Issuer without
the consent of, or prior approval from, or any notification to, the
applicable Obligor, other than (i) certain Contracts (which, in proportion
to the aggregate of all of the Contracts, is not material) that require
notification of the assignment to the Obligor, which notification will have
been given by the Servicer not later than 30 days following the Merger
Consummation Date, and (ii) Contracts which require the consent of the
Obligor, which consent has been obtained.
(n) ALL FILINGS MADE. All filings and other actions required to
be made, taken or performed by any Person in any jurisdiction to give the
Issuer a first priority perfected lien or ownership interest in the
Contracts has been made, taken or performed.
SECTION 2.5. NONPETITION COVENANT. None of the Depositor, the
Servicer, the Owner Trustee (in its individual capacity or on behalf of the
Trust) nor TCC shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 2.6. PURCHASE OF CONTRACTS UPON BREACH OF REPRESENTATIONS AND
WARRANTIES. Concurrently with the execution and delivery of this Agreement,
TCC, the Originators and the Depositor have entered into the Purchase Agreement,
the rights of the Depositor under which have been assigned by the Depositor to
the Issuer pursuant to Section 2.1. Under the Purchase Agreement, TCC and the
Originators have made certain representations and warranties to the Depositor
with respect to the Contracts (the "Contract Representations and Warranties").
As of the second Accounting Date following its discovery or its receipt of
notice of any breach of the Contract Representations and Warranties that
materially and adversely affects the value of any Contract (including any
Liquidated Contract), TCC shall, unless such breach shall have been cured in all
material respects, purchase such Contract and the related Equipment from the
Issuer and, on or before the related Deposit Date, TCC shall pay the Purchase
Amount to the Servicer on
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behalf of the Owner Trustee. The obligations of the Depositor with respect to
any such breach of representations and warranties shall be limited to taking any
and all actions necessary to enable the Owner Trustee to enforce directly the
obligations of TCC under the Purchase Agreement. It is understood and agreed
that, except as set forth in the following paragraph, the obligation of TCC to
purchase any Contract, together with the related Equipment, as to which a breach
has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against TCC for such breach available to the Owner
Trustee on behalf of the Equity Certificateholders and the Equipment
Certificateholder or the Indenture Trustee on behalf of the Noteholders.
In addition to the foregoing and notwithstanding whether the Contract
and related Equipment shall have been purchased by TCC, TCC shall indemnify the
Equity Certificateholders, the Equipment Certificateholder, the Owner Trustee,
the Issuer, the Noteholders and the Indenture Trustee against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third party claims arising out of the events or facts giving rise to
such breach.
SECTION 2.7. FURTHER ASSURANCES. Following the Closing Date, the
Depositor shall, at the reasonable request of the Owner Trustee, the Indenture
Trustee or the Servicer, and at the Depositor's expense, execute and deliver
any further instruments of transfer or other documents, and shall take all
such other actions that may be necessary, appropriate or desirable, to fully
convey the Contracts to the Issuer or otherwise to evidence, effectuate or
implement the transactions contemplated hereby. In addition, the Depositor, as
agent for the Issuer, shall defend the Contracts against any and all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to that of the Issuer.
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ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.1. DUTIES OF THE SERVICER. The Servicer is hereby
authorized to act as agent for the Issuer and in such capacity shall manage,
service, administer and make collections on the Contracts, and perform the other
actions required by the Servicer under this Agreement. The Servicer agrees that
its servicing of the Contracts shall be carried out in accordance with customary
and usual procedures of institutions which service equipment lease contracts,
installment sale contracts, promissory notes, loan and security agreements and
other similar types of receivables comparable to the Contracts and, to the
extent more exacting, the degree of skill and attention that the Servicer
exercises from time to time with respect to all comparable such contracts that
it services for itself or others. In performing such duties, so long as TCC is
the Servicer, it shall comply in all material respects with its credit and
collection policies and procedures in effect from time to time. The Servicer
may at any time change its credit and collection policies and procedures:
PROVIDED that any such change shall not materially impair the collectibility of
any Contract nor the Servicer's ability to perform its obligations under this
Agreement. The Servicer's duties shall include, without limitation, billing,
collection and posting of all payments, responding to inquiries of Obligors on
the Contracts, investigating delinquencies, sending invoices to Obligors,
policing the collateral, accounting for collections and furnishing monthly and
annual statements to the Owner Trustee and the Indenture Trustee with respect to
distributions, monitoring the status of Insurance Policies with respect to the
Equipment and performing the other duties specified herein. The Servicer shall
also administer and enforce all material rights and responsibilities of the
lessor or secured party under the Contracts provided for in the Insurance
Policies, to the extent that such Insurance Policies relate to the Contracts,
the Equipment or the Obligors. To the extent consistent with the standards,
policies and procedures otherwise required hereby, the Servicer shall follow its
customary standards, policies and procedures and shall have full power and
authority to do any and all things in connection with such managing, servicing,
administration and collection that it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Servicer is hereby authorized and
empowered by the Owner Trustee to execute and deliver, on behalf of the Equity
Certificateholders, the Equipment Certificateholder and the Issuer or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments, with respect to
the Contracts and with respect to the Equipment; PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Servicer shall not, except pursuant to an
order from a court of competent jurisdiction, release an Obligor from payment of
any Scheduled Payment under any Contract or waive the right to collect any
unpaid Scheduled Payment under any Contract from the Obligor, except that the
Servicer may forego collection efforts if it would forego collection in
accordance with its credit and collection policies and procedures or its
customary business practices. The Servicer is hereby authorized to commence, in
its own name (or in the name of the Issuer, PROVIDED the Servicer has obtained
the Owner Trustee's consent, which consent shall not be unreasonably withheld),
a legal proceeding to enforce a Contract pursuant to Section 3.3 or to commence
or participate in any other legal proceeding (including, without limitation, a
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bankruptcy proceeding) relating to or involving a Contract, an Obligor or the
related Equipment. If the Servicer commences or participates in such a legal
proceeding in its own name, the Issuer shall thereupon be deemed to have
automatically assigned such Contract to the Servicer solely for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Owner Trustee to execute and
deliver in the Servicer's name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with any
such proceeding. The Owner Trustee shall furnish the Servicer with any powers
of attorney and other documents which the Servicer may reasonably request and
which the Servicer deems necessary or appropriate and take any other steps which
the Servicer may deem necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties under this Agreement.
SECTION 3.2. COLLECTION OF CONTRACT PAYMENTS; MODIFICATIONS OF
CONTRACTS.
(a) Consistent with the standards, policies and procedures required
by this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Contracts as and when
the same shall become due, and shall follow such collection procedures as it
follows with respect to all comparable contracts that it services for itself or
others and otherwise act with respect to the Contracts, the Insurance Policies
and the other Trust Property in such manner as will, in the reasonable judgment
of the Servicer, maximize the amount to be received by the Issuer with respect
thereto. The Servicer is authorized in its discretion to waive any
Administrative Fees that may be collected in the ordinary course of servicing
any Contract.
(b) The Servicer may at any time agree to a modification or amendment
of a Contract in order to (i) change the Obligor's regular due date to a date
within the Collection Period in which such due date occurs or (ii) re-amortize
the scheduled payments on the Contract following a partial Prepayment.
(c) The Servicer may grant payment extensions on, or other
modifications or amendments to, a Contract (in addition to those modifications
permitted by Section 3.2(b)) in accordance with its credit and collection
policies and procedures if the Servicer believes in good faith that such
extension, modification or amendment is necessary to avoid a default on such
Contract, will maximize the amount to be received by the Issuer with respect to
such Contract, and is otherwise in the best interests of the Issuer; PROVIDED,
HOWEVER, that:
(i) the aggregate period of all extensions on a Contract shall
not exceed three months; PROVIDED that the Servicer may, in its discretion,
grant extensions beyond three months (but in no event beyond the final
Stated Maturity Date) so long as the aggregate of the Contract Principal
Balances of all Contracts as to which such extensions have been granted
does not exceed % of the Cut-Off Date Contract Pool Principal
Balance;
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(ii) in no event may a Contract be extended beyond the
Collection Period immediately preceding the final Scheduled Maturity Date;
(iii) no such extension, modification or amendment shall be
granted more than 90 days after the date of execution and delivery of this
Agreement if such action would have the effect of causing such Contract to
be deemed to have been exchanged for another Contract within the meaning of
Section 1001 of the Internal Revenue Code of 1986, as amended, or any
proposed, temporary or final Treasury Regulations issued thereunder; and
(iv) no such modification or amendment shall be granted if, as a
result thereof, any of the representations or warranties contained in
clauses [(u), (v), (w) and (x)] of the Contract Representations and
Warranties would cease to be true.
Nothing in this Section 3.2(c) shall be deemed to prevent the Servicer from
extending or renewing, or otherwise accepting the continued performance by the
Obligor under, a Contract after expiration of its stated term.
(d) The Servicer will not allow a Prepayment, in whole or in part, of
any Lease Contract which, by its terms, is not prepayable, unless the amount of
such Prepayment, together with such additional amounts as are (i) available to
the Servicer for the purpose of prepaying such Lease Contract (including the
Servicer's own funds, but excluding any monies otherwise constituting Pledged
Revenues) and (ii) deposited in the Collection Account contemporaneously with
such Prepayment, is at least equal to the Required Payoff Amount for such Lease
Contract.
(e) The Servicer shall remit all payments by or on behalf of the
Obligors (other than amounts constituting Administrative Fees) received by the
Servicer to the Servicing Account as soon as practicable, but in no event later
than the second Business Day after receipt thereof.
SECTION 3.3. REALIZATION UPON CONTRACTS. Consistent with the
standards, policies and procedures required by this Agreement, the Servicer
shall, except as provided in the following paragraph, use commercially
reasonable efforts to repossess (or otherwise comparably convert the ownership
of) and dispose of any Equipment securing a Contract with respect to which the
Servicer has determined that payments thereunder are not likely to be resumed,
as soon as is practicable after default on such Contract but in no event later
than the date on which 10% or more of a Scheduled Payment has become 180 days
delinquent. The Servicer will not be required to repossess (or otherwise
comparably convert the ownership of) any Equipment the repossession of which, in
accordance with the Servicer's credit and collection policies and procedures,
and based on the Servicer's good faith estimate of the value of the Equipment
and its availability, would not be reasonable. The Servicer is authorized to
follow such customary practices and procedures as it shall deem necessary or
advisable, consistent with the standard of care required by Section 3.1, which
practices and procedures may include the sale of the related Equipment at public
or private sale, the submission of claims under an Insurance Policy and other
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actions by the Servicer in order to realize upon such a Contract. The foregoing
is subject to the provision that, in any case in which the Equipment shall have
suffered damage, the Servicer shall not expend funds in connection with any
repair or towards the repossession of such Equipment unless it shall determine
in its reasonable judgment that such repair and/or repossession shall increase
the proceeds of liquidation of the related Contract by an amount greater than
the amount of such expenses. All amounts received upon liquidation of Equipment
shall be remitted by the Servicer to the Servicing Account as soon as
practicable, but in no event later than the second Business Day after receipt
thereof. The Servicer shall be entitled to recover all reasonable expenses
incurred by it in the course of repossessing and liquidating Equipment into cash
proceeds, but only out of the cash proceeds of such Equipment or any deficiency
obtained from the Obligor, which amounts may be retained by the Servicer (and
shall not be required to be deposited as provided in Section 3.2(e)) to the
extent of such expenses. The Servicer shall pay on behalf of the Issuer any
personal property taxes assessed on repossessed Equipment, as well as any sales
or similar taxes on the disposition thereof, and shall be entitled to
reimbursement of any such tax from Liquidation Proceeds with respect to the
related Contract.
Although it is intended that the Servicer dispose of any Equipment in
a commercially reasonable manner with a view to realizing proceeds at least
equal to the fair market value of the Equipment, the Servicer may, in its
discretion, choose to dispose of Equipment through a new lease or in some other
manner which does not result in the timely receipt of Liquidation Proceeds equal
to the fair market value thereof. However, if, under any circumstances, the
Liquidation Proceeds (together with liquidation expenses retained by the
Servicer) derived by the Servicer with respect to any Equipment upon the
disposition thereof is, in the reasonable judgment of the Servicer, less than
the fair market value thereof, the Servicer shall, within two Business Days
after the receipt of such Liquidation Proceeds, deposit to the credit of the
Servicing Account, from its own monies and in addition to such Liquidation
Proceeds, an amount equal to such deficiency. Any such amounts so deposited by
the Servicer shall be treated as additional Liquidation Proceeds with respect to
the related Contract and Equipment.
SECTION 3.4. INSURANCE, MAINTENANCE AND TAXES.
(a) The Servicer shall establish one or more insurance, maintenance
and tax accounts (collectively, the "Insurance, Maintenance and Tax Accounts")
in the name of the Servicer and for the benefit of the respective Obligors. The
Servicer shall deposit into the Insurance, Maintenance and Tax Accounts any
payments made by or on behalf of Obligors which constitute (i) insurance
premiums paid by an Obligor to the lessor or secured party under a Contract
(except for any such payments in respect of insurance premiums which were paid
by the applicable Originator prior to the Cut-Off Date, which payments shall
constitute Scheduled Payments hereunder), (ii) any insurance payments or
recoveries paid by an insurance company or comparable third party and related to
the damage to, or destruction of, the Equipment related to such Contract (unless
paid directly by such insurance company or comparable third party directly to
the Obligor), (iii) any payments made by or on behalf of Obligors which
constitute amounts paid by an Obligor to the lessor or secured party under a
Contract in respect of the maintenance of the related
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Equipment, and (iv) taxes paid by the Obligor with respect to the related
Contract or Equipment (except for any such payments in respect of taxes which
were paid by the applicable Originator prior to the Cut-Off Date, which payments
shall constitute Scheduled Payments hereunder). None of the foregoing payments
shall constitute Pledged Revenues except under the circumstances described in
clause (c)(ii) below.
(b) The Servicer shall withdraw amounts from the Insurance,
Maintenance and Tax Accounts, when and if appropriate, to pay when due (i) all
insurance premiums in the amounts received under clause (a)(i) above, (ii) any
amounts payable under any applicable maintenance contract or otherwise with
respect to the maintenance of the related Equipment in the amounts received
under clause (a)(iii) above, and (iii) all taxes in the amounts received under
clause (a)(iv) above. If the Servicer paid any such insurance premiums,
maintenance costs or taxes from its own funds prior to receipt of the
corresponding amounts from the Obligor, the Servicer shall be entitled to
reimbursement therefor from payments thereafter received from such Obligor.
(c) Amounts on deposit in the Insurance, Maintenance and Tax Accounts
which represent amounts received by the Servicer pursuant to clause (a)(ii)
above shall be applied by the Servicer as follows: (i) if the Obligor purchases
equipment to replace the Equipment that was damaged or destroyed, and such
replacement equipment is (in the reasonable opinion of the Servicer) of
comparable use and equivalent value to the Equipment that was damaged or
destroyed, the Servicer shall release such amount so received from the insurance
company or comparable third party to or at the instructions of the Obligor; and
(ii) if such replacement option is not exercised by the Obligor, then the
Servicer shall treat such amount as Liquidation Proceeds and (A) if the related
Contract is a Loan Contract, transfer such amount from the Insurance,
Maintenance and Tax Accounts to the Collection Account, and (B) if the related
Contract is a Lease Contract, transfer (I) that portion thereof which is
allocable to the Notes and the Equity Certificates (as described in the second
sentence of the definition of "Liquidation Proceeds") from the Insurance,
Maintenance and Tax Account to the Collection Account, and (II) the balance
thereof from the Insurance, Maintenance and Tax Account to the Equipment
Account.
(d) The Servicer may sue to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Issuer. If the
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Issuer under such Insurance Policy to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce an Insurance Policy on the grounds that
it is not a real party in interest or a holder entitled to enforce the Insurance
Policy, the Owner Trustee, on behalf of the Issuer, shall take such steps as the
Servicer deems necessary to enforce such Insurance Policy, including bringing
suit in its name or the name of the Owner Trustee for the benefit of the Equity
Certificateholders and the Equipment Certificateholder and the Indenture Trustee
for the benefit of the Noteholders.
(e) With respect to each Contract, the Servicer shall maintain
customary
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insurance against casualty loss with respect to any Equipment financed by or
leased pursuant to the Contract, to the extent the Contract requires the lessor
or secured party under the Contract to maintain such insurance, and shall
otherwise require the Obligor under the Contract to maintain such insurance, to
the extent the Contract requires that such insurance be maintained by the
Obligor. The Servicer shall not otherwise be liable to the Owner Trustee, the
Indenture Trustee or any Noteholder or Certificateholder for any casualty loss
with respect to any Equipment related to a Contract, except to the extent
otherwise explicitly provided in this Agreement.
[(f) The Servicer shall give prompt written notice to the Indenture
Trustee of the Servicer's failure to pay when due any insurance premium or tax
payment required to be paid pursuant to this Section 3.4 and the reason for such
failure. Upon receipt of any such notice, or if the Indenture Trustee has
otherwise received notice of any such failure to pay an insurance premium or tax
payment, the Trustee shall take such actions as are reasonably necessary
(including the withdrawal of monies, if any, available therefor in the
Insurance, Maintenance and Tax Accounts and payment of such insurance premium or
tax payment) to cause any such amounts to be paid. The Indenture Trustee shall
be permitted to withdraw monies from the Insurance, Maintenance and Tax Accounts
for purposes of performing its obligations under this paragraph, but shall not,
in any event, be required to use its own funds for such purposes.]
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN EQUIPMENT. To the
extent the Servicer's credit and collection policies and procedures in this
regard would so require (it being acknowledged that, in certain instances, such
credit and collection policies and procedures would not so require), the
Servicer shall take such steps as are necessary to maintain perfection of any
security interest created by each Contract in the related Equipment on behalf of
the Issuer, including, but not limited to, obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and continuation
statements as are necessary to maintain the security interest granted by the
Obligors under the respective Contracts. The Owner Trustee hereby authorizes
the Servicer, and the Servicer agrees, to take any and all steps necessary to
re-perfect such security interest on behalf of the Issuer as necessary because
of the relocation of Equipment or for any other reason.
SECTION 3.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF SERVICER.
By its execution and delivery of this Agreement, the Servicer makes the
following representations, warranties and covenants.
(a) The Servicer covenants as follows:
(i) LIENS IN FORCE. The Equipment securing each Contract shall
not be released in whole or in part from any interest the lessor or secured
party may have in such Equipment under the terms of the Contract, except
upon payment in full of the Contract or as otherwise contemplated herein;
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(ii) NO IMPAIRMENT. The Servicer shall do nothing to impair the
rights of the Issuer, the Equity Certificateholders, the Equipment
Certificateholder or the Noteholders in the Contracts, the Insurance
Policies or the other Trust Property; and
(iii) NO AMENDMENTS. The Servicer shall not extend or otherwise
amend the terms of any Contract with respect to the Scheduled Payments
thereon, except (A) in accordance with Section 3.2, or (B) at such time as
the Notes and the Equity Certificates are no longer Outstanding, with the
consent of the Owner Trustee.
(b) The Servicer represents, warrants and covenants as of the date of
execution and delivery of this Agreement:
(i) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, with power, authority and legal right to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement and the Servicer's Related
Documents;
(ii) DUE QUALIFICATION. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business (including
the performance of its obligations under this Agreement and the Servicer's
Related Documents) requires or shall require such qualification;
(iii) POWER AND AUTHORITY. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out the terms
hereof; and the execution, delivery and performance of this Agreement and
the Servicer's Related Documents have been duly authorized by the Servicer
by all necessary corporate action;
(iv) BINDING OBLIGATION. This Agreement and the Servicer's
Related Documents shall each constitute the legal, valid and binding
obligation of the Servicer enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(v) NO VIOLATION. The execution and delivery of this
Agreement, the consummation of the transactions contemplated by this
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Agreement and the Servicer's Related Documents, and the fulfillment of the
terms hereof, shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse of
time, or both) a default under, the articles of incorporation or bylaws of
the Servicer, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Servicer is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement or any Related
Document, or violate any law, order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or any of its properties;
(vi) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Servicer or
its properties (A) asserting the invalidity of this Agreement or any of the
Servicer's Related Documents, (B) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Servicer's Related Documents,
or (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement or any of the
Servicer's Related Documents or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates or the Notes; and
(vii) NO CONSENTS. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the
Servicer's Related Documents.
SECTION 3.7. SUB-SERVICERS. The Servicer may, without the Owner
Trustee's consent, maintain or enter into one or more agreements with
Sub-Servicers for the servicing and administration of the Contracts by such
Sub-Servicers. Notwithstanding the terms or existence of any such agreement
between the Servicer and a Sub-Servicer, the Servicer shall not be relieved of
any of its obligations under this Agreement by reason of such agreement and
shall be obligated to the same extent and under the same terms and conditions as
if the Servicer alone was servicing and administering the Contracts, and neither
the Owner Trustee nor the Indenture Trustee shall have any obligation to deal
with anyone other than the Servicer with respect to the servicing of the
Contracts.
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SECTION 3.8. TOTAL SERVICING FEE; PAYMENT OF EXPENSES BY SERVICER.
On each Payment Date, the Servicer shall be entitled to receive out of the
Collection Account the Servicing Fee for the related Collection Period pursuant
to Section 8.03(i) of the Indenture. The Servicer shall be entitled to retain,
as additional servicing compensation under this Agreement, any Administrative
Fees and any earnings on the investment of amounts in the Servicing Account.
The Servicer shall be required to pay all expenses incurred by it in connection
with its activities under this Agreement (including taxes imposed on the
Servicer and all expenses incurred in connection with reports to Equity
Certificateholders and Noteholders). In addition, the Servicer shall pay to the
Indenture Trustee, and the Indenture Trustee shall be entitled to, certain
annual fees and shall reimburse the Indenture Trustee for all ordinary and
reasonable out-of-pocket expenses incurred or made by it in connection with the
performance of its duties under the Indenture (excluding those incurred or made
in the performance of its duties under Article V of the Indenture, as referred
to in Section 6.07(b) of the Indenture). Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts.
SECTION 3.9. SERVICER'S CERTIFICATE. No later than 10:00 a.m. New
York City time on each Determination Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and each Rating Agency a Servicer's
Certificate executed by a Responsible Officer of the Servicer containing, among
other things, (i) all information necessary to enable the Indenture Trustee to
make the withdrawals and distributions required by Sections 8.03 and 8.06 of the
Indenture (including, for purposes of making withdrawals from the Cash
Collateral Account pursuant to Section 8.06(c) of the Indenture, notice to the
Indenture Trustee of any amounts to be so withdrawn which have not resulted,
directly or indirectly, from delinquencies or defaults, or both, on the
Contracts), (ii) all information necessary to enable the Indenture Trustee to
send the statements to Noteholders and Equity Certificateholders required by
Section 7.05 of the Indenture, and (iii) all information necessary to enable the
Indenture Trustee to reconcile all deposits to, and withdrawals from, the
Collection Account for the related Collection Period and Payment Date, including
the accounting required by Section 4.4. Contracts purchased by TCC on the
related Deposit Date or by the Depositor on the related Accounting Date, and
each Contract which became a Liquidated Contract or which was paid in full
during the related Collection Period, shall be identified by account number (as
set forth in the Schedule of Contracts). A copy of such certificate may be
obtained by any Equity Certificateholder or Noteholder (or by any Note Owner,
upon certification that such Person is a Note Owner and payment of any expenses
associated with the distribution thereof) by a request in writing to the
Indenture Trustee addressed to the Corporate Trust Office.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF SERVICER
TERMINATION EVENT.
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency, on or before March 31 (or 90 days after the end
of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31,
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1997, an officer's certificate signed by any Responsible Officer of the
Servicer, dated as of December 31 (or other applicable date) of the immediately
preceding year, stating that (i) a review of the activities of the Servicer
during the preceding 12-month period (or such other period as shall have elapsed
from the date of execution and delivery of this Agreement to the date of the
first such certificate) and of its performance under this Agreement has been
made under such officer's supervision, and (ii) to such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency, promptly after having obtained knowledge
thereof, but in no event later than two Business Days thereafter, written notice
in an officer's certificate of any event which with the giving of notice or
lapse of time, or both, would become a Servicer Termination Event under Section
8.1(a). The Depositor or the Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Servicer or the Depositor (as applicable) and each Rating
Agency promptly after having obtained knowledge thereof, but in no event later
than two Business Days thereafter, written notice in an officer's certificate of
any event which with the giving of notice or lapse of time, or both, would
become a Servicer Termination Event under any other clause of Section 8.1.
SECTION 3.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer, to deliver to the Owner Trustee,
the Indenture Trustee and each Rating Agency, on or before March 31 (or 90 days
after the end of the Servicer's fiscal year, if other than December 31) of each
year, beginning on March 31, 1997, with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) (or such other
period as shall have elapsed from the date of execution and delivery of this
Agreement to the date of such certificate), a statement (the "Accountant's
Report") addressed to the Board of Directors of the Servicer, to the Owner
Trustee and to the Indenture Trustee, to the effect that such firm has audited
the financial statements of the Servicer and issued its report thereon and that
such audit was made in accordance with generally accepted auditing standards,
and accordingly included such tests of the accounting records and such other
auditing procedures as such firm considered necessary in the circumstances,
including procedures as determined by the Independent Accountants related to (1)
the documents and records concerning the servicing of equipment lease contracts,
installment sale contracts, promissory notes, loan and security agreements
and/or other similar types of receivables under servicing agreements
substantially similar one to another (such statement to have attached thereto a
schedule setting forth the servicing agreements covered thereby, including this
Agreement); and (2) the delinquency and loss statistics relating to the
Servicer's portfolio of equipment lease contracts, installment sale contracts,
promissory notes, loan and security agreements and/or other similar types of
receivables; and except as described in the statement, disclosed no exceptions
or errors in the records relating to the contracts serviced for others that, in
the firm's opinion, generally accepted
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auditing standards requires such firm to report. The Accountants' Report shall
further state that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer's Certificates, and (2) except as
disclosed in the Report, no exceptions or errors in the Servicer's Certificates
so examined were found.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Depositor and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
(c) A copy of the Accountants' Report may be obtained by any Equity
Certificateholder or Noteholder (or by any Note Owner, upon certification that
such Person is a Note Owner and payment of any expenses associated with the
distribution thereof) by a request in writing to the Indenture Trustee addressed
to the Corporate Trust Office.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING CONTRACTS. The Servicer shall provide to representatives of the Owner
Trustee and the Indenture Trustee reasonable access to the documentation
regarding the Contracts. The Servicer shall provide such access to any Equity
Certificateholder or Noteholder (or Note Owner) only in such cases where the
Servicer is required by applicable statutes or regulations (whether applicable
to the Servicer or to such Equity Certificateholder or Noteholder or Note Owner)
to permit such Equity Certificateholder or Noteholder (or Note Owner) to review
such documentation. In each case, such access shall be afforded without charge
but only upon reasonable request and during normal business hours. Nothing in
this Section shall derogate from the obligation of the Servicer to observe any
applicable law, rule or contractual provision with an Obligor prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section. Any Equity
Certificateholder or Noteholder (or Note Owner), by its acceptance of an Equity
Certificate or Note (or by acquisition of its beneficial interest therein), as
applicable, shall be deemed to have agreed to keep confidential and not to use
for its own benefit any information obtained by it pursuant to this Section,
except as may be required by applicable law.
SECTION 3.13. CERTAIN DUTIES OF THE SERVICER UNDER THE TRUST
AGREEMENT. The Servicer shall, and hereby agrees that it will, monitor the
Trust's compliance with all applicable provisions of federal securities laws,
notify the Issuer of any actions to be taken by the Issuer necessary for
compliance with such laws and prepare on behalf of the Issuer all notices,
filings or other documents or instruments required to be filed under such laws.
SECTION 3.14. DUTIES OF THE SERVICER UNDER THE INDENTURE. The
Servicer shall, and hereby agrees that it will, perform on behalf of the Issuer
and the Owner Trustee the following duties of the Issuer or the Owner Trustee,
as applicable, under the Indenture (references are to the applicable Sections in
the Indenture):
(a) the direction to the Paying Agents, if any, to deposit moneys
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with the Indenture Trustee (Section 3.03);
(b) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the Notes
and each other instrument and agreement included in the Trust Estate (Section
3.04);
(c) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and other
instruments, in accordance with Section 3.05 of the Indenture, necessary to
protect the Trust Estate (Section 3.05);
(d) the annual delivery of Opinions of Counsel, in accordance with
Section 3.06 of the Indenture, as to the Trust Estate, and the annual delivery
of the Officers' Certificate and certain other statements, in accordance with
Section 3.09 of the Indenture, as to compliance with the Indenture (Sections
3.06 and 3.09);
(e) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the Indenture
(Section 4.01);
(f) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officers' Certificate
and the obtaining of the Opinion of Counsel and the Independent Certificate
relating thereto (Section 4.01);
(g) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of any
co-trustee or separate trustee (Sections 6.08 and 6.11);
(h) the opening of one or more accounts in the Trust's name, the
preparation of Issuer Orders, Officers' Certificates and Opinions of Counsel and
all other actions necessary with respect to investment and reinvestment of funds
in the Trust Accounts (Sections 8.02, 8.04 and 8.05);
(i) the preparation of Trust Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures (Sections 9.01,
9.02 and 9.03);
(j) the preparation of all Officers' Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the Issuer
to the Indenture Trustee to take any action under the Indenture (Section 11.01);
and
(k) the recording of the Indenture, if applicable (Section 11.15).
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SECTION 3.15. FIDELITY BOND. The Servicer shall maintain (i) a
policy or policies of insurance covering errors and omissions by the Servicer,
and (ii) a fidelity bond. Such policy or policies and such fidelity bond shall
be in such form and amount as is generally customary among persons that service
a portfolio of equipment lease contracts, installment sale contracts, promissory
notes, loan and security agreements and/or other similar types of receivables
having an unpaid balance of at least $100,000,000 and which are generally
regarded as servicers acceptable to institutional investors.
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ARTICLE IV
COLLECTIONS AND DEPOSITS
SECTION 4.1. INITIAL DEPOSIT. On the date of execution and delivery
of this Agreement, the Servicer shall deposit in the Collection Account (i) all
Scheduled Payments and Prepayments of Contracts received by the Servicer on or
after the Cut-Off Date (including those Scheduled Payments due prior to, but not
received as of, the Cut-Off Date, but excluding those Scheduled Payments due on
or after, but received prior to, the Cut-Off Date) and on or prior to the
[fifth] Business Day immediately preceding such date and (ii) all Liquidation
Proceeds (including proceeds of Insurance Policies to be treated as such in
accordance with Section 3.4) realized in respect of the related Equipment and
applied by the Servicer after the Cut-Off Date.
SECTION 4.2. COLLECTIONS.
(a) The Servicer shall establish the Servicing Account in the name of
the Indenture Trustee for the benefit of the Certificateholders and the
Noteholders. The Servicer shall remit to the Servicing Account all payments by
or on behalf of the Obligors on the Contracts (other than amounts constituting
Administrative Fees) and all Liquidation Proceeds (including (1) proceeds of
Insurance Policies to be treated as such in accordance with Section 3.4 and (2)
deficiency amounts paid by the Servicer with respect to the disposition of
Equipment to be treated as such in accordance with the last paragraph of Section
3.3) received by the Servicer, in each case, as soon as practicable, but in no
event later than the second Business Day after receipt thereof. Within five
Business Days after the deposit of such payments and proceeds therein, the
Servicer shall transfer all amounts credited to the Servicing Account on account
of such payments and proceeds (i) to the extent they constitute Pledged
Revenues, to the Collection Account, and (ii) to the extent they represent
amounts allocated to the Equipment Certificateholder, to the Equipment Account.
Notwithstanding the foregoing, the Servicer may utilize an alternative
remittance schedule acceptable to the Servicer if the Servicer provides to the
Indenture Trustee written confirmation from each Rating Agency that such
alternative remittance schedule will not result in the downgrading or withdrawal
by the Rating Agency of the rating then assigned to the Notes or the Equity
Certificates. Amounts from time to time in the Servicing Account may be
invested in such Eligible Investments as the Servicer may determine (taking into
account the timing of the transfer of such amounts to the Collection Account and
the Equipment Account, as aforesaid), and the Servicer shall be entitled to
retain any earnings on such investments as additional servicing compensation
hereunder.
(b) The Servicer shall remit to the Collection Account (i) that
portion of any Purchase Amount relating to the Required Payoff Amount received
by the Servicer upon the purchase by TCC of any Contract pursuant to Section
2.6, and (ii) that portion of the amount paid by the Depositor to purchase the
Contracts pursuant to Section 5.1 as is required to be deposited in the
Collection Account pursuant to such Section.
(c) Notwithstanding the provisions of subsections (a) and (b) hereof,
the
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Servicer will be entitled to be reimbursed from amounts on deposit in the
Collection Account with respect to a Collection Period for amounts previously
deposited in the Collection Account but later determined by the Servicer in good
faith to (i) have resulted from mistaken deposits or postings or checks returned
for insufficient funds, or (ii) be required to be repaid to an Obligor. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Payment Date pursuant to Section 8.03(i) of the Indenture upon certification by
the Servicer of such amounts and the provision of such information to the
Indenture Trustee as may be necessary in the opinion of the Indenture Trustee to
verify the accuracy of such certification.
(d) The Servicer shall remit directly to the Equipment Account (i)
that portion of any Purchase Amount relating to the Book Value received by the
Servicer upon the purchase by TCC of any Contract pursuant to Section 2.6, and
(ii) that portion of the amount paid by the Depositor to purchase the Equipment
pursuant to Section 5.1 as is required to be deposited in the Equipment Account
pursuant to such Section.
SECTION 4.3. APPLICATION OF COLLECTIONS. For the purposes of this
Agreement, all collections for a Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Contract, payments by or on behalf of
the Obligor thereof (other than Administrative Fees with respect to such
Contract, to the extent collected) shall be applied to Scheduled Payments
and Prepayments in accordance with the terms of such Contract and the
Servicer's credit and collection policies and procedures. With respect to
each Liquidated Contract, that portion of the Liquidation Proceeds
allocable to the Notes and the Equity Certificates shall be applied, for
purposes of this Agreement and the Indenture only, to Scheduled Payments
and Prepayment on the Contract as if the Liquidation Proceeds had been paid
by the Obligor on the Accounting Date, and then to any other amounts due
and payable with respect to such Contract. The Servicer shall not be
entitled to any Administrative Fees with respect to a Liquidated Contract
unless the Required Payoff Amount for such Contract has been deposited in
the Collection Account.
(b) With respect to each Contract that has become a Purchased
Contract as of any Deposit Date, that portion of the Purchase Amount
relating to the Required Payoff Amount shall be applied, for purposes of
this Agreement and the Indenture only, to Scheduled Payments and Prepayment
on the Contract as if the Purchase Amount had been paid by the Obligor on
the related Accounting Date. Nothing contained herein shall relieve any
Obligor of any obligation relating to any Contract. All payments by or on
behalf of an Obligor received with respect to any Purchased Contract after
the Accounting Date immediately preceding the Deposit Date on which the
Purchase Amount was paid by TCC, shall be paid to TCC and shall not be
included in Pledged Revenues.
(c) With respect to each Contract that has been purchased by the
Depositor pursuant to Section 5.1, that portion of the purchase price paid
relating
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to the Required Payoff Amount shall be applied, for purposes of this
Agreement and the Indenture only, to Scheduled Payments and Prepayment
on the Contract as if such purchase price had been paid by the Obligor on
the Accounting Date. Nothing contained herein shall relieve any Obligor
of any obligation relating to any Contract. All payments by or on behalf
of an Obligor received with respect to any Contract so purchased after the
Accounting Date on which the purchase price was paid by the Depositor,
shall be paid to the Depositor and shall not be included in the Amount
Available.
SECTION 4.4. NET DEPOSITS. So long as no Servicer Termination Event
shall have occurred and be continuing with respect to the Servicer, the Servicer
may make the remittances to be made by it pursuant to Section 4.2 net of amounts
(which amounts may be netted prior to any such remittance for a Collection
Period) to be distributed to it pursuant to Section 8.03(i) of the Indenture);
PROVIDED, HOWEVER, that the Servicer shall account for all of such amounts in
the related Servicer's Certificate as if such amounts were deposited and
distributed separately; and, PROVIDED, FURTHER, that if an error is made by the
Servicer in calculating the amount to be deposited or retained by it, with the
result that an amount less than required is deposited in the Collection Account,
the Servicer shall make a payment of the deficiency to the Collection Account,
immediately upon becoming aware, or receiving notice from the Indenture Trustee,
of such error.
SECTION 4.5. EXPIRATION OF LEASE CONTRACTS. In the case of any Lease
Contract which has reached its stated expiration date, is not in default and as
to which, in accordance with the terms of such Lease Contract, the lessor
thereunder is entitled to the related Equipment, the Servicer shall take such
action as the Equipment Certificateholder shall direct to vest title to such
Equipment in the Equipment Certificateholder. Any payments thereafter made by
the Obligor in respect of such Equipment, whether on the related Lease Contract
or otherwise, shall be the property of the Equipment Certificateholder or its
designated assignee.
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ARTICLE V
TERMINATION
SECTION 5.1. OPTIONAL PURCHASE OF ALL CONTRACTS; LIQUIDATION OF TRUST
ESTATE.
(a) At such time as the sum of the Aggregate Principal Balance of the
Notes and the Principal Balance of the Equity Certificates is less than 10% of
the Cut-Off Date Contract Pool Principal Balance, the Depositor shall have the
option to purchase the corpus of the Issuer; PROVIDED, HOWEVER, that that
portion of the amount to be paid for such purchase (as set forth in the
following sentence) constituting Pledged Revenues shall, in any event, be
sufficient to pay the full amount of principal and interest then due and payable
on the Notes and the Equity Certificates. To exercise such option, Depositor
shall, on any Accounting Date, pay to the Servicer the aggregate purchase price
for the Contracts (which shall be an amount equal to (i) the sum of the Required
Payoff Amounts for all of the Contracts plus (ii) the Book Value of all related
Equipment), plus the appraised value of any other property (including the right
to receive any future recoveries) held as part of the Issuer, such appraisal to
be conducted by an appraiser mutually agreed upon by the Depositor and the
Indenture Trustee (or, if the Notes are no longer Outstanding, the Owner
Trustee), and shall succeed to all interests in and to the Trust Property. The
fees and expenses related to such appraisal shall be paid by the Depositor. The
Servicer shall immediately deposit the purchase price so paid as follows: (1)
into the Collection Account, that portion thereof paid in respect of the
Required Payoff Amounts of the Contracts, to be distributed in accordance with
Section 10.01 of the Indenture, (2) into the Equipment Account, that portion
thereof paid in respect of the Book Value of the Equipment, and (3) into the
Equity Certificate Distribution Account, the balance thereof, to be distributed
in accordance with Section 5.2 of the Trust Agreement.
(b) Notice of any termination of the Issuer shall be given by the
Servicer to the Owner Trustee and the Indenture Trustee as soon as practicable
after the Servicer has received notice thereof.
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ARTICLE VI
THE DEPOSITOR
SECTION 6.1. LIABILITY OF DEPOSITOR. The Depositor shall be liable
hereunder only to the extent of the obligations in this Agreement specifically
undertaken by the Depositor and the representations made by the Depositor.
SECTION 6.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, DEPOSITOR; AMENDMENT OF CERTIFICATE OF INCORPORATION.
(a) The Depositor shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the Depositor's
business except in accordance with the requirements of this Section. The
certificate of incorporation of any corporation (i) into which the Depositor may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which the Depositor shall be a party, or (iii) succeeding to the business of
Depositor, shall contain provisions relating to limitations on business and
other matters substantively identical to those contained in the Depositor's
certificate of incorporation. Any such successor corporation shall execute an
agreement of assumption of every obligation of the Depositor under this
Agreement and each Related Document and, whether or not such assumption
agreement is executed, shall be the successor to the Depositor under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties to this Agreement. The Depositor shall provide
prompt notice of any merger, consolidation or succession pursuant to this
Section 6.2 to the Owner Trustee, the Indenture Trustee and the Rating Agencies.
Notwithstanding the foregoing, the Depositor shall not merge or consolidate with
any other Person or permit any other Person to become a successor to the
Depositor's business, unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.4 shall
have been breached (for purposes hereof, such representations and warranties
shall speak as of the date of the consummation of such transaction) and no event
that, after notice or lapse of time, or both, would become a Servicer
Termination Event shall have occurred and be continuing, (y) the Depositor shall
have delivered to the Owner Trustee and the Indenture Trustee an officer's
certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
6.2 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (z) the Depositor
shall have delivered to the Owner Trustee and the Indenture Trustee an Opinion
of Counsel, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Issuer in the Trust Property and reciting the details of the filings or
(B) no such action shall be necessary to preserve and protect such interest.
(b) The Depositor hereby agrees that it shall not (i) take any action
prohibited by Article XVI of its certificate of incorporation or (ii) without
the prior written consent of the Owner Trustee and the Indenture Trustee and
without giving prior
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written notice to the Rating Agencies, amend Article III, Article IX, Article
XIV or Article XVI of its certificate of incorporation.
SECTION 6.3. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement. The Depositor shall not be under any obligation
to appear in, prosecute or defend any legal action that is not incidental to its
obligations as transferor of the Contracts under this Agreement and that in its
opinion may involve it in any expense or liability.
SECTION 6.4. DEPOSITOR MAY OWN CERTIFICATES OR NOTES. Each of the
Depositor and any Affiliate of the Depositor may in its individual or any other
capacity become the owner or pledgee of Certificates or Notes with the same
rights as it would have if it were not the Depositor or an Affiliate thereof
except as otherwise specifically provided herein or in the Related Documents.
Certificates or Notes so owned by or pledged to the Depositor or such Affiliate
shall have an equal and proportionate benefit under the provisions of this
Agreement or any Related Document, without preference, priority, or distinction
as among all of the Certificates or Notes; PROVIDED that any Certificates or
Notes owned by the Depositor or any Affiliate thereof, during the time such
Certificates or Notes are owned by them, shall be without voting rights for any
purpose set forth in this Agreement or any Related Document (it being
acknowledged that any Certificate owned by or pledged to
[the Revolver Trust] shall not be deemed to be an Affiliate of the Depositor for
this purpose). The Depositor shall notify the Owner Trustee and the Indenture
Trustee promptly after it or any of its Affiliates become the owner or pledgee
of a Certificate or Note.
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ARTICLE VII
THE SERVICER
SECTION 7.1. LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer (in its capacity as such and, in the case of TCC,
without limitation of its obligations under the Purchase Agreement) shall be
liable hereunder only to the extent of the obligations in this Agreement
specifically undertaken by the Servicer and the representations made by the
Servicer.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, their respective officers,
directors, agents and employees, the Certificateholders and the Noteholders from
and against any and all costs, expenses, losses, claims, damages and liabilities
to the extent that such cost, expense, loss, claim, damage or liability arose
out of, or was imposed upon the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders through the Servicer's breach
of this Agreement, the gross negligence, willful misfeasance or bad faith of the
Servicer in the performance of its duties under this Agreement or by reason of
reckless disregard of its obligations and duties under this Agreement.
(c) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee, in its individual capacity, its officers, directors, agents and
employees, from and against all costs, taxes (other than income taxes on fees
and expenses payable to the Owner Trustee), expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties contained in the Trust Agreement and the
Related Documents, except to the extent that such cost, taxes (other than income
taxes), expense, loss, claim, damage or liability (A) is due to the willful
misfeasance or gross negligence of the Owner Trustee, or (B) arises from the
Owner Trustee's breach of any of its representations or warranties set forth in
Section 7.3 of the Trust Agreement; PROVIDED, HOWEVER, that amounts payable
under this paragraph shall be increased by the amount of income taxes actually
paid by the Owner Trustee in respect of any indemnity payment unless the Owner
Trustee received or can reasonably be expected to receive a tax deduction for
the related loss or cost.
(d) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, with interest
thereon at a rate per annum equal to .
(e) TCC, in its individual capacity, hereby acknowledges that the
indemnification provisions in the Purchase Agreement benefiting the Issuer, the
Owner Trustee and the Indenture Trustee are enforceable by each hereunder.
SECTION 7.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
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OBLIGATIONS OF, THE SERVICER. Following the Merger Consummation Date, the
Servicer shall not merge or consolidate with any other person, convey, transfer
or lease substantially all its assets as an entirety to another Person, or
permit any other Person to become the successor to the Servicer's business
unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be an Eligible Servicer and
shall be capable of fulfilling the duties of the Servicer contained in this
Agreement. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; PROVIDED,
HOWEVER, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section to the Owner Trustee and
the Indenture Trustee. Notwithstanding the foregoing, the Servicer shall not
merge or consolidate with any other Person or permit any other Person to become
a successor to the Servicer's business, unless (a) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 3.6 shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction), (b) the Servicer shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, (c) the Servicer shall have delivered to the Owner Trustee and the
Indenture Trustee an Opinion of Counsel, stating that, in the opinion of such
counsel, either (1) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to preserve
and protect the interest of the Owner Trustee in the Trust Property and reciting
the details of the filings or (2) no such action shall be necessary to preserve
and protect such interest, and (d) the Rating Agency Condition has been
satisfied.
SECTION 7.3. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Certificateholders or
the Noteholders, except as provided in this Agreement, for any action taken or
for refraining from the taking of any action in good faith pursuant to this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of a breach of this Agreement or willful misfeasance, bad faith or gross
negligence (excluding errors in judgment) in the performance of duties, by
reason of reckless disregard of obligations and duties under this Agreement or
any violation of law by the Servicer or such person, as the case may be;
PROVIDED FURTHER, that this provision shall not affect any liability to
indemnify the Owner Trustee and the Indenture Trustee for costs, taxes,
expenses, claims, liabilities, losses or damages paid by the Owner Trustee or
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the Indenture Trustee, each in its individual capacity. The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
the advice of counsel or on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
SECTION 7.4. SERVICER NOT TO RESIGN. Subject to the provisions of
Section 7.2, the Servicer shall not resign from the obligations and duties
imposed on it by this Agreement as Servicer except upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer, and a Note
Majority (or, at such time as the Notes are no longer Outstanding, an Equity
Certificate Majority) does not elect to waive the obligations of the Servicer to
perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered and acceptable to the Owner Trustee and the Indenture Trustee. No
resignation of the Servicer shall become effective until a successor Servicer
that is an Eligible Servicer shall have assumed the responsibilities and
obligations of the Servicer; PROVIDED, HOWEVER, that in the event a successor
Servicer is not appointed within 60 days after the Servicer has given notice of
its resignation and has provided the Opinion of Counsel required by this
Section, the Servicer may petition a court for its removal.
SECTION 7.5. CORPORATE EXISTENCE. The Servicer shall maintain its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation, and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which the failure to so qualify would have an adverse effect on the validity or
enforceability of any Contract or this Agreement or on the ability of the
Servicer to perform its duties under this Agreement.
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ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. SERVICER TERMINATION EVENT. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deposit within the time
periods specified in this Agreement in the Collection Account for
distribution to Equity Certificateholders or Noteholders, or in the
Equipment Account for distribution to the Equipment Certificateholders, any
proceeds or payment required to be so deposited under the terms of this
Agreement (or, if TCC is the Servicer, the Purchase Agreement) that
continues unremedied for a period of five Business Days (three Business
Days with respect to payment of Purchase Amounts) after written notice is
received by the Servicer from the Indenture Trustee or after discovery of
such failure by a Responsible Officer of the Servicer; or
(b) Failure by the Servicer to deliver to the Indenture Trustee
and the Owner Trustee the Servicer's Certificate by the
Business Day prior to the related Payment Date, or failure on the part of
the Servicer to observe its covenants and agreements set forth in Section
7.2; or
(c) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement (or, if TCC is the Servicer, the
Purchase Agreement), which failure (i) materially and adversely affects the
rights of the Issuer, Certificateholders or Noteholders, and (ii) continues
unremedied for a period of 30 days after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the Owner Trustee, the Indenture Trustee or any
Certificateholder or Noteholder; or
(d) (i) The commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law
and such case is not dismissed within 60 days; or (ii) the entry of a
decree or order for relief by a court or regulatory authority having
jurisdiction in respect of the Servicer in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or another present
or future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any
substantial part of their respective properties or ordering the winding up
or liquidation of the affairs of the Servicer; or
(e) The commencement by the Servicer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law,
or the consent by the
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Servicer to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Servicer or of any substantial part of its property or the
making by the Servicer of an assignment for the benefit of creditors or the
failure by the Servicer generally to pay its debts as such debts become due
or the taking of corporate action by the Servicer in furtherance of any of
the foregoing; or
(f) Any representation, warranty or statement of the Servicer
made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material
respect as of the time when the same shall have been made, the
incorrectness of such representation, warranty or statement has a material
adverse effect on the Issuer, Certificateholders or Noteholders, and,
within 30 days after written notice thereof shall have been given to the
Servicer or the Depositor by the Owner Trustee, the Indenture Trustee or
any Certificateholder or Noteholder, the circumstances or condition in
respect of which such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured.
SECTION 8.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a
Servicer Termination Event shall occur and be continuing, the Indenture Trustee
may, and at the direction of a Note Majority (or, at such time as the Notes are
no longer Outstanding, an Equity Certificate Majority or the Equipment
Certificateholder) shall, by notice given in writing to the Servicer and the
Owner Trustee, terminate all of the rights and obligations of the Servicer under
this Agreement. On or after the receipt by the Servicer of such written notice,
all authority, power, obligations and responsibilities of the Servicer under
this Agreement, whether with respect to the Certificates, the Notes, the Trust
Property or otherwise, shall be terminated and automatically shall pass to, be
vested in and become obligations and responsibilities of the Indenture Trustee
(unless and until a successor Servicer is appointed in accordance with Section
8.3); PROVIDED, HOWEVER, that the Indenture Trustee shall have no liability with
respect to any obligation which was required to be performed by the terminated
Servicer prior to the date that the Indenture Trustee becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer. The Indenture Trustee is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination. The terminated Servicer agrees to
cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement,
including, without limitation, the transfer to the Indenture Trustee for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in any of the Trust Accounts or thereafter received with respect to
the Contracts and the delivery to the Indenture Trustee of all Contract Files,
Monthly Records and Collection Records [and a computer tape in readable form as
of the most recent Business Day] containing all information necessary to enable
the Indenture Trustee or a successor Servicer to service the Contracts and the
other Trust Property. The terminated Servicer shall grant the Owner
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Trustee, the Indenture Trustee and the successor Servicer reasonable access to
the terminated Servicer's premises at the terminated Servicer's expense.
SECTION 8.3. INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.2, the Indenture Trustee shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for in this Agreement, and
shall be subject to all the responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Servicer by the terms
and provisions of this Agreement. As compensation therefor, the Indenture
Trustee shall be entitled to receive the Total Servicing Fee. The Owner Trustee
and the Indenture Trustee shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
(b) Notwithstanding the foregoing, the Indenture Trustee may, if it
shall be unwilling to so act, or shall, if it is legally unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any Eligible
Servicer as the successor to the Servicer hereunder in the performance of all or
any part of the responsibilities, duties or liabilities of the Servicer
hereunder. Pending appointment of a successor pursuant to the preceding
sentence, the Indenture Trustee shall act as successor Servicer unless it is
legally unable to do so, in which event the outgoing Servicer shall continue to
act as Servicer until a successor has been appointed and accepted such
appointment.
(c) In connection with such appointment and assumption, the
Indenture Trustee may make such arrangements for the compensation of such
successor out of payments on the Contracts as it and such successor shall agree;
PROVIDED, HOWEVER, that no such monthly compensation shall, without the written
consent of the Depositor and 100% of the Noteholders and the Equity
Certificateholders, exceed the Total Servicing Fee. The Indenture Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession.
(d) If a successor Servicer is acting as Servicer hereunder, it
shall be subject to termination under Section 8.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.
(d) At such time as any successor Servicer (including the Indenture
Trustee) becomes Servicer hereunder, it shall agree to perform all of the
obligations of the Servicer under the Cash Collateral Account Agreement, and
shall take such actions as the parties to the Cash Collateral Account Agreement
may reasonably request to evidence such agreement.
SECTION 8.4. NOTIFICATION TO CERTIFICATEHOLDERS AND NOTEHOLDERS.
Upon any termination of, or appointment of a successor to, the Servicer pursuant
to this Article VIII, the Owner Trustee shall give prompt written notice thereof
to Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency,
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and the Indenture Trustee shall give prompt written notice thereof to
Noteholders at their respective addresses appearing in the Note Register.
SECTION 8.5. WAIVER OF PAST DEFAULTS. A Note Majority (or, at such
time as the Notes are no longer Outstanding, an Equity Certificate Majority or
the Equipment Certificateholder) may waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Servicer
Termination Event arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. AMENDMENT.
(a) This Agreement may be amended by the Depositor, the Servicer, the
Issuer and the Indenture Trustee without the consent of any of the Noteholders
or Equity Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement any provisions in this Agreement that may be inconsistent with any
other provision herein, or (iii) to make any other provisions with respect to
matters or questions arising under this Agreement that are not inconsistent with
the provisions hereof; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of the Noteholders or Equity Certificateholders.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Issuer and the Indenture Trustee with the consent
of an Equity Certificate Majority and a Note Majority (which consent of any
Holder of an Equity Certificate or Note given pursuant to this Section or
pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Equity Certificate or
Note and of any Equity Certificate or Note issued upon the transfer thereof or
in exchange thereof or in lieu thereof whether or not notation of such consent
is made upon the Equity Certificate or Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Holders of
Equity Certificates or Notes; PROVIDED, HOWEVER, that no such amendment shall
(a) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Contracts or distributions required to be
made on any Equity Certificate or Note or the rate of interest payable thereon,
(b) amend any provisions of Section 5.06 or 8.03 of the Indenture in such a
manner as to affect the priority of payment of interest or principal to
Noteholders or Equity Certificateholders, or (c) reduce the aforesaid percentage
required to consent to any such amendment or any waiver hereunder, without the
consent of the Holders of all Equity Certificates or Notes then Outstanding and
affected thereby; and PROVIDED, FURTHER, that no such amendment shall be
effective unless and until the Rating Agency Condition has been satisfied.
(c) Promptly after the execution of any such amendment or consent,
the Owner Trustee or the Indenture Trustee, as appropriate, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder.
(d) It shall not be necessary for the consent of Equity
Certificateholders or Noteholders pursuant to Section 9.1(b) to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents (and any other consents of Equity Certificateholders and
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Equity Certificateholders or Noteholders shall be
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<PAGE>
subject to such reasonable requirements as the Owner Trustee or Indenture
Trustee, as applicable, may prescribe, including the establishment of record
dates.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement, in addition to the Opinion of Counsel referred to in Section 9.2(h).
The Owner Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's own rights, duties or immunities
under this Agreement or otherwise.
SECTION 9.2. PROTECTION OF TITLE TO TRUST PROPERTY.
(a) The Depositor shall execute and file such financing statements
and cause to be executed and filed such continuation and other statements
(including those prepared by the Servicer pursuant to Section 3.14(c)), all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer, the Owner Trustee and the
Indenture Trustee in the Trust Property and in the proceeds thereof; except that
(i) UCC-1 financing statements and continuation statements, listing the Obligor
as debtor and the related Equipment as collateral, need be filed only as
required by Section 3.5; and (ii) no assignments of any such financing
statements relating to the Equipment shall be filed to reflect the assignment of
the Contracts by the Originators to the Depositor and by the Depositor to the
Issuer. The Depositor shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
(b) Neither the Depositor nor the Issuer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Owner Trustee and
the Indenture Trustee at least 60 days' prior written notice thereof, and shall
promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Each of the Depositor, the Servicer and the Issuer shall give the
Owner Trustee and the Indenture Trustee at least 60 days' prior written notice
of any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement. The Servicer shall at all times maintain each office
from which it services Contracts and its principal executive office within the
United States of America.
(d) The Servicer shall maintain accounts and records as to each
Contract accurately and in sufficient detail to permit (i) the reader thereof to
know at any time the status of such Contract, including payments and recoveries
made and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with
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<PAGE>
respect to) each Contract and the amounts from time to time deposited in the
Collection Account in respect of such Contract.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of transfer and assignment under this Agreement of the
Contracts to the Issuer, the Servicer's master computer records (including any
backup archives) that refer to any Contract indicate clearly that the Contract
is owned by the Issuer. Indication of the Trust's ownership of a Contract shall
be deleted from or modified on the Servicer's computer systems when, and only
when, the Contract has been paid in full or purchased by the Depositor or TCC.
(f) Upon receipt by the Servicer of reasonable prior notice, Servicer
shall permit the Owner Trustee, the Indenture Trustee and their respective
agents, at any time during the Servicer's normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Contracts or any other portion of the Trust Property.
(g) The Servicer shall furnish to the Owner Trustee and the Indenture
Trustee at any time upon request a list (which may, at the option of the
Servicer, be on a computer disk or other electronic storage medium) of all
Contracts then held as part of the Issuer, together with a reconciliation of
such list to the Schedule of Contracts and to each of the Servicer's
Certificates furnished before such request indicating removal of Contracts from
the Issuer. Upon request, the Servicer shall furnish a copy of any list to the
Depositor. The Owner Trustee shall hold any such list and Schedule of Contracts
for examination by interested parties during normal business hours at the
Corporate Trust Office upon reasonable notice by such Persons of their desire to
conduct an examination.
(h) The Depositor and the Servicer shall deliver to the Owner Trustee
and the Indenture Trustee simultaneously with the execution and delivery of this
Agreement and of each amendment thereto and upon the occurrence of the events
giving rise to an obligation to give notice pursuant to Section 9.2(b) or (c),
an Opinion of Counsel either (a) stating that, in the opinion of such Counsel,
all financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Issuer and the Indenture Trustee in the Contracts and the other Trust Property,
and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (b) stating that, in the opinion of
such counsel, no such action is necessary to preserve and protect such interest.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee, within 90 days after the beginning of each calendar year beginning with
the first calendar year beginning more than three months after the date of
execution and delivery of this Agreement, an Opinion of Counsel, either (a)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the Indenture Trustee in the
Contracts, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of
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<PAGE>
such counsel, no action shall be necessary to preserve and protect such
interest.
SECTION 9.3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
SECTION 9.4. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Equity
Certificates or the Notes or the respective rights of the Holders thereof.
SECTION 9.5. ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer), this Agreement may not be assigned by the Depositor or the
Servicer without the prior written consent of the Owner Trustee, the Indenture
Trustee, a Note Majority, an Equity Certificate Majority and the Equipment
Certificateholder.
SECTION 9.6. THIRD-PARTY BENEFICIARIES. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 9.7. COUNTERPARTS. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 9.8. INTENTION OF PARTIES. The parties hereto intend that,
in the event that the conveyance of the Contracts and other Trust Assets
pursuant to this Agreement is determined to be made as security for a loan made
by the Issuer, the Equity Certificateholders or the Noteholders to the
Depositor, the Depositor intends that it shall have granted to the Owner Trustee
a first priority security interest in all of the Depositor's right, title and
interest in and to the Trust Property conveyed to the Issuer pursuant to Section
2.1 of this Agreement, and that this Agreement shall constitute a security
agreement under applicable law.
SECTION 9.9. NOTICES. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail-return
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<PAGE>
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of TCC, the Depositor or the Servicer, at the following address:
, with copies to:
, (b) in the case of the Owner Trustee,
at
, and (c) in the case of the Indenture Trustee, at
,
or at such other address as shall be designated by any such party in a written
notice to the other parties.
SECTION 9.10. Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by , not
individually or personally but solely as Owner Trustee of the Issuer under the
Trust Agreement, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by ________________ but is made and
intended for the purpose for binding only the Issuer, (c) nothing herein
contained shall be construed as creating any liability on ____________
_________, individually or personally, to perform any covenant either expressed
or implied contained herein, all such liability, if any, being expressly waived
by the parties to this Agreement and by any person claiming by, through or under
them and (d) under no circumstances shall ________________ be personally liable
for the payment of any indebtedness or expenses of the Issuer or be liable for
the breach or failure of any obligation, representation, warranty or covenant
made or undertaken by the Issuer under this Agreement or any related documents.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, the Issuer, the Depositor, TCC, the Servicer and the
Indenture Trustee have caused this Transfer and Servicing Agreement to be duly
executed by their respective officers as of the day and year first above
written.
ISSUER:
CAPITA EQUIPMENT RECEIVABLES
TRUST 1996-1
By ,
----------------------------------
not in its individual capacity but
solely as Owner Trustee
By
----------------------------------
Name:
Title:
DEPOSITOR:
ANTIGUA FUNDING CORPORATION
By
----------------------------------
Name:
Title:
AT&T CAPITAL CORPORATION
In its individual capacity and as
Servicer
By
----------------------------------
Name:
Title:
INDENTURE TRUSTEE:
---------------------------------------
not in its individual capacity but
solely as Indenture Trustee
By
----------------------------------
Name:
Title:
-52-
<PAGE>
EXHIBIT A-1
SCHEDULE OF LEASE CONTRACTS
A-2-53
<PAGE>
EXHIBIT A-2
SCHEDULE OF LOAN CONTRACTS
A-2-54
<PAGE>
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
B-55
<PAGE>
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
____% RECEIVABLE-BACKED NOTES, CLASS A
____% RECEIVABLE-BACKED NOTES, CLASS B
____%RECEIVABLE-BACKED NOTES, CLASS C
INDENTURE
DATED AS OF SEPTEMBER ___, 1996
-------------------------------------
-------------------------------------
TRUSTEE
<PAGE>
CROSS REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.10
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.2
(a)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08; 6.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.12
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.02
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.04
(b)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.04
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.04
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.04
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.03
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.06; 11.15
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05; 11.05
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . . 1.01
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.08
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.03
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.07
1Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
2N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions and Incorporation by Reference . . . . . . . 3
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.02. Incorporation by Reference of Trust Indenture Act . 23
SECTION 1.03. Rules of Construction . . . . . . . . . . . . . . . 23
ARTICLE II The Notes . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.01. Form . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.02. Execution, Authentication and Delivery . . . . . . 25
SECTION 2.03. Temporary Notes . . . . . . . . . . . . . . . . . . 26
SECTION 2.04. Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes . . . . 27
SECTION 2.06. Person Deemed Owner . . . . . . . . . . . . . . . . 28
SECTION 2.07. Payment of Principal and Interest; Defaulted
Interest . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.08. Cancellation . . . . . . . . . . . . . . . . . . . 29
SECTION 2.09. Book-Entry Notes . . . . . . . . . . . . . . . . . 30
SECTION 2.10. Notices to Depository . . . . . . . . . . . . . . . 31
SECTION 2.11. Definitive Notes . . . . . . . . . . . . . . . . . 31
SECTION 2.12. Calculations . . . . . . . . . . . . . . . . . . . 31
ARTICLE III Covenants . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.01. Payment of Principal and Interest . . . . . . . . . 32
SECTION 3.02. Maintenance of Office or Agency . . . . . . . . . . 32
SECTION 3.03. Money for Payments To Be Held in Trust . . . . . . 32
SECTION 3.04. Existence . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.05. Protection of Trust Estate . . . . . . . . . . . . 34
SECTION 3.06. Opinions as to Trust Estate . . . . . . . . . . . . 35
SECTION 3.07. Performance of Obligations; Servicing of Contracts 35
SECTION 3.08. Negative Covenants . . . . . . . . . . . . . . . . 36
SECTION 3.09. Annual Statement as to Compliance . . . . . . . . . 37
SECTION 3.10. Issuer May Consolidate or Merge Only on
Certain Terms . . . . . . . . . . . . . . . . . . . 38
SECTION 3.11. Successor or Transferee . . . . . . . . . . . . . . 40
SECTION 3.12. No Other Business . . . . . . . . . . . . . . . . . 40
SECTION 3.13. No Borrowing . . . . . . . . . . . . . . . . . . . 40
SECTION 3.14. Servicer's Obligations . . . . . . . . . . . . . . 40
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities . 40
SECTION 3.17. Restricted Payments . . . . . . . . . . . . . . . . 41
SECTION 3.18. Notice of Events of Default . . . . . . . . . . . . 41
SECTION 3.19. Further Instruments and Acts . . . . . . . . . . . 41
SECTION 3.20. Compliance with Laws . . . . . . . . . . . . . . . 41
SECTION 3.21. Amendments of Transfer and Servicing Agreement
and Trust Agreement . . . . . . . . . . . . . . . . 42
- -3-
<PAGE>
ARTICLE IV Satisfaction and Discharge . . . . . . . . . . . . . . . 43
SECTION 4.01. Satisfaction and Discharge of Indenture . . . . . . 43
SECTION 4.02. Application of Trust Money . . . . . . . . . . . . 44
SECTION 4.03. Repayment of Moneys Held by Paying Agent . . . . . 44
SECTION 4.04. Release of Trust Estate . . . . . . . . . . . . . . 45
ARTICLE V Remedies . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.01. Events of Default . . . . . . . . . . . . . . . . . 46
SECTION 5.02. Rights upon Event of Default . . . . . . . . . . . 47
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee; Authority of Trustee . . . . . . . . . 47
SECTION 5.04. Remedies . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.05. Optional Preservation of the Contracts . . . . . . 50
SECTION 5.06. Priorities . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.07. Limitation of Suits . . . . . . . . . . . . . . . . 51
SECTION 5.08. Unconditional Rights of Noteholders To Receive . .
Principal and Interest . . . . . . . . . . . . . . 52
SECTION 5.09. Restoration of Rights and Remedies . . . . . . . . 52
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . 53
SECTION 5.11. Delay or Omission Not a Waiver . . . . . . . . . . 53
SECTION 5.12. Control by Noteholders . . . . . . . . . . . . . . 53
SECTION 5.13. Waiver of Past Defaults . . . . . . . . . . . . . . 53
SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . . 54
SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . . 54
SECTION 5.16. Action on Notes . . . . . . . . . . . . . . . . . . 54
SECTION 5.17. Performance and Enforcement of Certain Obligations 55
ARTICLE VI The Trustee . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 6.01. Duties of Trustee . . . . . . . . . . . . . . . . . 56
SECTION 6.02. Rights of Trustee . . . . . . . . . . . . . . . . . 58
SECTION 6.03. Individual Rights of Trustee . . . . . . . . . . . 59
SECTION 6.04. Trustee's Disclaimer . . . . . . . . . . . . . . . 59
SECTION 6.05. Notice of Defaults . . . . . . . . . . . . . . . . 60
SECTION 6.06. Reports by Trustee to Holders . . . . . . . . . . . 60
SECTION 6.07. Compensation and Indemnity . . . . . . . . . . . . 60
SECTION 6.08. Replacement of Trustee . . . . . . . . . . . . . . 60
SECTION 6.09. Successor Trustee by Merger . . . . . . . . . . . . 62
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee . . . 62
SECTION 6.11. Eligibility; Disqualification . . . . . . . . . . . 64
SECTION 6.12. Preferential Collection of Claims Against Issuer . 64
SECTION 6.13. Representations and Warranties of the Trustee . . . 64
SECTION 6.14. Servicer's Obligations . . . . . . . . . . . . . . 64
- -4-
<PAGE>
ARTICLE VII Noteholders' Lists and Reports . . . . . . . . . . . . . 65
SECTION 7.01. Issuer To Furnish Trustee Names and Addresses
to Noteholders . . . . . . . . . . . . . . . . . . 65
SECTION 7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . 65
SECTION 7.03. Reports by Issuer . . . . . . . . . . . . . . . . . 65
SECTION 7.04. Reports by Trustee . . . . . . . . . . . . . . . . 66
SECTION 7.05. Statements to Noteholders and Equity
Certificateholders . . . . . . . . . . . . . . . . 66
ARTICLE VIII Trust Accounts, Disbursements and Releases . . . . . . . 69
SECTION 8.01. Collection of Money . . . . . . . . . . . . . . . . 69
SECTION 8.02. Collection Account . . . . . . . . . . . . . . . . 69
SECTION 8.03. Distributions . . . . . . . . . . . . . . . . . . . 69
SECTION 8.04. Note Distribution Account . . . . . . . . . . . . . 70
SECTION 8.05. Escrow Account . . . . . . . . . . . . . . . . . . 71
SECTION 8.06. Cash Collateral Account . . . . . . . . . . . . . . 72
SECTION 8.07. General Provisions Regarding Trust Accounts and
Cash Collateral Account . . . . . . . . . . . . . 73
ARTICLE IX Supplemental Indentures . . . . . . . . . . . . . . . . . 76
SECTION 9.01. Supplemental Indentures Without Consent of . . . .
Noteholders or Equity Certificateholders . . . . . 76
SECTION 9.02. Supplemental Indentures With Consent of . . . . . .
Noteholders and Equity Certificateholders . . . . . 77
SECTION 9.03. Execution of Supplemental Indentures . . . . . . . 79
SECTION 9.04. Effect of Supplemental Indenture . . . . . . . . . 79
SECTION 9.05. Conformity With Trust Indenture Act . . . . . . . . 79
SECTION 9.06. Reference in Notes to Supplemental Indentures . . . 80
ARTICLE X Redemption of Notes . . . . . . . . . . . . . . . . . . . 81
SECTION 10.01. Redemption . . . . . . . . . . . . . . . . . . . . 81
SECTION 10.02. Form of Redemption Notice . . . . . . . . . . . . . 81
SECTION 10.03. Notes Payable on Redemption Date . . . . . . . . . 82
ARTICLE XI Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.01. Compliance Certificates and Opinions, etc.. . . . . 83
SECTION 11.02. Form of Documents Delivered to Trustee . . . . . . 85
SECTION 11.03. Acts of Noteholders . . . . . . . . . . . . . . . . 86
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating
Agencies . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.05. Notices to Noteholders; Waiver . . . . . . . . . . 87
SECTION 11.06. Alternate Payment and Notice Provisions . . . . . . 88
SECTION 11.07. Conflict with Trust Indenture Act . . . . . . . . . 88
SECTION 11.08. Effect of Headings and Table of Contents . . . . . 88
SECTION 11.09. Successors and Assigns . . . . . . . . . . . . . . 88
SECTION 11.10. Severability . . . . . . . . . . . . . . . . . . . 88
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SECTION 11.11. Benefits of Indenture . . . . . . . . . . . . . . . 88
SECTION 11.12. Legal Holidays . . . . . . . . . . . . . . . . . . 89
SECTION 11.13. Governing Law . . . . . . . . . . . . . . . . . . . 89
SECTION 11.14. Counterparts . . . . . . . . . . . . . . . . . . . 89
SECTION 11.15. Recording of Indenture . . . . . . . . . . . . . . 89
SECTION 11.16. Trust Obligation . . . . . . . . . . . . . . . . . 89
SECTION 11.17. No Petition . . . . . . . . . . . . . . . . . . . . 89
SECTION 11.18. Inspection . . . . . . . . . . . . . . . . . . . . 90
SECTION 11.19. Limitation of Liability . . . . . . . . . . . . . . 90
Testimonium, Signatures and Seals. . . . . . . . . . . . . . . . . . . . 91
Exhibit A Schedule of Contracts
Exhibit B Form of Depository Agreement
Exhibit C-1 Form of Class A Note
Exhibit C-2 Form of Class B Note
Exhibit C-3 Form of Class C Note
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INDENTURE, dated as of September ___, 1996, between CAPITA EQUIPMENT
RECEIVABLES TRUST 1996-1, a trust formed pursuant to the laws of the State of
New York (the "Issuer"), and ___________________________, a ___________________,
in its capacity as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's ______%
Receivable-Backed Notes, Class A (the "Class A Notes"), ______%
Receivable-Backed Notes, Class B (the "Class B Notes") and ______%
Receivable-Backed Notes, Class C (the "Class C Notes" and, together with the
Class A Notes and the Class B Notes, the "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer hereby Grants to the
Trustee at the Closing Date, on behalf of and for the benefit of the Noteholders
to secure the performance of the Secured Obligations, the following
(collectively, the "Trust Estate"):
GRANTING CLAUSE FIRST
All rights, title, interest and privileges of the Issuer in and to:
(a) the amounts on deposit in (and Eligible Investments allocated to)
the Escrow Account;
(b) the Contracts and (subject to the rights of the Equipment
Certificateholder therein, as set forth in the Transfer and Servicing
Agreement) the related Equipment (including all rights, if any, the Issuer
may have against vendors of the Equipment);
(c) the Pledged Revenues;
(d) the Trust Accounts;
(e) the Cash Collateral Account;
(f) the Transfer and Servicing Agreement;
(g) the Purchase Agreement; and
(h) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or
under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion,
voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivables, 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, instruments and other property which at any
time constitute all or part of or are included in the proceeds of any of
the foregoing.
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GRANTING CLAUSE SECOND
All other property of every name and nature from time to time
hereafter by delivery or by writing of any kind conveyed, pledged, assigned or
transferred, as and for additional security hereunder by the Issuer or by anyone
in its behalf or with its written consent to the Trustee, which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof.
The Trustee, for the benefit of the Holders of the Notes, acknowledges such
Grant. The Trustee, on behalf of the Holders of the Notes, accepts the trusts
under this Indenture in accordance with the provisions of this Indenture and
agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
All terms defined in the Transfer and Servicing Agreement, the Trust
Agreement or the Cash Collateral Account Agreement (each as defined below) shall
have the same meaning in this Indenture. Except as otherwise specified herein
or as the context may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Indenture.
"ACCOUNTING DATE" means, with respect to a Payment Date, the last day
of the related Collection Period.
"ACT" has the meaning specified in Section 11.03(a).
"AFFILIATE" means, 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 PRINCIPAL BALANCE" means, as of any date, the aggregate of
the Principal Balances of each Class of Notes.
"AMOUNT AVAILABLE" means, with respect to any Payment Date, the sum of
(i) the Available Pledged Revenues for such Payment Date, and (ii) that portion
of the balance in the Cash Collateral Account available for withdrawal by the
Trustee in accordance with Section 8.06(c).
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"AVAILABLE CASH COLLATERAL AMOUNT" means, with respect to a Payment
Date, the amount of funds equal to the lesser of (i) the amount on deposit in
the Cash Collateral Account (determined (a) exclusive of any net investment
earnings thereon, and (b) before giving effect to any deposit to be made to or
withdrawals from the Cash Collateral Account with respect to such Payment Date),
and (ii) the Requisite Cash Collateral Amount.
"AVAILABLE PLEDGED REVENUES" means, with respect to any Payment Date,
the sum of (i) the Related Collection Period Pledged Revenues for such Payment
Date, (ii) all
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Purchase Amounts (other than any portion thereof attributable to the Book Value
of the Equipment) on deposit in the Collection Account as of the preceding
Deposit Date, (iii) the amount paid by the Depositor to purchase the Contracts
and the Equipment pursuant to Section 5.1 of the Transfer and Servicing
Agreement (other than any portion thereof attributable to the Book Value of the
Equipment) on deposit in the Collection Account as of the preceding Deposit
Date, (iv) all net income from investments of funds in the Collection Account
and the Note Distribution Account during the related Collection Period, and (v)
to the extent necessary to pay the Note Interest Distributable Amount and the
Equity Certificate Interest Distributable Amount for such Payment Date, the
Current Collection Period Pledged Revenues for such Payment Date.
"BOOK-ENTRY NOTE" means any Note registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"BUSINESS DAY" means any day (other than a Saturday, Sunday or legal
holiday) on which commercial banking institutions in New York, New York, and
are open for regular business.
"CASH COLLATERAL ACCOUNT" means the Eligible Account established and
maintained by the Trustee in accordance with Section 8.06.
"CASH COLLATERAL ACCOUNT AGREEMENT" means the Loan Agreement, dated as
of September ____________ 1996, among the Depositor, the Owner Trustee, the
Trustee, the Cash Collateral Account Lenders and the Cash Collateral Account
Lenders' Agent, as the same may be amended, supplemented or otherwise modified
in accordance with the terms thereof.
"CASH COLLATERAL ACCOUNT LENDERS" means the Depositor and the other
parties identified as lenders in the Cash Collateral Account Agreement.
"CASH COLLATERAL ACCOUNT LENDERS' AGENT" means the party identified as
agent for the Cash Collateral Account Lenders in the Cash Collateral Account
Agreement.
"CLASS" means, when used with respect to the Notes, all Notes of a
given Class.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, the excess, if any, of the Class A Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class A Notes on such preceding Payment Date, plus,
to the extent permitted by law, one month's interest on such excess at the Class
A Interest Rate, computed on the basis of a 360-day year comprised of twelve
30-day months.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of the Class A Monthly Interest Distributable Amount and
the
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Class A Interest Carryover Shortfall for such Payment Date.
"CLASS A INTEREST RATE" means ______% per annum.
"CLASS A MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, one month's interest (or, in the case of the first interest
period, interest accrued from and including ___________________________ to but
excluding October _______, 1996) at the Class A Interest Rate on the Principal
Balance of the Class A Notes on the immediately preceding Payment Date (or, in
the case of the first interest period, on the Closing Date), after giving effect
to all payments of principal to Class A Noteholders on or prior to such
immediately preceding Payment Date, computed on the basis of a 360-day year
comprised of twelve 30-day months.
"CLASS A NOTES" means the ______% Receivable-Backed Notes, Class A,
substantially in the form of Exhibit C-1.
"CLASS A SCHEDULED MATURITY DATE" means _______________________ (or,
if such day is not a Business Day, the next succeeding Business Day thereafter).
"CLASS B INTEREST CARRYOVER SHORTFALL"means, with respect to any
Payment Date, the excess, if any, of the Class B Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class B Notes on such preceding Payment Date, plus,
to the extent permitted by law, one month's interest on such excess at the Class
B Interest Rate, computed on the basis of a 360-day year comprised of twelve
30-day months.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of the Class B Monthly Interest Distributable Amount and
the Class B Interest Carryover Shortfall for such Payment Date.
"CLASS B INTEREST RATE" means ______% per annum.
"CLASS B MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, one month's interest (or, in the case of the first interest
period, interest accrued from and including __________________________ to but
excluding October _________, 1996) at the Class B Interest Rate on the Principal
Balance of the Class B Notes on the immediately preceding Payment Date (or, in
the case of the first interest period, on the Closing Date), after giving effect
to all payments of principal to Class B Noteholders on or prior to such
immediately preceding Payment Date, computed on the basis of a 360-day year
comprised of twelve 30-day months.
"CLASS B NOTES" means the ______% Receivable-Backed Notes, Class B,
substantially in the form of Exhibit C-2.
"CLASS B SCHEDULED MATURITY DATE" means ______________________ (or, if
such day is not a Business Day, the next succeeding Business Day thereafter).
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"CLASS C INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, the excess, if any, of the Class C Interest Distributable Amount
for the preceding Payment Date over the amount that was actually distributed in
respect of interest on the Class C Notes on such preceding Payment Date, plus,
to the extent permitted by law, one month's interest on such excess at the Class
C Interest Rate, computed on the basis of a 360-day year comprised of twelve
30-day months.
"CLASS C INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of the Class C Monthly Interest Distributable Amount and
the Class C Interest Carryover Shortfall for such Payment Date.
"CLASS C INTEREST RATE" means the ______% per annum.
"CLASS C MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, one month's interest (or, in the case of the first interest
period, interest accrued from and including ____________________________ to but
excluding October ____, 1996) at the Class C Interest Rate on the Principal
Balance of the Class C Notes on the immediately preceding Payment Date (or, in
the case of the first interest period, on the Closing Date), after giving effect
to all payments of principal to Class C Noteholders on or prior to such
immediately preceding Payment Date, computed on the basis of a 360-day year
comprised of twelve 30-day months.
"CLASS C NOTES" means the ______% Receivable-Backed Notes, Class C,
substantially in the form of Exhibit C-3.
"CLASS C SCHEDULED MATURITY DATE" means ___________________ (or, if
such day is not a Business Day, the next succeeding Business Day thereafter).
"CLOSING DATE" means September __, 1996.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" means the Eligible Account or Accounts
established and maintained by the Trustee in accordance with Section 8.02.
"COLLECTION PERIOD" means, with respect to any Payment Date, the
calendar month preceding the month in which such Payment Date occurs (such
calendar month being referred to as the "related" Collection Period with respect
to such Payment Date). With respect to an Accounting Date, the calendar month
in which such Accounting Date occurs is referred to herein as the "related"
Collection Period to such Accounting Date.
"CONTRACT POOL PRINCIPAL BALANCE" means, with respect to any Payment
Date, the sum of the Contract Principal Balances (computed as of the related
Accounting Date) for all Contracts.
"CONTRACT PRINCIPAL BALANCE" means, as of any Accounting Date:
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(i) in the case of a Lease Contract, the present value of the unpaid
Scheduled Payments due on such Lease Contract after such Accounting Date
(excluding all Scheduled Payments due on or prior to, but not received as
of, such Accounting Date, as well as any Scheduled Payments due after, but
received as of, such Accounting Date) discounted monthly at the rate of
___% per annum (assuming, for purposes of such calculation, that each
Scheduled Payment is due on the last day of the applicable Collection
Period); and
(ii) in the case of a Loan Contract, the unpaid principal balance of
such Loan Contract as of such Accounting Date (after giving effect to any
Scheduled Payments due on or prior to such Accounting Date, whether or not
received, as well as any Prepayments, and any Scheduled Payments due after
such Accounting Date, received as of such Accounting Date);
PROVIDED that (a) for purposes of computing the Monthly Principal Amount for a
given Payment Date (as well as all Payment Dates thereafter), the Contract
Principal Balance of any Contract which became a Liquidated Contract during the
related Collection Period or was required to be purchased by TCC as of the last
day of the related Collection Period in accordance with Section 2.6 of the
Transfer and Servicing Agreement, will be deemed to be zero on and after the
last day of such Collection Period, and (b) for purposes of computing the
Requisite Cash Collateral Amount for a given Payment Date (as well as all
Payment Dates thereafter), the Contract Principal Balance of any Contract which
became a Liquidated Contract (other than by virtue of clause (ii) of the
definition thereof) during the related Collection Period or became a Purchased
Contract as of the related Deposit Date, will be deemed to be zero on and after
the last day of the related Collection Period.
"CONTRACTS" means the Lease Contracts and the Loan Contracts.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at date of the execution of this Agreement is located at _________
________________________________, Attention: Corporate Trust Department; or at
such other address as the Trustee may designate from time to time by notice to
the Noteholders and the Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor Trustee will notify the
Noteholders and the Issuer).
"CURRENT COLLECTION PERIOD PLEDGED REVENUES" means, with respect to
any Payment Date, the amount of Pledged Revenues in the Collection Account as of
the preceding Deposit Date which were received by the Servicer after the related
Collection Period, including all Liquidation Proceeds so received but excluding
any Purchase Amounts.
"CURRENT REALIZED LOSSES" means, with respect to any Payment Date, the
aggregate Liquidation Losses of all Contracts that became Liquidated Contracts
during the related Collection Period.
"CUT-OFF DATE" means September 1, 1996.
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"CUT-OFF DATE CONTRACT POOL PRINCIPAL BALANCE" is $________.
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEPOSIT DATE" means, with respect to any Collection Period, the
Business Day immediately preceding the related Determination Date.
"DEFINITIVE NOTES" means any Note evidenced by a definitive, fully
registered Note and any Note issued in lieu of a Book-Entry Note pursuant to
Section 2.09.
"DEPOSITOR" means Antigua Funding Corporation, a Delaware corporation.
"DEPOSITORY" means the initial Depository, The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of
$________ in aggregate principal amount of the Class A Notes, $________ in
aggregate principal amount of the Class B Notes and $________ in aggregate
principal amount of the Class C Notes as of the Closing Date, and any permitted
successor depository. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"DEPOSITORY AGREEMENT" means the agreement among the Issuer, the
Trustee and The Depository Trust Company, as the initial Depository, dated as of
the Closing Date, relating to the Notes, substantially in the form of Exhibit B.
"DEPOSITORY PARTICIPANT" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"DETERMINATION DATE" means, with respect to any Collection Period, the
__________ Business Day immediately preceding the related Payment Date.
"DUFF & PHELPS" means Duff & Phelps Credit Rating Co., or any
successor thereto.
"ELIGIBLE ACCOUNT" means (i) an account maintained at an Eligible
Institution; (ii) an account or accounts the deposits in which are fully insured
by either the Bank Insurance Fund or the Savings Association Insurance Fund of
the FDIC; (iii) a trust account (which shall be a "segregated trust account")
maintained with the corporate trust department of a federal or state chartered
depository institution or trust company with trust powers and acting in its
fiduciary capacity for the benefit of the Trustee, which depository institution
or trust company (or, if such depository institution or trust company is a
subsidiary of a bank holding company, such bank holding company) shall have
capital and surplus of not less than $50,000,000 and the securities of such
depository institution or trust company (or, if such depository institution or
trust company is a subsidiary of a bank holding company and has no securities
which are rated, the securities of such bank holding company) shall have a
credit rating from each of the Rating Agencies
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(if rated by such Rating Agency) in one of its generic credit rating categories
which signifies investment grade; or (iv) an account that will not cause any
Rating Agency to downgrade or withdraw its then-current rating assigned to the
Notes or the Equity Certificates, as confirmed in writing by such Rating Agency.
"ELIGIBLE INSTITUTION" means any depository institution (which may be
the Trustee or an Affiliate of the Trustee) organized under the laws of the
United States or any state, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund of the FDIC, which is subject to
supervision and examination by federal or state authorities and whose short-term
deposits, commercial paper or other short-term debt obligations have been rated
at least P-1 by Moody's, A-1+ by S&P, F-1 by Fitch (if rated by Fitch) and D-1
by Duff & Phelps (if rated by Duff & Phelps) or whose unsecured long-term debt
has been rated in one of the two highest rating categories by each Rating Agency
(if rated by such Rating Agency).
"ELIGIBLE INVESTMENTS" means any one or more of the following types of
investments:
(i) direct obligations of, and obligations fully guaranteed as to
timely receipt of principal and interest by, the United States of America,
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;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any Affiliate of the
Trustee, acting in its commercial capacity) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal or state authorities, so long as, at
the time of such investment or contractual commitment providing for such
investment, the short-term deposits, commercial paper or other short-term
debt obligations of such depository institution or trust company are rated
at least P-1 by Moody's, A-1+ by S&P, F-1 by Fitch (if rated by Fitch) and
D-1 by Duff & Phelps (if rated by Duff & Phelps); and (B) any other demand
or time deposit or certificate of deposit which is fully insured by the
Bank Insurance Fund of the FDIC;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933, as amended, and have a rating from each of the
Rating Agencies in its highest rating category;
(iv) repurchase obligations with respect to (A) any security described
in clause (i) above or (B) any other security issued or guaranteed by an
agency or instrumentality of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (ii)(A) above;
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(v) 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, at the time of such investment, have a credit
rating of at least Aa3 from Moody's, AAA from S&P, AA from Fitch (if rated
by Fitch) and ___________ from Duff & Phelps (if rated by Duff & Phelps);
PROVIDED, HOWEVER, that securities issued by any particular corporation
will not be Eligible Investments to the extent that investment therein will
cause the then outstanding principal amount of securities issued by such
corporation and held as part of a given Trust Account to exceed 10% of
amounts held in such Trust Account;
(vi) commercial paper having a rating of at least P-1 by Moody's, A-1+
by S&P, F-1 by Fitch (if rated by Fitch) and by Duff & Phelps (if
rated by Duff & Phelps) at the time of such investment; and
(vii)any other investment which will not cause any Rating Agency to
downgrade or withdraw its then-current rating assigned to the Notes or the
Equity Certificates, as confirmed in writing by such Rating Agency.
Eligible Investments may be purchased by or through the Trustee or any of its
Affiliates.
"EQUIPMENT" means, with respect to any Contract, the property which is
leased or purchased pursuant to such Contract, or which otherwise provides
security for the payment of amounts payable thereunder.
"EQUITY CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, with respect
to any Payment Date, the excess, if any, of the Equity Certificate Interest
Distributable Amount for the preceding Payment Date over the amount that was
actually distributed in respect of interest on the Equity Certificates on such
preceding Payment Date, plus, to the extent permitted by law, one month's
interest on such excess at the Equity Certificate Interest Rate, computed on the
basis of a 360-day year comprised of twelve 30-day months.
"EQUITY CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect
to any Payment Date, the sum of the Equity Certificate Monthly Interest
Distributable Amount and the Equity Certificate Interest Carryover Shortfall for
such Payment Date.
"EQUITY CERTIFICATE INTEREST RATE" means _________ % per annum.
"EQUITY CERTIFICATE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Payment Date, one month's interest (or, in the case of the first
interest period, interest accrued from and including _______________________
to but excluding October ________, 1996) at the Equity Certificate Interest
Rate on the Principal Balance of the Equity Certificates on the immediately
preceding Payment Date (or, in the case of the first interest period, on the
Closing Date), after giving effect to all payments of principal to Equity
Certificateholders on or prior to such immediately preceding Payment Date,
computed on the basis of a 360-day year comprised of twelve 30-day months.
"EQUITY CERTIFICATE POOL FACTOR" means, with respect to any Payment
Date
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and the Equity Certificates, an eight-digit decimal figure equal to the
Principal Balance of the Equity Certificates as of such Payment Date (after
giving effect to all distributions on such date) divided by the original
Principal Balance of the Equity Certificates.
"EQUITY CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Payment Date (other than the Equity Certificate Scheduled
Maturity Date), the Equity Certificateholders' Percentage of the Monthly
Principal Amount for such Payment Date. The "Equity Certificate Principal
Distributable Amount" on the Equity Certificate Scheduled Maturity Date will
equal the Principal Balance of the Equity Certificates as of such Scheduled
Maturity Date. In no event may the Equity Certificate Principal Distributable
Amount for any Payment Date exceed the Principal Balance of the Equity
Certificates immediately prior to such Payment Date.
"EQUITY CERTIFICATE SCHEDULED MATURITY DATE" means
(or, if such day is not a Business Day, the next succeeding Business Day
thereafter).
"EQUITY CERTIFICATEHOLDER" means the holder of an Equity Certificate.
The Trustee shall, until receipt of written notice from the Owner Trustee to the
contrary, be entitled to treat the _____________________ [Revolver Trustee] as
the holder of all Equity Certificates for all purposes of this Indenture. In
the event that the Issuer is terminated pursuant to Section 9.1(b) of the Trust
Agreement and the Equity Certificates are canceled, all rights hereunder
provided in respect of the Equity Certificates (including the right to receive
distributions of principal, interest and other amounts described herein) shall
automatically vest in the successor in interest to the Equity
Certificateholders, as such successor in interest shall be identified to the
reasonable satisfaction of the Trustee.
"EQUITY CERTIFICATEHOLDERS' PERCENTAGE" means, with respect to any
Payment Date, 100% minus the Noteholders' Percentage as of such Payment Date.
"ESCROW ACCOUNT" means the Eligible Account or Accounts established
and maintained pursuant to Section 8.05.
"EVENT OF DEFAULT" has the meaning specified in Section 5.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXECUTIVE OFFICER" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, any Responsible Officer, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
"FITCH" means Fitch Investors Service, L.P., or any successor thereto.
"GRANT" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Trust Estate or of any other
agreement or instrument shall include all rights, powers
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<PAGE>
and options (but none of the obligations) of the Granting party thereunder,
including the immediate and continuing right to claim for, collect, receive and
give receipt for principal and interest payments in respect of the Trust Estate
and all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the Granting party or otherwise and
generally to do and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Note is
registered on the Note Register.
"INDEBTEDNESS" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"INDENTURE" means this Indenture as amended or supplemented from time
to time.
"INDEPENDENT" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Depositor, the Servicer and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the
Depositor, the Servicer or any Affiliate of any of the foregoing Persons and (c)
is not connected with the Issuer, any such other obligor, the Depositor, the
Servicer or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
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<PAGE>
"INTEREST RATE" means the Class A Interest Rate, the Class B Interest
Rate and the Class C Interest Rate, as applicable.
"ISSUER" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"LEASE CONTRACTS" means the lease contracts listed on Exhibit A-1 to
the Transfer and Servicing Agreement and all rights and obligations under such
contracts, including, without limitation, all monies at any time paid or payable
thereon or in respect thereof from and after the Cut-Off Date (whether in the
form of (i) Scheduled Payments (including those Scheduled Payments due prior to,
but not received as of, the Cut-Off Date, but excluding those Scheduled Payments
due on or after, but received prior to, the Cut-Off Date), (ii) Prepayments,
(iii) payments made after the original term of such contracts, (iv) payments to
be applied by the Servicer to the payment of insurance premiums, maintenance,
taxes or other similar obligations, (v) payments to be retained by the Servicer
in payment of Administrative Fees, or otherwise), and all rights of the lessor
in the related Equipment, Insurance Policies and any other security for the
payment of amounts due under such contracts.
"LIEN" means any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind, including tax liens, mechanics' liens and any
liens that attach by operation of law.
"LIQUIDATED CONTRACT" means, with respect to any Collection Period, a
Contract as to which, during such Collection Period, (i) the Servicer has
repossessed and disposed of the related Equipment, or otherwise collected all
proceeds (including any proceeds of insurance to be applied as described in
Section 3.4(c)(ii) of the Transfer and Servicing Agreement) which, in the
Servicer's reasonable judgment, can be collected under such Contract, following
a default thereunder or upon damage to or destruction of such Equipment (if such
Equipment is not to be replaced in accordance with Section 3.4(c)(i) of the
Transfer and Servicing Agreement), or (ii) 10% or more of a Scheduled Payment
shall have become 180 days delinquent.
"LIQUIDATION LOSS" means, with respect to any Liquidated Contract, the
amount, if any, by which (a) the Required Payoff Amount for such Liquidated
Contract as of the date such Contract became a Liquidated Contract exceeds (b)
that portion of the Liquidation Proceeds for such Liquidated Contract allocated
to the Notes and the Equity Certificates.
"LIQUIDATION PROCEEDS" means, with respect to a Liquidated Contract,
all amounts realized with respect to such Contract (including any insurance
proceeds received with respect to damaged or destroyed Equipment which are not
to be applied to the repair,
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<PAGE>
restoration or replacement of such Equipment) net of (i) reasonable expenses
incurred by or on behalf of the Servicer in connection with the collection of
such Contract and the maintenance, repossession and disposition of the Equipment
(including taxes and insurance premiums, to the extent in excess of amounts
available therefor in the Insurance, Maintenance and Tax Accounts, as well as
attorneys' fees) and (ii) amounts that are required to be refunded to the
Obligor on such Contract; PROVIDED, HOWEVER, that the Liquidation Proceeds with
respect to any Contract shall in no event be less than zero. The Liquidation
Proceeds in respect of any Contract shall be allocated as follows: (1) with
respect to any Loan Contract, all such Liquidation Proceeds shall be allocated
to the Notes and the Equity Certificates; and (2) with respect to any Lease
Contract, such Liquidation Proceeds shall be allocated pro rata between the
Notes and the Equity Certificates, on the one hand, and the Equipment
Certificate, on the other, based upon the Required Payoff Amount for such
Contract and the Book Value of the related Equipment, respectively; PROVIDED
that, in the event the Liquidation Proceeds in respect of any Lease Contract
exceed the sum of the Required Payoff Amount for such Contract and the Book
Value of the related Equipment, any such excess shall be allocated solely to the
Equipment Certificate.
"LOAN CONTRACTS" means the installment sale contracts, promissory
notes, loan and security agreements and other similar types of receivables
listed on Exhibit A-2 to the Transfer and Servicing Agreement and all rights and
obligations under such contracts, including, without limitation, all monies at
any time paid or payable thereon or in respect thereof from and after the
Cut-Off Date (whether in the form of (i) Scheduled Payments (including those
Scheduled Payments due prior to, but not received as of, the Cut-Off Date, but
excluding those Scheduled Payments due on or after, but received prior to, the
Cut-Off Date), (ii) Prepayments, (iii) payments made after the original term of
such contracts, (iv) payments to be applied by the Servicer to the payment of
insurance premiums, maintenance, taxes or other similar obligations, (v)
payments to be retained by the Servicer in payment of Administrative Fees, or
otherwise), and all rights of the secured party in the related Equipment,
Insurance Policies and any other security for the payment of amounts due under
such contracts.
"MERGER" means the merger of TCC with and into Antigua Acquisition
Corporation.
"MERGER CONSUMMATION DATE" means the date on which the Merger is
consummated.
"MONTHLY PRINCIPAL AMOUNT" means, with respect to any Payment Date,
(i) the difference between (a) the Contract Pool Principal Balance as of the
last day of the Collection Period relating to the prior Payment Date (or, in the
case of the first Payment Date, the Cut-Off Date Contract Pool Principal
Balance), and (b) the Contract Pool Principal Balance as of the last day of the
Collection Period relating to such Payment Date, plus (ii) any portion of the
Monthly Principal Amount for the prior Payment Date that was not distributed in
respect of principal on the Notes or the Equity Certificates, as appropriate, on
such prior Payment Date.
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<PAGE>
"MOODY'S" means Moody's Investors Service, Inc., or any successor
thereto.
"NOTE" means a Class A Note, Class B Note or Class C Note, as
applicable.
"NOTE DISTRIBUTION ACCOUNT" means the Eligible Account or Accounts
established and maintained by the Trustee in accordance with Section 8.04.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of the Class A Interest Distributable Amount, the Class B
Interest Distributable Amount and the Class C Interest Distributable Amount.
"NOTE MAJORITY" means Holders representing a majority of the Principal
Balance of each Class of the Notes then Outstanding.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person who
is the beneficial owner of such Book-Entry Note, as reflected on the books of
the Depository, or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant, in each case in accordance
with the rules of such Depository) and with respect to any Definitive Notes, the
Holder.
"NOTE POOL FACTOR" means, with respect to any Payment Date and each
Class of Notes, an eight-digit decimal figure equal to the Principal Balance of
such Class of Notes as of such Payment Date (after giving effect to all
distributions on such date) divided by the original Principal Balance of such
Class of Notes.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date (other than the Scheduled Maturity Date with respect to any Class
of Notes), the Noteholders' Percentage of the Monthly Principal Amount for such
Payment Date. The Note Principal Distributable Amount on the Scheduled Maturity
Date for any Class of Notes will equal the sum of (i) the Noteholders'
Percentage of the Monthly Principal Amount, plus (ii) the excess, if any, of the
Principal Balance of such Class of Notes over the amount in clause (i). In no
event may the Note Principal Distributable Amount for any Payment Date exceed
the Principal Balance of the Notes immediately prior to such Payment Date.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.04.
"NOTEHOLDERS' PERCENTAGE" means, (i) with respect to any Payment Date
prior to the Payment Date on which the Principal Balance of the Equity
Certificates is reduced to $ ________________________, ____________%, (ii) with
respect to the Payment Date on which the Principal Balance of the Equity
Certificates is reduced to $ ________________________, the greater of (a)
_____%, and (b) 100% less that percentage of the Monthly Principal Amount for
such Payment Date which is necessary to reduce the Principal Balance of the
Equity Certificates to $ ________________________, (iii) with respect to
any Payment Date thereafter and prior to the Payment Date on which the Principal
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Balance of the Class C Notes is reduced to zero, 100%, (iv) with respect to the
Payment Date on which the Principal Balance of the Class C Notes is reduced to
zero, that percentage of the Monthly Principal Amount for such Payment Date
which is necessary to reduce the Principal Balance of the Class C Notes to zero,
and (vi) with respect to any Payment Date after the Payment Date on which the
Principal Balance of the Class C Notes is reduced to zero, 0%.
"NOTES" means the Class A Notes, the Class B Notes and the Class C
Notes.
"OFFICERS' CERTIFICATE" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Trustee. Unless otherwise specified, any reference in this Indenture to an
Officers' Certificate shall be to an Officers' Certificate of any Authorized
Officer of the Issuer.
"OPINION OF COUNSEL" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer or the Servicer and who shall be satisfactory to the
Trustee and which shall comply with any applicable requirements of Section
11.01, and shall be in form and substance satisfactory to the Trustee.
"OUTSTANDING" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes (provided, however, that
if such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor, satisfactory to the
Trustee, has been made);
and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof satisfactory
to the Trustee is presented that any such Notes are held by a bona fide
purchaser;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Related Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Depositor or
any Affiliate of any of the foregoing Persons 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 Notes that the Trustee knows to be so owned
shall be so disregarded. Notes so owned that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Notes and that
the pledgee is not the Issuer, any other obligor upon the Notes, the Depositor
or any Affiliate of any of the foregoing Persons.
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<PAGE>
"OUTSTANDING AMOUNT" means the Aggregate Principal Balance of the
Notes, or the Principal Balance of a Class of Notes, as applicable, Outstanding
at the date of determination.
"OWNER TRUSTEE" means _______________________________, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.
"PAYING AGENT" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the distributions from the Note Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"PAYMENT DATE" means the ______ day of each calendar month, or if such
______ day is not a Business Day, the next succeeding Business Day, commencing
October ____, 1996.
"PERSON" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"PLEDGED REVENUES" means (i) all Scheduled Payments on the Contracts
received on or after the Cut-Off Date (including all Scheduled Payments due
prior to, but not received as of, the Cut-Off Date, but excluding any Scheduled
Payments due on or after, but received prior to, the Cut-Off Date); (ii) any
Prepayments received on the Contracts on or after the Cut-Off Date; (iii) the
Purchase Amount of any Contracts purchased by TCC in accordance with Section 2.6
of the Transfer and Servicing Agreement (other than any portion thereof
attributable to the Book Value of the Equipment); (iv) the amount paid by the
Depositor to purchase the Contracts pursuant to Section 5.1 of the Transfer and
Servicing Agreement (other than any portion thereof attributable to the Book
Value of the Equipment); (v) that portion of the Liquidation Proceeds received
in respect of any Contracts on or after the Cut-Off Date and allocated to the
Notes and the Equity Certificates; and (vi) any earnings on the investment of
amounts credited to the Collection Account and the Note Distribution Account.
"PREPAYMENT" means, with respect to any Collection Period for any
Contract, a voluntary prepayment during such Collection Period of amounts due
and owing under such Contract; PROVIDED that the amount, if any, by which any
such Prepayment exceeds the Required Payoff Amount for such Contract shall not
constitute Pledged Revenues.
"PREDECESSOR NOTE" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
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<PAGE>
"PRINCIPAL BALANCE" means, as of any date, (i) when used with respect
to a Class of Notes, the original principal balance of such Class, less all
distributions previously made to such Class in respect of principal, and (ii)
when used with respect to the Equity Certificates, the original principal
balance of such Certificates, less all distributions previously made to such
Certificates in respect of principal.
"PRINCIPAL DEFICIENCY AMOUNT" means, with respect to any Payment Date,
the lesser of (a) the Current Realized Losses for the related Collection Period
or (b) the excess, if any, of (i) the Aggregate Principal Balance of the Notes
plus the Principal Balance of the Equity Certificates (after giving effect to
all distributions of principal from Available Pledged Revenues on such Payment
Date), over (ii) the aggregate of the Required Payoff Amounts for all Contracts
as of the last day of the related Collection Period.
"PROCEEDING" means any suit in equity, action at law or other judicial
or administrative proceeding.
"PURCHASE AGREEMENT" means the Purchase and Sale Agreement, dated as
of September 1, 1996, among TCC, the Originators and the Depositor.
"PURCHASE AMOUNT" means, with respect to a Contract and related
Equipment required to be purchased by TCC in accordance with Section 2.6 of the
Transfer and Servicing Agreement, the sum of (i) the Required Payoff Amount for
such Contract as of the Accounting Date on which such obligation to so purchase
arises, plus (ii) the Book Value of the related Equipment.
"PURCHASED CONTRACT" means, as of any Deposit Date, any Contract which
TCC has purchased as of the related Accounting Date, as required by Section 2.6
of the Transfer and Servicing Agreement, and as to which the Purchase Amount has
been deposited in the Collection Account (as to that portion thereof relating to
the Required Payoff Amount for such Contract) and the Equipment Account (as to
that portion thereof, if any, relating to the Book Value of the related
Equipment), as approriate, by the Servicer on or before such Deposit Date.
"RATING AGENCY" means each of Moody's, S&P, Fitch and Duff & Phelps,
so long as such Persons maintain a rating on the Notes or the Equity
Certificates; and, if any of Moody's, S&P, Fitch or Duff & Phelps no longer
maintains a rating on the Notes or the Equity Certificates, such other
nationally recognized statistical rating organization, if any, selected by the
Depositor.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof and that each
of the Rating Agencies shall have notified the Issuer, the Servicer, the
Trustee, and the Depositor in writing that such action will not result in a
reduction, qualification or withdrawal of the then-current rating of the Notes.
"RECORD DATE" means, with respect to a Payment Date or Redemption
Date, the close of business on the last Business Day immediately preceding such
Payment Date or
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<PAGE>
Redemption Date (so long as the Notes are Book-Entry Notes), or the last day of
the prior calendar month (if Definitive Notes have been issued).
"REDEMPTION DATE" means, in the case of a redemption of the Notes
pursuant to Section 10.01(b) or a payment to Noteholders pursuant to Section
10.01(c), the Payment Date specified by the Servicer or the Issuer pursuant to
Section 10.01(b) or 10.01(c), as applicable.
"REDEMPTION PRICE" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(b), an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest on the principal amount of each
Class of Notes at the respective Interest Rate for each such Class of Notes
being so redeemed to but excluding the Redemption Date, or (b) in the case of a
payment made to Noteholders pursuant to Section 10.01(c), the amount on deposit
in the Note Distribution Account, but not in excess of the amount specified in
clause (a) above.
"REGISTERED HOLDER" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"RELATED COLLECTION PERIOD PLEDGED REVENUES" means, with respect to
any Payment Date, the amount of Pledged Revenues in the Collection Account which
were received by the Servicer during the related Collection Period, including
all Liquidation Proceeds so received but excluding any Purchase Amounts.
"RELATED DOCUMENTS" means the Trust Agreement, the Notes, the
Certificates, the Transfer and Servicing Agreement, the Purchase Agreement, the
Cash Collateral Account Agreement, the Depository Agreements and the
underwriting agreements between the Depositor and the underwriters of the Notes.
The Related Documents executed by any party are referred to herein as "such
party's Related Documents," "its Related Documents" or by a similar expression.
"REQUIRED PAYOFF AMOUNT" means, with respect to any Collection Period
for any Contract, the sum of (i) the Scheduled Payment due in such Collection
Period, together with any Scheduled Payments due in prior Collection Periods but
not yet received, plus (ii) the Contract Principal Balance of such Contract
(after taking into account the Scheduled Payment due in such Collection Period).
"REQUISITE CASH COLLATERAL AMOUNT" means, with respect to any Payment
Date, an amount equal to (i) __________% of the Contract Pool Principal Balance
as of the Cut-Off Date plus (ii) _____% of the Contract Pool Principal Balance
as of the last day of the related Collection Period, but in no event less than
the lesser of (a) $___________________ and (b) the sum of the Aggregate
Principal Balance of the Notes and the Principal Balance of the Equity
Certificates as of the last day of such Collection Period. [Insert any
adjustments]
"RESPONSIBLE OFFICER" means, with respect to the Trustee, any officer
of the Trustee assigned by the Trustee to administer its corporate trust affairs
relating to the
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Trust Estate.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
"SCHEDULE OF CONTRACTS" means, collectively, the schedules of Lease
Contracts and Loan Contracts (which shall be made available to the parties to
the Transfer and Servicing Agreement on a computer disk or other data storage
medium) attached to the Transfer and Servicing Agreement as (or described in)
Exhibit A-1 and Exhibit A-2, respectively.
"SCHEDULED MATURITY DATE" means, with respect to (i) each Class of
Notes, the Class A Scheduled Maturity Date, the Class B Scheduled Maturity Date
and the Class C Scheduled Maturity Date, as appropriate, and (ii) the Equity
Certificates, the Equity Certificate Scheduled Maturity Date.
"SCHEDULED PAYMENT" means, with respect to any Collection Period for
any Contract during the term of such Contract (without giving effect to any
end-of-term extensions or renewals thereof), the scheduled payment or payments
due under such Contract in such Collection Period other than those portions of
such payments which, under such Contract, are to be (i) applied by the Servicer
to the payment of insurance premiums, maintenance, taxes and other similar
obligations, or (ii) retained by the Servicer in payment of Administrative Fees.
"SECURED OBLIGATIONS" means all amounts and obligations which the
Issuer may at any time owe to or on behalf of the Trustee for the benefit of the
Noteholders under this Indenture.
"SPECIAL REDEMPTION DATE" means September __, 1996, or such earlier
date as the Depositor may elect upon giving the Trustee written notice thereof
at least five Business Days prior to such date.
"SPECIAL REDEMPTION PRICE" means the sum of (i)(a) with respect to
each Class A Note, ___% of the Principal Balance thereof, (b) with respect to
each Class B Note, ___% of the Principal Balance thereof, and (c) with respect
to each Class C Note, ___% of the Principal Balance thereof; plus (ii) in each
case, interest on such amount from (and including) the Closing Date to (but
excluding) the Special Redemption Date at the rate of 10% per annum.
"STATE" means any one of the 50 states of the United States of America
or the District of Columbia.
"TCC" means AT&T Capital Corporation, a Delaware corporation.
"TERMINATION DATE" means the date on which the Trustee shall have
received payment and performance of all Secured Obligations and the obligations
of the Trustee to the Holders of Equity Certificates hereunder and to the Cash
Collateral Account Lenders
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under the Cash Collateral Account Agreement shall have been satisfied, or such
earlier date on which the Issuer is terminated in accordance with the Trust
Agreement.
"TRANSFER AND SERVICING AGREEMENT" means the Transfer and Servicing
Agreement, dated as of September __, 1996, among the Depositor, the Servicer,
the Trustee and the Issuer.
"TRUST ACCOUNTS" means the Escrow Account, the Collection Account and
the Note Distribution Account, and such other accounts as may be established in
the name of the Issuer or the Trustee pursuant to the Trust Agreement or the
Transfer and Servicing Agreement.
"TRUST ESTATE" means the Trust Estate as described in the Granting
Clauses hereof.
"TRUST INDENTURE ACT" OR "TIA" means the Trust Indenture Act of 1939,
as amended, as in force on the date hereof, unless otherwise specifically
provided.
"TRUSTEE" means ____________________________, a
______________________, as Trustee under this Indenture, or any successor
Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
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SECTION 1.03. RULES OF CONSTRUCTION. Unless otherwise specified:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) references to Sections, Subsections, Schedules and Exhibits
shall refer to such portions of this Indenture.
Unless the context shall clearly indicate otherwise, or may otherwise
require, in this Indenture the terms "herein," "hereunder," "hereby," "hereto,"
"hereof" and any similar terms refer to this Indenture as a whole and not to any
particular article, section or subdivision hereof.
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<PAGE>
ARTICLE II
THE NOTES
SECTION 2.01. FORM. The Class A Notes, the Class B Notes and the
Class C Notes, in each case together with the Trustee's certificate of
authentication, shall be in substantially the forms set forth in Exhibits C-1,
C-2 and C-3, respectively, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture 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 Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the officers executing such Notes, as evidenced
by their execution of such Notes.
The terms of the Notes set forth in Exhibits C-1, C-2 and C-3 are part
of the terms of this Indenture.
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon receipt of an Issuer Order authenticate and
deliver Class A Notes for original issue in an aggregate principal amount of
$__________, Class B Notes in an aggregate principal amount of $__________
and Class C Notes in an aggregate principal amount of $__________. The
aggregate principal amount of Class A Notes, the Class B Notes and the Class
C Notes outstanding at any time may not exceed that amount except as provided
in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly
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authenticated and delivered hereunder.
SECTION 2.03. TEMPORARY NOTES. Pending the preparation of definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as definitive Notes.
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
The Issuer shall cause to be kept a register (the "Note Register") in which,
subject to such reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration of transfers of
Notes. The Trustee shall be the initial "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. The Issuer may
revoke the appointment of, and remove, any Note Registrar if the Issuer
determines in its sole discretion that such Note Registrar failed to perform its
obligations under this Indenture in any material respect. Any Note Registrar
shall be permitted to resign as Note Registrar upon 30 days' notice to the
Issuer and, if the Note Registrar is not the Trustee, to the Trustee; PROVIDED,
HOWEVER, that such resignation shall not be effective and such Note Registrar
shall continue to perform its duties as Note Registrar until the Issuer has
appointed a successor Note Registrar or elected to assume such duties. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the
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name of the designated transferee or transferees, one or more new Notes of the
same Class in any authorized denominations, of a like aggregate principal
amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee
shall authenticate and the Noteholder shall obtain from the Trustee, the Notes
which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee 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 Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnity as may be required
by the Trustee to hold the Issuer and the Trustee harmless, then, in the absence
of notice to the Issuer, the Note Registrar or the Trustee that such Note has
been acquired by a bona fide purchaser, the Issuer 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 Note, a replacement Note;
PROVIDED, HOWEVER, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within seven days shall be due and payable,
or shall have been called for redemption, instead of issuing a replacement Note,
the Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or
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stolen Note pursuant to the proviso to the preceding sentence, a bona fide
purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment such original Note, the Issuer and the Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, 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 expense incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes 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 Notes.
SECTION 2.06. PERSON DEEMED OWNER. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST.
(a) The Notes shall accrue interest as provided in the forms of the
Class A Note, the Class B Note and the Class C Note set forth in Exhibits C-1,
C-2 and C-3, respectively, and such interest shall be payable on each Payment
Date as specified therein, subject to Section 3.01. Any installment of interest
or principal, if any, payable on any Note which is punctually paid or duly
provided for by the Issuer on the applicable Payment Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid to such
Person's address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.11, with
respect to Notes registered on the Record Date in the name of the nominee of the
Depository, payment will be made by wire transfer in immediately available funds
to the account
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designated by such nominee and except for (i) the final installment of principal
payable with respect to such Note on a Payment Date and (ii) the Special
Redemption Price or Redemption Price for any Note called for redemption pursuant
to Section 10.01(a) or Section 10.01(b), respectively, which shall be payable as
provided below. The funds represented by any such checks returned undelivered
shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on
each Payment Date as provided in the forms of the Class A Note, the Class B Note
and the Class C Note set forth in Exhibits C-1, C-2 and C-3, respectively.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the date on which an Event
of Default shall have occurred and be continuing and the Trustee or a Note
Majority have declared the Notes to be immediately due and payable in the manner
provided in Section 5.02. All principal payments on a class of Notes shall be
made pro rata to the Noteholders of such Class entitled thereto. The Trustee
shall notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the Issuer
expects that the final installment of principal of and interest on such Note
will be paid. Such notice shall be mailed no later than five days prior to such
final Payment Date and shall specify that such final installment will be payable
only upon presentation and surrender of such Note and shall specify the place
where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders as provided in Section 10.02.
SECTION 2.08. CANCELLATION. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it, provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
SECTION 2.09. BOOK-ENTRY NOTES. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository,
by, or on behalf of, the Issuer. Each such Note shall initially be registered
on the Note Register in the name of Cede & Co., the nominee of the initial
Depository, and no Note Owner will receive a Definitive Note representing such
Note Owner's interest in such Note, except as provided in Section 2.11. Unless
and until Definitive Notes have been issued to Note Owners pursuant to Section
2.11:
(i) the provisions of this Section shall be in full force and
effect;
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(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through
the Depository and shall be limited to those established by law and
agreements between such Note Owners and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless and
until Definitive Notes are issued pursuant to Section 2.11, the initial
Depository will make book-entry transfers among the Depository Participants
and receive and transmit payments of principal of and interest on the Notes
to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes evidencing
a specified percentage of the Outstanding Amount of the Notes, the
Depository shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note Owners and/or
Depository Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Trustee.
SECTION 2.10. NOTICES TO DEPOSITORY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Depository and shall have no
obligation to the Note Owners.
SECTION 2.11. DEFINITIVE NOTES. If (i) the Depositor advises the
Trustee in writing that the Depository is no longer willing or able properly to
discharge its responsibilities with respect to the Notes, and the Depositor is
unable to locate a qualified successor, (ii) the Depositor at its option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository or (iii) after the occurrence of an Event of Default, a Note
Majority advises the Trustee and the Depository in writing that the continuation
of a book-entry system through the Depository is no longer in the best interests
of the Note Owners, then the Depository shall notify all Note Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Trustee of the Note or Notes representing the Book-Entry Notes by the
Depository, accompanied by registration instructions, the Issuer shall execute
and the Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note Registrar or the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, all references herein to obligations
imposed upon or to be performed by the Depository shall be deemed to be imposed
upon and performed by the
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Trustee, to the extent applicable with respect to such Definitive Notes, and the
Trustee shall recognize the Holders of the Definitive Notes as Noteholders.
SECTION 2.12. CALCULATIONS. All calculations of the amount of
interest accrued on the Equity Certificates and the Notes and all calculations
of the amount of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months.
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ARTICLE III
COVENANTS
SECTION 3.01. PAYMENT OF PRINCIPAL AND INTEREST. The Issuer will
duly and punctually pay the principal and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
the Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Payment Date in accordance with Section 8.04(b).
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in ___________________________________, an office or agency where Notes
may be surrendered for registration of transfer or exchange, and where notices
and demands to or upon the Issuer in respect of the Notes and this Indenture may
be served. The Issuer hereby initially appoints the Trustee to serve as its
agent for the foregoing purposes. The Issuer will give prompt written notice to
the Trustee of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Trustee as its agent to receive
all such surrenders, notices and demands.
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST. As provided in
Section 8.04, all payments of amounts due and payable with respect to any Notes
that are to be made from amounts withdrawn from the Note Distribution Account
pursuant to Section 8.04(b) shall be made on behalf of the Issuer by the Trustee
or by another Paying Agent, and no amounts so withdrawn from the Note
Distribution Account for payments of Notes shall be paid over to the Issuer.
On or before each Payment Date and Redemption Date, the Issuer shall
deposit or cause to be deposited in the Note Distribution Account an aggregate
sum sufficient to pay the amounts then becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto and (unless the Paying
Agent is the Trustee) shall promptly notify the Trustee of its action or failure
so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as
herein provided;
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(ii) give the Trustee notice of any default (of which it has
actual knowledge) by the Issuer (or any other obligor upon the Notes)
in the making of any payment required to be made with respect to the
Notes;
(iii) 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;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
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 the 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.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and upon
Issuer Request shall be deposited by the Trustee in the Collection Account; and
the Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money 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 Issuer 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 of New York, 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 or for the account of the
Issuer. The Trustee may also adopt and employ, at the expense of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Trustee or of any Paying Agent, at the last address of record for
each such Holder).
SECTION 3.04. EXISTENCE. The Issuer will keep in full effect its
existence,
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rights and franchises as a trust under the laws of the State of New York (unless
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Contracts and each other instrument or agreement included in the
Trust Estate.
SECTION 3.05. PROTECTION OF TRUST ESTATE. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee to
be prior to all other liens in respect of the Trust Estate, and the Issuer shall
take all actions necessary to obtain and maintain, in favor of the Trustee, for
the benefit of the Noteholders, a first lien on and a first priority, perfected
security interest in the Trust Estate. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(i) grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) in favor of the Trustee for the benefit of the
Trustee created by this Indenture or carry out more effectively the
purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Contracts and each other instrument or
agreement included in the Trust Estate;
(v) preserve and defend title to the Trust Estate and the rights
of the Trustee in such Trust Estate against the claims of all persons
and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
SECTION 3.06. OPINIONS AS TO TRUST ESTATE.
(a) On the Closing Date, the Issuer shall furnish to the Trustee an
Opinion of Counsel either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording and filing of this
Indenture, any indentures supplemental hereto, and any other requisite
documents, and with respect to the execution and filing of any financing
statements and continuation statements, as are necessary to
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perfect and make effective the first priority lien and security interest in
favor of the Trustee, for the benefit of the Trustee, created by this Indenture
and reciting the details of such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien and security interest
effective.
(b) On or before April 30 in each calendar year, beginning in 1997,
the Issuer shall furnish to the Trustee an Opinion of Counsel with respect to
each jurisdiction in which the Contracts are located or a Uniform Commercial
Code financing statement has been filed by the Servicer either stating that, in
the opinion of such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements as
is necessary to maintain the first priority lien and security interest created
by this Indenture and reciting the details of such action or stating that in the
opinion of such counsel no such action is necessary to maintain such lien and
security interest. Such Opinion of Counsel shall also describe the recording,
filing, re-recording and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and the execution and filing of any
financing statements and continuation statements that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until April 30 in the following calendar year.
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Transfer and Servicing Agreement or
such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officers' Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture. The Owner Trustee shall not be responsible for the action or
inaction of the Servicer.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Related Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this Indenture
and the Transfer and Servicing Agreement in accordance with and within the time
periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Termination Event under the Transfer and Servicing Agreement, the
Issuer shall promptly
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notify the Trustee and the Rating Agencies thereof, and shall specify in such
notice the action, if any, the Issuer is taking with respect of such default.
If a Servicer Termination Event shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Transfer and Servicing
Agreement with respect to the Contracts, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) If the Issuer has given notice of termination to the Servicer of
the Servicer's rights and powers pursuant to Section 8.2 of the Transfer and
Servicing Agreement, as promptly as possible thereafter, the Issuer shall
appoint a successor servicer in accordance with Section 8.3 of the Transfer and
Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Transfer and Servicing Agreement, the Issuer shall promptly notify the
Trustee. As soon as a successor Servicer is appointed, the Issuer shall notify
the Trustee of such appointment, specifying in such notice the name and address
of such successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Depositor of their respective duties under the
Related Documents if the effect thereof would adversely affect the Holders of
the Notes.
SECTION 3.08. NEGATIVE COVENANTS. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by this Indenture or the Trust
Agreement, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the
Trust Estate, unless directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes levied or
assessed upon any part of the Trust Estate;
(iii) dissolve or liquidate in whole or in part;
(iv) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien in favor of the Trustee created by this
Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture except as
may be expressly permitted hereby;
(v) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien in favor of the
Trustee created by this Indenture) to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof or
any interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law,
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in each case on the Equipment and arising solely as a result of an
action or omission of the related Obligor);
(vi) permit the lien in favor of the Trustee created by this
Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien described in clause
(v) above) security interest in the Trust Estate; or
(vii) amend, modify or fail to comply with the provisions of
the Related Documents without the prior written consent of the
Trustee.
SECTION 3.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year ended December 31, 1996), an Officers'
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a
default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. ISSUER MAY CONSOLIDATE OR MERGE ONLY ON CERTAIN TERMS.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form and substance satisfactory to the
Trustee, the due and punctual payment of the principal of and interest
on all Notes and the performance or observance of every agreement and
covenant of this Indenture and each other Related Document on the part
of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be
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delivered to and shall be satisfactory to the Trustee to the effect
that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Equity
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Trustee by this Indenture shall have
been taken;
(vi) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (a)(v) of this Section or that no
such actions will be taken) each stating that such consolidation or
merger and such supplemental indenture comply with this Article III
and that all conditions precedent herein provided for relating to such
transaction have been compiled with (including any filing required by
the Exchange Act); and
(vii) the Issuer or the Person (if other than the Issuer)
formed by or surviving such consolidation or merger has a net worth,
immediately after such consolidation or merger, that is (a) greater
than zero and (b) not less than the net worth of the Issuer
immediately prior to giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all
of its properties or assets, including those included in the Trust Estate, to
any Person (except as expressly permitted by the Indenture or the Transfer and
Servicing Agreement), unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the
United States of America or any State, (B) expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee,
in form and substance satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each Related Document on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate
to the rights of Holders of the Notes, (D) unless otherwise provided
in such supplemental indenture, expressly agree to indemnify, defend
and hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall
make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to
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such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which
shall be delivered to and shall be satisfactory to the Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Equity
Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Trustee by this Indenture shall have
been taken;
(vi) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (b)(v) of this Section or that no
such actions will be taken) each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III
and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by
the Exchange Act); and
(vii) the Person acquiring by conveyance or transfer the
properties or assets of the Issuer has a net worth, immediately after
such conveyance or transfer, that is (a) greater than zero and (b) not
less than the net worth of the Issuer immediately prior to giving
effect to such conveyance or transfer.
SECTION 3.11. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), Capita Equipment Receivables Trust 1996-
1 will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Trustee stating that
Capita Equipment Receivables Trust 1996-1 is to be so released.
SECTION 3.12. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts and the related Equipment in the manner contemplated by this Indenture
and the Related Documents and activities incidental thereto.
SECTION 3.13. NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Related Documents. The proceeds of the Notes shall be
used exclusively to fund the Depositor's
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<PAGE>
purchase of the Contracts and the other assets specified in the Transfer and
Servicing Agreement and to pay the Issuer's organizational, transactional and
start-up expenses or to pay the Special Redemption Price of the Notes upon a
redemption thereof in accordance with Section 10.01(a).
SECTION 3.14. SERVICER'S OBLIGATIONS. The Issuer shall monitor the
performance of the Servicer under the Transfer and Servicing Agreement, and
shall use its reasonable good faith efforts to cause the Servicer duly and
punctually to perform all of its duties and obligations thereunder.
SECTION 3.15. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES.
Except as contemplated by the Transfer and Servicing Agreement or this
Indenture, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuming another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.16. INCOME TAX CHARACTERIZATION. The Depositor has
structured the Trust Agreement, this Indenture, the Cash Collateral Account
Agreement, the Notes and the Certificates with the intention that the Notes will
qualify under applicable federal, state, local and foreign tax law as
indebtedness of the Depositor secured by the Contracts. The Depositor, the
Servicer, each Noteholder and each Note Owner agree to treat and to take no
action inconsistent with the treatment of the Notes as such indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Noteholder and each Note
Owner, by acceptance of its Note or beneficial interest therein, agrees to be
bound by the provisions of this Section. Each Noteholder agrees that it will
cause any Note Owner acquiring an interest in a Note through it to comply with
this Indenture as to treatment as indebtedness under applicable tax law, as
described in this Section.
SECTION 3.17. RESTRICTED PAYMENTS. Except as expressly permitted by
this Indenture, the Trust Agreement or the Transfer and Servicing Agreement, the
Issuer shall not, directly or indirectly, (i) make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose. The Issuer will
not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Related
Documents.
SECTION 3.18. NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the Depositor
of its obligations under the
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Transfer and Servicing Agreement.
SECTION 3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.20. COMPLIANCE WITH LAWS. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Related Document.
SECTION 3.21. AMENDMENTS OF TRANSFER AND SERVICING AGREEMENT AND
TRUST AGREEMENT. The Issuer shall not agree to any amendment to Section 9.1 of
the Transfer and Servicing Agreement or Section 11.1 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.
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<PAGE>
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal and interest thereon, (iv) Sections 3.03, 3.04,
3.05, 3.07, 3.08, 3.10, 3.12, 3.13, 3.16, 3.20 and 3.21, (v) the rights,
obligations and immunities of the Trustee hereunder (including the rights of the
Trustee under Section 6.07 and the obligations of the Trustee under Section
4.02) and (vi) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them, and
the Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.05 and (ii)
Notes for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section 3.03)
have been delivered to the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their
Scheduled Maturity Date within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name,
and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with
the Trustee as part of the Trust Estate cash or direct
obligations of or obligations guaranteed by the United States of
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America (which will mature prior to the date such amounts are
payable), in trust in an Eligible Account in the name of the
Trustee for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore
delivered to the Trustee for cancellation when due to their
Scheduled Maturity Date or Redemption Date (if Notes shall have
been called for redemption pursuant to Section 10.01(a)), as the
case may be;
(B) the Issuer has paid or caused to be paid all Secured
Obligations; and
(C) the Issuer has delivered to the Trustee an Officers'
Certificate, an Opinion of Counsel and (if required by the TIA or the
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section
11.01(a) and each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this
Indenture have been complied with and the Rating Agency Condition has
been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to the Notes, the obligations of the Trustee to the Holders of Equity
Certificates hereunder and to the Cash Collateral Account Lenders under the Cash
Collateral Account Agreement shall survive until the payment in full of the
Equity Certificates and the payment of all amounts due and owing to the Cash
Collateral Account Lenders under the Cash Collateral Account Agreement or the
termination of the Issuer in accordance with the Trust Agreement.
SECTION 4.02. APPLICATION OF TRUST MONEY. All moneys deposited with
the Trustee pursuant to Section 4.01 shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the
Transfer and Servicing Agreement or required by law.
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 4.04. RELEASE OF TRUST ESTATE. The Trustee shall, on or
after the Termination Date, release any remaining portion of the Trust Estate
from the lien created by this Indenture and deposit in the Collection Account
any funds then on deposit in any
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other Trust Account. The Trustee shall release property from the lien created
by this Indenture pursuant to this Section only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.
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<PAGE>
ARTICLE V
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
five days; or
(ii) default in the payment of the principal of any Note on the
Special Redemption Date, Redemption Date or Scheduled Maturity Date
applicable thereto; or
(iii) default in the observance or performance in any material
respect of any covenant or agreement of the Issuer made in this Indenture
(other than a covenant or agreement, a default in the observance or
performance of which is elsewhere in this Section specifically dealt with),
or any representation or warranty of the Issuer made in this Indenture or
in any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material respect
as of the time when the same shall have been made, and such default shall
continue or not be cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 30 days after there shall
have been given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25% of
the Outstanding Amount of the Notes, a written notice specifying such
default or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(iv) the commencement of an involuntary case against the Issuer or the
Depositor under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, and such case is not
dismissed within 60 days; or
(v) (A) the commencement by the Issuer or the Depositor of a
voluntary case under any applicable Federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, (B) the entry of an order
for relief in an involuntary case against the Issuer or the Depositor under
any such law, (C) the consent by the Issuer or the Depositor to the entry
of any such order for relief, (D) the consent by the Issuer or the
Depositor to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or the Depositor or for any substantial part of the Trust
Estate, (E) the making by the
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Issuer or the Depositor of any general assignment for the benefit of
creditors, (F) the failure by the Issuer or the Depositor generally to pay
its debts as such debts become due, or (G) the taking of action by the
Issuer or the Depositor, as applicable, in furtherance of any of the
foregoing.
The Issuer shall deliver to the Trustee, within five days after
obtaining knowledge of the occurrence thereof, written notice in the form of an
Officers' Certificate of any event which with the giving of notice and the lapse
of time would become an Event of Default under clause (iii) or (iv), its status
and what action the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT.
If an Event of Default shall have occurred and be continuing, a Note
Majority or the Trustee may, upon prior written notice to the Rating Agencies,
declare by written notice to the Issuer that the Notes become, whereupon they
shall become, immediately due and payable at par, together with accrued interest
thereon. Notwithstanding anything to the contrary in this Section, if an Event
of Default specified in Section 5.01(iv) or (v) shall occur and be continuing,
the Notes shall become immediately due and payable at par, together with accrued
interest thereon. If an Event of Default shall have occurred and be continuing,
the Trustee may exercise any of the remedies specified in Sections 5.03 and
5.04.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE; AUTHORITY OF TRUSTEE.
(a) The Issuer covenants that if any Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate 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
its agents and counsel.
(b) If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(c) In case there shall be pending, relative to the Issuer, the
Depositor or any other obligor upon the Notes or any Person having or claiming
an ownership interest in the Trust Estate, Proceedings under Title 11 of the
United States Code or any other
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applicable Federal or state bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer, the Depositor or such other obligor or Person,
or its property, or in case of any other comparable judicial Proceedings
relative to the Issuer, the Depositor or other obligor upon the Notes, or to the
creditors or property of the Issuer, the Depositor or such other obligor, the
Trustee, irrespective of whether the principal of any Notes 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 pursuant to the provisions of
this Section, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes 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 reasonable
compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee, except as a result of negligence or bad
faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and of the Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee or the
Holders of Notes allowed in any judicial proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(d) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a
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trustee in bankruptcy or similar Person.
(e) All rights of action and of asserting claims under this Indenture
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(f) In any Proceedings brought by the Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Trustee shall be held to represent all the Holders of the Notes, and it
shall not be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. REMEDIES. If an Event of Default shall have occurred
and be continuing, the Trustee may (subject to Section 5.05):
(i) institute Proceedings in its own name and as or on behalf of a
trustee of an express trust for the collection of all amounts then payable
on the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and
any other remedy available to the Trustee and take any other appropriate
action to protect and enforce the rights and remedies of the Trustee on
behalf of the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; PROVIDED, HOWEVER, that the
Trustee may not sell or otherwise liquidate the Trust Estate following an
Event of Default unless
(A) the Holders of 100% of the Outstanding Amount of the Notes
consent thereto,
(B) the proceeds of such sale or liquidation distributable to
the Noteholders will be sufficient to discharge in full all amounts
then due and unpaid upon such Notes for principal and interest, or
(C) the Trustee determines that the Trust Estate will not
continue to provide sufficient funds for the payment of principal of
and interest on
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the Notes as they would have become due if the Notes had not been
declared due and payable, and the Trustee provides prior written
notice to the Rating Agencies and obtains the consent of Holders of
66-2/3% of the Outstanding Amount of the Notes.
In determining such sufficiency or insufficiency with respect to clause (B) or
(C), the Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.05. OPTIONAL PRESERVATION OF THE CONTRACTS. If any Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.06. PRIORITIES.
If the Trustee collects any money or property pursuant to this Article
V, including any money or property in respect of liquidation of the Trust Estate
pursuant to Section 5.04(a)(iv), the Trustee shall pay as promptly as
practicable out the money or property in the following order:
FIRST: amounts due and owing to the Trustee pursuant to Section
6.07(b);
SECOND: amounts due and owing and required to be distributed to the
Servicer pursuant to priority (i) of Section 8.03 and not previously
distributed;
THIRD: to Class A Noteholders for amounts due and unpaid on the Class
A Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A Notes for interest;
FOURTH: to Class A Noteholders for amounts due and unpaid on the
Class A Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class A Notes for
principal;
FIFTH: to Class B Noteholders for amounts due and unpaid on the Class
B Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class B Notes for interest;
SIXTH: to Class B Noteholders for amounts due and unpaid on the Class
B
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Notes for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class B Notes for
principal;
SEVENTH: to Class C Noteholders for amounts due and unpaid on the
Class C Notes for interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class C Notes for
interest;
EIGHTH: to Class C Noteholders for amounts due and unpaid on the
Class C Notes for principal, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Class C Notes for
principal;
NINTH: amounts due and unpaid on the Equity Certificates for interest
and principal, to the Owner Trustee for distribution to Equity
Certificateholders in accordance with Section 5.2(c) of the Trust
Agreement;
TENTH: to the parties entitled thereto in accordance with the Cash
Collateral Agreement for amounts due and unpaid thereunder; and
ELEVENTH: the remainder, if any, to the Owner Trustee for
distribution to Equity Certificateholders in accordance with Section 5.2(c)
of the Trust Agreement.
SECTION 5.07. LIMITATION OF SUITS. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of the
Notes have made written request to the Trustee to institute such Proceeding
in respect of such Event of Default in its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute such Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to
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obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.08. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST. Notwithstanding any other provisions in this Indenture,
the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such Note
on or after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Special Redemption
Date or Redemption Date, as applicable) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Noteholder has instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discontinued or abandoned for
any reason or has been determined adversely to the Trustee or to such
Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders 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 and the Noteholders shall continue as
though no such Proceeding had been instituted.
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy
herein conferred upon or reserved to the Trustee or to the Noteholders 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 5.11. DELAY OR OMISSION NOT A WAIVER. No delay or omission
of the Trustee or any Holder of any Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by this Article V or by law
to the Trustee or to the Noteholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Noteholders, as the
case may be.
SECTION 5.12. CONTROL BY NOTEHOLDERS. The Holders of a majority of
the Outstanding Amount of the Notes shall have the right to direct the time,
method and place of conducting any Proceeding for any remedy available to the
Trustee with respect to the Notes or exercising any trust or power conferred on
the Trustee; provided that
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(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction to
the Trustee to sell or liquidate all or any portion of the Trust Estate
shall be by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes; and
(iii) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; PROVIDED, HOWEVER,
that, subject to Section 6.01, the Trustee need not take any action that it
determines might involve it in liability or might materially adversely
affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. WAIVER OF PAST DEFAULTS.
The Holders of Notes of not less than a majority of the Outstanding
Amount of the Notes may waive any past Default or Event of Default and its
consequences except a Default (a) in payment of principal of or interest on any
of the Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Note. In the case
of any such waiver, the Issuer, the Trustee and the Holders of the Notes shall
be restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.14. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's 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 Indenture, 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 shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
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(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, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages 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 5.16. ACTION ON NOTES. The Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer 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
Issuer.
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SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Trustee to do so and at the
Depositor's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Depositor or the Servicer, as applicable, of each of their obligations to the
Issuer under or in connection with the Transfer and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Transfer and Servicing Agreement to the extent and in the manner
directed by the Trustee, including the transmission of notices of default on the
part of the Depositor or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Depositor or the Servicer of each of their obligations under the Transfer and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Trustee may, and at the direction (which direction shall be in writing,
including facsimile) of the Holders of 66-2/3% of the Outstanding Amount of the
Notes shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Depositor or the Servicer under or in connection with the
Transfer and Servicing Agreement, including the right or power to take any
action to compel or secure performance or observance by the Depositor or the
Servicer of each of their obligations to the Issuer thereunder and to give any
consent, request, notice, direction, approval, extension or waiver under the
Transfer and Servicing Agreement, and any right of the Issuer to take such
action shall be suspended.
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ARTICLE VI
THE TRUSTEE
SECTION 6.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise the rights and powers vested in it by this Indenture with
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith 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 Indenture; however,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture and, if
applicable, the Trustee's other Related Documents.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Transfer
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and Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur 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 to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Transfer and Servicing Agreement, except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, powers, duties and privileges of the Servicer, in
accordance with the terms of the Transfer and Servicing Agreement.
(j) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Transfer and Servicing
Agreement.
(k) Without limiting the generality of this Section, the Trustee
shall have no duty (i) to see to any recording, filing or depositing of this
Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Equipment, or to see to the maintenance of
any such recording or filing or depositing or to any recording, refiling or
redepositing of any thereof, (ii) to see to any insurance of the Equipment or
Obligors or to effect or maintain any such insurance, (iii) except as
specifically provided in the Transfer and Servicing Agreement, to see to the
payment or discharge of any tax, assessment or other governmental charge or any
Lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust Estate, (iv) to confirm or verify the contents of
any reports or certificates delivered to the Trustee pursuant to this Indenture
or the Transfer and Servicing Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties, or (v) to
inspect the Equipment at any time or ascertain or inquire as to the performance
of observance of any of the Issuer's, the Depositor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer under the Transfer and Servicing Agreement.
(l) Except for actions expressly authorized by this Indenture or the
Transfer and Servicing Agreement or taken by the Trustee pursuant to Section
6.01(a), the Trustee shall take no action reasonably likely to impair (i) the
interests of the Trust Estate in any contract or agreement now existing or
hereafter created or (ii) the value of any contract or agreement now existing or
hereafter created.
(m) The Trustee shall have no power to vary the corpus of the Trust
Estate, except as expressly provided in this Indenture.
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(n) In the event that the Note Registrar or the Paying Agent (if
other than the Trustee) shall fail to perform any obligation, duty or agreement
in the manner or on the day required to be performed by the Note Registrar or
the Paying Agent, as the case may be, under this Indenture, the Trustee shall be
obligated, as soon as possible upon knowledge of a Responsible Officer thereof
and receipt of appropriate records, if any, to perform such obligation, duty or
agreement in the manner so required.
SECTION 6.02. RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 6.01:
(a) the Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee
need not (except under the circumstances described in paragraph (g) below)
investigate any fact or matter stated in the document;
(b) before the Trustee acts or refrains from acting, it may require
an Officers' Certificate (with respect to factual matters) or an Opinion of
Counsel, as applicable. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel, as applicable, or as directed by the
requisite amount of Note Owners as provided herein;
(c) 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 or a custodian or nominee, and the Trustee shall not be
responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed
with due care by it hereunder;
(d) the Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its
rights or powers; PROVIDED, HOWEVER, that the Trustee's conduct does not
constitute willful misconduct, negligence or bad faith;
(e) the Trustee may consult with counsel, and the advice or opinion
of counsel with respect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of
such counsel;
(f) the Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of
Notes, pursuant to the provisions of this Indenture, unless such Holders of
Notes shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred therein or
thereby; PROVIDED, HOWEVER, that the Trustee shall, upon the occurrence of
an Event of Default (that has not been cured), exercise the
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rights and powers vested in it by this Indenture with the same degree of
care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs; and
(g) 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, consent, order, approval,
bond or other paper or document, unless requested in writing to do so by
the Holders of Notes evidencing not less than 25% of the Outstanding Amount
thereof; PROVIDED, HOWEVER, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by the
terms of this Indenture or the Transfer and Servicing Agreement, the
Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of every
such examination shall be paid by the Person making such request, or, if
paid by the Trustee, shall be reimbursed by the Person making such request
upon demand.
SECTION 6.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee is required to comply with Sections 6.11 and 6.12.
SECTION 6.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and, except as provided in Section 6.13, makes no representation
as to the validity or adequacy of this Indenture, the Trust Estate or the Notes,
it shall not be accountable for the Issuer's use of the proceeds from the Notes,
and it shall not be responsible for any statement of the Issuer in the Indenture
or in any document issued in connection with the sale of the Notes or in the
Notes other than the Trustee's certificate of authentication.
SECTION 6.05. NOTICE OF DEFAULTS. If a Default occurs and is
continuing and if it is known to a Responsible Officer of the Trustee, the
Trustee shall mail to each Noteholder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Trustee may withhold the notice if and so long as
a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
SECTION 6.06. REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall
provide or cause to be provided to each Noteholder all such tax information as
may be required by law to be distributed to enable such holder to prepare its
federal and state income tax returns.
SECTION 6.07. COMPENSATION AND INDEMNITY.
(a) The Servicer, pursuant to the Transfer and Servicing Agreement,
has
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covenanted and agreed to pay to the Trustee, and the Trustee shall be entitled
to, certain annual fees and to reimburse the Trustee for all ordinary and
reasonable out-of-pocket expenses incurred or made by it in connection with the
performance of its duties hereunder (excluding those incurred or made in the
performance of its duties under Article V, as referred to in paragraph (b)
below). Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts.
(b) The Trustee shall also be entitled to reimbursement, from moneys
available therefor in accordance with Section 5.06, for all reasonable
out-of-pocket expenses (including reasonable attorneys' fees) incurred or made
by it in connection with the performance of its duties under Article V. When
the Trustee incurs expenses after the occurrence of a Default specified in
Section 5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
Notwithstanding anything else set forth in this Indenture or the Related
Documents, the Trustee agrees that the obligations of the Issuer to the Trustee
hereunder and under the Related Documents shall be recourse to the Trust Estate
only. In addition, the Trustee agrees that its recourse to the Issuer or the
Trust Estate shall be limited to the right to receive the reimbursement referred
to in the first sentence of this paragraph.
SECTION 6.08. REPLACEMENT OF TRUSTEE. The Trustee may resign at any
time by so notifying the Issuer in writing. The Issuer may remove the Trustee
if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Trustee in an involuntary case or proceeding under federal or state banking
or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Trustee or for any substantial
part of the Trustee's property, or ordering the winding-up or liquidation
of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Trustee and such case is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
other similar official) for the Trustee or for any substantial part of the
Trustee's property, or makes any assignment for the benefit of creditors or
fails generally to pay its debts as such debts become due
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or takes any corporate action in furtherance of any of the foregoing;
(v) the Trustee otherwise becomes incapable of acting; or
(vi) the rating assigned to the long-term unsecured debt obligations
of the Trustee (or the holding company thereof) by the Rating Agencies
shall be lowered below the rating of "BBB", "Baa3" or equivalent rating or
be withdrawn by any Rating Agency.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to this Section and payment of all fees and expenses owed to the
retiring Trustee. Notwithstanding the replacement of the Trustee pursuant to
this Section, the retiring Trustee shall be entitled to payment or reimbursement
of such amounts as such Person is entitled pursuant to Section 6.07.
SECTION 6.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; PROVIDED that no such merger,
conversion or consolidation shall relieve the Trustee of its obligation to
comply with Section 6.11. The Trustee shall provide the Rating Agencies prompt
notice of any such transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee
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may adopt the certificate of authentication of any predecessor trustee, and
deliver such Notes so authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the Trustee may authenticate
such Notes either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Notes or in this Indenture provided that
the certificate of the Trustee shall have.
SECTION 6.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, such title to
the Trust, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Trustee may
consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the
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estates or property specified in its instrument of appointment, either jointly
with the Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at
all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9); PROVIDED, HOWEVER, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee represents and warrants as of the Closing Date that:
(i) the Trustee is a organized, existing
and in good standing under the laws of the ;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Indenture and each of the Trustee's Related
Documents, and has taken all necessary action to authorize the execution,
delivery and performance by it of this Indenture and each such Related
Document; and
(iii) each of this Indenture and the Trustee's Related Documents
has been duly executed and delivered by the Trustee and represents a legal,
valid and binding obligation of the Trustee enforceable against the Trustee
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity).
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SECTION 6.14. SERVICER'S OBLIGATIONS. The Trustee shall use its
reasonable good faith efforts to cause the Servicer duly and punctually to
perform all of its duties and obligations under the Transfer and Servicing
Agreement.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. ISSUER TO FURNISH TRUSTEE NAMES AND ADDRESSES TO
NOTEHOLDERS. The Issuer will furnish or cause to be furnished to the Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; PROVIDED, HOWEVER, that so long as the Trustee is the
Note Registrar, no such list shall be required to be furnished.
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
NOTEHOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
SECTION 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Issuer may be required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with rules
and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
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(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA Section 313(c)) such summaries of
any information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this paragraph as may be required by
rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. REPORTS BY TRUSTEE. If required by TIA Section 313(a),
within 60 days after each March 31 beginning with March 31, 1997, the Trustee
shall mail to each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. The Issuer shall notify the Trustee if and when the
Notes are listed on any stock exchange.
SECTION 7.05. STATEMENTS TO NOTEHOLDERS AND EQUITY
CERTIFICATEHOLDERS.
(a) On each Payment Date, the Trustee shall include with each
distribution to each Noteholder, a statement (which statement shall also be
provided to each Rating Agency) based on information in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 3.9
of the Transfer and Servicing Agreement, setting forth for the Collection Period
relating to such Payment Date the following information with respect to each
class of Notes:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Cash Collateral Account;
(iv) the Principal Balance of each Class of Notes and of the Equity
Certificates (after giving effect to distributions made on such Payment
Date);
(v) the Class A Interest Carryover Shortfall, the Class B Interest
Carryover Shortfall, the Class C Interest Carryover Shortfall and the
Equity Certificate Interest Carryover Shortfall, if any, and the change in
such amounts from the preceding statement;
(vi) the amount of fees paid by the Trust with respect to such
Collection Period;
(vii) the Note Pool Factor with respect to each class of Notes
(after giving
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effect to distributions made on such Payment Date);
(viii) the balance remaining (up to the Requisite Cash Collateral
Amount) in the Cash Collateral Account and the amount, if any, by which
such balance is less than the Requisite Cash Collateral Amount; and
(ix) the Contract Pool Principal Balance as of the last day of such
Collection Period and as of the last day of the prior Collection Period.
Each amount set forth pursuant to subclauses (i) through (iii) and (v) above may
be expressed as a dollar amount per $1,000 of original Principal Balance of a
Note.
(b) On each Payment Date, the Owner Trustee shall include with each
distribution to each Equity Certificateholder, a statement based on information
in the Servicer's Certificate delivered on the related Determination Date
pursuant to Section 3.9 of the Transfer and Servicing Agreement, setting forth
for the Collection Period relating to such Payment Date the following
information:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Cash Collateral Account;
(iv) the Principal Balance of the Equity Certificates and the
Aggregate Principal Balance of the Notes (after giving effect to
distributions made on such Payment Date);
(v) the Equity Certificate Interest Carryover Shortfall, the Class
A Interest Carryover Shortfall, the Class B Interest Carryover Shortfall
and the Class C Interest Carryover Shortfall, if any, and the change in
such amounts from the preceding statement;
(vi) the amount of fees paid by the Trust with respect to such
Collection Period;
(vii) the Equity Certificate Pool Factor (after giving effect to
distributions made on such Payment Date);
(viii) the balance remaining (up to the Requisite Cash Collateral
Amount) in the Cash Collateral Account and the amount, if any, by which
such balance is less than the Requisite Cash Collateral Amount; and
(ix) the Contract Pool Principal Balance as of the last day of such
Collection Period and as of the last day of the prior Collection Period.
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Each amount set forth pursuant to subclauses (i) through (iii) and (v) above may
be expressed as a dollar amount per $1,000 of original Principal Balance of an
Equity Certificate.
(c) Note Owners may obtain copies of the statements delivered by the
Trustee pursuant to subsection (a) above upon written request to the Trustee at
its Corporate Trust Office (together with a certification that such Person is a
Note Owner and payment of any expenses associated with the distribution
thereof). Equity Certificate Owners may obtain copies of the certificates
delivered by the Owner Trustee pursuant to subsection (b) above upon written
request to the Owner Trustee at the Corporate Trust Office (together with a
certification that such Person is an Equity Certificate Owner and payment of any
expenses associated with the distribution thereof).
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ARTICLE VIII
TRUST ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. COLLECTION OF MONEY. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as
otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of this Indenture or the Notes, the Trustee may 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
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.02. COLLECTION ACCOUNT. On or prior to the Closing Date,
the Trustee shall establish the Collection Account in the name of the Trustee
for the benefit of the Equity Certificateholders and the Noteholders. The
Collection Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Trustee and maintained with the
Trustee, into which (i) the Servicer shall deposit or cause to be deposited all
amounts described in Sections 4.1 and 5.1 of the Transfer and Servicing
Agreement, and (ii) the Trustee shall deposit the amounts described in Section
8.06(c).
SECTION 8.03. DISTRIBUTIONS. On each Payment Date, the Trustee shall
(based on the information contained in the Servicer's Certificate delivered on
the related Determination Date) distribute the following amounts and in the
order of priority specified below. Within each order of priority, amounts shall
be deemed withdrawn first from Available Pledged Revenues, and second (but only
as to amounts described in clauses (ii) through (iv) below) from amounts
deposited in the Collection Account pursuant to Section 8.06(c).
(i) first, from the Available Pledged Revenues then on deposit in
the Collection Account, to the Servicer, the Servicing Fee for the related
Collection Period and any amounts specified in Section 4.2(c) of the
Transfer and Servicing Agreement, to the extent the Servicer has not
reimbursed itself in respect of such amounts pursuant to Section 4.4 of the
Transfer and Servicing Agreement;
(ii) second, from the Amount Available then remaining on deposit in
the Collection Account, to the Note Distribution Account, an amount equal
to the Note Interest Distributable Amount for such Payment Date;
(iii) third, from the Amount Available then remaining on deposit
in the Collection Account, to the Equity Certificate Distribution Account,
an amount equal to the Equity Certificate Interest Distributable Amount for
such Payment Date;
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(iv) fourth, from the Amount Available then remaining on deposit in
the Collection Account, to the Note Distribution Account, an amount equal
to the Note Principal Distributable Amount for such Payment Date;
(v) fifth, from the Amount Available then remaining on deposit in
the Collection Account, to the Equity Certificate Distribution Account, an
amount equal to the Equity Certificate Principal Distributable Amount for
such Payment Date;
(vi) sixth, from the Available Pledged Revenues then remaining on
deposit in the Collection Account, to the Cash Collateral Account, the
amount, if any, necessary to increase the balance therein to the Requisite
Cash Collateral Amount;
(vii) seventh, from the Available Pledged Revenues then remaining
on deposit in the Collection Account, to the parties entitled thereto in
accordance with the Cash Collateral Agreement, any amounts due and unpaid
thereunder; and
(viii) eighth, any remaining Available Pledged Revenues to the
Equity Certificate Distribution Account.
SECTION 8.04. NOTE DISTRIBUTION ACCOUNT.
(a) On or prior to the Closing Date, the Trustee shall establish the
Note Distribution Account in the name of the Trustee for the benefit of the
Noteholders. The Note Distribution Account shall be an Eligible Account and
initially shall be a segregated trust account established with the Trustee and
maintained with the Trustee.
(b) On each Payment Date and Redemption Date, the Trustee shall
distribute all amounts on deposit in the Note Distribution Account in the
following amounts and in the following order of priority (except as otherwise
provided in Section 5.06):
(i) interest on the Notes in the following order of priority:
(A) to the Class A Noteholders, the Class A Interest
Distributable Amount;
(B) to the Class B Noteholders, the Class B Interest
Distributable Amount; and
(C) to the Class C Noteholders, the Class C Interest
Distributable Amount; and
(ii) principal on the Notes in the following order of priority:
(A) principal of the Class A Notes until the principal balance
thereof has been reduced to zero;
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(B) principal of the Class B Notes until the principal balance
thereof has been reduced to zero; and
(C) principal of the Class C Notes until the principal balance
thereof has been reduced to zero.
SECTION 8.05. ESCROW ACCOUNT.
(a) On or prior to the Closing Date, the Trustee shall establish the
Escrow Account, which shall be an Eligible Account funded on the Closing Date,
from proceeds of the Notes and other moneys furnished to the Trustee by the
Depositor, in an amount equal to $_____________ [the Special Redemption Price].
Withdrawals from the Escrow Account may be made only (1) on the Special
Redemption Date, to redeem the Notes in accordance with Section 10.01(a), and to
pay to the Depositor any balance in the Escrow Account upon completion of such
redemption, or (2) on such date prior to the Special Redemption Date as of which
all of the conditions specified in paragraph (b) below have been satisfied, to
pay over to the Depositor all amounts deposited in the Escrow Account in order
to clear and terminate such Escrow Account.
(b) The Notes shall be redeemed on the Special Redemption Date
unless, on or prior to the last Business Day prior to such date, each of the
following shall have occurred:
(i) the Merger shall have been consummated;
(ii) [the Purchase Agreement, in substantially the form attached
hereto as Exhibit _______, shall have been duly executed and delivered,
and] the sale of the Contracts and the Equipment, together with any other
assets relating thereto, to the Depositor pursuant [thereto] to the
Purchase Agreement, as well as all other actions to be taken thereunder at
or prior to such sale, shall have been completed or performed in all
material respects, as evidenced by a certification and acknowledgement, in
substantially the form attached hereto as Exhibit ________, given by
authorized officers of TCC and the Depositor;
(iii) the transfer and assignment of the Contracts and the
Equipment, together with any other assets relating thereto, to the Issuer
pursuant to the Transfer and Servicing Agreement, as well as all other
actions to be taken thereunder at or prior to such transfer and assignment,
shall have been completed or performed in all material respects, as
evidenced by a certification and acknowledgement, in substantially the form
attached hereto as Exhibit ________, given by authorized officers of the
Depositor and the Owner Trustee;
(iv) opinions of counsel, in substantially the forms attached hereto
as Exhibit ________, shall have been rendered.
(c) Upon satisfaction of the conditions specified in paragraph (b)
above, the Trustee shall give prompt notice thereof to the Noteholders, the
Equity Certificateholders
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and each Rating Agency.
SECTION 8.06. CASH COLLATERAL ACCOUNT.
(a) On or prior to __________________________ [Closing Date/Merger
Consummation Date], the Trustee shall establish the Cash Collateral Account in
the name of the Trustee in accordance with the requirements of the Cash
Collateral Account Agreement for the benefit of the Equity Certificateholders,
the Noteholders and the Cash Collateral Account Lenders. The Cash Collateral
Account shall be an Eligible Account [and initially shall be a segregated trust
account established with the Trustee and maintained with the Trustee]. The Cash
Collateral Account will be funded on __________________________ in an amount
equal to the Requisite Cash Collateral Amount from the proceeds of loans to be
made by the Cash Collateral Account Lenders (including an initial deposit
therein by the Depositor).
(b) If the amount on deposit in the Cash Collateral Account on any
Payment Date (after giving effect to any deposits therein pursuant to Section
8.03(vi) and any withdrawals therefrom pursuant to Section 8.06(c)) is greater
than the Requisite Cash Collateral Amount for such Payment Date, the Trustee
shall distribute the amount of the excess in accordance with the Cash Collateral
Account Agreement. Amounts properly distributed pursuant to the prior sentence
shall be deemed released from the Trust Estate and the security interest herein
granted to the Trustee, and the Issuer shall in no event thereafter be required
to refund any such distributed amounts.
(c) On the last Business Day preceding each Payment Date, the Trustee
shall withdraw from amounts on deposit in the Cash Collateral Account, and
deposit into the Collection Account, an amount equal to the lesser of the
Available Cash Collateral Amount for such Payment Date and the sum of the
following amounts, if any (to the extent the deficiency represented by such
amounts has resulted, directly or indirectly, from delinquencies or defaults, or
both, on the Contracts):
(i) the amount, if any, by which the Available Pledged Revenues with
respect to such Payment Date, after payment of the amounts specified in
clause (i) of Section 8.03, is less than the sum of the amounts specified
in clauses (ii) and (iii) of Section 8.03; plus
(ii) the Principal Deficiency Amount, if any, for such Payment Date;
plus
(iii) the amount, if any, by which the Available Pledged Revenues
with respect to the Scheduled Maturity Date for any Class of Notes or the
Equity Certificates, after payment of all amounts specified in clauses (i)
through (iii) of Section 8.03, is less than the remaining Principal Balance
of such Class of Notes or the Equity Certificates, as applicable.
In the event that the Available Cash Collateral Amount for any Payment Date is
less than the total amount, if any, specified above for such Payment Date, the
amount actually withdrawn by the Trustee shall be applied in the order of
priority specified above, and,
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within each clause specified above, in the order of priority specified in
Section 8.03. For purposes of making withdrawals from the Cash Collateral
Account pursuant to this paragraph, the Trustee may conclusively presume, in the
absence of written notice from the Servicer to the contrary, that all amounts to
be so withdrawn have resulted, directly or indirectly, from delinquencies or
defaults, or both, on the Contracts.
SECTION 8.07. GENERAL PROVISIONS REGARDING TRUST ACCOUNTS AND CASH
COLLATERAL ACCOUNT.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all amounts held in the Trust Accounts and the Cash Collateral
Account shall, to the extent permitted by applicable laws, rules and
regulations, be invested, as directed by the Servicer, in Eligible Investments
that mature not later than one Business Day prior to the Payment Date for the
Collection Period to which such amounts relate (or, in the case of the Cash
Collateral Account, in Eligible Investments that mature not later than one
Business Day prior to the next Payment Date with respect to which amounts may be
withdrawn therefrom). Any such written direction shall certify that any such
investment is authorized by this Section. Investments in Eligible Investments
shall be made in the name of the Trustee on behalf of the Trust, and such
investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Trust Accounts or in the Cash Collateral Account
shall be made in Eligible Investments held by a financial institution in
accordance with the following requirements:
(i) all Eligible Investments shall be held in an account with such
financial institution in the name of the Trustee;
(ii) with respect to securities held in such account, such
securities shall be:
(A) certificated securities (as such term is used in N.Y. UCC
Section 8-313(d)(i)), securities deemed to be certificated securities
under applicable regulations of the United States government, or
uncertificated securities issued by an issuer organized under the laws
of the State of New York or the State of Delaware,
(B) either (I) in the possession of such institution, (II) in
the possession of a "clearing corporation" (as such term is used in
Section 8-102(5) of the Uniform Commercial Code of the State of New
York, registered in the name of such clearing corporation or its
nominee, not endorsed for collection or surrender or any other purpose
not involving transfer, not containing any evidence of a right or
interest inconsistent with the Trustee's security interest therein,
and held by such clearing corporation in an account of such
institution, (III) held in an account of such institution with the
Federal Reserve Bank of New York, or (IV) in the case of
uncertificated securities, issued in the name of such institution, and
(C) identified, by book entry or otherwise, as held for the
account of, or pledged to, the Trustee on the records of such
institution, and such
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institution shall have sent the Trustee a confirmation thereof;
(iii) with respect to repurchase obligations held in such account,
such repurchase obligations shall be identified by such institution, by
book entry or otherwise, as held for the account of, or pledged to, the
Trustee on the records of such institution, and the related securities
shall be held in accordance with the requirements of clause (ii) above; and
(iv) with respect to other Eligible Investments other than
securities and repurchase agreements, such Eligible Investments shall be
held in a manner acceptable to the Trustee.
Subject to the other provisions hereof, the Trustee shall have sole control over
each such investment and the income thereon, and any certificate or other
instrument evidencing any such investment, if any, shall be delivered directly
to the Trustee or its agent, together with each document of transfer, if any,
necessary to transfer title to such investment to the Trustee in a manner which
complies with this Section. All interest, dividends, gains upon transfer and
other income from, or earnings on, investments of funds in the Trust Accounts
shall be deposited in the Collection Account and distributed on the next Payment
Date in accordance with Section 8.03. All interest, dividends, gains upon
transfer and other income from, or earnings on, investments of funds in the Cash
Collateral Account shall be retained therein until distributed in accordance
with Section 8.06(b).
(b) Subject to Section 6.01(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts or the
Cash Collateral Account resulting from any loss on any Eligible Investment
included therein except for losses attributable to the Trustee's failure to make
payments on such Eligible Investments issued by the Trustee, in its commercial
capacity as principal obligor and not as Trustee, in accordance with their
terms.
(c) The Trustee, in holding all funds in the Trust Accounts and in
the Cash Collateral Account, and in making distributions as provided in this
Agreement, shall act solely on behalf of and as agent for the Equity
Certificateholders, the Noteholders and (as to the Cash Collateral Account) the
Cash Collateral Account Lenders.
(d) Any account which is required to be established as an Eligible
Account pursuant to this Indenture and which ceases to be an Eligible Account
shall within five Business Days (or such longer period, not to exceed 30 days,
as to which each Rating Agency may consent) be established as a new account
which shall be an Eligible Account, and any cash and/or any investments shall be
transferred to such new account.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS
OR EQUITY CERTIFICATEHOLDERS.
(a) Without the consent of the Holders of any Notes or Equity
Certificateholders, but with prior notice to the Rating Agencies, the Issuer and
the Trustee, when authorized by an Issuer Order, at any time and from time to
time, may enter into one or more indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Trustee any property subject to, or required to be
subjected to, the lien created by this Indenture, or to subject to the lien
created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of
the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee;
(v) to cure any ambiguity or to correct or supplement any provision
herein which may be inconsistent with any other provision herein;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI;
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar Federal statute
hereafter enacted and to add to this Indenture such other provisions as may
be expressly required by the TIA; or
(viii) to avoid a reduction, qualification or withdrawal of any
rating on the Notes.
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The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes or the Equity
Certificateholders, but upon satisfaction of the Rating Agency Condition, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; PROVIDED, HOWEVER, that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder.
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS AND
EQUITY CERTIFICATEHOLDERS.
(a) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies and the consent of a Note
Majority of each Class affected thereby, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; PROVIDED, HOWEVER, that, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date, timing or method of determination of payment of
any installment of principal of or interest on any Note, or reduce the
principal amount thereof, the interest rate thereon or the Redemption Price
or Special Redemption Price with respect thereto, change the provision of
this Indenture relating to the application of collections on, or the
proceeds of the sale of, the Trust Estate to payment of principal of or
interest on the Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair
the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes
on or after the respective due dates thereof (or, in the case of
redemption, on or after the Special Redemption Date or Redemption Date, as
applicable);
(ii) impair the right of the Holder to institute suit pursuant to
Section 5.08;
(iii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iv) modify or alter the provisions of the proviso to the definition
of the
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term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.04;
(vi) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Related Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien created by this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security provided
by the lien created by this Indenture; or
(viii) result in a reduction, qualification or withdrawal of the
rating of any class of Notes.
Any supplemental indenture to be entered into in accordance with this
Section shall be deemed to affect all Outstanding Notes other than any Class of
Notes with respect to which an Opinion of Counsel for the Issuer is addressed
and delivered to the Trustee to the effect that the interests of the Holders of
Notes of such Class are not affected in any material respect by the supplemental
indenture.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof. The
manner of obtaining such approvals shall be subject to such reasonable
requirements as the Trustee may prescribe.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
also may, with prior notice to the Rating Agencies and the consent of the Equity
Certificateholders, enter into an indenture or indentures supplemental hereto
for the purpose of modifying the rights of the Equity Certificateholders under
this Indenture.
The Trustee may in its discretion determine whether or not the rights
of the Equity Certificateholders under this Indenture would be modified by any
supplemental indenture, and any such determination shall be conclusive upon the
Equity Certificateholders. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for the Equity Certificateholders to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if the Equity Certificateholders shall approve the substance thereof.
The manner of obtaining such approvals and of evidencing the authorization of
the execution thereof by Equity Certificateholders shall be subject to such
reasonable requirements as the Trustee may
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prescribe.
(c) Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes and the Equity Certificateholders to which such amendment
or supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes and the Equity Certificates affected thereby, and the
respective rights, limitations of rights, obligations, duties, liabilities and
immunities under this Indenture of the Trustee, the Issuer, the Holders of the
Notes and the Equity Certificateholders shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX 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
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. REDEMPTION.
(a) If the conditions specified in Section 8.05(b) have not been
satisfied as of the Business Day immediately preceding the Special Redemption
Date, or if the Depositor has given notice to the Trustee of a Special
Redemption Date earlier than ___________________________, 1996, not less than
five Business Days prior to such Special Redemption Date, the Trustee shall, on
the Business Day immediately preceding the Special Redemption Date, withdraw
from the Escrow Account and deposit in the Note Distribution Account the Special
Redemption Price for the Notes, whereupon all of the Notes shall be due and
payable on the Special Redemption Date. The Depositor shall furnish the Rating
Agencies notice of such redemption.
(b) In the event that the Depositor pursuant to Section 5.1 of the
Transfer and Servicing Agreement purchases the corpus of the Trust, the Notes
are subject to redemption in whole, but not in part, on the Payment Date on
which such repurchase occurs, for a purchase price equal to the Redemption
Price; PROVIDED, HOWEVER, that the Issuer has available funds sufficient to pay
the Redemption Price. The Depositor, the Servicer or the Issuer shall furnish
the Rating Agencies notice of such redemption. If the Notes are to be redeemed
pursuant to this paragraph, the Servicer or the Issuer shall furnish notice of
such election to the Trustee not later than 25 days prior to the Redemption
Date, and the Issuer shall deposit with the Trustee in the Note Distribution
Account the Redemption Price of the Notes to be redeemed, whereupon all such
Notes shall be due and payable on the Redemption Date upon the furnishing of a
notice complying with Section 10.02 to each Holder of the Notes.
(c) In the event that the assets of the Trust are sold pursuant to
Section 9.1 of the Trust Agreement, the proceeds of such sale shall be
distributed as provided in Section 5.06. If amounts are to be paid to
Noteholders pursuant to this paragraph, the Servicer or the Issuer shall, to the
extent practicable, furnish notice of such event to the Trustee not later than
25 days prior to the Redemption Date whereupon all such amounts shall be payable
on the Redemption Date.
SECTION 10.02. FORM OF REDEMPTION NOTICE.
(a) Notice of redemption under Section 10.01(b) shall be given by the
Trustee by first-class mail, postage prepaid, mailed not less than five days
prior to the applicable Redemption Date to each Holder of Notes, as of the close
of business on the Record Date with respect to the Payment Date immediately
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
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(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Sections 10.01(a) and 10.01(c)
is not required to be given to Noteholders.
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE. The Notes or
portions thereof to be redeemed shall, following notice of redemption (if any)
as required by Section 10.02, on the Special Redemption Date or Redemption Date,
as applicable, become due and payable at the Redemption Price and (unless the
Issuer shall default in the payment of the Redemption Price) no interest shall
accrue on the Redemption Price for any period after the date to which accrued
interest is calculated for purposes of calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee (i) an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) 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;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation
as is necessary to enable such signatory to express an informed
opinion as to whether or not such covenant or condition has been
complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any property or securities with
the Trustee that is to be made the basis for the release of any
property subject to the lien created by this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Trustee (1) an Officers'
Certificate certifying or stating the opinion of each person signing
such certificate as to the fair value (within 90 days of such deposit)
to the Issuer of the property or securities to be so deposited, (2) an
Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording and
filing of this Indenture and any other requisite documents, and with
respect to the execution and filing of any financing statements and
continuation statements, as are necessary to perfect and make
effective the first priority lien and
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security interest in favor of the Trustee, for the benefit of the
Trustee, created by this Indenture in the property or securities to be
so deposited, and reciting the details of such action, or stating
that, in the opinion of such counsel, no such action is necessary to
make such lien and security interest effective, and (3) evidence that
the Rating Agency Condition has been satisfied.
(ii) Whenever the Issuer is required to furnish to the Trustee an
Officers' Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer
shall also deliver to the Trustee an Independent Certificate as to the
same matters, if the fair value to the Issuer of the property to be so
deposited and of all other such property made the basis of any such
withdrawal or release since the commencement of the then-current
fiscal year of the Issuer, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Amount of the Notes, but such a certificate need not
be furnished with respect to any property so deposited, if the fair
value thereof to the Issuer as set forth in the related Officers'
Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in
clause (A) or (B) of Section 11.01(b)(v), whenever any property or
securities are to be released from the lien created by this Indenture,
the Issuer shall also furnish to the Trustee an Officers' Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in
the opinion of such person the proposed release will not impair the
security created by this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee an
Officers' Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of
all other property or securities (other than property described in
clauses (A) or (B) of Section 11.01(b)(v)) released from the lien
created by this Indenture since the commencement of the then current
fiscal year, as set forth in the certificates required by clause (iii)
above and this clause (iv), equals 10% or more of the Outstanding
Amount of the Notes, but such certificate need not be furnished in the
case of any release of property or securities if the fair value
thereof as set forth in the related Officers' Certificate is less than
$25,000 or less than one percent of the then Outstanding Amount of the
Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this
Section, (A) collect, liquidate, sell or otherwise dispose of
Contracts as and to the extent permitted or required by the Related
Documents (including as provided in Section 3.1 of the Transfer and
Servicing Agreement) and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by the Related
Documents.
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SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Depositor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Depositor or the Issuer, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
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
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders 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 Indenture and
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(subject to Section 6.01) conclusive in favor of the Trustee and the Issuer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration 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 Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.04. NOTICES, ETC., TO TRUSTEE, ISSUER AND RATING AGENCIES.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
(b) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: Capita
Equipment Receivables Trust 1996-1, in care of
_______________________, as Owner Trustee,
___________________________________, Attention: Corporate Trust
Administration or at any other address previously furnished in writing
to the Trustee by Issuer. The Issuer shall promptly transmit any
notice received by it from the Noteholders to the Trustee, or
Notices required to be given to the Rating Agencies by the
Issuer, the Trustee or the Owner Trustee shall be in writing,
personally delivered or mailed by certified mail, return receipt
requested to (i) in the case of Moody's, at the following address:
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church
Street, New York, New York 10007, (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's Ratings Services,
26 Broadway (20th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department (iii) in the case of Fitch, at the
following address: Fitch Investors Services, L.P., One State Street
Plaza, New York, New York 10004 and (iv) in the case of Duff & Phelps,
at the following address: Duff & Phelps Credit Rating Co., 17 State
Street, New York, New York 10004; or as to each of the foregoing, at
such other address as shall be designated by written notice to the
other parties.
SECTION 11.05 NOTICES TO NOTEHOLDERS; WAIVER. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given
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(unless otherwise herein expressly provided) if in writing and mailed,
first-class, postage prepaid, to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice.
In any case where notice to Noteholders is given by mail, neither the failure to
mail such notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with respect to other
Noteholders, and any notice that is mailed in the manner herein provided shall
conclusively be presumed to have been duly given.
Where this Indenture 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 Noteholders 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 a 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 of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any reasonable manner of
giving such notice as shall be satisfactory to the Trustee shall be deemed to be
a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Trustee or any Paying Agent
to such Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer will furnish to the Trustee
a copy of each such agreement and the Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.07. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.08. 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.
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SECTION 11.09. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not.
All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 11.10. SEVERABILITY. In case any provision in this Indenture
or in the Notes 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 11.11. BENEFITS OF INDENTURE. Nothing in this Indenture or
in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Trust Estate, any benefit or any legal or equitable right,
remedy or claim under this Indenture.
SECTION 11.12. LEGAL HOLIDAYS. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment 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 date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. COUNTERPARTS. This Indenture 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 11.15. RECORDING OF INDENTURE. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Trustee or any other counsel reasonably
acceptable to the Trustee) to the effect that such recording is necessary either
for the protection of the Noteholders or any other Person secured hereunder or
for the enforcement of any right or remedy granted to the Trustee under this
Indenture.
SECTION 11.16. TRUST OBLIGATION. No recourse may be taken, directly
or indirectly, with respect to the obligations of the Issuer, the Owner Trustee
or the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner,
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owner, beneficiary, agent, officer, director, employee or agent of the Trustee
or the Owner Trustee in its individual capacity, any holder of a beneficial
interest in the Issuer, the Owner Trustee or the Trustee or of any successor or
assign of the Trustee or the Owner Trustee in its individual capacity, except as
any such Person may have expressly agreed (it being understood that the Trustee
and the Owner Trustee have no such obligations in their individual capacity) and
except that any such partner, owner or beneficiary shall be fully liable, to the
extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity. For all purposes of this Indenture, in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
SECTION 11.17. NO PETITION. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Depositor or the Issuer, or
join in any institution against the Depositor or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Indenture or any
of the Related Documents.
SECTION 11.18. INSPECTION. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Trustee shall
and shall cause its representatives to hold in confidence all such information
except to the extent disclosure may be required by law (and all reasonable
applications for confidential treatment are unavailing) and except to the extent
that the Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
SECTION 11.19. LIMITATION OF LIABILITY. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by ___________________________________, not individually or personally
but solely as Owner Trustee of the Issuer under the Trust Agreement, in the
exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by ___________________________________ but is made and intended for
the purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on ______________________________,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties to this Agreement and by any person claiming by, through or under them
and (d) under no circumstances shall _______________________________ be
personally liable for the payment of any indebtedness or expenses of the Issuer
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or
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undertaken by the Issuer under this Agreement or any related documents.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
By ,
not in its individual capacity but solely as
Owner Trustee under the Trust Agreement
By
Name:
Title:
,
not in its individual capacity but solely as
Trustee,
By
Name:
Title:
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EXHIBIT A
Schedule of Contracts
A-93
<PAGE>
EXHIBIT B
Form of Depository Agreement
B-94
<PAGE>
EXHIBIT C-1
REGISTERED $________________(1)
No. [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ___________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
_____% RECEIVABLE-BACKED NOTE, CLASS A
Capita Equipment Receivables Trust 1996-1, a trust organized and
existing under the laws of the State of New York (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [ ],
or registered assigns, the principal sum of [ ]
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $_________ [INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $________ [INSERT
INITIAL CLASS A PRINCIPAL BALANCE] by (ii) the aggregate amount, if any, payable
from the Note Distribution Account in respect of principal on the Class A Notes
pursuant to Section ___ of the Indenture hereinafter referred to; PROVIDED,
HOWEVER, that the entire unpaid principal amount of this Note shall be due and
payable on the earliest of the Special Redemption Date (if any), pursuant to
Section 10.01(a) of the Indenture, the Payment Date occurring in ____________
(the "Class A Scheduled Maturity Date") and the Redemption Date, if any,
pursuant to Section 10.01(b) and (c) of the Indenture. The Issuer will pay
interest on
- --------------------
1. Denominations of $1,000 and integral multiples thereof.
C-1-95
<PAGE>
this Note at the rate per annum shown above on each Payment Date until the
principal of this Note is paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Payment Date (after giving
effect to all payments of principal made on the preceding Payment Date).
Interest on this Note will accrue for each Payment Date from the most recent
Payment Date on which interest has been paid to but excluding such Payment Date
or, if no interest has yet been paid, from September ___, 1996. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: CAPITA EQUIPMENT RECEIVABLES
TRUST 1996-1
By
not in its individual capacity but solely as Owner Trustee under
the Trust Agreement,
By
Name:
Title:
C-1-96
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
,
not in its individual capacity but
solely as Trustee,
By
Authorized Signatory
C-1-97
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Receivable-Backed Notes, Class A (herein called the
"Class A Notes"), all issued under an Indenture dated as of September 1, 1996
(such indenture, as supplemented or amended, herein called the "Indenture"),
between the Issuer and _________________________, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A Notes, the Class B Notes and the Class C Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class A Notes will be payable on each Payment Date in
an amount described on the face hereof. "PAYMENT DATE" means the ______________
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in October 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Special Redemption Date (if
any), pursuant to Section 10.01(a) of the Indenture, the Class A Scheduled
Maturity Date and the Redemption Date, if any, pursuant to Section 10.01(b) or
10.01(c) of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing on the date on which an
Event of Default shall have occurred and be continuing and the Trustee or the
Holders of the Notes representing at least 66-2/3% of the Outstanding Amount of
the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.02 of the Indenture. All principal payments on the
Class A Notes shall be made pro rata to the Class A Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) affected by any payments made
on any Payment Date shall be binding upon all future
C-1-98
<PAGE>
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If
funds are expected to be available, as provided in the Indenture, for payment in
full of the then remaining unpaid principal amount of this Note on a Payment
Date, then the Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date with
respect to the Payment Date immediately preceding such Redemption Date by notice
mailed within five days of such Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class A Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(b) of the Indenture, in whole, but not in part, at the option of
the Depositor on any Payment Date on or after the date on which the sum of the
Aggregate Principal Balance of the Notes and the Principal Balance of the Equity
Certificates is less than or equal to 10% of the Cut-Off Date Contract Pool
Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the city in which the Corporate
Trust Office is located, or a member firm of a national securities exchange, and
such other documents as the Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital
C-1-99
<PAGE>
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Depositor or the Issuer,
or join in any institution against the Depositor or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
The Depositor has structured the Trust Agreement, the Indenture, the
Cash Collateral Account Agreement, the Notes and the Certificates with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Depositor secured by the Contracts. The
Depositor, the Servicer, each Noteholder and each Note Owner agree to treat and
to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder and each Note Owner, by acceptance of its Note or beneficial interest
therein, agrees to be bound by the provisions of this paragraph. Each
Noteholder agrees that it will cause any Note Owner acquiring an interest in a
Note through it to comply with the Indenture as to treatment as indebtedness
under applicable tax law, as described in this paragraph.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer
C-1-100
<PAGE>
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Related Documents, neither ___________________________ in its
individual capacity, any owner of a beneficiary interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purpose of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Related Documents, in the
case of an Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
PROVIDED, HOWEVER, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
C-1-101
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- --------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
-----------------------------------------------------------------
- --------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: **
----------------------------
Signature Guaranteed:
- --------------------------------------------
- ----------------------------
** NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C-1-102
<PAGE>
EXHIBIT C-2
REGISTERED $_________________ (2)
No. [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. ___________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
______% RECEIVABLE-BACKED NOTE, CLASS B
Capita Equipment Receivables Trust 1996-1, a trust organized and
existing under the laws of the State of New York (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [ ],
or registered assigns, the principal sum of [ ]
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $__________ [INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $__________ [INSERT
INITIAL CLASS B PRINCIPAL BALANCE] by (ii) the aggregate amount, if any, payable
from the Note Distribution Account in respect of principal on the Class B Notes
pursuant to Section ___ of the Indenture hereinafter referred to; PROVIDED,
HOWEVER, that the entire unpaid principal amount of this Note shall be due and
payable on the earliest of the Special Redemption Date (if any), pursuant to
Section 10.01(a) of the Indenture, the Payment Date occurring in _______________
(the "Class B Scheduled Maturity Date") and the Redemption Date, if any,
pursuant to Section 10.01(b) and (c) of the Indenture. The Issuer will pay
interest on
- -------------------------
2. Denominations of $1,000 and integral multiples thereof.
C-2-103
<PAGE>
this Note at the rate per annum shown above on each Payment Date until the
principal of this Note is paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Payment Date (after giving
effect to all payments of principal made on the preceding Payment Date).
Interest on this Note will accrue for each Payment Date from the most recent
Payment Date on which interest has been paid to but excluding such Payment Date
or, if no interest has yet been paid, from September ___, 1996. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: CAPITA EQUIPMENT RECEIVABLES TRUST
1996-1
By
not in its individual capacity but solely as Owner
Trustee under the Trust Agreement,
By
Name:
Title:
C-2-104
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
,
not in its individual capacity but
solely as Trustee,
By
Authorized Signatory
C-2-105
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Receivable-Backed Notes, Class B (herein called the
"Class B Notes"), all issued under an Indenture dated as of September 1, 1996
(such indenture, as supplemented or amended, herein called the "Indenture"),
between the Issuer and _________________________, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A Notes, the Class B Notes and the Class C Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of /Denominations of $1,000 and integral multiples thereof
the Class B Notes will be payable on each Payment Date in an amount described on
the face hereof. "PAYMENT DATE" means the ________________________ day of each
month, or, if any such date is not a Business Day, the next succeeding Business
Day, commencing in October 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Special Redemption Date (if
any), pursuant to Section 10.01(a) of the Indenture, the Class B Scheduled
Maturity Date and the Redemption Date, if any, pursuant to Section 10.01(b) or
10.01(c) of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing on the date on which an
Event of Default shall have occurred and be continuing and the Trustee or the
Holders of the Notes representing at least 66-2/3% of the Outstanding Amount of
the Notes have declared the Notes to be immediately due and payable in the
manner provided in Section 5.02 of the Indenture. All principal payments on the
Class B Notes shall be made pro rata to the Class B Noteholders entitled
thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) affected by any payments made
on any Payment Date shall be binding upon all future
C-2-106
<PAGE>
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If
funds are expected to be available, as provided in the Indenture, for payment in
full of the then remaining unpaid principal amount of this Note on a Payment
Date, then the Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date with
respect to the Payment Date immediately preceding such Redemption Date by notice
mailed within five days of such Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class B Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(b) of the Indenture, in whole, but not in part, at the option of
the Depositor on any Payment Date on or after the date on which the sum of the
Aggregate Principal Balance of the Notes and the Principal Balance of the Equity
Certificates is less than or equal to 10% of the Cut-Off Date Contract Pool
Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the city in which the Corporate
Trust Office is located, or a member firm of a national securities exchange, and
such other documents as the Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital
C-2-107
<PAGE>
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Depositor or the Issuer,
or join in any institution against the Depositor or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
The Depositor has structured the Trust Agreement, the Indenture, the
Cash Collateral Account Agreement, the Notes and the Certificates with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Depositor secured by the Contracts. The
Depositor, the Servicer, each Noteholder and each Note Owner agree to treat and
to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder and each Note Owner, by acceptance of its Note or beneficial interest
therein, agrees to be bound by the provisions of this paragraph. Each
Noteholder agrees that it will cause any Note Owner acquiring an interest in a
Note through it to comply with the Indenture as to treatment as indebtedness
under applicable tax law, as described in this paragraph.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer
C-2-108
<PAGE>
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Related Documents, neither ___________________________ in its
individual capacity, any owner of a beneficiary interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purpose of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Related Documents, in the
case of an Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
PROVIDED, HOWEVER, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
C-2-109
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- --------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
--------------------------------------------------------------
--------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: **
----------------------------
Signature Guaranteed:
- --------------------------------------------
- ----------------------------
** NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C-2-110
<PAGE>
EXHIBIT C-3
REGISTERED $ _______________ (3)
No. [ ]
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO.________
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
______% RECEIVABLE-BACKED NOTE, CLASS C
Capita Equipment Receivables Trust 1996-1, a trust organized and
existing under the laws of the State of New York (herein referred to as the
"Issuer"), for value received, hereby promises to pay to [ ],
or registered assigns, the principal sum of [ ]
payable on each Payment Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $__________ [INSERT INITIAL
PRINCIPAL AMOUNT OF NOTE] and the denominator of which is $__________ [INSERT
INITIAL CLASS C PRINCIPAL BALANCE] by (ii) the aggregate amount, if any, payable
from the Note Distribution Account in respect of principal on the Class C Notes
pursuant to Section ___ of the Indenture hereinafter referred to; PROVIDED,
HOWEVER, that the entire unpaid principal amount of this Note shall be due and
payable on the earliest of the Special Redemption Date (if any), pursuant to
Section 10.01(a) of the Indenture, the Payment Date occurring in _____________
(the "Class C Scheduled Maturity Date") and the Redemption Date, if any,
pursuant to Section 10.01(b) and (c) of the Indenture. The Issuer will pay
interest on
- ----------------------
3. Denominations of $1,000 and integral multiples thereof.
C-3-111
<PAGE>
this Note at the rate per annum shown above on each Payment Date until the
principal of this Note is paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Payment Date (after giving
effect to all payments of principal made on the preceding Payment Date).
Interest on this Note will accrue for each Payment Date from the most recent
Payment Date on which interest has been paid to but excluding such Payment Date
or, if no interest has yet been paid, from September ___, 1996. Interest will
be computed on the basis of a 360-day year comprised of twelve 30-day months.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: CAPITA EQUIPMENT RECEIVABLES
TRUST 1996-1
By
not in its individual capacity but solely as Owner Trustee under the
Trust Agreement,
By
Name:
Title:
C-3-112
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
,
not in its individual capacity but
solely as Trustee,
By
Authorized Signatory
C-3-113
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its ______% Receivable-Backed Notes, Class C (herein called the
"Class C Notes"), all issued under an Indenture dated as of September 1, 1996
(such indenture, as supplemented or amended, herein called the "Indenture"),
between the Issuer and _________________________, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A Notes, the Class B Notes and the Class C Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Class C Notes will be payable on each Payment Date in
an amount described on the face hereof. "PAYMENT DATE" means the ______________
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing in October 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earliest of the Special Redemption Date (if any)
pursuant to Section 10.01(a) of the Indenture, the Class C Scheduled Maturity
Date and the Redemption Date, if any, pursuant to Section 10.01(b) or 10.01(c)
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable on the date on which an Event of
Default shall have occurred and be continuing on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Notes representing at least 66-2/3% of the Outstanding Amount of the Notes
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.02 of the Indenture. All principal payments on the Class C Notes
shall be made pro rata to the Class C Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) affected by any payments made
on any Payment Date shall be binding upon all future
C-3-114
<PAGE>
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If
funds are expected to be available, as provided in the Indenture, for payment in
full of the then remaining unpaid principal amount of this Note on a Payment
Date, then the Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the Registered Holder hereof as of the Record Date with
respect to the Payment Date immediately preceding such Redemption Date by notice
mailed within five days of such Redemption Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class C Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(b) of the Indenture, in whole, but not in part, at the option of
the Depositor on any Payment Date on or after the date on which the sum of the
Aggregate Principal Balance of the Notes and the Principal Balance of the Equity
Certificates is less than or equal to 10% of the Cut-Off Date Contract Pool
Principal Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the city in which the Corporate
Trust Office is located, or a member firm of a national securities exchange, and
such other documents as the Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital
C-3-115
<PAGE>
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Depositor or the Issuer,
or join in any institution against the Depositor or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
The Depositor has structured the Trust Agreement, the Indenture, the
Cash Collateral Account Agreement, the Notes and the Certificates with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Depositor secured by the Contracts. The
Depositor, the Servicer, each Noteholder and each Note Owner agree to treat and
to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder and each Note Owner, by acceptance of its Note or beneficial interest
therein, agrees to be bound by the provisions of this paragraph. Each
Noteholder agrees that it will cause any Note Owner acquiring an interest in a
Note through it to comply with the Indenture as to treatment as indebtedness
under applicable tax law, as described in this paragraph.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer
C-3-116
<PAGE>
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly provided in
the Related Documents, neither ___________________________ in its individual
capacity, any owner of a beneficiary interest in the Issuer, nor any of their
respective partners, beneficiaries, agents, officers, directors, employees or
successors or assigns shall be personally liable for, nor shall recourse be had
to any of them for, the payment of principal of or interest on, or performance
of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purpose of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Related Documents, in the
case of an Event of Default under the Indenture, the Holder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
PROVIDED, HOWEVER, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
C-3-117
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- --------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
--------------------------------------------------------------
--------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: **
----------------------------
Signature Guaranteed:
- --------------------------------------------
- ----------------------------
** NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C-3-118
<PAGE>
TRUST AGREEMENT
Dated as of September 1, 1996
between
ANTIGUA FUNDING CORPORATION
and
______________________________
Owner Trustee
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . DEFINITIONS
1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Usage of Terms . . . . . . . . . . . . . . . . . . . . 3
Section 1.3. Calculations . . . . . . . . . . . . . . . . . . . . . 4
Section 1.4. Section References . . . . . . . . . . . . . . . . . . 4
Section 1.5. Action by or Consent of Certificateholders . . . . . . 4
ARTICLE II . . . . . . . . . . . . . . . . . . . . . CREATION OF TRUST
4
Section 2.1. Creation of Trust . . . . . . . . . . . . . . . . . . . 4
Section 2.2. Office . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3. Purposes and Powers . . . . . . . . . . . . . . . . . . 4
Section 2.4. Trust May Consolidate or Merge Only on Certain Terms . 5
Section 2.5. Appointment of Owner Trustee . . . . . . . . . . . . . 6
Section 2.6. Initial Capital Contribution of Trust Estate . . . . . 6
Section 2.7. Declaration of Trust . . . . . . . . . . . . . . . . . 6
Section 2.8. Liability of the Depositor. . . . . . . . . . . . . . . . 6
Section 2.9. Representations and Warranties of the Depositor . . . . . 7
Section 2.10. Covenants of the Depositor . . . . . . . . . . . . . . 8
Section 2.11. Covenants of the Certificateholders . . . . . . . . . . 11
ARTICLE III . . . . . . . . . . . . . . . . . . . . . .THE CERTIFICATES
12
Section 3.1. Initial Ownership . . . . . . . . . . . . . . . . . . . 12
Section 3.2. The Certificates; Authorized Denominations . . . . . . 12
Section 3.3. Authentication of Certificates . . . . . . . . . . . . 13
Section 3.4. Registration of Transfer and Exchange of
Certificates. . . . . . . . . . . . . . . . . . . . . 13
Section 3.5. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . . . . 15
Section 3.6. Persons Deemed Owners . . . . . . . . . . . . . . . . . 15
Section 3.7. Access to List of Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . . . . . . 15
Section 3.8. Maintenance of Office or Agency . . . . . . . . . . . . 16
Section 3.9. Appointment of Paying Agent . . . . . . . . . . . . . . 16
ARTICLE IV . . . . . . . . . . . . . . . . . .ACTIONS BY OWNER TRUSTEE
17
Section 4.1. Restriction on Power of Certificateholders . . . . . . 17
Section 4.2. Prior Notice to Certificateholders with Respect
to Certain Matters . . . . . . . . . . . . . . . . . 17
Section 4.3. Action by Certificateholders with Respect to
Bankruptcy . . . . . . . . . . . . . . . . . . . . . 17
- -2-
<PAGE>
Section 4.4. Restrictions on Certificateholders' Power . . . . . . . 17
ARTICLE V . . . . . . . . .APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
18
Section 5.1. Trust Accounts . . . . . . . . . . . . . . . . . . . . 18
Section 5.2. Application of Funds in the Equity Certificate
Distribution Account . . . . . . . . . . . . . . . . . 20
Section 5.3. Distribution of Funds in the Equipment Account
and Transfer of Equipment . . . . . . . . . . . . . . . 22
Section 5.4. Method of Payment . . . . . . . . . . . . . . . . . . . 22
Section 5.5. No Segregation of Monies; No Interest . . . . . . . . . 22
ARTICLE VI . . . . . . . . . . . AUTHORITY AND DUTIES OF OWNER TRUSTEE
23
Section 6.1. General Authority . . . . . . . . . . . . . . . . . . . .23
Section 6.2. General Duties . . . . . . . . . . . . . . . . . . . . 23
Section 6.3. Action upon Instruction . . . . . . . . . . . . . . . . 23
Section 6.4. No Duties Except as Specified in this Agreement
or in Instructions . . . . . . . . . . . . . . . . . 24
Section 6.5. No Action Except under Specified Documents or
Instructions. . . . . . . . . . . . . . . . . . . . . 25
Section 6.6. Restrictions . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII . . . . . . . . . . . . . . . .CONCERNING THE OWNER TRUSTEE
25
Section 7.1. Acceptance of Trust and Duties . . . . . . . . . . . . 25
Section 7.2. Furnishing of Documents . . . . . . . . . . . . . . . . 27
Section 7.3. Representations and Warranties . . . . . . . . . . . . 27
Section 7.4. Reliance; Advice of Counsel . . . . . . . . . . . . . . 27
Section 7.5. Not Acting in Individual Capacity . . . . . . . . . . . 28
Section 7.6. Owner Trustee Not Liable for Certificates,
Notes or Contracts . . . . . . . . . . . . . . . . . . 28
Section 7.7. Owner Trustee May Own Certificates and Notes . . . . . 29
ARTICLE VIII . . . . . . . . . . . . . . . COMPENSATION OF OWNER TRUSTEE
29
Section 8.1. Owner Trustee's Fees and Expenses . . . . . . . . . . . 29
Section 8.2. Indemnification . . . . . . . . . . . . . . . . . . . . 29
Section 8.3. Non-recourse Obligations . . . . . . . . . . . . . . . 30
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . TERMINATION
30
Section 9.1. Termination of the Trust . . . . . . . . . . . . . . . 30
ARTICLE X . . .SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
32
Section 10.1. Eligibility Requirements for Owner Trustee . . . . . . 32
- -3-
<PAGE>
Section 10.2. Resignation or Removal of Owner Trustee . . . . . . . . 33
Section 10.3. Successor Owner Trustee . . . . . . . . . . . . . . . . 33
Section 10.4. Merger or Consolidation of Owner Trustee . . . . . . . 34
Section 10.5. Appointment of Co-Trustee or Separate Trustee . . . . . 34
ARTICLE XI . . . . . . . . . . . . . . . . . .MISCELLANEOUS PROVISIONS
36
Section 11.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.2. No Recourse . . . . . . . . . . . . . . . . . . . . . . 37
Section 11.3. Governing Law . . . . . . . . . . . . . . . . . . . . . 37
Section 11.4. Severability of Provisions . . . . . . . . . . . . . . 37
Section 11.5. Certificates Nonassessable and Fully Paid . . . . . . . 38
Section 11.6. Third-Party Beneficiaries . . . . . . . . . . . . . . . 38
Section 11.7. Counterparts . . . . . . . . . . . . . . . . . . . . . 38
Section 11.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . 38
- -4-
<PAGE>
EXHIBITS
Exhibit A -- Form of Equity Certificate
Exhibit B -- Form of Equipment Certificate
Exhibit C -- Form of Representation Letter
-5-
<PAGE>
THIS TRUST AGREEMENT, dated as of September 1, 1996, is made between
Antigua Funding Corporation, a Delaware corporation (the "Depositor"), and
___________________________, a _________________________, as Owner Trustee (in
such capacity, the "Owner Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. All terms defined in the Indenture
(defined below) shall have the same meaning in this Agreement. Whenever
capitalized and used in this Agreement, the following words and phrases, unless
otherwise specified, shall have the following meanings:
AGREEMENT OR "THIS AGREEMENT": This Trust Agreement, all amendments
and supplements thereto and all exhibits and schedules to any of the foregoing.
APPLICANTS: The meaning assigned in Section 3.7.
AUTHENTICATION AGENT: ____________________, or its successor in
interest, and any successor authentication agent appointed as provided in this
Agreement.
BENEFIT PLAN: The meaning assigned in Section 3.4(g).
CERTIFICATE: An Equity Certificate or an Equipment Certificate, as
applicable.
CERTIFICATE ACCOUNT: The Equity Certificate Distribution Account or
the Equipment Account, as applicable.
CERTIFICATE MAJORITY: The meaning assigned in Section 1.5(a).
CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: The register
maintained and the registrar appointed pursuant to Section 3.4(a).
CERTIFICATEHOLDER OR HOLDER: A Person in whose name a Certificate is
registered in the Certificate Register.
CODE: The Internal Revenue Code of 1986, as amended.
CORPORATE TRUST OFFICE: The principal office of the Owner Trustee at
which
-6-
<PAGE>
at any particular time its corporate trust business shall be administered, which
office at the Closing Date is located at ___________________________, Attention:
Corporate Trust Administration; the telecopy number for the Corporate Trust
Office on the date of the execution of this Agreement is ______________.
DEPOSITOR: Antigua Funding Corporation, a Delaware corporation, in
its capacity as depositor hereunder.
EQUIPMENT ACCOUNT: The account designated as the Equipment Account
in, and which is established and maintained pursuant to, Section 5.1.
EQUIPMENT CERTIFICATEHOLDER: The Person in whose name the Equipment
Certificate is registered in the Certificate Register.
EQUIPMENT CERTIFICATE: A certificate executed by the Owner Trustee
evidencing a beneficial ownership interest in the Trust, substantially in the
form attached hereto as Exhibit B.
EQUITY CERTIFICATE DISTRIBUTION ACCOUNT: The account designated as
the Equity Certificate Distribution Account in, and which is established and
maintained pursuant to, Section 5.1.
EQUITY CERTIFICATEHOLDER: A Person in whose name an Equity
Certificate is registered in the Certificate Register.
EQUITY CERTIFICATE: A certificate executed by the Owner Trustee
evidencing a beneficial ownership interest in the Trust, substantially in the
form attached hereto as Exhibit A.
ERISA: The meaning assigned to such term in Section 3.4(g).
EXPENSES: The meaning assigned to such term in Section 8.2.
INDEMNIFIED PARTIES: The meaning assigned to such term in Section
8.2.
INDENTURE: The Indenture, dated as of September 1, 1996, between the
Trust and ____________________, as Indenture Trustee, as the same may be amended
and supplemented from time to time.
OWNER TRUSTEE: ________________________, or its successor in
interest, acting not individually but solely as trustee, and any successor
trustee appointed as provided in this Agreement.
PAYING AGENT: Any paying agent or co-paying agent appointed pursuant
to
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Section 3.9, which initially shall be [Indenture Trustee/Revolver Trustee --
same paying agent as on the Revolving Trust Certificates].
RECORD DATE: With respect to any Payment Date or Redemption Date, the
close of business on the last Business Day immediately preceding such Payment
Date or Redemption Date.
RELATED DOCUMENTS: The Transfer and Servicing Agreement, the
Indenture, the Purchase Agreement, the Cash Collateral Account Agreement, the
Revolving Trust Agreement, the Certificates, the Notes, and the underwriting
agreements between the Depositor and the underwriters of the Notes. The Related
Documents executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
REVOLVING TRUST AGREEMENT: The Trust Agreement, dated as of September
__, 1996, among Antigua Funding Corporation, as depositor, AT&T Capital
Corporation, as administrator, [Collateral Agent], as collateral agent, and
[Revolver Trustee], as Trustee, relating to the [Name of Revolving Trust].
TRANSFER AND SERVICING AGREEMENT: The Transfer and Servicing
Agreement, dated as of September 1, 1996, among the Trust, the Depositor, TCC,
in its individual capacity and as Servicer, and [Indenture Trustee], as trustee
under the Indenture, as the same may be amended and supplemented from time to
time.
TRUST: The trust created by this Agreement, the estate of which
consists of the Trust Assets.
TRUST ACCOUNTS: The Equity Certificate Distribution Account, the
Equipment Account, and such other accounts as may be established in the name of
the Trust pursuant to the Indenture or the Transfer and Servicing Agreement.
TRUST ASSETS: The property and proceeds of every description conveyed
pursuant to Section 2.6 hereof and Sections 2.1, 2.2 and 2.6 of the Transfer and
Servicing Agreement, together with the Trust Accounts (including all Eligible
Investments therein and all proceeds therefrom) and the right to withdraw funds
from the Cash Collateral Account pursuant to Section 8.06 of the Indenture.
Section 1.2. USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and
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assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation."
Section 1.3. CALCULATIONS. All calculations of the amount of
interest accrued on the Equity Certificates shall be made on the basis of a
360-day year consisting of twelve 30-day months.
Section 1.4. SECTION REFERENCES. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.
Section 1.5. ACTION BY OR CONSENT OF CERTIFICATEHOLDERS.
(a) Except as expressly provided herein, any action that may be taken
by the Certificateholders under this Agreement may be taken by a majority of
each class affected unless this Agreement provides that the vote with respect to
the matter may be taken by only one class, in which case only the vote of the
affected class shall be required. Except as expressly provided herein, any
written notice or consent of the Equity Certificateholders or the Equipment
Certificateholder delivered pursuant to this Agreement shall be effective for
such class if signed by Holders of the Equity Certificates evidencing not less
than a majority of the Equity Certificate Balance, and by the Holder of the
Equipment Certificate, respectively, at the time of the delivery of such notice
(a "Certificate Majority").
(b) Whenever any provision of this Agreement refers to action to be
taken, or consented to, by Certificateholders, such provision shall be deemed to
refer to Certificateholders of record as of the Record Date immediately
preceding the date on which such action is to be taken, or consent given, by
Certificateholders.
ARTICLE II
CREATION OF TRUST
Section 2.1. CREATION OF TRUST. There is hereby formed a trust to be
known as "Capita Equipment Receivables Trust 1996-1."
Section 2.2. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholders, the
Depositor, and the Indenture Trustee.
Section 2.3. PURPOSES AND POWERS. The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
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(i) to issue the Notes pursuant to the Indenture and to sell the
Notes in the manner directed by the Depositor;
(ii) to issue the Equity Certificates to or upon the order of the
Depositor and to issue the Equipment Certificate to the Depositor, pursuant
to this Agreement;
(iii) with the proceeds of the sale of the Notes, to fund the
Escrow Account, and to pay the organizational, start-up and transactional
expenses of the Trust;
(iv) to acquire the Contracts, the Equipment and the other items
conveyed pursuant to the Transfer and Servicing Agreement;
(v) to assign, grant, transfer, pledge, mortgage and convey any
or all of the Trust Assets to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders;
(vi) to hold, manage and distribute to the Certificateholders any
portion of the Trust Assets released from the Lien of, and remitted to the
Trust pursuant to, the Indenture and to distribute to the
Certificateholders any other portion of the Trust Assets in the manner
prescribed by the Transfer and Servicing Agreement, the Indenture and the
Cash Collateral Account Agreement;
(vii) to enter into and perform its obligations under the
Transfer and Servicing Agreement and the other Related Documents to which
it is to be a party;
(viii) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(ix) subject to compliance with the Related Documents, to engage
in such other activities as may be required in connection with conservation
of the Trust Assets and the making of distributions to the
Certificateholders and the Noteholders.
The Owner Trustee is hereby authorized to engage in the foregoing activities on
behalf of the Trust. The Owner Trustee, on behalf of the Trust, shall not
engage in any activity other than in connection with the foregoing or other than
as required or expressly authorized by the terms of this Agreement or the
Related Documents.
Section 2.4. TRUST MAY CONSOLIDATE OR MERGE ONLY ON CERTAIN TERMS.
(a) The Trust shall not consolidate or merge with or into any other
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Person, unless the conditions specified in Section 3.10(a) of the Indenture
have been satisfied.
(b) The Trust shall not convey or transfer all or substantially all
of its properties or assets, including those included in the Trust Estate under
the Indenture, to any Person (except as expressly permitted by the Indenture or
the Transfer and Servicing Agreement), unless the conditions specified in
Section 3.10(b) of the Indenture have been satisfied.
Section 2.5. APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
Section 2.6. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $10. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Assets and
shall be deposited in the Equity Certificate Distribution Account. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
Section 2.7. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Assets in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholders, subject to
the interests and rights in the Trust Assets granted to other Persons by the
Related Documents.
Section 2.8. LIABILITY OF THE DEPOSITOR.
(a) The Depositor shall be liable directly to indemnify each injured
party for all losses, claims, damages, liabilities and expenses of the Trust, to
the extent not paid out of the Trust Assets, PROVIDED, HOWEVER, that the
Depositor shall not be liable for any losses incurred by a Certificateholder in
the capacity of an investor in the Certificates or a Note Owner in the capacity
of an investor in the Notes; PROVIDED, FURTHER, that the Depositor shall not
shall be liable to indemnify any injured party if such party has agreed that its
recourse against the Trust for any obligation or liability of the Trust to such
party shall be limited to the assets of the Trust. In addition, any third party
creditors of the Trust (other than in connection with the obligations described
in the provisos to the preceding sentence for which the Depositor shall not
shall be liable) shall be deemed third party beneficiaries of this paragraph.
(b) The Depositor, other than to the extent set forth in paragraph
(a), shall not have any personal liability for any liability or obligation of
the Trust or by
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reason of any action taken by the parties to this Agreement pursuant to any
provisions of this Agreement or any Related Document.
Section 2.9. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. By
execution of this Agreement, the Depositor makes the following representations
and warranties on which the Owner Trustee relies in accepting the Trust Assets
in trust and issuing the Notes and Certificates.
(a) ORGANIZATION AND GOOD STANDING. It has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and as such
business is currently conducted and is proposed to be conducted pursuant to
this Agreement and the Related Documents.
(b) DUE QUALIFICATION. It is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property, the conduct of its business and the performance of
its obligations under this Agreement and the Related Documents requires
such qualification.
(c) POWER AND AUTHORITY. It has the power and authority to execute
and deliver this Agreement and its Related Documents and to perform its
obligations pursuant thereto (including but not limited to the transfer of
the Contracts and the Equipment to the Trust); and the execution, delivery
and performance of this Agreement and its Related Documents have been duly
authorized by all necessary corporate action.
(d) NO CONSENT REQUIRED. No consent, license, approval or
authorization of, or registration or declaration with, any Person or any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made.
(e) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and its Related Documents and the fulfillment of its
obligations under this Agreement and its Related 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, its certificate of incorporation or by-laws, or any indenture,
agreement, mortgage, deed of trust or other instrument to which it is a
party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, or
violate any law, order, rule or regulation applicable to it of any court or
of any federal or state
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regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties (A) asserting
the invalidity of this Agreement or any of the Related Documents, (B)
seeking to prevent the issuance of the Certificates or the Notes or the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (C) seeking any determination or ruling that
might materially and adversely affect its performance of its obligations
under, or the validity or enforceability of, this Agreement or any of the
Related Documents, or (D) seeking to adversely affect the federal income
tax or other federal, state or local tax attributes of the Trust or the
Certificates.
(g) PLACE OF BUSINESS. The principal executive offices of the
Depositor are in __________, and the offices where the Depositor keeps its
records concerning the Contracts and related documents are in _______.
(h) NOT AN INVESTMENT COMPANY. The Depositor is not an "investment
company" within the meaning of the Investment Company Act, or is exempt
from all provisions of such Act.
(i) BINDING OBLIGATIONS. This Agreement and the Related Documents
each constitutes the legal, valid and binding obligation of the Depositor,
enforceable against the Depositor in accordance with its terms, except (A)
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect, affecting the enforcement of creditors' rights in general, and (B)
as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
Section 2.10. COVENANTS OF THE DEPOSITOR. The Depositor agrees and
covenants for the benefit of each Note Owner, each Certificateholder and the
Owner Trustee, during the term of this Agreement, and to the fullest extent
permitted by applicable law, that:
(a) OTHER INDEBTEDNESS. It shall not create, incur or suffer to
exist any indebtedness or engage in any business, except, in each case, as
permitted by its certificate of incorporation and the Related Documents;
(b) NON-PETITION. It shall not, for any reason, institute
proceedings for itself or the Trust to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against itself or the Trust, or file a petition seeking or
consenting to reorganization or relief under any applicable
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federal or state law relating to the bankruptcy of itself or the Trust, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of itself or the Trust or a
substantial part of its assets or the property of the Trust or cause or
permit itself or the Trust to make any assignment for the benefit of
creditors, or admit in writing its inability or the inability of the Trust
to pay its debts generally as they become due, or declare or effect a
moratorium on the debt of itself or the Trust or take any action in
furtherance of any such action;
(c) OTHER PARTIES. It shall obtain from each counterparty to each
Related Document to which it or the Trust is a party and each other
agreement entered into on or after the date hereof to which it or the Trust
is a party, an agreement by each such counterparty that prior to the
occurrence of an Event of Default under the Indenture such counterparty
shall not institute against, or join any other Person in instituting
against, it or the Trust, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under
the laws of the United States or any state of the United States;
(d) NO LIENS. Except for the conveyances as provided hereunder or in
the Related Documents, the Depositor will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to
exist any Lien on, any Contract, any Equipment or any other Trust Assets,
whether now existing or hereafter created, and the Depositor shall defend
the right, title and interest of the Trust in, to and under the Contracts,
the Equipment and the other Trust Assets, whether now existing or hereafter
created, and such rights, remedies, powers and privileges, against all
claims of third parties claiming through or under the Depositor; the
Depositor will immediately notify the Trustee of the existence of any Lien
on any Contract or Equipment; and the Depositor shall defend the right,
title and interest of the Trust in, to and under the Contracts or
Equipment, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Depositor; PROVIDED, HOWEVER,
that nothing in this subsection 2.10(d) shall prevent or be deemed to
prohibit the Depositor from suffering to exist upon any of the Contracts or
Equipment any Permitted Lien.
(e) ENFORCEMENT OF PURCHASE AGREEMENT. The Depositor agrees to take
all action necessary and appropriate to enforce its rights and claims under
the Purchase Agreement.
(f) SEPARATE BUSINESS. The Depositor:
(i) will (A) maintain and prepare financial reports, financial
statements, books and records and bank accounts separate from those of
its Affiliates and any other person or entity and (B) not permit any
Affiliate or any other person or entity independent access to its bank
accounts;
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(ii) will not commingle its funds and other assets with those of
any Affiliate, any guarantor of any of the obligations of the
Depositor (each, a "Guarantor"), any Affiliate of any Guarantor or any
other person or entity;
(iii) will conduct its own business in its own name and will hold
all of its assets in its own name;
(iv) will remain solvent and pay its debts and liabilities
(including employment and overhead expenses) from its assets as the
same become due;
(v) will do all things necessary to observe corporate
formalities, and preserve its existence as a single-purpose,
bankruptcy-remote entity in accordance with the standards of the
Rating Agencies providing ratings on the Notes or the Equity
Certificates, as such standards are in effect on the date of issuance
of the Notes and the Equity Certificates;
(vi) will enter into transactions with Affiliates only if each
such transaction is commercially reasonable and on substantially
similar terms as a transaction that would be entered into on an arm's
length basis with a person or entity other than an Affiliate of the
Depositor;
(vii) will pay the salaries of its own employees from its own
funds and maintain a sufficient number of employees in light of its
contemplated business operations;
(viii) will compensate each of its consultants and agents from its
own funds for services provided to it and pay from its own assets all
obligations of any kind incurred;
(ix) will not guarantee, become obligated for, or hold itself or
its credit out to be responsible for, or available to satisfy, the
debts or obligations of any other person or entity or the decisions or
actions respecting the daily business or affairs of any other person
or entity;
(x) will not (i) acquire obligations or securities of any
Affiliate or any of the stockholders of the Depositor or (ii) buy or
hold any evidence of indebtedness issued by any other person or
entity, other than cash, investment-grade securities and the
Contracts;
(xi) will allocate fairly and reasonably and pay from its own
funds the cost of (i) any overhead expenses (including paying for any
office space) shared with any Affiliate of the Depositor and (ii) any
services (such as asset management, legal and accounting) that are
provided jointly to the Depositor
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and one or more of its Affiliates;
(xii) will maintain and utilize separate stationery, invoices and
checks bearing its own name and allocate separate office space (which
may be a separately identified area in office space shared with one or
more Affiliates of the Depositor) and maintain a separate sign in the
office directory of the building in which the Depositor maintains its
principal place of business;
(xiii) will not make any loans or advances to, or pledge its assets
for the benefit of, any other person or entity, including, without
limitation, any Affiliate or Guarantor or any Affiliate of any
Guarantor;
(xiv) will be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other person or
entity;
(xv) will, in the event that any authorized officer knows of any
misunderstanding regarding the separate identity of the Depositor,
correct such misunderstanding;
(xvi) will not identify itself or any of its Affiliates as a
division or part of any other entity; and
(xvii) will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations.
(g) PURCHASE AGREEMENT NOTICES. The Depositor (i) shall promptly
give the Owner Trustee and the Indenture Trustee copies of any notices,
reports or certificates given or delivered to the Depositor under the
Purchase Agreement, (ii) shall not without the consents, approvals and
opinions, if any, required by Section 11.1 hereof, as if Section 11.1
related to the Purchase Agreement rather than this Agreement, enter into
any amendment, supplement or other modification to, or waiver of any
provision of, the Purchase Agreement and (iii) shall not permit the removal
of a Contract from the operation of the Purchase Agreement unless there is
a corresponding right or obligation of the Depositor to remove such
Contract from the Trust.
Section 2.11. COVENANTS OF THE CERTIFICATEHOLDERS. Each
Certificateholder by becoming a Certificateholder agrees:
(a) to be bound by the terms and conditions of the Certificates of
which such Holder is the beneficial owner and of this Agreement, including
any supplements or amendments hereto and to perform the obligations of a
Holder as set forth therein or herein, in all respects as if it were a
signatory hereto. This
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undertaking is made for the benefit of the Trust, the Owner Trustee and all
other Certificateholders present and future.
(b) not to, for any reason, institute proceedings for the Trust or
the Depositor to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust or
the Depositor, or file a petition seeking or consenting to reorganization
or relief under any applicable federal or state law relating to bankruptcy,
or consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or the Depositor or a
substantial part of its property, or cause or permit the Trust or the
Depositor to make any assignment for the benefit of its creditors, or admit
in writing its inability to pay its debts generally as they become due, or
declare or effect a moratorium on its debt or take any action in
furtherance of any such action.
ARTICLE III
THE CERTIFICATES
Section 3.1. INITIAL OWNERSHIP. Upon the formation of the Trust by
the contribution by the Depositor pursuant to Section 2.6 and until the issuance
of the Certificates, the Depositor shall be the sole beneficiary of the Trust.
Section 3.2. THE CERTIFICATES; AUTHORIZED DENOMINATIONS.
(a) The Certificates shall be executed on behalf of the Owner Trustee
by manual or facsimile signature of any authorized signatory of the Owner
Trustee having such authority under the Owner Trustee's seal imprinted or
otherwise affixed thereon and attested on behalf of the Owner Trustee by the
manual or facsimile signature of any authorized signatory of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Owner Trustee shall be validly issued and entitled to the benefits of this
Agreement, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates.
(b) On the Closing Date, one Equity Certificate, in the principal
amount of $__________, shall be issued to or upon the order of the Depositor.
Unless and until the Equity Certificate is transferred pursuant to the terms of
a pledge thereof (as permitted by Section 3.4(b) hereof), there shall at all
times be a single Equity Certificate. In the event of any such transfer, Equity
Certificates may thereafter be issued in denominations of $250,000 initial
principal amount and integral multiples of $1,000 thereof.
(c) One Equipment Certificate shall be issued on the Closing Date to
the Depositor. There shall at all times be a single Equipment Certificate.
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Section 3.3. AUTHENTICATION OF CERTIFICATES. No Certificate shall
entitle its holder to any benefit under this Agreement, or shall be valid for
any purpose, unless there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in Exhibit A in the case of
an Equity Certificate or Exhibit B in the case of an Equipment Certificate,
executed by the Owner Trustee or the Authentication Agent, by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Certificate shall have been duly authenticated and delivered
hereunder. [Indenture Trustee/Revolver Trustee] is hereby initially appointed
Authentication Agent. All Certificates shall be dated the date of their
authentication.
Section 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Certificate Registrar shall maintain, or cause to be
maintained, at the office or agency maintained pursuant to Section 3.8, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Owner Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates as provided in this Agreement.
[The Owner Trustee hereby initially appoints itself] [[Indenture Trustee] is
hereby initially appointed] Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as provided in this
Agreement.
(b) The Depositor may transfer and/or pledge the Equity Certificate
to [Revolver Trustee], as Trustee under the Revolving Trust Agreement, and in
connection therewith may instruct the Certificate Registrar to register the sole
Equity Certificate in the name of the Depositor, [Revolver Trustee] or [Revolver
Trustee]'s nominee. The Equity Certificate shall not thereafter be
transferable, except (i) as required by the terms of the Revolving Trust
Agreement, (ii) upon the termination of the Revolving Trust Agreement, and (iii)
as may be required to reflect the interest of a successor trustee under the
Revolving Trust Agreement.
(c) The Equipment Certificate shall initially be issued to the
Depositor. Except as a result of a merger or similar change in corporate
structure of the Depositor, if and to the extent permitted by Article XVI of its
Certificate of Incorporation, the Equipment Certificate may not be transferred
and the Certificate Registrar shall not register any transfer of the Equipment
Certificate.
(d) If the registration of transfer of an Equity Certificate is
permitted by subsection (b), then, upon surrender for registration of transfer
of such Equity Certificate at the office or agency maintained pursuant to
Section 3.8, the Owner Trustee shall execute, authenticate and deliver (or shall
cause the Authentication Agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Equity Certificates in
authorized denominations and aggregate proportion of the Equity Certificate
Balance dated the date of authentication by the Owner Trustee or any
Authenticating Agent. If the registration of transfer of an Equity Certificate
is permitted by subsection (b), then at the option of the Holder, such Equity
Certificate may be
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exchanged for other Equity Certificates in authorized denominations of a like
aggregate amount upon surrender of the Equity Certificates to be exchanged at
the office or agency maintained pursuant to Section 3.8.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange must be accompanied by a written instrument of transfer in
form satisfactory to the Owner Trustee and the Certificate Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Certificate properly surrendered for registration of transfer or exchange shall
be canceled and subsequently disposed of by the Owner Trustee in accordance with
its customary practice.
(f) No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Owner Trustee or the Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Certificates.
(g) No Certificate may be acquired by or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to the
provisions of Title 1 of ERISA, (ii) a plan described in Section 4975(e)(1) of
the Internal Revenue Code of 1985, as amended, or (iii) any entity whose
underlying assets include plan assets by reason of a plan's investment in the
entity (each, a "Benefit Plan"). By accepting and holding a Certificate, the
Holder thereof shall be deemed to have represented and warranted that it is not
a Benefit Plan.
(h) In addition to the restrictions of subsection (b) above, and
except for the transfer and/or pledge of the Equity Certificate to [Revolver
Trustee], no transfer of an Equity Certificate may be made by the Depositor or
any other Person unless such transfer is exempt from the registration
requirements of the Securities Act of 1933 (the "Act"), as amended, and any
applicable state securities laws or is made in accordance with the Act and such
state laws. In the event that any such transfer is to be made, (A) the
Depositor may require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Depositor that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from the Act and such state laws or is being made pursuant to the Act and such
state laws, which Opinion of Counsel shall not be an expense of the Owner
Trustee or the Depositor, and (B) the Owner Trustee shall require the transferee
to execute a representation letter substantially in the form of Exhibit C
attached hereto, which representation letter shall not be an expense of the
Owner Trustee or the Depositor. The Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Owner Trustee, the
Depositor and the Certificate Registrar against any liability that may result if
the transfer is not so exempt or is not made in accordance with the Act and such
state laws.
Section 3.5. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If
(a) any
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mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (b) there is delivered to the Certificate
Registrar and the Owner Trustee such security or indemnity as may be required by
them to save each of them harmless, then, in the absence of notice to the
Certificate Registrar or the Owner Trustee that such Certificate has been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute, authenticate and deliver (or the Authentication Agent shall
authenticate and deliver), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
portion of the Equity Certificate Balance (in the case of an Equity
Certificate). In connection with the issuance of any new Certificate under this
Section 3.5, the Owner Trustee 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 Owner
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 3.5 shall constitute conclusive
evidence of ownership of a beneficial interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 3.6. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar and any agent of the Owner Trustee or the Certificate Registrar may
treat the person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
5.2 or Section 5.3, as applicable, and for all other purposes whatsoever, and
neither the Owner Trustee, the Certificate Registrar nor any agent of the Owner
Trustee or the Certificate Registrar shall be affected by any notice to the
contrary.
Section 3.7. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Owner Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Owner Trustee of a written request
therefor, a list, in such form as the Servicer may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record Date
for payment of distributions to Certificateholders. If three or more Equity
Certificateholders, or one or more Certificateholders evidencing not less than
25% of the Equity Certificate Balance, or the Equipment Certificateholder
(hereinafter referred to as "Applicants"), apply in writing to the Owner
Trustee, and such application states that the Applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and is accompanied by a copy of the communication that
such Applicants propose to transmit, then the Owner Trustee shall, within five
Business Days after the receipt of such application, afford such Applicants
access, during normal business hours, to the current list of Certificateholders.
Every Certificateholder, by receiving and holding a Certificate, agrees that
none of the Servicer or the Owner Trustee, nor any agent thereof, shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders under this Agreement, regardless of the
source from which such
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information was derived.
Section 3.8. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee
shall maintain an office or offices or agency or agencies where Certificates may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Owner Trustee in respect of the Certificates and the
Related Documents may be served. The Owner Trustee initially designates
__________ as its principal corporate trust office for such purposes. The Owner
Trustee shall give prompt written notice to the Depositor and to the
Certificateholders of any change in the location of the Certificate Register or
any such office of agency.
Section 3.9. APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make distributions to Equity Certificateholders from the Equity Certificate
Distribution Account pursuant to Section 5.2, shall make distributions to the
Equipment Certificateholder from the Equipment Account pursuant to Section 5.3,
and shall report the amounts of such distributions to the Owner Trustee. Any
Paying Agent shall have the revocable power to withdraw funds from the Equity
Certificate Distribution Account and the Equipment Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent shall initially
be [Indenture Trustee/Revolver Trustee], and any co-paying agent chosen by
[Indenture Trustee/Revolver Trustee] and acceptable to the Owner Trustee.
[Indenture Trustee/Revolver Trustee] shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Owner Trustee. In the event that
[Indenture Trustee/Revolver Trustee] shall no longer be the Paying Agent, the
Owner Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company). The Owner Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Owner Trustee to execute
and deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee that as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Owner Trustee, and upon removal of a Paying Agent, such Paying
Agent shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 7.1, 7.3, 7.4 and 8.2 shall apply to the Owner Trustee
also in its role as Paying Agent for so long as the Owner Trustee shall act as
Paying Agent and, to the extent applicable, to any other Paying Agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include
any co-paying agent unless the context requires otherwise.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
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Section 4.1. RESTRICTION ON POWER OF CERTIFICATEHOLDERS. No
Certificateholder shall have any right to vote or in any manner otherwise
control the operation and management of the Trust except as expressly provided
in this Agreement.
Section 4.2. PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. The Owner Trustee shall not take any of the following actions,
unless at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Certificateholders shall not have notified the Owner Trustee in writing
prior to the 30th day after such notice is given that such Certificateholders
have withheld consent or provided alternative direction:
(a) the amendment of this Agreement, unless such amendment would not
materially and adversely affect the interests of the Certificateholders;
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required unless such
amendment would not materially and adversely affect the interests of the
Certificateholders;
(c) the amendment of any other Related Document, unless such
amendment would not materially and adversely affect the interests of the
Certificateholders; or
(d) the initiation or settlement of any material claim, proceeding or
lawsuit affecting the Trust or the Trust Assets.
Section 4.3. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO BANKRUPTCY.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Depositor or the Trust without the unanimous prior
approval of all Equity Certificateholders and the Equipment Certificateholder
and the delivery to the Owner Trustee by each such Equity Certificateholder and
Equipment Certificateholder of a certificate certifying that such Equity
Certificateholder or Equipment Certificateholder, as the case may be, reasonably
believes that the Depositor or the Trust, as appropriate, is insolvent.
Section 4.4. RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. No
Certificateholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any Related
Document, unless (i) the Equity Certificateholders and the Equipment
Certificateholder have provided instruction to the Owner Trustee pursuant to
Section 6.3, (ii) an Equity Certificateholder and the Equipment
Certificateholder previously shall have given to the Owner Trustee a written
notice of default under or breach of this Agreement or any Related Document and
of the continuance thereof, as provided in this Agreement, and (iii) Equity
Certificateholders evidencing not less than
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25% of the Equity Certificate Balance represented by the Equity Certificates or
the Equipment Certificateholder shall have made written request upon the Owner
Trustee to institute such action, suit or proceeding in its own name as Owner
Trustee under this Agreement and shall have offered to the Owner Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
days after its receipt of such notice, request, and offer of indemnity, shall
have neglected or refused to institute any such action, suit, or proceeding, and
during such 30-day period no request or waiver inconsistent with such written
request has been given to the Owner Trustee pursuant to and in compliance with
this Section or Section 6.3; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 4.4, each and every Certificateholder and the Owner Trustee
shall be entitled to such relief as can be given either at law or in equity.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1. TRUST ACCOUNTS.
(a) The Owner Trustee shall establish and maintain the Equity
Certificate Distribution Account in the name of the Trust for the benefit of the
Equity Certificateholders. The Equity Certificate Distribution Account shall be
an Eligible Account and initially shall be a segregated trust account
established with the Owner Trustee and maintained with the Owner Trustee.
(b) The Owner Trustee shall establish and maintain the Equipment
Account in the name of the Trust for the benefit of the Equipment
Certificateholders. The Equipment Account shall be an Eligible Account and
initially shall be a segregated trust account established with the Owner Trustee
and maintained with the Owner Trustee.
(c) The Owner Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Certificate Accounts and in all
proceeds thereof. If, at any time, any Certificate Account ceases to be an
Eligible Account, the Owner Trustee shall within 5 Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Equity Certificate Distribution Account and Equipment
Account as Eligible Accounts and shall transfer any cash and/or any investments
to such new Certificate Account.
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(d) All amounts held in the Certificate Accounts shall, to the extent
permitted by applicable laws, rules and regulations, be invested by the Owner
Trustee at the direction of the Depositor in Eligible Investments that mature
not later than one Business Day prior to the immediately following Payment Date.
Such investments shall not be sold or disposed of prior to their maturity. All
investments of funds in a Certificate Account shall be held by a financial
institution in accordance with the following requirements:
(i) all Eligible Investments shall be held in an account with such
financial institution in the name of the Owner Trustee;
(ii) with respect to securities held on such account, such securities
must be:
(A) certificated securities (as such term is used in N.Y. UCC
Section 8-313(d)(i)), securities deemed to be certificated
securities under applicable regulations of the United States
government, or uncertificated securities issued by an issuer
organized under the laws of the State of New York or the State of
Delaware;
(B) either (I) in the possession of such financial institution,
(II) in the possession of a clearing corporation (as such term is
used in Section 8-102(5) of the Uniform Commercial Code of the
State of New York, registered in the name of such clearing
corporation or its nominee, not endorsed for collection or
surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with
the Owner Trustee's security interest therein, and held by such
clearing corporation in an account of such financial institution,
(III) held in an account of a financial institution with the
Federal Reserve Bank of New York, or (IV) in the case of
uncertificated securities, issued in the name of such financial
institution; and
(C) identified, by book entry or otherwise, as held for the
account of, or pledged to, the Owner Trustee on the records of such
financial institution, and such financial institution shall have
sent the Owner Trustee a confirmation thereof;
(iii) with respect to repurchase obligations held in a Certificate
Account, such repurchase obligation must be identified by such financial
institution, by book entry or otherwise, as held for the account of, or
pledged to, the Owner Trustee on the records of such financial institution,
and the related securities must be held in accordance with the requirements
of clause (ii) above;
(iv) with respect to any Eligible Investments other than securities
and
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repurchase agreements, such Eligible Investments must be held in a manner
acceptable to the Owner Trustee.
Subject to the other provisions hereof, the Owner Trustee shall have
sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Owner Trustee or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment to
the Owner Trustee in a manner which complies with this Section 5.1. All
interest, dividends, gains upon sale and other income from, or earnings on
investment of funds in such Certificate Account shall be deposited in the Equity
Certificate Distribution Account and distributed on the next Payment Date
pursuant to Section 5.2(d). The Depositor shall deposit in such Certificate
Account an amount equal to any net loss on such investments immediately as
realized.
Section 5.2. APPLICATION OF FUNDS IN THE EQUITY CERTIFICATE
DISTRIBUTION ACCOUNT.
(a) On each Payment Date the Paying Agent will, based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9 of the Transfer and Servicing
Agreement, distribute to Equity Certificateholders, to the extent of the funds
available, amounts deposited in the Equity Certificate Distribution Account
pursuant to Sections 8.03 and 8.06 of the Indenture with respect to such Payment
Date in the following order of priority:
(i) first, from the amounts deposited in the Equity Certificate
Distribution Account pursuant to Sections 8.03 and 8.06 of the Indenture,
to the Equity Certificateholders, on a pro rata basis, an amount equal to
the Equity Certificate Interest Distributable Amount;
(ii) second, from the amounts deposited in the Equity Certificate
Distribution Account pursuant to Sections 8.03 and 8.06 of the Indenture,
to the Equity Certificateholders, on a pro rata basis, an amount equal to
the Equity Certificate Principal Distributable Amount;
(iii) third, from amounts, if any, deposited in the Equity Certificate
Distribution Account pursuant to Section 8.06 of the Indenture, to the
Equity Certificateholders, on a pro rata basis, an amount equal to the
Principal Deficiency Amount, if any, allocable to the Equity Certificates;
and
(iv) fourth, from amounts, if any, deposited in the Equity Certificate
Distribution Account pursuant to Section 8.03(viii) of the Indenture, to
the Equity Certificateholders on a pro rata basis, all such amounts.
(b) On the Payment Date following the date on which amounts received
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in respect of the Depositor's exercise of its option to purchase the corpus of
the Trust pursuant to Section 5.1(a) of the Transfer and Servicing Agreement are
deposited in the Equity Certificate Distribution Account pursuant to Section
8.03 of the Indenture, the Paying Agent will distribute such funds (taking into
account any concurrent distribution made pursuant to Section 5.2(a)) in the
following order of priority:
(i) first, to Equity Certificateholders, on a pro rata basis, an
amount equal to the Equity Certificate Interest Distributable Amount; and
(ii) second, to Equity Certificateholders, on a pro rata basis, the
remaining Equity Certificate Balance.
(c) On the Payment Date following each date on which the Indenture
Trustee makes payments of money or property in respect of liquidation of the
Trust Assets pursuant to Section 5.06 of the Indenture and deposits funds
received in connection with such liquidation in the Equity Certificate
Distribution Account, the Paying Agent will distribute such funds (taking into
account any concurrent distribution made pursuant to Section 5.2(a)) in the
following order of priority:
(i) first, to Equity Certificateholders, on a pro rata basis, an
amount equal to the Equity Certificate Interest Distributable Amount; and
(ii) second, to Equity Certificateholders, on a pro rata basis, for
amounts in respect of principal on the Equity Certificates.
(d) Any funds remaining in the Equity Certificate Distribution
Account after distribution of all other amounts specified in this Section 5.2
shall be distributed to the Equity Certificateholders, pro rata.
(e) On each Payment Date, the Paying Agent shall send to each Equity
Certificateholder the statement required pursuant to Section 7.05(b) of the
Indenture.
(f) In the event that any withholding tax is imposed on the Trust's
payment to a Certificateholder, such tax shall reduce the amount otherwise
distributable to the Certificateholder in accordance with this Section. The
Paying Agent is hereby authorized and directed to retain from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Owner Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such
Certificateholders at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-U.S.
Certificateholder), the Owner Trustee
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may in its sole discretion withhold such amounts in accordance with this
paragraph (f). In the event that a Certificateholder wishes to apply for a
refund of any such withholding tax, the Owner Trustee shall reasonably cooperate
with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
Section 5.3. DISTRIBUTION OF FUNDS IN THE EQUIPMENT ACCOUNT AND
TRANSFER OF EQUIPMENT.
(a) On each Business Day the Owner Trustee will distribute to the
Equipment Certificateholder all funds deposited in the Equipment Account
pursuant to Sections 4.2(a), 4.2(d) or 4.5 of the Transfer and Servicing
Agreement.
(b) Pursuant to Section 4.5 of the Transfer and Servicing Agreement,
the Owner Trustee will, as promptly as practicable, transfer to the Equipment
Certificateholder all Equipment released from the lien of the Indenture (other
than upon a sale or other disposition by the Servicer). The Owner Trustee is
authorized to execute such bills of sale and other instruments of transfer as
the Equipment Certificateholder deems necessary to transfer title in such
Equipment to or upon the order of the Equipment Certificateholder.
Section 5.4. METHOD OF PAYMENT. Subject to Section 9.1(c),
distributions of funds required to be made to Certificateholders on any Payment
Date shall be made to each Certificateholder of record on the preceding Record
Date either by wire transfer, in immediately available funds, to the account of
such Holder at a bank or other entity having appropriate facilities therefor,
provided that such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business Days prior to
such Payment Date and such Holder's Certificates in the aggregate evidence an
initial denomination of not less than $1,000,000 (or if such Certificateholder
is [Revolver Trustee], the Depositor or an Affiliate thereof), or, if not, by
check mailed to such Certificateholder at the address of such holder appearing
in the Certificate Register.
Section 5.5. NO SEGREGATION OF MONIES; NO INTEREST. Subject to
Section 5.1, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or by the
Indenture and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1. GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver the Related Documents to which the Trust is to
be a party
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and each certificate or other document attached as an exhibit to or contemplated
by the Related Documents to which the Trust is to be a party and any amendment
thereto, and on behalf of the Trust, to direct the Indenture Trustee to
authenticate and deliver the Class A Notes in the aggregate principal amount of
$__________, the Class B Notes in the aggregate principal amount of $__________,
and the Class C Notes in the aggregate principal amount of $__________. In
addition to the foregoing, the Owner Trustee is authorized, but shall not be
obligated, to take all actions required of the Trust pursuant to the Related
Documents.
Section 6.2. GENERAL DUTIES. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged through such agents as shall be
appointed) all of its responsibilities pursuant to the terms of this Agreement
and the Related Documents and to administer the Trust in the interest of the
Certificateholders, subject to the Related Documents and in accordance with the
provisions of this Agreement.
Section 6.3. ACTION UPON INSTRUCTION.
(a) Subject to Article IV, the Certificateholders shall have the
exclusive right to direct the actions of the Owner Trustee in the management of
the Trust, so long as such instructions are not inconsistent with the express
terms set forth herein or in any Related Document, and provided that if the
Indenture Trustee, the Noteholders or the Servicer are entitled, pursuant to the
Indenture or the Transfer and Servicing Agreement, to direct any actions of the
Owner Trustee, such directions shall control. The Certificateholders may not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
Related Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Related Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is contrary to the terms hereof or of any Related Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Related Document, and the Owner Trustee has not received
instructions with respect to such matter from the Indenture Trustee, the
Noteholders or the Servicer pursuant to the terms of the Indenture or the
Transfer and Servicing Agreement, the Owner Trustee shall promptly give notice
(in such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction received from the Certificateholders, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
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inconsistent with this Agreement or the Related Documents, as it shall deem to
be in the best interests of the Certificateholders, and shall have no liability
to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Related Document or any
such provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Related
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
Section 6.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of, or
otherwise deal with the Trust Assets, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Trust is a party, except as expressly provided by the terms of this
Agreement (including as provided in Section 6.2) or in any written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Related Document against
the Owner Trustee. The Owner Trustee shall have no responsibility for
preparing, monitoring or filing any financing or continuation statements in any
public office at any time or otherwise to perfect or maintain the perfection of
any security interest or lien granted to it hereunder or to record this
Agreement or any Related Document; however, the Owner Trustee will from time to
time execute and deliver such financing or continuation statements as are
prepared by the Servicer and delivered to the Owner Trustee for its execution on
behalf of the Trust for the purpose of perfecting or maintaining the perfection
of such a security interest or lien or effecting such a recording. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense (and not
at the expense of the Trust), promptly take all action as may be necessary to
discharge any liens on any part of the Trust Assets that are attributable to
claims against the Owner Trustee in its individual capacity that are not related
to the ownership or the administration of the Trust Assets.
Section 6.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS.
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The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of, the Trust Assets except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Related Documents and (iii) in accordance
with any document or instruction delivered to the Owner Trustee pursuant to
Section 6.3.
Section 6.6. RESTRICTIONS. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Certificateholders may not direct the Owner Trustee to take
action that would violate the provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1. ACCEPTANCE OF TRUST AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The
Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Trust Assets upon the terms of the Related Documents
and this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Related Document under any circumstances, except (i) for
its own willful misconduct or gross negligence, (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.3, (iii) for
liabilities arising from the failure of the Owner Trustee to perform obligations
expressly undertaken by it in the last sentence of Section 6.4 hereof, (iv) for
any investments issued by the Owner Trustee or any branch or affiliate thereof
in its commercial capacity or (v) for taxes, fees or other charges on, based on
or measured by, any fees, commissions or compensation received by the Owner
Trustee in connection with any of the transactions contemplated by this
Agreement or any Related Document. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Owner Trustee;
(b) the Owner 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
instructions of the Certificateholders;
(c) no provision of this Agreement or any Related Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Related Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is
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not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under this Agreement or any of the
Related Documents, including the principal of and interest on the Equity
Certificates or the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement (except as provided in
Section 7.3 hereof) or for the due execution hereof by the Depositor or for
the form, character, genuineness, sufficiency, value or validity of any of
the Trust Assets or for or in respect of the validity or sufficiency of the
Related Documents, other than the certificate of authentication on the
Certificates, and the Owner Trustee shall in no event assume or incur any
liability, duty, or obligation to, the Indenture Trustee, any Noteholder or
to any Certificateholder, other than as expressly provided for herein and
in the Related Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee or the Servicer under any of the
Related Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under this
Agreement or the Related Documents that are required to be performed by the
Indenture Trustee under the Indenture or the Servicer under the Transfer
and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Related Document, at the request, order
or direction of the Certificateholders, unless such Certificateholders have
offered to the Owner Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the
Owner Trustee therein or thereby. The right of the Owner Trustee to
perform any discretionary act enumerated in this Agreement or in any
Related Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its gross negligence or willful
misconduct in the performance of any such act.
Section 7.2. FURNISHING OF DOCUMENTS. The Owner Trustee shall
furnish to the Certificateholders promptly upon receipt of a written request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Related Documents unless the Certificateholders have
previously received such items.
Section 7.3. REPRESENTATIONS AND WARRANTIES. The Owner Trustee
hereby represents and warrants to the Depositor and the Certificateholders that:
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(a) It is a _________________ duly organized and validly existing in
good standing under the laws of __________. It has all requisite corporate
power and authority and all franchises, grants, authorizations, consents,
orders and approvals from all governmental authorities necessary to
execute, deliver and perform its obligations under this Agreement and each
Related Document to which the Trust is a party.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and each Related Document to
which the Trust is a party, and this Agreement and each Related Document
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene
any Federal or New York law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or
by-laws or any indenture, mortgage, contract, agreement or instrument to
which it is a party or by which any of its properties may be bound or
result in the creation or imposition of any lien, charge or encumbrance on
the Trust Assets resulting from actions by or claims against the Owner
Trustee individually which are unrelated to this Agreement or the Related
Documents.
Section 7.4. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for
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the conduct or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and not contrary to this Agreement or any Related
Document.
Section 7.5. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided
in this Article VII, in accepting the trusts hereby created
_____________________ acts solely as Owner Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any Related
Document shall look only to the Trust Assets for payment or satisfaction
thereof.
Section 7.6. OWNER TRUSTEE NOT LIABLE FOR CERTIFICATES, NOTES OR
CONTRACTS. The recitals contained herein and in the Certificates (other than
the signature and counter-signature of the Owner Trustee on the Certificates)
shall be taken as the statements of the Depositor (other than the signature or
counter-signature of the Owner Trustee on the Notes), and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner Trustee makes
no representations as to the validity or sufficiency of this Agreement, of any
Related Document or of the Certificates (other than the signature and
counter-signature of the Owner Trustee on the Certificates) or the Notes (other
than the signature or counter-signature of the Owner Trustee on the Notes), or
of any Contract or related documents. The Owner Trustee shall at no time have
any responsibility or liability for or with respect to the legality, validity
and enforceability of any Contract, or the perfection and priority of any
security interest created by any Contract in any Equipment or the maintenance of
any such perfection and priority of any security interest created by any
Contract in any Equipment, or for or with respect to the sufficiency of the
Trust Assets or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Equipment; the existence and enforceability of any insurance thereon; the
existence and contents of any Contract or any computer or other record thereof;
the validity of the assignment of any Contract to the Trust or of any
intervening assignment; the completeness of any Contract; the performance or
enforcement of any Contract; the compliance by the Depositor or the Servicer
with any warranty or representation made under any Related Document or in any
related document or the accuracy of any such warranty or representation or any
action of the Indenture Trustee or the Servicer taken in the name of the Owner
Trustee.
Section 7.7. OWNER TRUSTEE MAY OWN CERTIFICATES AND NOTES. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Depositor, the Indenture Trustee
and the Servicer in banking or other transactions with the same rights as it
would have if it were
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not Owner Trustee.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1. OWNER TRUSTEE'S FEES AND EXPENSES. The Servicer,
pursuant to the Transfer and Servicing Agreement, has covenanted and agreed to
pay to the Owner Trustee, and the Owner Trustee shall be entitled to, certain
annual fees and to reimburse the Owner Trustee for all ordinary and reasonable
out-of-pocket expenses incurred or made by it, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder; PROVIDED,
HOWEVER, that the Owner Trustee shall only be entitled to reimbursement for
expenses hereunder to the extent such expenses (i) are fees of outside counsel
engaged by the Owner Trustee in respect of the performance of its obligations
hereunder or (ii) relate to the performance of its obligations pursuant to
Section 5.4 hereof.
Section 8.2. INDEMNIFICATION. Antigua Funding Corporation shall be
liable as primary obligor for, and shall indemnify the Owner Trustee in its
individual capacity and its successors, assigns, agents and servants, and any
co-trustee (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and suits,
and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Related Documents, the Trust Assets,
the administration of the Trust Assets or the action or inaction of the Owner
Trustee hereunder, except only that Antigua Funding Corporation shall not be
liable for or required to indemnify the Owner Trustee from and against Expenses
arising or resulting from any of the matters described in the third sentence of
Section 7.1. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement.
Section 8.3. NON-RECOURSE OBLIGATIONS. Notwithstanding anything in
this Agreement or any Related Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the Trust shall be recourse to the Trust Assets only and specifically shall
not be recourse to the assets of any Certificateholder.
ARTICLE IX
TERMINATION
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Section 9.1. TERMINATION OF THE TRUST.
(a) The respective obligations and responsibilities of the Depositor
and the Owner Trustee created by this Agreement and the Trust created by this
Agreement shall terminate upon the earliest of (i) the maturity or other
liquidation of the last Contract (including the purchase by the Depositor at its
option of the corpus of the Trust as described in Section 5.1 of the Transfer
and Servicing Agreement or the liquidation of the Trust Assets pursuant to
Section 5.06 of the Indenture) and the subsequent distribution of amounts in
respect of such Contracts as provided in the Related Documents, (ii) the
circumstances described in subsection (b) below, or (iii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to this
Agreement and the payment to the Lenders of all amounts due under the Cash
Collateral Account Agreement. In any case, there shall be delivered to the
Owner Trustee, the Indenture Trustee and the Rating Agencies an Opinion of
Counsel that all applicable preference periods under federal, state and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to clause (iii); PROVIDED, HOWEVER, that in no event shall the
trust created by this Agreement continue beyond the expiration of 21 years from
the death of the last survivor of the descendants living on the date of this
Agreement of Rose Kennedy of the Commonwealth of Massachusetts; and PROVIDED,
FURTHER, that the rights to indemnification under Section 8.2 shall survive the
termination of the Trust. The Servicer shall promptly notify the Owner Trustee
of any prospective termination pursuant to this Section 9.1. The bankruptcy,
liquidation, dissolution, termination, resignation, expulsion, withdrawal, death
or incapacity of any Certificateholder shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Trust Assets nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) In the event of
(i) the commencement of an involuntary case in respect of the
Depositor 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;
(ii) the entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Depositor in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Depositor
or of any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Depositor; or
(iii) the commencement by the Depositor of a voluntary case under the
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federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law,
or the consent by the Depositor to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Depositor or of any substantial part of its
property, or the making by the Depositor of an assignment for the benefit
of creditors, or the failure by the Depositor generally to pay its debts as
such debts become due, or the taking of corporate action by the Depositor
in furtherance of any of the foregoing;
and the Indenture Trustee, as required by Section 5.04 of the Indenture, has
foreclosed upon its security interest in the Trust Estate granted pursuant to
the Indenture, the respective obligations and responsibilities of the Depositor
and the Owner Trustee created by this Agreement and the Trust created by this
Agreement shall terminate. All Persons who were Certificateholders on the date
of such termination shall thereupon be entitled to receive distributions
directly from the Indenture Trustee in the manner and order of priority
specified in Section 5.06(EIGHTH) the Indenture.
(c) Except as provided in Section 9.1(a), neither the Depositor nor
any Certificateholder shall be entitled to revoke or terminate the Trust.
(d) Within five Business Days of receipt of notice of final
distribution on the Certificates from the Depositor or the Servicer given
pursuant to Section 5.1 of the Transfer and Servicing Agreement, the Owner
Trustee shall mail written notice to the Certificateholders specifying (i) the
Payment Date upon which final payment of the Certificates shall be made upon
presentation and surrender of Certificates at the office of the Paying Agent
therein specified, (ii) the amount of any such final payment, and (iii) that the
Record Date otherwise applicable to such Payment Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Paying Agent therein specified. The Owner Trustee shall give
such notice to the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given, the Indenture Trustee
shall make deposits into the Equity Certificate Distribution Account and the
Equipment Account in accordance with Section 8.03 of the Indenture, or, in the
case of an optional purchase of Contracts pursuant to Section 5.1 of the
Transfer and Servicing Agreement, shall deposit the amount specified in Section
5.1 of the Transfer and Servicing Agreement. Upon presentation and surrender of
the Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Payment Date pursuant to
Sections 5.2 and 5.3.
(e) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may
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take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain subject to this Agreement. Any funds which are payable to
Certificateholders remaining in the Trust after exhaustion of such remedies
shall be distributed by the Owner Trustee to The United Way (but only upon
termination of this Agreement), and the Certificateholders, by acceptance of
their Certificates, hereby waive any rights with respect to such funds.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation (i) authorized to exercise corporate
trust powers; (ii) having a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or State authorities; and
(iii) having (or having a parent which has) a long-term debt rating of at least
___ by Moody's or ___ by Standard & Poor's. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose 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. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
Section 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Depositor and the Servicer at least 30
days before the date specified in such instrument. Upon receiving such notice
of resignation, the Depositor shall promptly appoint a successor Owner Trustee
meeting the qualifications set forth in Section 10.1 by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee, provided that the
Depositor shall have received written confirmation from each of the Rating
Agencies that the proposed appointment will not result in a reduction,
qualification or withdrawal of the ratings then assigned to the Notes and the
Equity Certificates by any of the Rating Agencies. If no successor Owner
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Owner Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Depositor or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall
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be appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Depositor may remove the Owner Trustee.
If the Depositor shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Depositor shall promptly appoint a successor
Owner Trustee meeting the qualification requirements of Section 10.1 by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
outgoing Owner Trustee so removed and one copy to the successor Owner Trustee
and payment of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until all fees and expenses, including any indemnity
payments, due to the outgoing Owner Trustee have been paid and until acceptance
of appointment by the successor Owner Trustee pursuant to Section 10.3. The
Depositor shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies.
Section 10.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Depositor and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Agreement; and the
Depositor and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Depositor shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies. If the Depositor shall fail to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Depositor.
Section 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or
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substantially all of the corporate trust business of the Owner Trustee, shall be
the successor of the Owner Trustee hereunder, provided such corporation shall be
eligible pursuant to Section 10.1, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding, and provided further that the Owner
Trustee shall mail notice of such merger or consolidation to the Rating
Agencies.
Section 10.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Assets may at the time be located, the Owner Trustee shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee to act as co-trustee, jointly with the
Owner Trustee, or separate trustee or separate trustees, of all or any part of
the Trust Assets, and to vest in such Person, in such capacity, such title to
the Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Owner
Trustee may consider necessary or desirable. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 10.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.1.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust Assets or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Owner Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as
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effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.1. AMENDMENT.
(a) This Agreement may be amended by the Depositor and the Owner
Trustee, without the consent of any of the Certificateholders or Noteholders,
but with prior notice to the Rating Agencies and the Indenture Trustee, for any
of the following purposes:
(i) to correct or amplify the description of the Trust Assets;
(ii) to cure any ambiguity;
(iii) to correct or supplement any provision herein which may be
inconsistent with any other provision herein;
(iv) to make any other provisions with respect to matters or questions
arising under this Agreement, provided that such amendment shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder or Certificateholder; or
(v) to avoid a reduction or withdrawal of any rating of the Notes or
the Equity Certificates.
(b) This Agreement may also be amended from time to time by the
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Depositor and the Owner Trustee with the consent of a Certificate Majority and,
unless such amendment does not, as evidenced by an Opinion of Counsel,
materially and adversely affects the interests of Noteholders, the consent of a
Note Majority (which consent of any Holder of a Certificate or Note given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Certificate or Note and of any Certificate or Note issued upon the transfer
thereof or in exchange therefor or in lieu thereof whether or not notation of
such consent is made upon the Certificate or Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Holders of
Certificates or Notes; PROVIDED, HOWEVER, that no such amendment shall (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Contracts or distributions that shall be
required to be made on any Certificate or Note or (ii) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of the Holders of all Certificates and Notes then
outstanding.
(c) Prior to the execution of any such amendment or consent, the
Depositor shall furnish written notification of the substance of such amendment
or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee unless
such parties have previously received such notification.
(e) It shall not be necessary for the consent of Certificateholders
or Noteholders pursuant to Section 11.1(b) to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Certificateholders and Noteholders provided for in this
Agreement) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe, including the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the
Owner Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such amendment have been satisfied. The Owner Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Section 11.2. NO RECOURSE. Each Certificateholder by accepting a
Certificate
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acknowledges that such Certificateholder's Certificates represent beneficial
interests in the Trust only and do not represent interests in or obligations of
the Depositor, the Servicer, the Owner Trustee, the Indenture Trustee or any
Affiliate of any of the foregoing and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated in
this Agreement, the Certificates or the Related Documents.
Section 11.3. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the principles of conflicts of laws thereof and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
Section 11.4. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.5. CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificate-holders shall not, except as expressly provided for herein with
respect to the Depositor, be personally liable for obligations of the Trust, the
beneficial interests in the Trust represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and Certificates upon authentication thereof by or on behalf of the
Owner Trustee pursuant to Section 3.3 are and shall be deemed fully paid.
Section 11.6. THIRD-PARTY BENEFICIARIES. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this
Agreement, no other Person shall have any right or obligation hereunder.
Section 11.7. COUNTERPARTS. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
Section 11.8. NOTICES. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Depositor, at the following address: Antigua
Funding Corporation, [address], Attention: Chief Financial Officer, (b) in the
case of the Owner Trustee, at the Corporate Trust Office, and (c) in the case of
each Rating Agency, Moody's Investors Service, Inc., 99 Church Street, New York,
New York 10007; Standard & Poor's Ratings Group, 26 Broadway, New York, New York
10004 Attention: Asset-Backed Surveillance; Fitch Investors Services, L.P., One
State Street Plaza, New York, New York 10004; Duff &
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Phelps Credit Rating Co., 17 State Street, New York, New York 10004; or at such
other address as shall be designated by any such party in a written notice to
the other parties. Notwithstanding the foregoing, any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register, and any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
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IN WITNESS WHEREOF, the Depositor and the Owner Trustee have caused
this Trust Agreement to be duly executed by their respective officers as of the
day and year first above written.
ANTIGUA FUNDING CORPORATION
By
Name:
Title:
[OWNER TRUSTEE]
By
Name:
Title:
-44-
<PAGE>
EXHIBIT A
[FORM OF EQUITY CERTIFICATE]
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
___% EQUITY CERTIFICATE
evidencing a beneficial interest in the Trust, as defined below,
the property of which includes a pool of equipment leases, installment
sale contracts, promissory notes, loan and security agreements and
similar types of receivables and the Equipment related thereto, all
transferred to the Trust by Antigua Funding Corporation.
This Equity Certificate does not represent an obligation of, or
an interest in, Antigua Funding Corporation or any affiliate thereof.
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT UNDER
THE CIRCUMSTANCES SPECIFIED IN SECTION 3.4 OF THE
TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.4 OF THE TRUST AGREEMENT REFERRED TO
HEREIN.
Certificate No. ____ Denomination: $________
Cut-Off Date: Aggregate Denomination of all
September 1, 1996 Equity Certificates: $_________
First Payment Date: Pass-Through Rate: _____%
October ___, 1996
Final Scheduled Payment Date:
Servicer: ______________, 199_
AT&T Capital Corporation
A-45
<PAGE>
CUSIP: ___________
A-46
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equity Certificates referred to in the
within-mentioned Trust Agreement.
__________________________________, _____________________________,
not in its individual capacity but not in its individual capacity but
solely as Owner Trustee or solely as Owner Trustee
By ________________________,
Authenticating Agent
by _____________________________________________
by _______________________________
THIS CERTIFIES THAT _______________________________ is the registered
owner of a nonassessable, fully-paid, beneficial interest in the Capita
Equipment Receivables Trust 1996-1 (the "Trust"). The Trust was created
pursuant to a Trust Agreement, dated as of September 1, 1996 (the "Trust
Agreement"), between Antigua Funding Corporation and __________________________,
not in its individual capacity but solely as owner trustee (the "Owner
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Trust Agreement or the
Indenture, dated as of September 1, 1996 (the "Indenture"), between the Trust
and ________________, as Indenture Trustee.
This Certificate is one of the duly authorized Certificates designated
as "___% Equity Certificates" (herein called the "Equity Certificates"). The
Trust is also issuing a single Equipment Certificate (the "Equipment
Certificate"). The Trust has also issued, under the Indenture, Notes designated
as ______% Receivable-Backed Notes, Class A (the "Class A Notes"), ___%
Receivable-Backed Notes, Class B (the "Class B Notes") and ______%
Receivable-Backed Notes, Class C (the "Class C Notes" and, together with the
Class A Notes and the Class B Notes, the "Notes"). This Equity Certificate is
issued under the Trust Agreement and is subject to the terms, provisions and
conditions of the Trust Agreement and the Indenture, to which Trust Agreement
and Indenture the holder of this Equity Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes (as more fully described in the Trust Agreement) a pool of equipment
leases, installment sale contracts, promissory notes, loan and security
agreements and similar types of receivables (the "Contracts"), an assignment of
the Depositor's ownership or security interest in the Equipment related to the
Contracts, certain monies received thereunder after the Cut-Off Date, certain
bank accounts, proceeds from certain insurance policies and proceeds of all of
the foregoing.
A-47
<PAGE>
Under the Trust Agreement, there will be distributed on the ___ day of
each month or, if such ___ day is not a Business Day, the next succeeding
Business Day (the "Payment Date"), commencing on October __, 1996 to the person
in whose name this Certificate is registered at the close of business on the
last day of the calendar month immediately preceding the month in which such
Payment Date occurs (the "Record Date"), such Certificateholder's fractional
undivided interest in the sum of (a) the Equity Certificate Interest
Distributable Amount and (b) the Equity Certificate Principal Distributable
Amount, to the extent of the funds available therefor. As provided in the
Indenture, interest hereon is subordinated in right of payment to the payment of
interest on the Notes, and principal hereon is subordinated in right of payment
to the payment of principal on the Notes.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor or join in any institution against the Depositor or the Trust of
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, the Notes, the Trust Agreement or any of the Related Documents.
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Owner Trustee by check or money order mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Owner Trustee. The Record Date otherwise
applicable to distributions shall not be applicable to such final distribution.
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Servicer, the Owner Trustee or any Affiliate of any of them.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Contracts, all as more specifically set forth in the
Trust Agreement and the Indenture. A copy of the Trust Agreement and the
Indenture may, upon request, be examined by any Certificateholder during normal
business hours at the principal office of the Depositor and at such other
places, if any, designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee. In certain
limited circumstances, the Trust Agreement may only be amended with the consent
of the Holders of Equity Certificates evidencing not less than a majority of the
Equity Certificate Balance and, in certain circumstances,
A-48
<PAGE>
100% of the Equity Certificate Balance. Any such consent by the Holder of this
Equity Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Equity Certificate and of any Equity Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Equity Certificate.
Under the limited circumstances specified in Section 3.4 of the Trust
Agreement, the transfer of this Equity Certificate is registrable in the
Certificate Registrar upon surrender of this Equity Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in __________, ___________ accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Equity
Certificates of authorized denominations evidencing the same aggregate
beneficial interest in the Trust of the same class will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Trust Agreement is __________________. Under such circumstances, the Equity
Certificates are issuable only as registered Certificates without coupons in
denominations of $250,000 initial principal amount and integral multiples of
$1,000 thereof, and Equity Certificates are exchangeable for new Equity
Certificates of authorized denominations of a like aggregate initial principal
amount, as requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange, but the Owner
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Equity Certificates may not be acquired by (a) an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title 1 of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding
this Equity Certificate, the Holder hereof shall be deemed to have represented
and warranted that it is not a Benefit Plan.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and neither the Owner Trustee, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Trust Agreement
and Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the disposition of all property held as part of the Trust. The Depositor may at
its option purchase the corpus of the Trust at a price specified in the Transfer
and Servicing Agreement, and such purchase of the Contracts and other property
of the Trust will effect early retirement of the Certificates; provided,
however, such right of purchase is exercisable only as of a
A-49
<PAGE>
Record Date as of which the aggregate principal balance of the Notes and the
Equity Certificates is less than 10% of the Cut-Off Date Contract Pool Principal
Balance.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Contract or related document.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Transfer and Servicing Agreement or be valid
for any purpose.
A-50
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not
in its individual capacity has caused this Certificate to be duly executed.
Dated: _________, 199 CAPITA EQUIPMENT RECEIVABLES
TRUST 1996-1
By: ,
not in its individual capacity but
solely as Owner Trustee
By:
Name:
Title:
Attest:
Name:
Title:
A-51
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*__________________________
Signature Guaranteed:
*__________________________
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
A-52
<PAGE>
EXHIBIT B
[FORM OF EQUIPMENT CERTIFICATE]
CAPITA EQUIPMENT RECEIVABLES TRUST 1996-1
EQUIPMENT CERTIFICATE
evidencing a beneficial interest in the Trust, as defined below, the
property of which includes a pool of equipment leases, installment sale
contracts, promissory notes, loan and security agreements and similar types of
receivables and the Equipment related thereto, all transferred to the Trust by
Antigua Funding Corporation.
This Equipment Certificate does not represent an obligation of, or an
interest in, Antigua Funding Corporation, or any affiliate thereof.
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT UNDER
THE CIRCUMSTANCES SPECIFIED IN SECTION 3.4 OF THE
TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.4 OF THE TRUST AGREEMENT REFERRED TO
HEREIN.
Certificate No. First Payment Date:
October ___, 1996
Cut-Off Date:
September 1, 1996 Servicer:
AT&T Capital Corporation
B-53
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Equipment Certificate referred to in the within-mentioned
Trust Agreement.
_______________________ ___________________________
not in its individual capacity but not in its individual capacity but
solely solely as Owner Trustee or as Owner Trustee
By _______________________,
Authenticating Agent
by
_________________________________________
by______________________________________
_________
THIS CERTIFIES THAT_________________________________is the registered
owner of a nonassessable, fully-paid, beneficial interest in the Capita
Equipment Receivables Trust 1996-1 (the "Trust"). The Trust was created
pursuant to a Trust Agreement, dated as of September 1, 1996 (the "Trust
Agreement"), between Antigua Funding Corporation and
____________________________, not in its individual capacity but solely as owner
trustee (the "Owner Trustee"), a summary of certain of the pertinent provisions
of which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the Trust
Agreement or the Indenture, dated as of September 1, 1996 (the "Indenture"),
between the Trust and ____________, as Indenture Trustee.
This Certificate is the sole Certificate of the duly authorized class
of Certificates designated as the "Equipment Certificate" (herein called the
"Equipment Certificate"). The Trust is also issuing ______% Equity Certificates
(the "Equity Certificates"). The Trust has also issued, under the Indenture,
Notes designated as ______% Receivable-Backed Notes, Class A (the "Class A
Notes"), ______% Receivable-Backed Notes, Class B (the "Class B Notes") and
______% Receivable-Backed Notes, Class C (the "Class C Notes" and, together
with the Class A Notes and the Class B Notes, the "Notes"). This Equipment
Certificate is issued under the Trust Agreement and is subject to the terms,
provisions and conditions of the Trust Agreement and the Indenture, to which
Trust Agreement and Indenture the holder of this Equipment Certificate by virtue
of the acceptance hereof assents and by which such holder is bound. The
property of the Trust includes (as more fully described in the Trust Agreement)
a pool of equipment leases, installment sale contracts, promissory notes, loan
and security agreements and similar types of receivables (the "Contracts"), an
assignment of the Depositor's ownership or security interest in the Equipment
related to the Contracts, certain monies received thereunder after the Cut-Off
Date, certain bank accounts, proceeds from certain insurance policies and
proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the ___ day of
each
B-54
<PAGE>
month or, if such ___ day is not a Business Day, the next succeeding Business
Day (the "Payment Date"), commencing on October __, 1996, to the person in whose
name this Certificate is registered at the close of business on the last
Business Day immediately preceding such Payment Date (the "Record Date"), a
portion (determined in the manner specified in the Indenture) of the proceeds of
the disposition of the related Equipment following a default or early
termination of certain Contracts, and all Equipment related to any Lease
Contracts that were terminated during the prior month.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Depositor or the Trust or join in any institution against the Depositor or
the Trust of any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the Related
Documents.
Except as provided in the Trust Agreement, distributions of monies on
this Equipment Certificate will be made by the Owner Trustee by check or money
order mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or the making of any
notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Equipment Certificate
will be made after due notice by the Owner Trustee of the pendency of such
distribution and only upon presentation and surrender of this Equipment
Certificate at the office or agency maintained for that purpose by the Owner
Trustee. The Record Date otherwise applicable to distributions shall not be
applicable to such final distribution.
This Equipment Certificate does not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Owner Trustee or any Affiliate of
any of them. This Equipment Certificate is limited in right of payment to
certain collections and recoveries respecting the Equipment, all as more
specifically set forth in the Trust Agreement and the Indenture. A copy of the
Trust Agreement and the Indenture may, upon request, be examined by any
Certificateholder during normal business hours at the principal office of the
Depositor and at such other places, if any, designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee. In certain
limited circumstances, the Trust Agreement may only be amended with the consent
of the Holder of the Equipment Certificate. Any such consent by the Holder of
this Equipment Certificate shall be conclusive and binding on such Holder and on
all future Holders of this Equipment Certificate and of any Equipment
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Equipment
Certificate.
B-55
<PAGE>
As provided in the Trust Agreement, this Equipment Certificate is not
transferable except under certain limited circumstances. Under such
circumstances, and subject to certain limitations set forth in the Trust
Agreement, the transfer of this Equipment Certificate is registrable in the
Certificate Registrar upon surrender of this Equipment Certificate for
registration of transfer at the offices or agencies of the Certificate Registrar
maintained by the Owner Trustee in __________, ___________ accompanied by a
written instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon a new Equipment Certificate
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is _______________. No service charge will
be made for any such registration of transfer, but the Owner Trustee may require
payment of a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
This Equipment Certificate may not be acquired by (a) an employee
benefit plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title 1 of ERISA, (b) a plan described in Section 4975(e)(1) of
the Code or (c) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding this Equipment Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
The Owner Trustee, the Certificate Registrar and any agent of the
Owner Trustee or the Certificate Registrar may treat the person in whose name
this Equipment Certificate is registered as the owner hereof for the purpose of
receiving distributions and for all other purposes, and neither the Owner
Trustee, the Certificate Registrar nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and Trust created thereby shall terminate upon the payment to the Equipment
Certificateholder of all amounts required to be paid to it pursuant to the Trust
Agreement and the disposition of all property held as part of the Trust. The
Depositor may at its option purchase the corpus of the Trust at a price
specified in the Transfer and Servicing Agreement, and such purchase of the
Contracts and other property of the Trust will effect retirement of the
Equipment Certificate; provided, however, such right of purchase is exercisable
only as of a Record Date as of which the aggregate principal balance of the
Notes and the Equity Certificates is less than 10% of the Cut-Off Date Contract
Pool Principal Balance.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Equipment Certificate
or of any Contract or related document.
B-56
<PAGE>
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Equipment Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or the Transfer and Servicing Agreement or be valid
for any purpose.
B-57
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not
in its individual capacity has caused this Equipment Certificate to be duly
executed.
Dated: _________, 199 CAPITA EQUIPMENT RECEIVABLES
TRUST 1996-1
By: ,
not in its individual capacity but
solely as Owner Trustee
By:
Name:
Title:
Attest:
Name:
Title:
B-58
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*__________________________
Signature Guaranteed:
*__________________________
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-59
<PAGE>
EXHIBIT C
FORM OF REPRESENTATION LETTER
[Owner Trustee]
[address]
Antigua Funding Corporation
[address]
RE: Capita Equipment Receivables Trust 1996-1
Equity Certificates
The undersigned purchaser (the "Purchaser") understands that the
purchase of the above-referenced certificates (the "Certificates") may be made
only by (a) institutions which are "Accredited Investors" under Rule 501(a)(1),
(2), (3) or (7) of Regulation D, as promulgated under the Securities Act of
1933, as amended (the "1933 Act"), or an entity in which all of the equity
owners meet such requirements, which includes banks, savings and loan
associations, registered brokers and dealers, insurance companies, investment
companies, and organizations described in Section 501(c)(3) of the Internal
Revenue Code, corporations, business trusts and partnerships, not formed for the
specific purpose of acquiring the Certificates offered, with total assets in
excess of $5,000,000, or (b) "Qualified Institutional Buyers" under Rule 144A,
as promulgated under the 1933 Act. The undersigned represents on behalf of the
Purchaser that the Purchaser is an "Accredited Investor" or a "Qualified
Institutional Buyer" within the meaning of such definitions. The Purchaser is
urged to review carefully the responses, representations and warranties it is
making herein.
REPRESENTATIONS AND WARRANTIES
The Purchaser makes the following representations and warranties in
order to permit the Owner Trustee and the Depositor to determine its suitability
as a purchaser of Certificates and to determine that the exemption from
registration relied upon by the Depositor under Section 4(2) of the 1933 Act is
available to it.
1. The Purchaser understands that the Certificates have not been and
will not be registered under the 1933 Act and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that the Depositor
is not required to register the Certificates and that any transfer must comply
with Section 3.4 of the Trust Agreement relating to the Certificates.
2. The Purchaser will comply with all applicable federal and state
C-60
<PAGE>
securities laws in connection with any subsequent resale of the Certificates.
3. The Purchaser is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment.
4. The Purchaser is acquiring the Certificates as principal for its
own account (or for the account of one or more other institutional investors for
which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser does not qualify as (i) an employee benefit plan (a
"Plan") as defined in section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not it is subject to the
provisions of Title I of ERISA, (ii) a plan described in section 4975(e)(1) of
the Internal Revenue Code of 1986 (also a "Plan"), or (iii) an entity whose
underlying assets are deemed to be assets of a Plan by reason of such Plan's
investment in the entity (as determined under Department of Labor Regulations,
29 C.F.R. Section 2510.3-101 (1990)).
6. The Purchaser understands that such Certificate will bear a
legend substantially as set forth in the form of Certificate included in the
Trust Agreement.
7. The Purchaser agrees that it will obtain from any purchaser of
the Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 6 and in this paragraph 7.
The representations and warranties contained herein shall be binding
upon the heirs, executors, administrators and other successors of the
undersigned. If there is more than one signatory hereto, the obligations,
representations, warranties and agreements of the undersigned are made jointly
and severally.
Executed at____________________,___________________, this___________
day of_______________,__________________.
Purchaser's Name (Print)
By ____________________________
Signature
Its ____________________________
C-61
<PAGE>
Address of Purchaser
______________________________
Purchaser's Taxpayer
Identification Number
C-62
<PAGE>
Draft of 8/8/96
PURCHASE AND SALE AGREEMENT
among
ANTIGUA FUNDING CORPORATION
Purchaser
AT&T CAPITAL CORPORATION
In its individual capacity and as Servicer
and
AT&T CAPITAL LEASING SERVICES, INC.
AT&T CREDIT CORPORATION
NCR CREDIT CORP.
AT&T COMMERCIAL FINANCE CORPORATION
Sellers
Dated as of September 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 General . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Specific Terms . . . . . . . . . . . . . . . 2
SECTION 1.3 Usage of Terms . . . . . . . . . . . . . . . 2
SECTION 1.4 Certain References . . . . . . . . . . . . . 3
SECTION 1.5 No Recourse . . . . . . . . . . . . . . . . 3
SECTION 1.6 Action by or Consent of Noteholders or Equity
. . . . . . . . . . . . . . . . Certificateholders . 3
ARTICLE II CONVEYANCE OF THE CONTRACTS. . . . . . . . . . . . . 3
SECTION 2.1 Conveyance of the Contracts . . . . . . . . 3
SECTION 2.2 Purchase Price of Contracts . . . . . . . . 4
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 4
SECTION 3.1 Representations and Warranties of TCC . . . 4
SECTION 3.2 Representations and Warranties of AT&T Capital
Leasing Services, Inc. . . . . . . . . . . . 6
SECTION 3.3 Representations and Warranties of AT&T Credit
. . . . . . . . . . . . . . . . . . .Corporation. . 8
SECTION 3.4 Representations and Warranties of
NCR Credit Corp.. . . . . . . . . . . . . . 10
SECTION 3.5 Representations and Warranties of AT&T Commercial
. . . . . . . . . . . .Finance Corporation. . 12
SECTION 3.6 Representations and Warranties of Antigua . 14
ARTICLE IV COVENANTS OF the Sellers . . . . . . . . . . . . . 16
SECTION 4.1 Protection of Title of Antigua and the Trust 16
SECTION 4.2 Other Liens or Interests . . . . . . . . . . 17
SECTION 4.3 Costs and Expenses . . . . . . . . . . . . . 18
SECTION 4.4 Indemnification . . . . . . . . . . . . . . 18
ARTICLE V REPURCHASES. . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.1 Repurchase of Contracts Upon Breach
of Warranty . . . . . . . . . . . . . . . . 20
SECTION 5.2 Reassignment of Purchased Contracts . . . . 21
SECTION 5.3 Waivers . . . . . . . . . . . . . . . . . . 21
ARTICLE VI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . 21
SECTION 6.1 Liability of the Sellers and TCC . . . . . . 21
SECTION 6.3 Limitation on Liability of the Sellers,
TCC and Others . . . . . . . . . . . . . . 22
SECTION 6.4 . . . The Sellers and TCC May Own Notes or Certificates
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22
SECTION 6.5 Amendment . . . . . . . . . . . . . . . . . 22
SECTION 6.6 Notices . . . . . . . . . . . . . . . . . . 23
SECTION 6.7 Merger and Integration . . . . . . . . . . . 24
SECTION 6.8 Severability of Provisions . . . . . . . . . 24
SECTION 6.9 Intention of the Parties . . . . . . . . . . 24
SECTION 6.10 . . . . . . . . . . . . . . .. . . .Governing Law
25
SECTION 6.11 . . . . . . . . . . . . . . . . . .. Counterparts
25
SECTION 6.12 . . . . .Conveyance of the Contracts to the Trust
25
SECTION 6.13 . . . . . . . . . . . . . . .Nonpetition Covenant
25
SCHEDULES
Schedule A-1 -- Schedule of Lease Contracts
Schedule A-2 -- Schedule of Loan Contracts
Schedule B--Representations and Warranties of the Sellers and TCC
3
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT, dated as of September 1, 1996,
executed between Antigua Funding Corporation, a Delaware corporation, as
purchaser ("Antigua"), AT&T Capital Corporation, a [ ] corporation, in its
individual capacity ("TCC"), and as servicer (the "Servicer"), AT&T Capital
Leasing Services, Inc., a [ ] corporation, AT&T Credit Corporation, a [ ]
corporation, NCR Credit Corp., a [ ] corporation and AT&T Commercial Finance
Corporation, a [ ] corporation, as sellers (each a "Seller" and, together,
"the Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers own certain Lease Contracts and Loan Contracts as
are more particularly described in Schedule A-1 and Schedule A-2, respectively,
attached hereto; and
WHEREAS, pursuant to the terms of a Transfer and Servicing Agreement,
dated as of September 1, 1996 (the "Transfer and Servicing Agreement"), by and
among Capita Equipment Receivables Trust 1996-1, as issuer (the "Trust"),
Antigua, as depositor, and TCC, in its individual capacity and as Servicer, to
be executed concurrently with the execution of this Agreement, Antigua will
convey the Contracts to the Trust; and
WHEREAS, Antigua has agreed to purchase the Contracts from the Sellers
and the Sellers, pursuant to this Agreement, are selling the Contracts to
Antigua;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and for other good and valuable consideration, the receipt of which
is acknowledged, Antigua, TCC, the Servicer and the Sellers, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 GENERAL. The words "herein," "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision, and Article, Section,
Schedule and Exhibit references, unless otherwise specified, refer to Articles
and Sections of and Schedules and Exhibits to this Agreement. All capitalized
terms used herein without definition shall have the respective meanings assigned
to such terms in the Transfer and Servicing Agreement or, if not defined in the
Transfer and Servicing Agreement, in the Indenture, dated as of
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September ___, 1996, (the "Indenture") between the Trust, as Issuer, and
__________, as Indenture Trustee.
SECTION 1.2 SPECIFIC TERMS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"AGREEMENT" shall mean this Purchase and Sale Agreement and all
amendments hereof and supplements hereto.
"CLOSING DATE" means September __, 1996.
"RELATED DOCUMENTS" means the Trust Agreement, the Indenture, the
Transfer and Servicing Agreement, the Equity Certificates, the Notes and the
Cash Collateral Account Agreement. The Related Documents to be executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"REPURCHASE EVENT" means, with respect to any Contract, the occurrence
of a breach of any of the representations and warranties set forth in the
Schedule of Representations that materially and adversely affects the value of
such Contract.
"SCHEDULE OF CONTRACTS" means, collectively, the schedules of Lease
Contracts and Loan Contracts attached hereto as Schedule A-1 and Schedule A-2,
respectively.
"SCHEDULE OF REPRESENTATIONS" means the Schedule of Representations
and Warranties attached hereto as Schedule B.
"TRUST" means the trust created by the Trust Agreement, the estate of
which consists of the Trust Property.
"TRUST PROPERTY" means the property and proceeds of every description
conveyed pursuant to Section 2.5 of the Trust Agreement and Section 2.1 of the
Transfer and Servicing Agreement, together with the Trust Accounts (including
all Eligible Investments therein and all proceeds therefrom).
SECTION 1.3 USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Transfer and
Servicing Agreement; references to
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Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.4 CERTAIN REFERENCES. All references to the Contract
Principal Balance of a Contract as of an Accounting Date shall refer to the
close of business on such day, or as of the first day of a Monthly Period shall
refer to the opening of business on such day. All references to the last day of
a Monthly Period shall refer to the close of business on such day.
SECTION 1.5 NO RECOURSE. Without limiting the obligations of the
Sellers or TCC hereunder, no recourse may be taken, directly or indirectly,
under this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer or director, as such, of
any of Antigua, the Sellers, TCC, the Servicer, the Indenture Trustee or the
Owner Trustee, or of any predecessor or successor of any of Antigua, the
Sellers, TCC, the Servicer, the Indenture Trustee or the Owner Trustee.
SECTION 1.6 ACTION BY OR CONSENT OF NOTEHOLDERS OR EQUITY
CERTIFICATEHOLDERS. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders or Equity Certificateholders, such
provision shall be deemed to refer to Noteholders or Equity Certificateholders,
as the case may be, of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by such Noteholders
or Equity Certificateholders, as the case may be. Solely for the purposes of
any action to be taken, or consented to, by Noteholders or Equity
Certificateholders, any Note or Equity Certificate registered in the name of any
of the Sellers or TCC, or any Affiliate thereof, shall be deemed not to be
outstanding, and the related Principal Balance, as applicable, evidenced thereby
shall not be taken into account in determining whether the requisite Principal
Balance necessary to effect any such action or consent has been obtained;
PROVIDED, HOWEVER, that, solely for the purpose of determining whether the
Indenture Trustee or Owner Trustee is entitled to rely upon any such action or
consent, only Notes or Equity Certificates which the Indenture Trustee or Owner
Trustee knows to be so owned shall be so disregarded.
ARTICLE II
CONVEYANCE OF THE CONTRACTS
SECTION 2.1 CONVEYANCE OF THE CONTRACTS. Subject to the terms and
conditions of this Agreement, each of the Sellers and TCC hereby sells,
transfers, assigns, and otherwise conveys to Antigua, without recourse (but
without limitation of its obligations in this Agreement), and Antigua hereby
purchases, all right, title and interest of each of the Sellers and TCC in and
to the Contracts, including, without limitation, all
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monies at any time paid or payable thereon or in respect thereof from and after
the Cut-Off Date (whether in the form of (i) Scheduled Payments (including those
Scheduled Payments due prior to, but not received as of, the Cut-Off Date, but
excluding those Scheduled Payments due on or after, but received prior to, the
Cut-Off Date), (ii) Prepayments, (iii) payments made after the original term of
such Contracts, (iv) payments to be applied by the Servicer to the payment of
insurance premiums, maintenance, taxes or other similar obligations, (v)
payments to be retained by the Servicer in payment of Administrative Fees, or
otherwise), all rights of the lessor or the secured party, as the case may be,
in the related Equipment, Insurance Policies and any other security for the
payment of amounts due under the Contracts, all funds on deposit from time to
time in the Trust Accounts and all investments therein and proceeds thereof, all
items contained in the related Contract Files, any and all other documents that
are kept on file in accordance with TCC's [the Seller's] customary procedures
relating to the Contracts, and all proceeds of the foregoing. The parties
hereto intend that the transfer and assignment contemplated by this Agreement
shall constitute a sale of the Contracts from each of the Sellers and TCC to
Antigua, conveying good title thereto free and clear of any Liens, and the
Contracts shall not be part of any Seller's or TCC's estate in the event of the
filing of a bankruptcy petition by or against any Seller or TCC under any
bankruptcy or similar law.
SECTION 2.2 PURCHASE PRICE OF CONTRACTS. Simultaneously with the
conveyance of the Contracts to Antigua, Antigua has paid or caused to be paid to
or upon the order of the Sellers approximately $____________ by wire transfer of
immediately available funds (representing the proceeds to Antigua from the sale
of the Notes and the Equity Certificates after deducting expenses of $_________
incurred by Antigua in connection with such sale).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF TCC. TCC makes the
following representations and warranties, on which Antigua relies in purchasing
the Contracts and in transferring the Contracts to the Trust under the Transfer
and Servicing Agreement. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Contracts hereunder and the sale, transfer and assignment thereof by
Antigua to the Trust under the Transfer and Servicing Agreement. TCC and
Antigua agree that Antigua will assign to the Trust all of Antigua's rights
under this Agreement and that the Trust will thereafter be entitled to enforce
this Agreement against TCC in the Trust's own name.
(a) SCHEDULE OF REPRESENTATIONS. With respect to each Contract, the
representations and warranties set forth on the Schedule of Representations are
true
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and correct.
(b) ORGANIZATION AND GOOD STANDING. TCC has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of [__________], with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
currently conducted, [and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Contracts transferred to
Antigua].
(c) DUE QUALIFICATION. TCC is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of its property
or the conduct of its business requires such qualification.
(d) POWER AND AUTHORITY. TCC has the power and authority to execute and
deliver this Agreement and its Related Documents and to carry out its terms and
their terms, respectively; [TCC has full power and authority to sell and assign
the Contracts to be sold and assigned to and deposited with Antigua hereunder
and has duly authorized such sale and assignment to Antigua by all necessary
corporate action]; and the execution, delivery and performance of this Agreement
and all of TCC's Related Documents have been duly authorized by TCC by all
necessary corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and each of TCC's
Related Documents have been duly executed and delivered, shall effect a valid
sale, transfer and assignment of the Contracts, enforceable against TCC, and
creditors of and purchasers from TCC; and this Agreement and each of TCC's
Related Documents constitute legal, valid and binding obligations of TCC,
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms of
this Agreement and the Related Documents shall not conflict with, result in any
breach of any of the terms and provisions of or constitute (with or without
notice or lapse of time, or both) a default under, the articles of incorporation
or bylaws of TCC, or any indenture, agreement, mortgage, deed of trust or other
instrument to which TCC is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, other than this
8
<PAGE>
Agreement, the Transfer and Servicing Agreement and the Indenture, or violate
any law, order, rule or regulation applicable to TCC of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over TCC or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations pending
or, to the knowledge of TCC, threatened against TCC, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over TCC or any properties of TCC (i)
asserting the invalidity of this Agreement or any of the Related Documents, (ii)
seeking to prevent the issuance of the Notes or the Equity Certificates or the
consummation of any of the transactions contemplated by this Agreement or any of
the Related Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by TCC of its obligations under,
or the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or other
federal, state or local tax attributes of, or seeking to impose any excise,
franchise, transfer or similar tax upon, the transfer and acquisition of the
Contracts hereunder or under the Transfer and Servicing Agreement.
(h) CHIEF EXECUTIVE OFFICES. The chief executive office of TCC is located
at [__________].
SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF AT&T CAPITAL LEASING
SERVICES, INC. AT&T Capital Leasing Services, Inc. makes the following
representations and warranties, on which Antigua relies in purchasing the
Contracts and in transferring the Contracts to the Trust under the Transfer and
Servicing Agreement. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Contracts hereunder and the sale, transfer and assignment thereof by
Antigua to the Trust under the Transfer and Servicing Agreement. AT&T Capital
Leasing Services, Inc. and Antigua agree that Antigua will assign to the Trust
all of Antigua's rights under this Agreement and that the Trust will thereafter
be entitled to enforce this Agreement against AT&T Capital Leasing Services,
Inc. in the Trust's own name.
(a) SCHEDULE OF REPRESENTATIONS. With respect to each Contract sold
by AT&T Capital Leasing Services, Inc. to Antigua hereunder, the
representations and warranties set forth on the Schedule of Representations
are true and correct.
(b) ORGANIZATION AND GOOD STANDING. AT&T Capital Leasing Services,
Inc. has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of [__________], with power and
authority to own its properties and to conduct its business as such
properties are currently
9
<PAGE>
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Contracts sold by AT&T Capital Leasing Services, Inc. to Antigua
hereunder.
(c) DUE QUALIFICATION. AT&T Capital Leasing Services, Inc. is duly
qualified to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of its property or the conduct of its business
requires such qualification.
(d) POWER AND AUTHORITY. AT&T Capital Leasing Services, Inc. has the
power and authority to execute and deliver this Agreement and its Related
Documents and to carry out its terms and their terms, respectively; AT&T
Capital Leasing Services, Inc. has full power and authority to sell and
assign the Contracts to be sold and assigned to and deposited with Antigua
hereunder and has duly authorized such sale and assignment to Antigua by
all necessary corporate action; and the execution, delivery and performance
of this Agreement and all of AT&T Capital Leasing Services, Inc.'s Related
Documents have been duly authorized by AT&T Capital Leasing Services, Inc.
by all necessary corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and each of AT&T
Capital Leasing Services, Inc.'s Related Documents have been duly executed
and delivered, shall effect a valid sale, transfer and assignment of the
Contracts, enforceable against AT&T Capital Leasing Services, Inc., and
creditors of and purchasers from AT&T Capital Leasing Services, Inc.; and
this Agreement and each of AT&T Capital Leasing Services, Inc.'s Related
Documents constitute legal, valid and binding obligations of AT&T Capital
Leasing Services, Inc., enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time, or both) a default under, the
articles of incorporation or bylaws of AT&T Capital Leasing Services, Inc.,
or any indenture, agreement, mortgage, deed of trust or other instrument to
which AT&T Capital Leasing Services, Inc. is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement, the
Transfer and Servicing Agreement and the Indenture, or violate any law,
order, rule
10
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or regulation applicable to AT&T Capital Leasing Services, Inc. of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over AT&T Capital
Leasing Services, Inc. or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of AT&T Capital Leasing Services, Inc.,
threatened against AT&T Capital Leasing Services, Inc., before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over AT&T Capital Leasing Services,
Inc. or any properties of AT&T Capital Leasing Services, Inc. (i) asserting
the invalidity of this Agreement or any of the Related Documents, (ii)
seeking to prevent the issuance of the Notes or the Equity Certificates or
the consummation of any of the transactions contemplated by this Agreement
or any of the Related Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by AT&T Capital
Leasing Services, Inc. of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents or (iv)
seeking to affect adversely the federal income tax or other federal, state
or local tax attributes of, or seeking to impose any excise, franchise,
transfer or similar tax upon, the transfer and acquisition of the Contracts
hereunder or under the Transfer and Servicing Agreement.
(h) CHIEF EXECUTIVE OFFICES. The chief executive office of AT&T
Capital Leasing Services, Inc. is located at [________].
SECTION 3.3 REPRESENTATIONS AND WARRANTIES OF AT&T CREDIT
CORPORATION. AT&T Credit Corporation makes the following representations and
warranties, on which Antigua relies in purchasing the Contracts and in
transferring the Contracts to the Trust under the Transfer and Servicing
Agreement. Such representations are made as of the execution and delivery of
this Agreement, but shall survive the sale, transfer and assignment of the
Contracts hereunder and the sale, transfer and assignment thereof by Antigua to
the Trust under the Transfer and Servicing Agreement. AT&T Credit Corporation
and Antigua agree that Antigua will assign to the Trust all of Antigua's rights
under this Agreement and that the Trust will thereafter be entitled to enforce
this Agreement against AT&T Credit Corporation in the Trust's own name.
(a) SCHEDULE OF REPRESENTATIONS. With respect to each Contract sold
by AT&T Credit Corporation to Antigua hereunder, the representations and
warranties set forth on the Schedule of Representations are true and
correct.
(b) ORGANIZATION AND GOOD STANDING. AT&T Credit Corporation has been
duly organized and is validly existing as a corporation in good standing
under the laws of the State of [__________], with power and authority to
own its
11
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properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Contracts sold by AT&T Credit Corporation to Antigua hereunder.
(c) DUE QUALIFICATION. AT&T Credit Corporation is duly qualified to
do business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business requires
such qualification.
(d) POWER AND AUTHORITY. AT&T Credit Corporation has the power and
authority to execute and deliver this Agreement and its Related Documents
and to carry out its terms and their terms, respectively; AT&T Credit
Corporation has full power and authority to sell and assign the Contracts
to be sold and assigned to and deposited with Antigua hereunder and has
duly authorized such sale and assignment to Antigua by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and all of AT&T Credit Corporation's Related Documents have been
duly authorized by AT&T Credit Corporation by all necessary corporate
action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and each of AT&T
Credit Corporation's Related Documents have been duly executed and
delivered, shall effect a valid sale, transfer and assignment of the
Contracts, enforceable against AT&T Credit Corporation, and creditors of
and purchasers from AT&T Credit Corporation; and this Agreement and each of
AT&T Credit Corporation's Related Documents constitute legal, valid and
binding obligations of AT&T Credit Corporation, enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time, or both) a default under, the
articles of incorporation or bylaws of AT&T Credit Corporation, or any
indenture, agreement, mortgage, deed of trust or other instrument to which
AT&T Credit Corporation is a party or by which it is bound, or result in
the creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement, mortgage, deed of trust or
other instrument, other than this Agreement, the Transfer and Servicing
Agreement and the Indenture, or violate any law, order, rule or regulation
12
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applicable to AT&T Credit Corporation of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over AT&T Credit Corporation or any of
its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of AT&T Credit Corporation, threatened against
AT&T Credit Corporation, before any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality having
jurisdiction over AT&T Credit Corporation or any properties of AT&T Credit
Corporation (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the issuance of the Notes or the
Equity Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by AT&T Credit Corporation of its obligations under,
or the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Contracts hereunder or under the Transfer and Servicing
Agreement.
(h) CHIEF EXECUTIVE OFFICES. The chief executive office of AT&T
Credit Corporation is located at [________].
SECTION 3.4 REPRESENTATIONS AND WARRANTIES OF NCR CREDIT CORP. NCR
Credit Corp. makes the following representations and warranties, on which
Antigua relies in purchasing the Contracts and in transferring the Contracts to
the Trust under the Transfer and Servicing Agreement. Such representations are
made as of the execution and delivery of this Agreement, but shall survive the
sale, transfer and assignment of the Contracts hereunder and the sale, transfer
and assignment thereof by Antigua to the Trust under the Transfer and Servicing
Agreement. NCR Credit Corp. and Antigua agree that Antigua will assign to the
Trust all of Antigua's rights under this Agreement and that the Trust will
thereafter be entitled to enforce this Agreement against NCR Credit Corp. in the
Trust's own name.
(a) SCHEDULE OF REPRESENTATIONS. With respect to each Contract sold
by NCR Credit Corp. to Antigua hereunder, the representations and
warranties set forth on the Schedule of Representations are true and
correct.
(b) ORGANIZATION AND GOOD STANDING. NCR Credit Corp. has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of [__________], with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority
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and legal right to acquire, own and sell the Contracts sold by NCR Credit
Corp. to Antigua hereunder.
(c) DUE QUALIFICATION. NCR Credit Corp. is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business requires
such qualification.
(d) POWER AND AUTHORITY. NCR Credit Corp. has the power and authority
to execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively; NCR Credit Corp. has
full power and authority to sell and assign the Contracts to be sold and
assigned to and deposited with Antigua hereunder and has duly authorized
such sale and assignment to Antigua by all necessary corporate action; and
the execution, delivery and performance of this Agreement and all of NCR
Credit Corp.'s Related Documents have been duly authorized by NCR Credit
Corp. by all necessary corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and each of NCR
Credit Corp.'s Related Documents have been duly executed and delivered,
shall effect a valid sale, transfer and assignment of the Contracts,
enforceable against NCR Credit Corp., and creditors of and purchasers from
NCR Credit Corp.; and this Agreement and each of NCR Credit Corp.'s Related
Documents constitute legal, valid and binding obligations of NCR Credit
Corp., enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time, or both) a default under, the
articles of incorporation or bylaws of NCR Credit Corp., or any indenture,
agreement, mortgage, deed of trust or other instrument to which NCR Credit
Corp. is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument,
other than this Agreement, the Transfer and Servicing Agreement and the
Indenture, or violate any law, order, rule or regulation applicable to NCR
Credit Corp. of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over NCR Credit Corp. or any of its properties.
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(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of NCR Credit Corp., threatened against NCR
Credit Corp., before any court, regulatory body, administrative agency or
other tribunal or governmental instrumentality having jurisdiction over NCR
Credit Corp. or any properties of NCR Credit Corp. (i) asserting the
invalidity of this Agreement or any of the Related Documents, (ii) seeking
to prevent the issuance of the Notes or the Equity Certificates or the
consummation of any of the transactions contemplated by this Agreement or
any of the Related Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by NCR Credit
Corp. of its obligations under, or the validity or enforceability of, this
Agreement or any of the Related Documents or (iv) seeking to affect
adversely the federal income tax or other federal, state or local tax
attributes of, or seeking to impose any excise, franchise, transfer or
similar tax upon, the transfer and acquisition of the Contracts hereunder
or under the Transfer and Servicing Agreement.
(h) CHIEF EXECUTIVE OFFICES. The chief executive office of NCR
Credit Corp. is located at [________].
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF AT&T COMMERCIAL FINANCE
CORPORATION. AT&T Commercial Finance Corporation makes the following
representations and warranties, on which Antigua relies in purchasing the
Contracts and in transferring the Contracts to the Trust under the Transfer and
Servicing Agreement. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Contracts hereunder and the sale, transfer and assignment thereof by
Antigua to the Trust under the Transfer and Servicing Agreement. AT&T Commercial
Finance Corporation and Antigua agree that Antigua will assign to the Trust all
of Antigua's rights under this Agreement and that the Trust will thereafter be
entitled to enforce this Agreement against AT&T Commercial Finance Corporation
in the Trust's own name.
(a) SCHEDULE OF REPRESENTATIONS. With respect to each Contract sold
by AT&T Commercial Finance Corporation to Antigua hereunder, the
representations and warranties set forth on the Schedule of Representations
are true and correct.
(b) ORGANIZATION AND GOOD STANDING. AT&T Commercial Finance
Corporation has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of [__________],
with power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire, own and sell the Contracts sold by AT&T Commercial
Finance Corporation to Antigua hereunder.
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(c) DUE QUALIFICATION. AT&T Commercial Finance Corporation is duly
qualified to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of its property or the conduct of its business
requires such qualification.
(d) POWER AND AUTHORITY. AT&T Commercial Finance Corporation has the
power and authority to execute and deliver this Agreement and its Related
Documents and to carry out its terms and their terms, respectively; AT&T
Commercial Finance Corporation has full power and authority to sell and
assign the Contracts to be sold and assigned to and deposited with Antigua
hereunder and has duly authorized such sale and assignment to Antigua by
all necessary corporate action; and the execution, delivery and performance
of this Agreement and all of AT&T Commercial Finance Corporation's Related
Documents have been duly authorized by AT&T Commercial Finance Corporation
by all necessary corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and each of AT&T
Commercial Finance Corporation's Related Documents have been duly executed
and delivered, shall effect a valid sale, transfer and assignment of the
Contracts, enforceable against AT&T Commercial Finance Corporation, and
creditors of and purchasers from AT&T Commercial Finance Corporation; and
this Agreement and each of AT&T Commercial Finance Corporation's Related
Documents constitute legal, valid and binding obligations of AT&T
Commercial Finance Corporation, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Related Documents and the fulfillment of the
terms of this Agreement and the Related Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice or lapse of time, or both) a default under, the
articles of incorporation or bylaws of AT&T Commercial Finance Corporation,
or any indenture, agreement, mortgage, deed of trust or other instrument to
which AT&T Commercial Finance Corporation is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement, the
Transfer and Servicing Agreement and the Indenture, or violate any law,
order, rule or regulation applicable to AT&T Commercial Finance Corporation
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over AT&T
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Commercial Finance Corporation or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the knowledge of AT&T Commercial Finance Corporation,
threatened against AT&T Commercial Finance Corporation, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over AT&T Commercial Finance
Corporation or any properties of AT&T Commercial Finance Corporation (i)
asserting the invalidity of this Agreement or any of the Related Documents,
(ii) seeking to prevent the issuance of the Notes or the Equity
Certificates or the consummation of any of the transactions contemplated by
this Agreement or any of the Related Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by AT&T Commercial Finance Corporation of its obligations
under, or the validity or enforceability of, this Agreement or any of the
Related Documents or (iv) seeking to affect adversely the federal income
tax or other federal, state or local tax attributes of, or seeking to
impose any excise, franchise, transfer or similar tax upon, the transfer
and acquisition of the Contracts hereunder or under the Transfer and
Servicing Agreement.
(h) CHIEF EXECUTIVE OFFICES. The chief executive office of AT&T
Commercial Finance Corporation is located at [________].
SECTION 3.6 REPRESENTATIONS AND WARRANTIES OF ANTIGUA. Antigua makes
the following representations and warranties, on which each of the Sellers and
TCC relies in selling, assigning, transferring and conveying the Contracts to
Antigua hereunder. Such representations are made as of the execution and
delivery of this Agreement, but shall survive the sale, transfer and assignment
of the Contracts hereunder and the sale, transfer and assignment thereof by
Antigua to the Trust under the Transfer and Servicing Agreement.
(a) ORGANIZATION AND GOOD STANDING. Antigua has been duly organized
and is validly existing and in good standing as a corporation under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and has, full power, authority and legal right to acquire and own
the Contracts and to transfer the Contracts to the Trust pursuant to the
Transfer and Servicing Agreement.
(b) DUE QUALIFICATION. Antigua is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect (i) Antigua's ability to acquire the
Contracts, (ii) the validity or enforceability of the Contracts or (iii)
Antigua's ability to perform its obligations
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hereunder and under the Related Documents.
(c) POWER AND AUTHORITY. Antigua has the power, authority and legal
right to execute and deliver this Agreement and its Related Documents and
to carry out the terms hereof and thereof and to acquire the Contracts
hereunder; and the execution, delivery and performance of this Agreement
and its Related Documents and all of the documents required pursuant hereto
or thereto have been duly authorized by Antigua by all necessary action.
(d) NO CONSENT REQUIRED. Antigua is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such as
have been obtained, effected or made.
(e) BINDING OBLIGATION. This Agreement and each of Antigua's
Related Documents constitutes a legal, valid and binding obligation of
Antigua, enforceable against Antigua in accordance with its terms; and this
Agreement and each of Antigua's Related Documents constitute legal, valid
and binding obligations of Antigua, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The execution, delivery and performance by Antigua
of this Agreement, the consummation of the transactions contemplated by
this Agreement and the Related Documents and the fulfillment of the terms
of this Agreement and the Related Documents do not and will not conflict
with, result in any breach of any of the terms and provisions of or
constitute (with or without notice or lapse of time, or both) a default
under the certificate of incorporation or bylaws of Antigua, or any
indenture, agreement, mortgage, deed of trust or other instrument to which
Antigua is a party or by which Antigua is bound or to which any of its
properties are subject, or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument (other than the
Transfer and Servicing Agreement and the Indenture), or violate any law,
order, rule or regulation, applicable to Antigua or its properties, of any
federal or state regulatory body or any court, administrative agency, or
other governmental instrumentality having jurisdiction over Antigua or any
of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the knowledge of Antigua, threatened against Antigua,
before any court,
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regulatory body, administrative agency, or other tribunal or governmental
instrumentality having jurisdiction over Antigua or its properties: (i)
asserting the invalidity of this Agreement or any of the Related Documents,
(ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Antigua of its obligations under, or the validity
or enforceability of, this Agreement or any of the Related Documents or
(iv) that may adversely affect the federal or state income tax attributes
of, or seeking to impose any excise, franchise, transfer or similar tax
upon, the transfer and acquisition of the Contracts hereunder or the
transfer of the Contracts to the Trust pursuant to the Transfer and
Servicing Agreement.
In the event of any breach of a representation and warranty made by Antigua
hereunder, each of the Sellers and TCC covenants and agrees that it will not
take any action or pursue any remedy that it may have hereunder, in law, in
equity or otherwise, until a year and a day have passed since the date on which
all Notes and Certificates issued by the Trust, or a trust or similar vehicle
formed by Antigua, have been paid in full. Each of the Sellers, TCC and Antigua
agree that damages will not be an adequate remedy for breach of the foregoing
covenant and that this covenant may be specifically enforced by Antigua or by
the Owner Trustee on behalf of the Trust.
ARTICLE IV
COVENANTS OF the Sellers
SECTION 4.1 PROTECTION OF TITLE OF ANTIGUA AND THE TRUST.
(a) At or prior to the Closing Date, with respect to Equipment
located in the State of New Jersey, each Seller shall have filed or caused to be
filed a UCC-1 financing statement, executed by the applicable Seller, as seller
or debtor, naming the Owner Trust as secured party and describing the applicable
Equipment, with respect to such Seller and this Agreement, being sold by it to
Antigua as collateral, with the office of the Secretary of State of the State of
New Jersey. Each Seller shall, with respect to the Contracts for Equipment
located in the State of New Jersey that it has sold to Antigua hereunder,
deliver (or cause to be delivered) to Antigua, the Owner Trustee and the
Indenture Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing. In the
event that any Seller fails to perform its obligations under this subsection,
Antigua or the Owner Trustee may do so at the expense of [such Seller/TCC].
(b) None of the Sellers [or TCC] shall change its name, identity, or
corporate structure in any manner that would, could or might make any financing
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statement or continuation statement filed by such Seller [or TCC] (or by Antigua
or the Owner Trustee on behalf of such Seller [or TCC]) in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given Antigua and the Owner Trustee at least 60
days' prior written notice thereof, and shall promptly file appropriate
amendments to all previously filed financing statements and continuation
statements.
(c) Each of the Sellers and TCC shall give Antigua, the Indenture
Trustee and the Owner Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. Each of the Sellers and TCC shall at all times maintain
each office from which it services Contracts and its principal executive office
within the United States of America.
(d) Each of the Sellers and TCC shall maintain its computer systems
so that, from and after the time of sale under this Agreement of the Contracts
to Antigua, and the conveyance of the Contracts by Antigua to the Trust, the
master computer records (including archives) of each of the Sellers and TCC that
shall refer to a Contract indicate clearly that such Contract has been sold to
Antigua and has been conveyed by Antigua to the Trust. Indication of the
Trust's ownership of a Contract shall be deleted from or modified on any of the
Sellers' or TCC's computer systems when, and only when, the Contract shall
become a Purchased Contract in accordance with Section 5.1 or shall have been
paid in full.
(e) If at any time any of the Sellers or TCC shall propose to sell,
grant a security interest in, or otherwise transfer any interest in lease
contracts or loan contracts of a character similar to the Contracts to any
prospective purchaser, lender or other transferee, such Seller or TCC, as
applicable, shall give to such prospective purchaser, lender, or other
transferee computer tapes, records, or print-outs (including any restored from
archives) that, if they shall refer in any manner whatsoever to any Contract,
shall indicate clearly that such Contract has been sold to Antigua and is owned
by the Trust.
SECTION 4.2 OTHER LIENS OR INTERESTS. Except for the conveyances
hereunder, with respect to any Contract, the Seller and TCC will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on such Contract or any interest therein, and such
Seller and TCC shall defend the right, title, and interest of Antigua and the
Trust in and to such Contract against all claims of third parties claiming
through or under such Seller or TCC.
SECTION 4.3 COSTS AND EXPENSES. Each Seller and TCC shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and its Related Documents.
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SECTION 4.4 INDEMNIFICATION.
Each of the Sellers, acting severally and not jointly, and TCC, as
applicable, shall defend, indemnify and hold harmless Antigua, the Trust, the
Owner Trustee, the Indenture Trustee, the Noteholders and the Equity
Certificateholders from and against:
(a) any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from any breach of any representations
and warranties of such Seller or TCC, as applicable, contained herein;
(b) [any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership or operation of
any item of Equipment;]
(c) any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from any action taken, or failed to be
taken, by it in respect of any portion of the Trust Property other than in
accordance with this Agreement or the Transfer and Servicing Agreement;
(d) [any taxes that may at any time be asserted against Antigua, the
Trust, the Owner Trustee, the Indenture Trustee, the Noteholders and the Equity
Certificateholders with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but not including any taxes asserted with respect to, and as of the date
of, the sale, transfer and assignment of the Contracts to Antigua and of the
Trust Property to the Trust or the issuance and original sale of the Notes or
the Equity Certificates, or asserted with respect to ownership of the Contracts
or the Trust Property which shall be indemnified by the Sellers pursuant to
clause (e) below, or federal, state or other income taxes, arising out of
distributions on the Notes or the Equity Certificates or transfer taxes arising
in connection with the transfer of the Notes or the Equity Certificates) and
costs and expenses in defending against the same, arising by reason of the acts
to be performed by such Seller or TCC, as applicable, under this Agreement or
imposed against such Persons;]
(e) [any taxes which may at any time be asserted against such Persons
with respect to, and as of the date of, the conveyance or ownership of the
Contracts and the conveyance or ownership of the Trust Property under the
Transfer and Servicing Agreement or the issuance and original sale of the Notes
and the Equity Certificates, including, without limitation, any sales, gross
receipts, personal property, tangible or intangible personal property, privilege
or license taxes (but not including any federal or other income taxes, including
franchise taxes, arising out of the transactions contemplated hereby or transfer
taxes arising in connection with the transfer of Notes or Equity Certificates)
and costs and expenses in defending against the same, arising by reason of the
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acts to be performed by such Seller or TCC, as applicable, under this Agreement
or imposed against such Persons;]
(f) [any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon Antigua, the Owner Trustee, the
Trust, the Indenture Trustee, the Noteholders and the Equity Certificateholders
through the negligence, willful misfeasance, or bad faith of such Seller or TCC,
as applicable, in the performance of its duties under this Agreement or by
reason of reckless disregard of the obligations and duties of such Seller or
TCC, as applicable, under this Agreement;]
(g) any loss, liability or expense incurred by reason of the
violation by such Seller or TCC, as applicable, of federal or state securities
laws in connection with the registration or the sale of the Notes and the Equity
Certificates; and
(h) any loss, liability or expense imposed upon, or incurred by,
Antigua, the Owner Trustee, the Indenture Trustee, the Trust, the Noteholders or
the Equity Certificateholders as a result of the failure of any Contract, or the
sale of the related Equipment, to comply with all requirements of applicable
law.
Indemnification under this Section 4.4 shall include reasonable fees
and expenses of counsel and expenses of litigation and shall survive termination
of the Trust. The indemnity obligations hereunder shall be in addition to any
obligation that any Seller or TCC, as applicable, may otherwise have.
ARTICLE V
REPURCHASES
SECTION 5.1 REPURCHASE OF CONTRACTS UPON BREACH OF WARRANTY. Upon
the occurrence of a Repurchase Event, TCC shall, unless such breach shall have
been cured in all material respects, repurchase such Contract from the Trust
and, on or before the related Deposit Date, TCC shall pay the Purchase Amount to
the Servicer on behalf of the Owner Trustee pursuant to Section 2.6 of the
Transfer and Servicing Agreement. It is understood and agreed that, except as
set forth in the following paragraph, the obligation of TCC to repurchase any
Contract as to which a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against TCC and the
applicable Seller for such breach available to Antigua, the Noteholders, the
Equity Certificateholders, the Owner Trustee on behalf of the Equity
Certificateholders and the Equipment Certificateholders or the Indenture Trustee
on behalf of the Noteholders. The provisions of this Section 5.1 are intended
to grant the Owner Trustee and the Indenture Trustee a direct right against TCC
to demand performance hereunder, and in connection
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therewith, TCC waives any requirement of prior demand against Antigua with
respect to such repurchase obligation. Any such purchase shall take place in
the manner specified in Section 2.6 of the Transfer and Servicing Agreement.
Notwithstanding any other provision of this Agreement or the Transfer and
Servicing Agreement to the contrary, the obligation of TCC under this Section
shall not terminate upon a termination of TCC as Servicer under the Transfer and
Servicing Agreement and shall be performed in accordance with the terms hereof
notwithstanding the failure of the Servicer or Antigua to perform any of their
respective obligations with respect to such Contract under the Transfer and
Servicing Agreement.
In addition to the foregoing and notwithstanding whether the related
Contract shall have been purchased by TCC, TCC shall indemnify Antigua, the
Owner Trustee, the Indenture Trustee, the Trust, the Noteholders and the Equity
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such Repurchase Events.
SECTION 5.2 REASSIGNMENT OF PURCHASED CONTRACTS. Upon deposit in the
Collection Account of the Purchase Amount of any Contract repurchased by TCC
under Section 5.1, Antigua and the Owner Trustee shall take such steps as may be
reasonably requested by TCC in order to assign to TCC all of Antigua's and the
Trust's right, title and interest in and to such Contract and all security and
documents conveyed to Antigua and the Trust directly relating thereto, without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of Antigua or the
Owner Trustee. Such assignment shall be a sale and assignment outright, and not
for security. If, following the reassignment of a Purchased Contract, in any
enforcement suit or legal proceeding, it is held that TCC may not enforce any
such Contract on the ground that it shall not be a real party in interest or a
holder entitled to enforce the Contract, Antigua and the Owner Trustee shall, at
the expense of TCC, take such steps as TCC deems reasonably necessary to enforce
the Contract, including bringing suit in Antigua's or the Owner Trustee's name
or the names of the Noteholders or Equity Certificateholders.
SECTION 5.3 WAIVERS. No failure or delay on the part of Antigua, the
Trust or the Owner Trustee as assignee of Antigua, in exercising any power,
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or remedy preclude
any other or future exercise thereof or the exercise of any other power, right
or remedy.
ARTICLE VI
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MISCELLANEOUS
SECTION 6.1 LIABILITY OF THE SELLERS AND TCC. Each of the Sellers
and TCC shall be liable in accordance herewith only to the extent of the
obligations in this Agreement specifically undertaken, individually and not
jointly, by each Seller and TCC, and the representations and warranties of each
Seller and TCC.
SECTION 6.2 MERGER OR CONSOLIDATION OF A SELLER, TCC OR ANTIGUA. Any
corporation or other entity (i) into which any Seller, TCC or Antigua may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
any Seller, TCC or Antigua is a party or (iii) succeeding to the business of any
Seller, TCC or Antigua, shall be the successor to such Seller, TCC or Antigua,
as the case may be (without relieving such Seller, TCC or Antigua of its
responsibilities hereunder, if it survives such merger or consolidation) without
the execution or filing of any document or any further act by any of the parties
to this Agreement. Such Seller, TCC or Antigua shall promptly inform the other
party, the Owner Trustee and the Indenture Trustee of such merger, consolidation
or purchase and assumption. Notwithstanding the foregoing, as a condition to
the consummation of the transactions referred to in clauses (i), (ii) and (iii)
above, (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Sections 3.1 and 3.2 and this
Agreement shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction), (y) such Seller, TCC or Antigua, as applicable, shall have
delivered written notice of such consolidation, merger or purchase and
assumption to the Rating Agencies prior to the consummation of such transaction
and shall have delivered to the Owner Trustee and the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.2 and that all conditions precedent, if any, provided for in this
Agreement, relating to such transaction have been complied with, and (z) such
Seller, TCC or Antigua, as applicable, shall have delivered to the Owner Trustee
and the Indenture Trustee an Opinion of Counsel, stating that, in the opinion of
such counsel, either (A) all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Owner Trustee in the Trust Property and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
SECTION 6.3 LIMITATION ON LIABILITY OF THE SELLERS, TCC AND OTHERS.
Each Seller and TCC, and any director, officer, employee or agent thereof, may
rely in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement. Each Seller and TCC shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its obligations under this Agreement or its Related Documents and
that in its reasonable judgment may involve it in any expense or liability.
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SECTION 6.4 THE SELLERS AND TCC MAY OWN NOTES OR CERTIFICATES.
Subject to the provisions of the Transfer and Servicing Agreement, each of the
Sellers and TCC, and any Affiliate of any Seller or TCC, may in its individual
or any other capacity become the owner or pledgee of Notes or Equity
Certificates with the same rights as it would have if it were not a Seller, TCC
or an Affiliate thereof.
SECTION 6.5 AMENDMENT.
(a) This Agreement may be amended by the Sellers, TCC and Antigua
without the consent of the Owner Trustee, the Indenture Trustee or any of the
Equity Certificateholders or Noteholders (A) to cure any ambiguity or (B) to
correct any provisions in this Agreement; PROVIDED, HOWEVER, that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee
and the Indenture Trustee, adversely affect in any material respect the
interests of any Equity Certificateholder or Noteholder.
(b) This Agreement may also be amended from time to time by the
Sellers, TCC and Antigua, with the prior written consent of the Owner Trustee,
the Indenture Trustee, a Note Majority and an Equity Certificate Majority, 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 Equity Certificateholders or the Noteholders; PROVIDED, HOWEVER,
that no such amendment shall (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Contracts,
distributions that shall be required to be made on any Equity Certificate or
Note or the applicable rate of interest payable thereon or (ii) reduce the
aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Notes or Equity
Certificates then Outstanding and affected thereby.
(c) Prior to the execution of any such amendment or consent, the
Sellers, TCC and Antigua shall have furnished written notification of the
substance of such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee or the Indenture Trustee, as applicable, shall furnish written
notification of the substance of such amendment or consent to each Equity
Certificateholder and Noteholder.
(e) It shall not be necessary for the consent of Equity
Certificateholders or Noteholders pursuant to this Section to approve the
particular form of any proposed amendment or consent, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of obtaining
such consents and of evidencing the authorization of the execution thereof by
Equity Certificateholders or Noteholders shall be subject to such
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reasonable requirements as the Owner Trustee or the Indenture Trustee, as
applicable, may prescribe, including the establishment of record dates. The
consent of any Holder of an Equity Certificate or Note given pursuant to this
Section or pursuant to any other provision of this Agreement shall be conclusive
and binding on such Holder and on all future Holders of such Equity Certificate
or Note and of any Equity Certificate or Note issued upon the transfer thereof
or in exchange thereof or in lieu thereof whether or not notation of such
consent is made upon the Equity Certificate or Note.
SECTION 6.6 NOTICES. All demands, notices and communications to the
Sellers, TCC or Antigua hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt:
(a) in the case of AT&T Capital Corporation, to [
], or such other address as shall be designated by AT&T Capital Corporation in a
written notice delivered to the other parties and to the Owner Trustee and the
Indenture Trustee;
(b) in the case of AT&T Capital Leasing Services, Inc., to [
], or such other address as AT&T Capital Leasing Services, Inc. shall be
designated by a written notice delivered to the other parties and to the Owner
Trustee and the Indenture Trustee;
(c) in the case of AT&T Credit Corporation, to [
], or such other address as shall be designated by AT&T Credit Corporation in a
written notice delivered to the other parties and to the Owner Trustee and the
Indenture Trustee;
(d) in the case of NCR Credit Corp., to [ ], or
such other address as shall be designated by NCR Credit Corp. in a written
notice delivered to the other parties and to the Owner Trustee and the Indenture
Trustee;
(e) in the case of AT&T Commercial Finance Corporation, to [
], or such other address as AT&T Commercial Finance Corporation shall
be designated by AT&T Commercial Finance Corporation in a written notice
delivered to the other parties and to the Owner Trustee and the Indenture
Trustee; and
(f) in the case of Antigua, to [
].
SECTION 6.7 MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement and the Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented
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except as provided herein.
SECTION 6.8 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.9 INTENTION OF THE PARTIES. The execution and delivery of
this Agreement shall constitute an acknowledgment by each of the Sellers, TCC
and Antigua that they intend that each assignment and transfer herein and
therein contemplated constitute a sale and assignment outright, and not for
security, of the Contracts, conveying good title thereto free and clear of any
Liens, from the Sellers to Antigua, and that no Contract shall be a part of the
estate of any Seller or TCC in the event of the bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, or the occurrence of another similar
event, of, or with respect to, any Seller or TCC. In the event that such
conveyance is determined to be made as security for a loan made by Antigua, the
Trust, the Equity Certificateholders or the Noteholders to the Sellers or TCC,
the parties intend that the Sellers and TCC shall have granted to Antigua a
security interest in all of the Sellers' and TCC's right, title and interest in
and to the Contracts, conveyed pursuant to Section 2.1 hereof, and that this
Agreement shall constitute a security agreement under applicable law.
SECTION 6.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the principles of conflicts of laws thereof, and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
SECTION 6.11 COUNTERPARTS. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.12 CONVEYANCE OF THE CONTRACTS TO THE TRUST. the Sellers
and TCC acknowledge that Antigua intends, pursuant to the Transfer and Servicing
Agreement, to convey the Contracts, together with its rights under this
Agreement, to the Trust on the date hereof. The Sellers and TCC acknowledge and
consent to such conveyance and waive any further notice thereof and covenant and
agree that the representations and warranties of the Sellers and TCC contained
in this Agreement and the rights of Antigua hereunder are intended to benefit
the Owner Trustee, the Indenture Trustee, the Trust, the Noteholders and the
Equity Certificateholders. In furtherance of the foregoing, the Sellers and TCC
covenant and agree to perform their duties and obligations hereunder, in
accordance with the terms hereof, for the benefit of the Owner
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<PAGE>
Trustee, the Indenture Trustee, the Trust, the Equity Certificateholders and the
Noteholders and that, notwithstanding anything to the contrary in this
Agreement, the Sellers and TCC shall be directly liable to the Owner Trustee and
the Trust (notwithstanding any failure by the Servicer or Antigua to perform its
duties and obligations hereunder or under the Transfer and Servicing Agreement)
and that the Owner Trustee may enforce the duties and obligations of the Sellers
or TCC under this Agreement against the Sellers or TCC for the benefit of the
Trust, the Equity Certificateholders and the Noteholders.
SECTION 6.13 NONPETITION COVENANT. Neither the Sellers, TCC nor
Antigua shall petition or otherwise invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Trust (or, in the case of the Sellers or TCC, against Antigua) under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust (or Antigua) or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Trust (or Antigua).
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Purchase and Sale
Agreement to be duly executed by their respective officers as of the day and
year first above written.
ANTIGUA FUNDING CORPORATION,
as Purchaser
By
Name:
Title:
AT&T CAPITAL CORPORATION,
In its individual capacity and as
Servicer
By
Name:
Title:
AT&T CAPITAL LEASING SERVICES, INC.,
as a Seller
By
Name:
Title:
AT&T CREDIT CORPORATION,
as a Seller
By
Name:
Title:
NCR CREDIT CORP.,
as a Seller
By
Name:
Title:
29
<PAGE>
AT&T COMMERCIAL FINANCE
CORPORATION, as a Seller
By
Name:
Title:
30
<PAGE>
SCHEDULE A-1
SCHEDULE OF LEASE CONTRACTS
<PAGE>
SCHEDULE A-2
SCHEDULE OF LOAN CONTRACTS
<PAGE>
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND TCC
With respect to each Contract as of the Cut-Off Date, the applicable
Seller and TCC represent and warrant as follows :
A. CHARACTERISTICS OF CONTRACTS. Each Contract (i) constitutes a
valid, binding and enforceable payment obligation of the Obligor in accordance
with its terms (except as may be limited by applicable bankruptcy, insolvency or
other similar laws affecting the enforceability of creditors' rights generally
and the availability of equitable remedies), (ii) was originated by one of the
Sellers in the ordinary course of such Seller's business, or (in the case of any
contract purchased by one of the Sellers) was acquired by such Seller for proper
consideration and was validly assigned to such Seller by the originator of such
Contract, and (iii) contains customary and enforceable provisions adequate to
enable realization against the Obligor and/or the related Equipment (although no
representation or warranty is made with respect to the perfection or priority of
any security interest in such related Equipment).
B. ADVERSE SELECTION. No selection procedures adverse to the
Noteholders were utilized in selecting the Contract from those lease and loan
contracts owned by the Seller on the Cut-Off Date.
C. COMPLIANCE WITH LAW. All requirements of applicable Federal,
state and local laws, and regulations thereunder, in respect of all of the
Contracts, have been complied with in all material respects.
D. NO DEFAULT. There has been no default, breach, violation or
event permitting cancellation or termination of the Contract by the lessor (in
the case of Lease Contracts) or by the secured party (in the case of Loan
Contracts) under the terms of any Contract (other than payment delinquencies (in
excess of 10% of the periodic payment due) of not more than 59 days), and
(except for administrative extensions in the case of certain Contracts which, in
proportion to the aggregate of all Contracts, is not material) there has been no
waiver of any of the foregoing; and as of the Cut-Off Date, no related Equipment
had been repossessed.
E. GOOD TITLE. Immediately prior to the sale, assignment and
conveyance of each Contract by a Seller to Antigua, such Seller had good title
to such Contract conveyed to Antigua and was the sole owner thereof, free of any
Lien; and immediately prior to the transfer and conveyance of the Contracts to
the Owner Trust, Antigua had good title thereto and was the sole owner thereof,
free of any Lien created by the applicable Seller.
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<PAGE>
F. NO IMPAIRMENT. No person has a participation in or other right
to receive Scheduled Payments under any Contract, and neither [Antigua] nor any
of the Sellers has taken any action to convey any right to any Person that would
result in such Person having a right to Scheduled Payments received with respect
to any Contract.
G. NO FRAUD OR MISREPRESENTATION. Each Contract was originated or
purchased by a Seller [and was sold by such Seller to Antigua] without any fraud
or misrepresentation on the part of such Seller.
H. THE OBLIGORS. Each Obligor (i) is located in the United States,
and (ii) is not (a) the United States of America or any State or local
government or any agency, department, subdivision or instrumentality thereof or
(b) Antigua, the Sellers, TCC or any subsidiaries thereof.
I. LAWFUL ASSIGNMENT. No Contract was originated in, or is subject
to the laws of, any jurisdiction the laws of which would make unlawful, void or
voidable the sale, transfer and assignment of such Contract from a Seller to
Antigua under this Agreement [or the transfer and conveyance from Antigua to the
Owner Trust under the Transfer and Servicing Agreement].
J. ALL FILINGS MADE. All filings and other actions required to be
made, taken or performed by any Person in any jurisdiction to give the Owner
Trust a first priority perfected lien or ownership interest in the Contracts has
been made, taken or performed.
K. CONTRACT FILES COMPLETE. There exists a Contract File pertaining
to each Contract, and such Contract File contains the Contract or a facsimile
copy thereof.
L. ONE ORIGINAL. There is only one original executed copy of each
Contract or, if there are multiple originals, all such originals are in the
possession of the Seller or the signed original in the possession of the Seller
is noted thereon as being the only copy that constitutes chattel paper.
M. CHATTEL PAPER. The Contracts constitute chattel paper within the
meaning of the UCC as in effect in the States of New Jersey and Massachusetts
(other than those Contracts in which the lessor is financing the Obligor's
software license or maintenance contract for leased Equipment, which Contracts,
in proportion to the aggregate of all of the Contracts are not material).
N. OBLIGOR BANKRUPTCY. Each Contract was entered into by an Obligor
who, at the Cut-Off Date, has not been identified on the records of TCC, the
Seller or Antigua as being the subject of a current bankruptcy proceeding.
[ O. COMPUTER TAPE. The Computer Tape containing information with
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<PAGE>
respect to the Contracts that was made available by Antigua to the Owner Trustee
and the Indenture Trustee on the Closing Date and was used to select the
Contracts (the "Computer Tape") was complete and accurate in all material
respects as of the Cut-Off Date and includes a description of the same Contracts
that are described in the Schedule of Contracts to the Transfer and Servicing
Agreement.]
P. MARKING RECORDS. By the Merger Consummation Date, the portions
of the electronic master record of TCC [and the Depositor] (the "Electronic
Ledger") relating to the Contracts will have been clearly and unambiguously
marked to show that the Contracts constitute part of the Trust Assets and are
owned by the Owner Trust in accordance with the terms of the Transfer and
Servicing Agreement.
Q. PAST DUE. No Contract has a payment delinquency (in excess of
10% of the periodic payment due) of more than 59 days past due as of the Cut-Off
Date.
R. ASSIGNMENT TO THE OWNER TRUST. Each Contract may be sold,
assigned and transferred by the Seller to Antigua, and may be assigned and
transferred by Antigua to the Owner Trust without the consent of, or prior
approval from, or any notification to, the applicable Obligor, other than (i)
certain Contracts (which, in proportion to the aggregate of all of the
Contracts, is not material) that require notification of the assignment to the
Obligor, which notification will have been given by the Servicer not later than
30 days following the Merger Consummation Date and (ii) Contracts which require
the consent of the Obligor, which consent has been obtained prior to the Merger
Consummation Date.
S. CONTRACT NOT ASSUMABLE. Each Contract prohibits the sale,
assignment or transfer of the Obligor's interest therein, the assumption of the
Contract by another person in a manner that would release the Obligor thereof
from the Obligor's obligation, or any sale, assignment or transfer of the
related Equipment, without the prior consent of the lessor (in the case of Lease
Contracts) or the lender (in the case of Loan Contracts), other than Contracts
which may (i) permit assignment to a subsidiary, corporate parent or other
affiliate, (ii) permit the assignment to a third party, provided the Obligor
remains liable under the Contract, or (iii) permit assignment to a third party
with a credit standing (determined in accordance with the underwriting policy
and practice at the time for an equivalent contract type, term and amount) equal
to or better than the original Obligor.
T. PAYMENTS IN UNITED STATES DOLLARS. The Obligor under each
Contract is required to make payments thereunder (i) in United States dollars,
and (ii) in fixed amounts and on fixed and predetermined dates.
U. MAINTENANCE AND REPAIR. Each Contract requires the Obligor to
assume responsibility for payment of all expenses in connection with the
maintenance and repair of the related Equipment, the payment of all premiums for
insurance of such
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Equipment and the payment of all taxes (including sales taxes) relating to such
Equipment.
V. SCHEDULED PAYMENTS. Each Contract requires the Obligor
thereunder to make all scheduled payments thereon under all circumstances and
regardless of the condition or suitability of the related Equipment and
notwithstanding any defense, set-off or counterclaim that the Obligor may have
against the lessor or lender (as the case may be).
W. REPAIR OR REPLACEMENT OF DAMAGED EQUIPMENT. Under each Lease
Contract, if the Equipment is damaged or destroyed, the Obligor is required
either (i) to repair such Equipment, (ii) to make a termination payment to the
lessor in an amount not less than the Contract Principal Balance, or (iii) in
some cases, to replace such damaged or destroyed Equipment with other equipment
of comparable use and value.
X. NO TERMINATION BY LESSEE. None of the Lease Contracts permit the
Lessee to terminate the Lease Contract prior to the Final Scheduled Payment Date
or to otherwise prepay the amounts due and payable thereunder, other than
certain Lease Contracts which do permit an early termination or prepayment, but
in such cases, the amount to be paid in connection with such termination or
prepayment is not less than the Contract Principal Balance (plus any delinquent
payments and the next Scheduled Payment).
Y. PREPAYMENT OPTION. Each Loan Contract permits the prepayment of
the amount due thereunder, at the option of the Obligor, but any such prepayment
must be in an amount not less than the principal amount then outstanding plus
accrued interest thereon to the date of such prepayment.
Z. NO TRANSFER OF TITLE REQUIRED. It is not a precondition to the
valid transfer or assignment of the Depositor's interest in any of the Equipment
related to any Contract that title to such Equipment be transferred on the
records of any governmental or quasi-governmental agency, body or authority.
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