As filed with the Securities and Exchange Commission on March 14, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
METLIFE CAPITAL EQUIPMENT LOAN TRUSTS
(Issuer of Securities)
METLIFE Capital Funding Corp. III
(Originator of the Trusts described herein)
(Exact Name of Registrant as Specified in Its Articles of Incorporation)
Delaware [Applied for]
(State or Other Jurisdiction (I.R.S. Employer
of Organization) Identification Number)
MetLife Capital Funding Corp. III
15915 Katy Freeway
Houston, TX 77094
(713) 398-8881
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
John Reiner
Treasurer
15915 Katy Freeway
Suite 150
Houston, TX 77094
(713) 398-8881
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies to:
CAMERON L. COWAN, Esq. JULIE BABCOCK, Esq. JEFFERY VANDUZER, Esq.
ORRICK, HERRINGTON & LLP METLIFE CAPITAL DAVIS WRIGHT
SUTCLIFFE CORPORATION TREMAINE
Washington Harbour 10900 NE 4th Street 2600 Century Square
3050 K Street, N.W. Suite 500 1501 Fourth Avenue
Washington, D.C. 20007 Bellevue, WA 98004 Seattle, WA 98101-1688
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If any of the securities being registered on this Form are to be 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, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
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 earlier 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. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================================
Amount to be Proposed Maximum Aggregate Proposed Maximum Aggregate Amount of
Title of Securities to be Registered Price Per Unit Offering Price * Registration Fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Asset-Backed Notes $1,000,000 100% $1,000,000 $303.03
=======================================================================================================================
</TABLE>
* Estimated solely for the purpose of calculating the registration fee.
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<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 and without delivery of a final prospectus supplement and accompanying
prospectus. This prospectus supplement and the accompanying 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.
SUBJECT TO COMPLETION, DATED MARCH 14, 1997
Prospectus Supplement
(To Prospectus dated _________ __, 199[ ])
$[____________________]
METLIFE CAPITAL EQUIPMENT LOAN TRUST 199[ ]-[ ]
[$__________ Class A-1 ____% Asset Backed Notes]
[$__________ Class A-2] ____% Asset Backed Notes
METLIFE CAPITAL FUNDING CORP. III, Transferor
METLIFE CAPITAL CORPORATION, Servicer
---------------
Interest on the [Class A-1 ____% Asset Backed Notes (the "Class A-1 Notes"), and
the Class A-2] ____%
(continued on the following page)
Potential investors should consider, among other things, the information set
forth in "Risk Factors" commencing on page [____] in the Prospectus.
THE NOTES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN METLIFE CAPITAL FUNDING CORP. III, METLIFE
CAPITAL CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE
SECURITIES NOR THE RECEIVABLES ARE ISSUED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY.
================================================================================
Price to Underwriting Proceeds to
Public(1) Discount Issuer(2)
- --------------------------------------------------------------------------------
[Per A-1 Note ____% ____% ____%]
- --------------------------------------------------------------------------------
Per [A-2] Note ____% ____% ____%
- --------------------------------------------------------------------------------
Total $__________ $__________ $__________
================================================================================
(1) Plus accrued interest, if any, from ________ __, 199_.
(2) Before deducting expenses, estimated to be $__________.
---------------
The Class A Notes are offered by the Underwriter[s], subject to prior
sale, when, as and if issued to and accepted by them and subject to their right
to reject orders in whole or in part. It is expected that delivery of the Class
A Notes will be made in book-entry form only through the Same Day Funds
Settlement System of The Depository Trust Company, or through Cedel Bank,
societe anonyme or the Euroclear System, on or about ________ __, 199_ (the
"Closing Date").
---------------
Underwriters of the Class A Notes
[Underwriters]
---------------
The date of this Prospectus Supplement is ___________, ___
<PAGE>
(continued from preceding page)
Asset Backed Notes ([the "Class A-2 Notes"; together with the Class A-1 Notes,]
the "Class A Notes") and the Class B ___% Asset Backed Notes (the "Class B
Notes"; together with the Class A Notes, the "Notes") issued by MetLife Capital
Equipment Loan Trust 199[ ]-[ ] (the "Trust" or the "Issuer") will be payable
monthly on or about the [ ]the day of each month (each, a "Distribution Date")
commencing on ________ __, 199_. Principal on the Notes will be payable on each
Distribution Date [with respect to the Amortization Period scheduled to commence
on __________ ____] [; provided, however, that no principal payments in respect
of the A-2 Notes will be made until the Class A-1 Notes have been paid in full.]
The final scheduled distribution date [for the Class A-1 Notes will be the
________ 199_ Distribution Date and the final scheduled distribution date for
the Class [A-2] Notes will be the ________ 199_ Distribution Date.] Only the
Class A Notes are being offered hereby. The rights of Class B Noteholders to
receive distributions with respect to the Class B Notes will be subordinated to
the rights of the Class A Noteholders to receive payments of interest on and
principal of the Class A Notes. The final scheduled distribution date for the
Class B Notes will be the ________ 199_ Distribution Date. The actual payment in
full of the [Class A-1 Notes, the Class A-2] Notes or [Class B Notes] could
occur earlier than their respective final scheduled distribution dates. The
assets of the Trust will include a pool of [[fixed rate] [floating rate] loan
contracts] [and/or] [finance leases] (the "Receivables") secured by [new and/or
used commercial and/or industrial equipment], and certain monies due or received
thereunder on or after ________ __, 199_, which will be purchased by the Trust
from the Transferor on [or prior to] [and after] the date of the issuance of the
Notes. The Transferor will purchase the Receivables from MetLife Capital
Corporation concurrently with the purchase by the Trust of the Receivables from
the Transferor. The Notes will be secured by the assets of the Trust.
The Class [A-2] Notes will be subject to prepayment in whole, but not in part,
on any Distribution Date on which the Servicer exercises its option to purchase
the Receivables when the Pool Balance is reduced to less than 10% of the Initial
Pool Balance.
The Issuer, a newly formed limited-purpose Delaware business trust, will
generally be prohibited from incurring any indebtedness other than the Notes and
its assets will include the Receivables, the Collection Account, the Interest
Payment Account, the Principal Funding Account, the Note Distribution Account,
and the Reserve Account, as described herein.
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 SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CLASS A NOTES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CLASS A NOTES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
S-2
<PAGE>
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS
IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER- ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CLASS A NOTES
AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CLASS A NOTEHOLDERS
Unless and until Definitive Class A Notes are issued, periodic and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.
("Cede"), as nominee of The Depository Trust Company ("DTC"), and the registered
holder of the Class A Notes. [Periodic and annual unaudited reports containing
information concerning the Receivables will be prepared by the Servicer and sent
on behalf of the Trust to the registered holders of the Class B Notes]. See
"Issuance of the Class A Notes--Book-Entry Registration" and "Description of the
Transaction Agreements--Reports to Noteholders" in the accompanying Prospectus.
Such reports will not constitute financial statements that have been examined
and reported upon by, with an opinion expressed by, an independent or certified
public accountant. The Trust will file with the Securities and Exchange
Commission (the "Commission") such periodic reports as are required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder and as are otherwise agreed to by the Commission.
Copies of such periodic reports may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
S-3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the detailed
information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in the summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer......................... MetLife Capital Equipment Loan Trust 199[ ]-[ ]
(the "Trust" or the "Issuer"), a Delaware
business trust formed by the Transferor and the
Owner Trustee pursuant to the Trust Agreement
dated as of ________, 199_, (the "Trust
Agreement") between the Transferor and the
Owner Trustee, acting thereunder not in its
individual capacity but solely as Owner
Trustee.
Transferor..................... MetLife Capital Funding Corp. III (the
"Transferor"), a Delaware corporation and a
wholly-owned subsidiary of MetLife Capital
Corporation. The principal executive offices of
the Transferor are located at ___________ and
its telephone number is (___) ___-____.
Servicer....................... MetLife Capital Corporation (the "Servicer" or
"MCC"), a Delaware corporation.
Indenture Trustee.............. ___________________________, as indenture
trustee under the Indenture (the "Indenture
Trustee").
Owner Trustee.................. __________________________, as owner trustee
under the Trust Agreement (the "Owner
Trustee").
The Notes...................... [Class A-1 ____% Asset Backed Notes (the "Class
A-1 Notes") in the aggregate principal amount
of $__________.]
[Class A-2] ____% Asset Backed Notes ([the
"Class A-2 Notes"; together with the A-1
Notes,] the "Class [A] Notes") in the aggregate
principal amount of $__________.
[Class B ____% Asset Backed Notes (the "Class B
Notes"; together with the Class A Notes, the
"Notes") in the aggregate principal amount of $
_______. Only the Class A Notes are being
offered hereby.]
S-4
<PAGE>
The Notes will be issued by the Trust pursuant
to an Indenture to be dated as of ________ __,
199_ (the "Indenture"), between the Issuer and
the Indenture Trustee. The Notes will be
secured by the assets of the Trust.
The Class A Notes will be available for
purchase in book-entry form only in minimum
denominations of $1,000 and integral multiples
thereof. The Class A Noteholders will not be
entitled to receive Definitive Notes except in
the limited circumstances described herein. See
"Description of the Notes--General" and
"Issuance of the Notes--Book-Entry
Registration" in the Prospectus.
The Trust...................... The Trust is a business trust established under
the laws of Delaware pursuant to the Trust
Agreement. The activities of the Trust are
limited by the terms of the Trust Agreement to
acquiring, owning and managing the Receivables,
issuing and making payments on the Notes and
other activities related thereto. The Trust
Property includes (i) the Receivables, (ii) all
monies (including accrued interest) due
thereunder on or after the Cut-Off Date (as
defined below), (iii) such amounts as from time
to time may be held in one or more accounts
established and maintained by the Servicer and
the Transferor pursuant to the Transfer and
Sale Agreement, as described below, (iv) the
security interests in the equipment financed by
the Receivables (the "Financed Equipment"), (v)
the rights to proceeds from claims on physical
damage, credit life, liability and disability
insurance policies, if any, covering Financed
Equipment or Obligors, as the case may be, (vi)
any proceeds of repossessed Financed Equipment
(less any repossession expenses), (vii) the
rights of the Transferor under the Contribution
and Sale Agreement, (viii) interest earned on
short-term investments made by the Trust and
(ix) any proceeds of the foregoing.
Receivables.................... The Receivables will consist of [[fixed rate]
[floating rate] commercial loan contracts,
("Loan Contracts")] [and/or] [finance leases
("Leases")] secured by [new and/or used]
[commercial and/or industrial] equipment,
including rights to receive
S-5
<PAGE>
certain payments made with respect to such
[Loan Contracts and/or Leases] (the
"Receivables"). On or prior to the Closing
Date, the Transferor will acquire Receivables
having an aggregate Principal Balance of
approximately $____________ (the "Initial Pool
Balance") as of ________, 19__ (the "Cut-Off
Date") from MCC pursuant to a Contribution and
Sale Agreement to be dated as of _________,
19__ (the "Contribution and Sale Agreement"),
between MCC and the Transferor. The Transferor
will transfer the Receivables to the Trust
pursuant to a Transfer and Sale Agreement to be
dated as of _______, 19__ (the "Transfer and
Sale Agreement") among the Transferor, the
Servicer and the Trust. [From time to time
during the Revolving Period additional
Receivables will be transferred by the
Transferor to the Trust as described herein.]
The Receivables will arise from various
commercial loan and/or lease products
originated or acquired by MCC in its ordinary
course of business and subsequently conveyed to
the Transferor. The Receivables have been
selected from the contracts owned by MCC based
on the criteria specified in the Contribution
and Sale Agreement and described herein. See
"The Receivables Pool" herein. As of the
Cut-Off Date, the weighted average annual
percentage rate of interest (the "APR") of the
Receivables (based on their respective
Principal Balances) was approximately ___% (the
"Cut-Off Date APR"), the weighted average
remaining maturity (i.e., for each Receivable,
the period from but excluding the Cut-Off Date
to and including such Receivable's maturity
date) of the Receivables was approximately ____
months and the weighted average original
maturity of the Receivables was approximately
___ months. [As of the Cut-Off Date, no
Receivables had a scheduled maturity later than
the date which is [_____] months prior to the
[_________] Distribution Date, which date is
[the Final Scheduled Distribution Date].]
The "Pool Balance" at any time will represent
the aggregate Principal Balance of the
Receivables at the end of the preceding
Collection Period, after giving effect to all
payments received from
S-6
<PAGE>
Obligors and Purchase Amounts to be remitted by
the Transferor or the Servicer, as the case may
be, for such Collection Period, and to all
Realized Losses on all Defaulted Receivables
during such Collection Period. The "Principal
Balance" of a Receivable, as of the close of
business on the last day of a Collection Period
or as of the applicable Cut-Off Date, as
applicable, means the aggregate amount of all
Scheduled Principal Payments that have not been
received by the Servicer (including all
Scheduled Principal Payments that are then due
and payable), calculated as of the Cut-Off Date
or as of the end of the preceding Collection
Period (as applicable)]; provided, that the
Principal Balance of each Defaulted Receivable
is zero.
Scheduled Principal Payment.... Any payment in respect of the principal amount
of any Receivable that is scheduled to be paid
in accordance with the terms and conditions of
such Receivable as in effect on the applicable
Cut-Off Date (other than by reason of
acceleration of such Scheduled Principal
Payment in connection with a default under such
Receivable or any other event that causes a
payment of the principal amount to become due
prior to its scheduled payment date pursuant to
the terms of such Receivable as in effect on
the applicable Cut-Off Date).
Terms of the Notes............. The principal terms of the Notes will be as
described below:
A. Interest Payments........ The Class [A-1] Notes will bear interest at the
rate of ____% per annum (the "Class [A-1] Note
Rate")[, and the Class A-2 Notes will bear
interest at the rate of ____% per annum (the
"Class A-2 Note Rate")] and the Class B Notes
will bear interest at the rate of __% per annum
(the "Class B Note Rate") (in each case
calculated on the basis of a 360-day year of
twelve 30-day months). Interest on the
outstanding principal amount of the Class A-1
Notes, the Class A-2 Notes and the Class B
Notes will accrue from ___________, in the case
of the initial Distribution Date, or from the
most recent Distribution Date on which interest
has been paid, to but excluding the following
Distribution Date and will be payable on the
__the day of each calendar month (or if any
such date is not a business day, on the next
S-7
<PAGE>
succeeding business day) (each, a "Distribution
Date") commencing ________ __, 199_, to the
holders of record of the Class [A-1] Notes (the
"Class [A-1] Noteholders") [and the holders of
record of the Class A-2 Notes] (the ["Class A-2
Noteholders"; together with the A-1
Noteholders, the] "Class A Noteholders") and
the holders of record of the Class B Notes (the
"Class B Noteholders"), each as of the related
Record Date (as defined below).
Interest payments on the Class A Notes will be
generally derived from the Available Interest
Amount remaining after the payment of the
Servicing Fee and the Administration Fee, and
from amounts on deposit in the Reserve Account.
If the amount of interest on the principal
balance of the [A-1] Notes [and the A-2 Notes]
payable on any Distribution Date exceeds the
sum of such remaining portion of the Available
Interest Amounts and amounts on deposit in the
Reserve Account, the [A-1] Noteholders [and the
A-2 Noteholders] will receive their ratable
share (based upon the total amount of interest
due to the [A-1 Noteholders and the A-2]
Noteholders) of the amount available to be
distributed in respect of interest on the [A-1]
Notes [and the A-2 Notes].
With respect to any Distribution Date and the
Notes, "Record Date" means (i) if the Notes are
held in book-entry form, the close of business
on the calendar day immediately preceding such
Distribution Date or (ii) if the Notes are held
in definitive form, the last calendar day of
the month preceding the month in which such
Distribution Date occurs.
B. Principal Payments....... Principal of each class of the Notes will be
payable on each Distribution Date [with respect
to the Amortization Period] in an amount
calculated as the applicable percentage set
forth herein of the Principal Distribution
Amount (as defined herein) for such
Distribution Date to the extent of funds
available therefor as described herein.
On each Distribution Date before the
Distribution Date on which the Class [A-1]
Notes have been paid in full, [principal of the
Class A-1 Notes will
S-8
<PAGE>
be payable in an amount equal to Class A
Noteholders' Principal Distributable Amount
and, on each Distribution Date on and after the
Distribution Date on which the Class A-1 Notes
have been paid in full,] principal of the
[Class A-2] Notes will be payable, until the
[Class A-2] Notes have been paid in full in an
amount equal to the [Class A-2] Noteholders'
Percentage (as defined below) of [(i)] the
Available Principal Amounts for such
Distribution Date[, less (ii) any portion of
the Principal Distribution Amount applied on
such Distribution Date to reduce the
outstanding principal amount of the Class A-1
Notes to zero.] [In addition, certain amounts
from the Reserve Account may be paid as
principal of the [Class] [A][-1] [A-2] Notes.]
See "Description of the Transaction
Agreements--Distributions" and "--Reserve
Account" herein.
The outstanding principal amount, if any, of
the [Class A-1] Notes will be payable in full
on the ________ 199_ Distribution Date (the
"[Class A-1] Final Scheduled Distribution
Date") [and the outstanding principal amount,
if any, of the Class A-2 Notes will be payable
in full on the ________ _____ Distribution Date
(the "Class A-2 Final Scheduled Distribution
Date"), in each case] from funds available
therefor (including amounts in the Reserve
Account). See "Description of the Transaction
Agreements--Reserve Account" herein.
C. Optional Prepayment...... The Notes may be prepaid in whole, but not in
part, in an amount equal to the principal
amount of the Notes redeemed plus accrued and
unpaid interest thereon at the applicable Note
Rate to but excluding the Redemption Date (the
"Redemption Price"). "Redemption Date" means
the date on which the Notes are redeemed as
provided in the Indenture on the Distribution
Date on which the Servicer exercises its option
to purchase the Receivables when the Pool
Balance has been reduced to 10% or less of the
Initial Pool Balance (the "Redemption Date").
See "Description of the Class A Notes--the
[A-1] Notes" and "The [A-2] Notes" herein and
"Description of the Notes--Principal and
Interest on the Notes" and
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<PAGE>
"Description of the Transaction
Agreements--Termination" in the Prospectus.
Priority of Distributions...... As more fully described in "Description of the
Transaction Agreements--Distributions" herein,
distributions of the Available Interest Amount
shall be made on each Distribution Date in the
following order of priority:
(i) to the Servicer, the Servicing Fee and all
unpaid Servicing Fees from prior Collection
Periods;
(ii) to the Administrator, the Administration
Fee and all unpaid Administration Fees from
prior Collection Periods;
(iii) to the Note Distribution Account (as
defined herein), the Noteholders' Class A
Interest Distributable Amount;
(iv) to the Principal Funding Account, the
positive difference, if any, between the
Principal Distribution Amount and the Available
Principal Amount (not taking into account this
deposit);
(v) to the Note Distribution Account, the
Noteholders' Class B Interest Distributable
Amount; and
(vi) to the Reserve Account the remaining
Available Interest Amount.
As more fully described in "Description of the
Transaction Agreements--Distributions" herein,
distributions of the Available Principal Amount
shall be made on each Distribution Date in the
following order of priority:
(i) on Distribution Dates with respect to the
Revolving Period, the Available Principal
Amount will be retained in the Principal
Funding Account and will be paid to the
Transferor in connection with transfers of
Subsequent Receivables to the Issuer pursuant
to the Transfer and Servicing Agreement
S-10
<PAGE>
(ii) on Distribution Dates with respect to the
Amortization Period, (a) first, to the Note
Distribution Account, the Class A Noteholders'
Principal Distributable Amount and (b) to the
Note Distribution Account, the Class B
Noteholders' Principal Distributable Amount;
and
(iii) on the first Distribution Date with
respect to the Amortization Period, from
Available Principal Amounts deposited in the
Principal Funding Account on prior Distribution
Dates that were not used to acquire Subsequent
Receivables form the Transferor on or prior to
such Distribution Date (the "Remaining
Available Principal Amounts"), in the following
order of priority: (a) to the Note Distribution
Account, the Class A Noteholders Percentage of
the Remaining Available Principal Amounts; and
(b) to the Note Distribution Account, the Class
B Noteholders' Percentage of the Remaining
Available Principal Amounts.
Notwithstanding the foregoing, if an Event of
Default has occurred and the maturity of the
Notes has been accelerated the Class B
Noteholders will not be entitled to receive any
distributions of interest or principal until
the Notes have been paid in full.
Funds, to the extent available, will be
withdrawn from amounts on deposit in the
Reserve Account, with respect to each
Distribution Date, to the extent that the (a)
Available Interest Amount is insufficient to
pay the sum of the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods,
the Administration Fee and the Monthly Class A
Note Interest or (b) [during the Amortization
Period] Available Principal Amount is
insufficient to pay the Class A Principal
Distributable Amount and funds in the amount of
the sum of such deficiency, to the extent
available, will be deposited in the Note
Distribution Account. Notwithstanding the
foregoing, if on any Distribution Date on which
any Notes are outstanding the amount on deposit
in the Reserve Account is less than [____]% of
the Pool Balance as of the end of the preceding
Collection Period, then funds will be withdrawn
from the Reserve Account only to the extent
needed to pay the
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<PAGE>
Servicing Fee, Administration Fee or Class A
Monthly Interest and no funds from the Reserve
Account will be applied on such Distribution
Date to principal of the Notes; provided, that
this restriction on withdrawals shall be
inapplicable if any Event of Default has
occurred which resulted in acceleration of the
Notes.
"Collection Period" means, with respect to the
first Distribution Date, the calendar month
ending on ________ __, 199_, and with respect
to each subsequent Distribution Date, the
preceding calendar month. See "Description of
the Transaction Agreements--Distributions"
herein.
On each Distribution Date, all amounts on
deposit in the Note Distribution Account will
be distributed to the Noteholders. See
"Description of the Transaction
Agreements--Distributions" herein for the
definitions of certain terms used above.
[The Revolving Period;
Subsequent Receivables....... No principal will be payable on the Notes until
the __________ ____ Distribution Date or, upon
the occurrence of an Early Amortization Event,
until the Distribution Date in the month
immediately succeeding the month in which such
Early Amortization Event occurs. From the
Closing Date and ending on the day immediately
preceding the commencement of the Amortization
Period (the "Revolving Period"), Available
Principal Amounts will be reinvested in
Subsequent Receivables so as to maintain the
Pool Balance at a constant level during the
Revolving Period. The events that might lead to
the termination of the Revolving Period prior
to its scheduled termination date are described
under "Description of the Transaction
Agreements--Early Amortization Events" herein.]
[Amortization Period;
Principal Payments........... The "Amortization Period" shall commence on the
earlier of __________ ____ (the "Amortization
Date") or the day on which an Early
Amortization Event occurs, and will end when
each Class of Notes has been paid in full or
when the Trust otherwise terminates. During the
Amortization
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<PAGE>
Period, Principal Collections will no longer be
reinvested in Subsequent Receivables as
described above. Instead, on each Distribution
Date beginning with the Distribution Date in
the month following the month in which the
Amortization Period commences and ending on the
Distribution Date on which the Class Notes have
been paid in full, all Principal Collections
for the related Collection Period that are
allocable to the Investor Interest will be
distributed as principal payments as described
herein.
See "Description of the Transaction
Agreements--Early Amortization Events" for a
description of the events that might lead to
the commencement of the Amortization Period
prior to the Amortization Date.
Reserve Account................ The Transferor will establish and maintain in
the name of the Indenture Trustee a reserve
account (the "Reserve Account") into which
funds will be deposited from time to time as
described herein. Funds on deposit in the
Reserve Account will be available on each
Distribution Date to cover shortfalls in
distributions of interest and principal on the
Class A Notes to the extent described herein.
The Reserve Account will be created with an
initial deposit by the Transferor of cash or
Eligible Investments having a value of
approximately $__________. The amount initially
deposited in the Reserve Account is referred to
as the "Reserve Account Initial Deposit." The
Reserve Account Initial Deposit will be
augmented on each Distribution Date by the
deposit in the Reserve Account of amounts
remaining in the Interest Payment Account, if
any, after payment of the Servicing Fee and the
Administration Fee and the deposit in the Note
Distribution Account and the Principal Funding
Account of amounts to be distributed to the
Noteholders and deposited into the Principal
Funding Account on such Distribution Date.
[Prior to the ________ 199_ Distribution Date,
amounts in the Reserve Account (after giving
effect to all distributions to be made on such
Distribution Date) in excess of the Specified
Reserve Account Balance for such Distribution
S-13
<PAGE>
Date will be released to the Transferor and, on
and after the ________ 199_ Distribution Date,
such excess will be released to the Note
Distribution Account to be distributed to the
A-2 Noteholders as a payment of principal (to
the extent of the principal amount of the Class
A-2 Notes).] The "Specified Reserve Account
Balance" with respect to any Distribution Date
means the greater of (i) [____]% of the Pool
Balance as of the close of business on the last
day of the preceding Collection Period and (ii)
[$__________]. See "Description of the
Transaction Agreements--Reserve Account"
herein.
Funds, to the extent available, will be
withdrawn from amounts on deposit in the
Reserve Account to the extent that the (a)
Available Interest Amount is insufficient to
pay the sum of the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods,
the Administration Fee and the Monthly Class A
Note Interest or (b) [during the Amortization
Period] Available Principal Amount is
insufficient to pay the Class A Principal
Distributable Amount and funds in the amount of
such deficiency, to the extent available, will
be deposited in the Note Distribution Account.
Notwithstanding the foregoing, if on a
Distribution Date on which any Class A Notes
are outstanding the amount on deposit in the
Reserve Account is less than __% of the Pool
Balance as of the end of the preceding
Collection Period, the funds will be withdrawn
from the Reserve Account only to the extent
needed to pay the Servicing Fee, Administration
Fee and Class A Monthly Interest and no funds
from the Reserve Account will be applied on
such Distribution Date to principal of the
Notes.
If the amount required to be withdrawn from the
Reserve Account to cover shortfalls in
collections on the Receivables on any
Distribution Date exceeds the amount of cash in
the Reserve Account on such date, a shortfall
in the amounts distributed to the Class A
Noteholders could result, which could, in turn,
increase the average life of the Class A Notes,
as the case may be, or result in losses to
Class A Noteholders.
S-14
<PAGE>
Collection Account............. The Servicer will be required to remit
collections received with respect to the
Receivables during a Collection Period within
two days of receipt and identification thereof
to one or more accounts in the name of the
Indenture Trustee (collectively, the
"Collection Account"), except upon the
occurrence of certain conditions described in
the Prospectus (in which case such remittances
may be required less frequently). See
"Description of the Transaction
Agreements--Payments on Receivables" in the
Prospectus. Pursuant to the Transfer and Sale
Agreement, the Servicer will have the revocable
power to instruct the Indenture Trustee to
withdraw the Available Interest Amount on
deposit in the Collection Account for deposit
in the Interest Payment Account and to withdraw
the Available Principal Amount on deposit in
the Collection Account for deposit in the
Principal Funding Account. Pursuant to the
Sales and Servicing Agreement, the Servicer
will also have the revocable power to instruct
the Indenture Trustee to withdrawal the amounts
on deposit in the Interest Payment Account and
the Principal Funding Account on each
Distribution Date for application as set forth
above in "Summary of Terms--Priority of
Distributions."
Maturity and Prepayment
Considerations............... Each prepayment will shorten the weighted
average remaining term of the Receivables and
[during the Amortization Period] the weighted
average life of the Notes. Prepayments of
principal will be included in the Principal
Distribution Amount and will be payable [first
to the Class A-1 Noteholders until the Class
A-1 Notes have been paid in full, and
thereafter will be payable] to the [Class A-2]
Noteholders in accordance with the Class A-2
Noteholders' Principal Distributable Amount and
to the Class B Noteholders in accordance with
the Class B Noteholders' Principal
Distributable Amount, as set forth herein. See
"Description of the Transaction
Agreements--Distributions."
The rate of prepayments on the Receivables may
be influenced by a variety of economic,
financial, climatic and other factors, and
under certain circumstances relating to
breaches of
S-15
<PAGE>
representations, warranties or covenants, the
Transferor and/or the Servicer is obligated to
purchase Receivables from the Trust. A higher
than anticipated rate of prepayments [during
the Amortization Period] will reduce the
aggregate principal balance of the Receivables
more quickly than expected and thereby reduce
anticipated aggregate interest payments on the
Notes. Any reinvestment risks resulting from a
faster or slower incidence of prepayment of
Receivables will be borne entirely by the
Noteholders as set forth in the priority of
distributions herein. Such reinvestment risks
include the risk that interest rates may be
lower at the time such holders received
payments from the Trust than interest rates
would otherwise have been had such prepayments
not been made or had such prepayments been made
at a different time.
Holders of Class A Notes should consider, in
the case of Class A Notes purchased at a
discount, the risk that a slower than
anticipated rate of principal payments on the
Receivables could result in an actual yield
that is less than the anticipated yield and, in
the case of any Class A Notes purchased at a
premium, the risk that a faster than
anticipated rate of principal payments on the
Receivables could result in an actual yield
that is less than the anticipated yield.
Servicing Fee.................. The Servicer shall receive a fee for each
Collection Period (the "Servicing Fee") equal
to _____ per annum (the "Servicing Fee Rate")
of the Pool Balance as of the first day of such
Collection Period, plus any Servicer's Yield
for such Collection Period. The "Servicer's
Yield" represents amounts actually collected by
the Servicer on account of late fees, indemnity
payments, and other charges. All collections
from an Obligor will be applied first to any
overdue scheduled payment, then to the current
scheduled payment and then to late fees, taxes
and other charges. The Servicing Fee with
respect to each Collection Period will decline
[during the Amortization Period] [over the term
of the Notes] as the Pool Balance decreases.
See "Description of the Transaction
Agreements--Servicing
S-16
<PAGE>
Compensation and Payment of Expenses" herein
and in the Prospectus.
Administration Agreement....... MCC, in its capacity as administrator (the
"Administrator"), will enter into an agreement
(the "Administration Agreement") with the Trust
and the Indenture Trustee. As compensation for
the performance of the Administrator's
obligations under the Administration Agreement
and as reimbursement for its expenses related
thereto, the Administrator will be entitled to
a monthly administration fee in an amount equal
to $[______] per month (the "Administration
Fee"). See "Description of the Transaction
Agreements--Administration Agreement" in the
Prospectus.
[Clearance and Settlement...... Class A Noteholders may elect to hold their
Class A Notes through any of DTC (in the United
States) or Cedel or Euroclear (in Europe).
Transfers within DTC, Cedel or Euroclear, as
the case may be, will be in accordance with the
usual rules and operation procedures of the
relevant system. Cross-market transfers between
persons holding directly or indirectly through
DTC, on the one hand, and counterparties
holding directly or indirectly through Cedel or
Euroclear, on the other, will be effected in
DTC through the relevant Depositaries of Cedel
or Euroclear. See "Issuance of the
Notes--Book-Entry Registration in the
Prospectus."]
Tax Status..................... Upon the issuance of the Class A Notes, Orrick,
Herrington & Sutcliffe LLP, as special tax
counsel to the related Trust, will deliver its
opinion to the effect that, for federal income
tax purposes: (i) the Class A Notes will be
characterized as debt and (ii) the Trust will
not be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. Each Class A Noteholder, by the
acceptance of a Class A Note, will agree to
treat the Class A Notes as indebtedness.
Alternative characterizations of the Trust are
possible, but should not result in materially
adverse tax consequences to the Class A
Noteholders. See "Federal Income Tax
S-17
<PAGE>
Considerations" [and "Certain State Tax
Considerations"] in the Prospectus.
ERISA Considerations........... Subject to the considerations described in
"ERISA Considerations" herein and in the
Prospectus, the Class A Notes are eligible for
purchase with Plan Assets of any Plan. A
fiduciary or other person contemplating
purchasing the Class A Notes on behalf of or
with Plan Assets of any Plan should consult
with its counsel regarding whether the purchase
or holding of the Class A Notes could give rise
to a transaction prohibited or not otherwise
permissible under ERISA or Section 4975 of the
Code. See "ERISA Considerations" herein and in
the Prospectus.
[Legal Investment.............. The A-1 Notes will be eligible securities for
purchase by money market funds under paragraph
(a)(5) of Rule 2a-7 under the Investment
Company Act of 1940, as amended.]
Rating of the Notes............ It is a condition to the issuance of the Notes
that the Class A Notes be rated at least
["______________"] or its equivalent, in each
case by at least two nationally recognized
rating organizations (each, a "Rating Agency".
See "Ratings" in the Prospectus.
S-18
<PAGE>
FORMATION OF THE TRUST
The Trust
The Issuer, MetLife Capital Equipment Loan Trust 199[ ]-[ ], will be a
business trust formed under the laws of the State of Delaware pursuant to the
Trust Agreement for the transactions described in this Prospectus Supplement.
After its formation, the Trust will not engage in any activity other than (i)
acquiring, owning and managing the Receivables and the other assets of the Trust
and proceeds therefrom, (ii) issuing and making payments on the Notes, and (iii)
engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
The owner of 100% of the equity in the Trust is a third party that is
unaffiliated with the Transferor, the Servicer or the Trust. The proceeds from
the initial sale of the Notes, will be used by the Trust to acquire the
Receivables from the Transferor pursuant to the Transfer and Sale Agreement.
[During the Revolving Period, the Available Principal Amount on each
Distribution Date will be used to acquire Subsequent Receivables from the
Transferor pursuant to the Transfer and Sale Agreement.] The Servicer will
initially service the Receivables pursuant to the Transfer and Sale Agreement,
and will be compensated for acting as the Servicer. See "Description of the
Transaction Agreements--Servicing Compensation and Payment of Expenses" herein
and in the Prospectus. UCC financing statements will be filed to perfect the
ownership or security interests of the Transferor, the Trust and the Indenture
Trustee described herein. To facilitate servicing and to minimize administrative
burden and expense, the Servicer will maintain possession of the related
Receivables Files on behalf of the Trust and the Indenture Trustee, but the
Servicer will not stamp the Loan Contracts or Leases to reflect the ultimate
assignment of the Receivables to the Trust or the Indenture Trustee. MCC will
not file UCC financing statements assigning or amending the UCC financing
statements filed to perfect the interest of MCC in the Financed Equipment. See
"Risk Factors-Risks Relating to Perfection of Interests in Receivables and in
Financed Equipment" in the Prospectus and "Certain Legal Aspects of the
Receivables-Sale and Transfer of Receivables" and "-Security Interest in
Equipment" in the Prospectus.
If the protection provided to Class A Noteholders in the Trust by the
subordination of the Class B Notes and the availability of the funds in the
Reserve Account is insufficient, the Trust must rely solely on the payments from
the Obligors on the Receivables, and the net proceeds from the repossession and
sale of Financed Equipment which secure defaulted Receivables. In such event,
certain factors, such as the Trust's not having first priority perfected
security interests in some of the Receivables or Financed Equipment as a result
of occurrences after the Closing Date, and the risk of fraud or negligence of
MCC, may affect the Trust's ability to realize on the collateral securing the
Receivables, and thus the proceeds to be distributed to Noteholders with respect
to the Notes may be reduced. See "Risk Factors-Risks Relating to Perfection of
Interests in Receivables and in Financed Equipment" in the Prospectus and
"Certain Legal Aspects of the Receivables" in the Prospectus.
[The Trust's principal offices are in Delaware, in care of
_______________________, as Owner Trustee, at the address listed below (under
"--The Owner Trustee")].
S-19
<PAGE>
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of the
Cut-Off Date, as if the issuance and sale of the Notes offered hereby had taken
place on such date:
[Class A-1 ____% Asset Backed Notes] $__________
[Class A-2] ____% Asset Backed Notes __________
[Class B] ____% Asset Backed Notes __________
Total $
==========
The Owner Trustee
[_____________________ is the Owner Trustee under the Trust Agreement.
______________________________ is a Delaware _________________________ and its
principal offices are located at ________________________________________.
[_______________ shall pay the fees of the Owner Trustee and shall reimburse it
for certain liabilities and expenses.] [In the ordinary course of its business,
the Owner Trustee and its affiliates have engaged and may in the future engage
in commercial banking or financial advisory transactions with MCC and its
affiliates.]
S-20
<PAGE>
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include the
Receivables transferred pursuant to the Contribution and Sale Agreement with an
aggregate principal balance of $______________ as of _________, _____ (the
"Cut-Off Date").
The Receivables were selected from the entire [MCC Middle Market and
Franchise Portfolios] (other than receivables previously sold which MCC
continues to service which are otherwise included in the [MCC Middle Market and
Franchise Portfolios] using several criteria, some of which are set forth in the
Prospectus under "The Receivables Pools," as well as that each Receivable (i)
has a stated maturity of not earlier than _______, ____ or later than ________,
____, (ii) has an annual percentage rate of interest (based on its Principal
Balance) ("APR") of at least ____% and (iii) is not more than __ days past due
as of the Cut-Off Date.] As of the Cut-Off Date, no Obligor on any Receivable
was noted in the related records of the Servicer as being in default under the
related Loan Contract [or Lease] or as being the subject of a bankruptcy
proceeding. No selection procedures believed by MCC or the Transferor to be
adverse to the Noteholders were used in selecting the Receivables.
[The composition of the Receivables and the distribution of the
Receivables by APR, equipment type, industry application, payment frequency and
Principal Balance as of the Cut-Off Date are set forth in the following tables.]
Amounts and percentages are based on the Principal Balance of the Receivables as
of the Cut-Off Date. The "Principal Balance" of a Receivable, as of the close of
business on the last day of a Collection Period or as of the applicable Cut-Off
Date, as applicable, means [(i) in the case of a Loan Contract,], the aggregate
amount of all Scheduled Principal Payments that have not been received by the
Servicer (including all Scheduled Principal Payments that are then due and
payable), calculated as of the Cut-Off Date or as of the end of the preceding
Collection Period (as applicable)] provided, that the Principal Balance of each
Defaulted Receivable is zero, [and (ii) in the case of a Lease, the present
value of the then outstanding Lease Scheduled Payments discounted monthly at the
related APR, calculated as of the Cut-Off Date or as of the end of the preceding
Collection Period (as applicable)]. As of the Cut-Off Date, aggregate current
Principal Balance of the Receivables is the Initial Pool Balance.
Composition of the Receivables
Weighted Weighted
Average Average
Weighted Original Remaining
Average APR of Pool Number of Term Term Average Principal
Receivables Balance Receivables (Range) (Range)(1) Balance (Range)
- -------------- ------- ----------- -------- --------- -----------------
% $ $
- ----------
(1) Based on scheduled payments and assuming no prepayments of the
Receivables.
S-21
<PAGE>
Distribution by APR of the Receivables
Percent of
Aggregate Aggregate
Number of Principal Principal
APR Range Receivables Balance Balance
----------- --------- ----------
$ %
_________ _________ ______
Total
$ %
========= ========= ======
- ----------
Distribution of the Receivables by Type of Financed Equipment
Percent of
Aggregate Aggregate
Number of Principal Principal
Type Receivables Balance Balance
---- ----------- --------- ----------
$ %
[Lift Trucks
Paving Equipment
Construction Equipment]
_________ _________ ______
Total
$ %
========= ========= ======
Distribution by Industry Application of Financed Equipment
Percent of
Aggregate Aggregate
Number of Principal Principal
Industry Receivables Balance Balance
-------- ----------- --------- ----------
$ %
_________ _________ ______
Total
$ %
========= ========= ======
- ----------
S-22
<PAGE>
Distribution of the Receivables by Payment Frequency
Percent of
Aggregate Aggregate
Number of Principal Principal
Type Receivables Balance Balance
---- ----------- --------- ----------
$ %
Monthly
[Quarterly]
[Semi-Annually]
[Annually]
_________ _________ ______
Total
$ %
========= ========= ======
- ----------
Distribution of the Receivables by Remaining Principal
Balance as of the Cut-Off Date
Percent of
Aggregate Aggregate
Number of Principal Principal
Remaining Principal Balance Range Receivables Balance Balance
- --------------------------------- ----------- --------- ----------
$ %
Up to $
_________ _________ ______
Total
$ 100%
========= ========= ======
Geographic Distribution of the Receivables
Percent of
Aggregate Aggregate
Number of Principal Principal
State(1) Receivables Balance Balance
- -------- ----------- --------- ----------
$ %
_________ _________ ______
Total
$ 100%
========= ========= ======
- ----------
(1) Based on billing addresses of Obligors.
Unless otherwise specified herein, references herein to percentages of the
Receivables refer in each case to the approximate percentage of the Initial Pool
Balance, based on the Principal Balances of the Receivables as of the Cut-Off
Date, and after giving effect to all payments received prior to the Cut-Off
Date.
[____% of the Receivables were Loan Contracts, and _____% of the
Receivables were Leases]
____% of the Receivables were originated or arranged by MCC.
S-23
<PAGE>
No single Obligor accounted for more than ____% of the Receivables, and
the five largest Obligors accounted for approximately ____% of the Receivables.
[At origination MCC confirms the applicable loan-to-value ratios of its
receivables. Because of the depreciating nature of the Financed Equipment, and
in light of MCC's credit loss experience set forth herein with respect to the
[MCC Middle Market and Franchise Portfolios] [MCC to confirm], the Transferor
believes that statistical information relating to original loan-to-value ratios
of the Receivables is not material to investors in the Notes.
Delinquencies, Repossessions and Net Losses
Set forth below is certain information concerning MCC's experience
pertaining to delinquencies, repossessions and net losses on the [MCC Middle
Market and Franchise Portfolios] by MCC [including receivables previously sold
which MCC continues to service.] [Generally, when an account becomes ____ days
delinquent, accrual of finance income is suspended, the collateral is
repossessed and the account is designated for litigation.]
[Delinquencies, repossessions and net losses on installment sales
contracts are affected by economic conditions generally.] [Insert Current
Analysis of Recent Historical Performance].
Although the Transferor believes that the composition of each of the [Loan
Contract] [and Lease] portfolios in the aggregate is representative of the [MCC
Middle Market and Franchise Portfolios] there can be no assurance that the
delinquency, recovery and net loss experience on the Receivables will be
comparable to that set forth below or that delinquencies, recoveries and net
losses in the future will be comparable to the past.
S-24
<PAGE>
Delinquency Experience for the [MCC Middle Market and Franchise Portfolios]
[MCC TO PROVIDE]
(Dollars in Millions)
At December 31,
---------------------------------------------------
199 [ ] 199 [ ] 199[ ] 199[ ]
--------- --------- -------- -------
Amount Amount Amount Amount
------ ------ ------ ------
At December 31, At ___________, At ____________,
--------------- --------------- ----------------
199[ ] 199[ ] 199[ ]
------ ------ ------
Amount Amount Amount
------ ------ ------
S-25
<PAGE>
Credit Loss/Recovery Experience for the [MCC Middle
Market and Franchise Portfolios]
(Dollars in Millions)
____ Months Ended
Year Ended December 31, _______,
----------------------------- -----------------
199_ 199_ 199_ 199_ 199_ 199_(1) 199_(1)
(1) Rates have been annualized.
[Delinquency Experience for the [MCC Middle Market and Franchise Portfolios]
(Dollars in Millions)
At December 31,
---------------------------------------------------
199[ ] 199[ ] 199[ ] 199[ ]
--------- --------- --------- ---------
Amount Amount Amount Amount
------ ------ ------ ------
At December, 199[ ] At _________, 199[ ] At _________, 199[ ]
------------------- -------------------- --------------------
Amount Amount Amount
------ ------ ------
Credit Loss/Recovery Experience for the [MCC Middle Market
and Franchise Portfolios]
(Dollars in Millions)
_____ Months
Year ended December 31, Ended ________
------------------------------ --------------------
199[ ] 199[ ] 199[ ] 199[ ] 199[ ] 199[ ](1) 199[ ](1)
------ ------ ------ ------ ------ --------- ---------
(1) Rates have been annualized.
S-26
<PAGE>
WEIGHTED AVERAGE LIFE OF THE NOTES
Information regarding certain maturity and prepayment considerations with
respect to the Notes is set forth under "Weighted Average Life of the Notes" in
the Prospectus. In addition, on and after the _____________ Distribution Date,
the Class A Noteholders are entitled to receive certain amounts available to be
released from the Reserve Account as an accelerated payment of principal. [No
principal payments on the Class B Notes will be made prior to the ____________
Distribution Date, and no principal payments will be made on the Class B Notes
until the Class A Notes have been paid in full.] See "Description of the Class A
Notes--[The Class A-1] Note--Payments of Principal" herein. As the rate of
payment of principal of the Notes depends primarily on the rate of payment
(including prepayments) of the aggregate Principal Balances of the Receivables,
final payment of the Notes could occur significantly earlier than their
applicable Final Scheduled Distribution Date. [During the Amortization Period]
Noteholders will bear the risk of being able to reinvest principal payments of
the Notes at yields at least equal to the yield on their respective Notes.
[In addition, the A-2 Noteholders and the Class B Noteholders will not
receive any principal payments until the A-1 Notes are paid in full. See
"Description of the Class A Notes--[The Class A-1] Notes--Payments of
Principal".]
POOL FACTORS AND TRADING INFORMATION
[Each of] the "Class [A-1] Note Pool Factor" [and] [, the "A-2 Note Pool
Factor"] [and the "Class B Note Pool Factor"] is a seven-digit decimal which the
Servicer will compute each month, indicating the remaining outstanding principal
amount of the [A-1] Notes [, the A-2 Notes or the Class B Notes, as applicable,]
as of the Distribution Date, as a fraction of the initial outstanding principal
balance of the [A-1] Notes [, the A-2 Notes or the Class B Notes], as
applicable. Each of the [A-1] Note Pool Factor [, the A-2 Note Pool Factor and
the Class B Pool Factor] will be 1.0000000 as of the Closing Date, and
thereafter will decline to reflect reductions in the outstanding principal
balance of the [A-1] Notes [or the A-2 Notes or the Class B Notes], as the case
may be. An [A-1] Noteholder's portion of the aggregate outstanding principal
balance of the A-1 Notes is the product of (i) the original denomination of the
[A-1] Noteholder's Note and (ii) the [A-1] Note Pool Factor [, and an A-2
Noteholder's portion of the aggregate outstanding principal balance of the A-2
Notes is the product of (i) the original denomination of the A-2 Noteholder's
Note and (ii) the A-2 Note Pool Factor.]
Pursuant to the Indenture, the Class A Noteholders will receive monthly
reports concerning the payments received on the Receivables, the Pool Balance,
the [A-1] Note Pool Factor, [the A-2 Note Pool Factor], as applicable, and
various other items of information. Class A Noteholders of record during any
calendar year will be furnished information for tax reporting purposes not later
than the latest date permitted by law. See "Description of the Transaction
Agreements--Reports to Noteholders" in the Prospectus.
S-27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sources of Capital and Liquidity
The Trust's primary sources of capital will be the net proceeds of the
offering of the Notes. See "Formation of the Trust--Capitalization of the Trust"
herein.
The Trust's primary sources of liquidity will be payments on the
Receivables. For a discussion of MCC's experience pertaining to delinquencies,
repossessions and net losses, see "The Receivables Pool -- Delinquencies,
Repossessions and Net Losses" herein.
Results of Operations
The Trust is newly formed and, accordingly, has no results of operations
as of the date of this Prospectus Supplement. Because the Trust does not have
any operating history, there has not been included in this Prospectus Supplement
any historical or pro forma ratio of earnings to fixed charges. The earnings on
the Receivables and other assets owned by the Trust, the interest costs of the
Notes and the related operating expenses will determine the Trust's results of
operations in the future. The income generated from the Trust's assets will be
used to pay principal and interest on the Notes and related operating costs and
expenses of the Trust (to the extent not paid by the Servicer). The principal
operating expenses of the Trust are expected to be the Servicing Fee and the
Administration Fee.
USE OF PROCEEDS
The net proceeds from the sale of Notes will be applied to the purchase of
the Receivables from the Transferor and to make the Transferor's initial deposit
to the Reserve Account. [The Transferor will apply its net proceeds to the
acquisition of the Receivables from MCC.]
THE TRANSFEROR AND THE SERVICER
For a general discussion of the Transferor and the Servicer, see "The
Transferor and the Servicer" in the Prospectus.
MetLife Capital Corporation
[MCC TO PROVIDE]
At [December 31], 199[_], MCC had ____ full-time employees and serviced
____ accounts, including approximately $____ [billion] in gross finance
receivables.
S-28
<PAGE>
DESCRIPTION OF THE CLASS A NOTES
General
The Class A 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, as well as other pertinent information included elsewhere
in this Prospectus Supplement and in the Prospectus, summarizes the material
terms of the Class A Notes and the Indenture. The summary does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
Class A Notes and the Indenture. The following summary supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Class A Notes of any given series and the related Indenture
set forth in the Prospectus, to which description reference is hereby made.
[The Class A-1] Notes
Payments of Interest. The [A-1] Notes will constitute [Fixed Rate
Securities] [Floating Rate Securities], as such term is defined under "Certain
Information Regarding the Securities [--Fixed Rate Securities"] [--Floating Rate
Securities] in the Prospectus. [Interest on the principal balance of the A-1
Notes will accrue at the rate of ____% per annum (the "A-1 Note Rate")
(calculated on the basis of a 360 day year of twelve 30 day months).] Interest
on the outstanding principal amount of the Class A-1 Notes will accrue from the
most recent Distribution Date on which interest has been paid or, in the case of
the initial Distribution Date, from and including the Closing Date, to but
excluding the following Distribution Date and will be payable to the A-1
Noteholders monthly on each Distribution Date commencing ________ __, 199_.
"Distribution Date" shall mean the ___the day of each month or, if any such date
is not a business day, on the next succeeding business day. Interest accrued as
of any Distribution Date but not paid on such Distribution Date will be due on
the next Distribution Date, together with, to the extent permitted by law,
interest on such amount at the A-1 Note Rate. Interest payments on the Class A-1
Notes will be generally derived from the Available Interest Amount remaining
after the payment of the Servicing Fee and the Administration Fee, and from
amounts on deposit in the Reserve Account. If the amount of interest on the
principal balance of the Class [A-1] Notes payable on any Distribution Date
exceeds the sum of such remaining portion of the sum of the Available Interest
Amounts and amounts on deposit in the Reserve Account, the Class [A-1]
Noteholders will receive their ratable share (based upon the total amount of
interest due to the Class [A-1] Noteholders) of the amount available to be
distributed in respect of interest on the Class [A-1] Notes.
Payments of Principal. Principal payments will be made to the A-1
Noteholders on each Distribution Date [with respect to the Amortization Period]
in an amount generally equal to [the Class A Noteholders' Principal
Distributable Amount] until the principal balance of the A-1 Notes is reduced to
zero. Principal payments on the A-1 Notes [during the Amortization Period] will
generally be derived from (i) Available Principal Amounts on deposit in the
Principal Funding Account and (ii) from funds, if any, in the Reserve Account
remaining after
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the payment of the Noteholders' Class A Interest Distributable Amount. See
"Description of the Transaction Agreements--Distributions" and "--Reserve
Account" herein. Distributions with respect to principal on the A-1 Notes will
not be made until all interest due on the Notes is paid in full. The outstanding
principal amount, if any, of the A-1 Notes will be payable in full on the A-1
Final Scheduled Distribution Date from available funds therefor (including
amounts in the Reserve Account).
The [Class A-2] Notes
Payments of Interest. The [A-2] Notes will constitute Fixed Rate
Securities, as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the principal
balance of the [A-2] Notes will accrue at the rate of ____% per annum (the
"[A-2] Note Rate") (calculated on the basis of a 360 day year of twelve 30 day
months). Interest on the outstanding principal amount of the Class A-2 Notes
will accrue from the most recent Distribution Date on which interest has been
paid or, in the case of the initial Distribution Date, from and including the
Closing Date, to but excluding the following Distribution Date and will be
payable to the [A-2] Noteholders monthly on each Distribution Date commencing
________ __, 199_. Interest accrued as of any Distribution Date but not paid on
such Distribution Date will be due on the next Distribution Date together with,
to the extent permitted by law, interest on such amount at the [A-2] Note Rate.
Interest payments on the Class [A-2] Notes will be generally derived from the
Available Interest Amount remaining after the payment of the Servicing Fee and
the Administration Fee, the Noteholders' Class A-1 Interest Distributable Amount
and from amounts on deposit in the Reserve Account. If the amount of interest on
the principal balance of the Class [A-2] Notes payable on any Distribution Date
exceeds the sum of such remaining portion of the sum of the Available Interest
Amounts and amounts on deposit in the Reserve Account, the Class [A-2]
Noteholders will receive their ratable share (based upon the total amount of
interest due to the Class [A-2] Noteholders) of the amount available to be
distributed in respect of interest on the Class [A-2] Notes.
Payments of Principal. Principal payments will be made to the [A-2]
Noteholders on each Distribution Date [with respect to the Amortization Period]
[on and after the Distribution Date on which the A-1 Notes have been paid in
full] in an amount generally equal to the A-2 Noteholders' Percentage (or, in
certain circumstances described herein in "Description of the Transaction
Agreements--Distributions", 100%) of [the difference between (i) the Principal
Distribution Amount and (ii) the portion, if any, of the Principal Distribution
Amount paid in respect of the A-1 Notes on such Distribution Date.] Principal
payments on the A-2 Notes will generally be derived from the Available Principal
Amount not used to fund the Class A-1 Noteholders' Principal Distributable
Amount [and from amounts on deposit in the Reserve Account. In addition, on and
after the _____________ Distribution Date [on which the A-1 Notes have been paid
in full], amounts available to be released from the Reserve Account will be
distributed to the [A-2] Noteholders as a payment of principal (to the extent of
the principal amount of the Class A-2 Notes). See "Description of the
Transaction Agreements--Distributions" and "--Reserve Account" herein. The
outstanding principal amount, if any, of the [A-2] Notes will be payable in full
on the [A-2] [Note] Final Scheduled Distribution Date from available funds
therefore (including amounts in the Reserve Account).
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Optional Prepayment. The Notes may be prepaid in whole, but not in part,
in an amount equal to the Redemption Price on any Distribution Date on which the
Servicer exercises its option to purchase the Receivables when the Pool Balance
has been reduced to 10% or less of the Initial Pool Balance. See "Description of
the Transaction Agreements--Termination" in the Prospectus.
The Indenture Trustee. ______________________ is the Indenture Trustee
under the Indenture. __________________ is ____________________ and its
corporate trust offices are located at _____________________________.
[_______________________ shall pay the fees of the Indenture Trustee and shall
reimburse it for certain liabilities and expenses.] [In the ordinary course of
its business, the Indenture Trustee and its affiliates have engaged and may in
the future engage in commercial banking or financial advisory transactions with
MCC and its affiliates.]
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DESCRIPTION OF THE TRANSACTION AGREEMENTS
The following, as well as other information included elsewhere in this
Prospectus Supplement and in the Prospectus, summarizes the material terms of
the Transfer and Sale Agreement, the Contribution and Sale Agreement, the
Administration Agreement, the Trust Agreement (collectively, the "Transaction
Agreements", forms of which have been filed as exhibits to the Registration
Statement). Copies of the Transaction Agreements will be filed with the
Commission following the issuance of the Notes. The following summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the provisions of the Transaction Agreements. The following
summary supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Transaction Agreements
set forth under the heading "Description of the Transaction Agreements" in the
Prospectus, to which description reference is hereby made.
Transfer and Assignment of Receivables
Certain information with respect to the conveyances on the Closing Date of
the Receivables from MCC to the Transferor pursuant to the Contribution and Sale
Agreement and from the Transferor to the Trust pursuant to the Transfer and Sale
Agreement is set forth under "Description of the Transaction
Agreements--Transfer and Assignment of Receivables" in the Prospectus. Under
certain circumstances MCC will be required to repurchase Receivables from the
Trust. See "Risk Factors-Risks Relating to Perfection of Interests in
Receivables and in Financed Equipment" in the Prospectus.
Accounts
In addition to the Accounts referred to in the Prospectus under
"Description of the Transaction Agreements--Accounts," the Transferor will also
establish and maintain the Reserve Account in the name of the Indenture Trustee
on behalf of the Noteholders. See "--Reserve Account" herein.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate with respect to the Servicing Fee to be paid to the
Servicer with respect to each Collection Period will be ___% per annum of the
Pool Balance as of the first day of each Collection Period. The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from prior
Distribution Dates) will be paid solely to the extent of the Total Distribution
Amount. However the Servicing Fee will be paid prior to the distribution of any
portion of the Total Distribution Amount to the Administrator and the
Noteholders, and under certain circumstances, deposits into the Collection
Account shall be made net of such amounts. The Servicer shall also be entitled
to any Servicer's Yield, and deposits into the Collection Account shall be made
net of such amounts. See "Description of the Transaction Agreements--Servicing
Compensation and Payment of Expenses" in the Prospectus.
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Distributions
Deposits to Collection Account. By the [fifth] business day prior to a
Distribution Date (each, a "Determination Date"), the Servicer will provide the
Indenture Trustee with certain information with respect to the related
Collection Period, including the amount of aggregate collections on the
Receivables and the aggregate Purchase Amount of Receivables required to be
repurchased by the Transferor or required to be purchased by the Servicer.
The Servicer will deposit all amounts collected during each Collection
Period into the Collection Account within two business days of receipt and
identification thereof.
Withdrawals from the Collection Account, Interest Payment Account and
Principal Funding Account. On the second Business Day prior to each Distribution
Date, the Servicer shall instruct the Indenture Trustee, to withdraw from the
Collection Account the Available Interest Amount and the Available Principal
Amount for deposit in the Interest Payment Account and the Principal Funding
Account, respectively, and to make the following deposits and distributions for
receipt by the Servicer or for deposit in the Note Distribution Account by
[12:00 A.M.] (New York time) on such following Distribution Date to the extent
of the Available Interest Amount and the Available Principal Amount:
(i) from the Available Interest Amount on deposit in the Interest
Payment Account, in the following order of priority:
(A) to the Servicer, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods;
(B) to the Administrator under the Administration Agreement, the
Administration Fee and all unpaid Administration Fees from prior
Collection Periods;
(C) to the Note Distribution Account, the Noteholders' Class A
Interest Distributable Amount;
(D) to the Principal Funding Account, the positive difference, if
any, between the Principal Distribution Amount and the Available Principal
Amount (not taking into account the amount of the Available Principal
Amount derived from clause (iii) of the definition thereof);
(E) to the Note Distribution Account, the Noteholders' Class B
Interest Distributable Amount; and
(F) to the Reserve Account, the remaining Available Interest Amount;
(ii) from the Available Principal Amount on deposit in the Principal
Funding Account, in the following order of priority:
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(A) on Distribution Dates with respect to the Revolving Period, the
Available Principal Amount will be retained in the Principal Funding
Account and will be paid to the Transferor in connection with transfers of
Subsequent Receivables to the Issuer pursuant to Transfer and Sale
Agreement; and
(B) on Distribution Dates with respect to the Amortization Period,
(1) first, to the Note Distribution Account, the Class A Noteholders'
Principal Distributable Amount and (2) second, to the Note Distribution
Account, the Class B Noteholders' Principal Distributable Amount;
(iii) on the first Distribution Date with respect to the
Amortization Period, from Available Principal Amounts deposited in the Principal
Funding Account on prior Distribution Dates that were not used to purchase
Subsequent Receivables from the Transferor on or prior to such Distribution Date
("Remaining Available Principal Amounts"), in the following order of priority:
(A) to the Note Distribution Account, the Class A Noteholders'
Percentage of the Remaining Available Principal Amounts; and
(B) to the Note Distribution Account, the Class B Noteholders'
Percentage of the Remaining Available Principal Amounts.
Notwithstanding the foregoing, if an Event of Default has occurred and the
maturity of the Class A Notes has been accelerated the Class B Noteholders will
not be entitled to receive any distributions of interest or principal until the
Notes have been paid in full.
Funds will be withdrawn from amounts on deposit in the Reserve Account to
the extent described below. See "Reserve Account."
"Available Interest Amount" means, with respect to any Distribution Date,
the sum of the following amounts, without duplication, with respect to the
preceding Collection Period: (i) all the portion of all Collections received
during such Collection Period (including any such amounts constituting
Prepayment Proceeds allocable to interest, (ii) all Investment Earnings with
respect to such Distribution Date and (iii) the portion of all Liquidation
Proceeds, Recoveries and Purchase Amounts received during such Collection Period
allocable to interest, but excluding (x) all payments and proceeds (including
Liquidation Proceeds) of any Purchased Receivables the principal portion of
which has been included in the Principal Distribution Amount in a prior
Collection Period and (y) any certain other amounts as provided in the Transfer
and Servicing Agreement.
"Available Principal Amount" means, with respect to any Distribution Date,
the sum of the following amounts, without duplication, with respect to the
preceding Collection Period: (i) that portion of all Collections received during
such Collection Period (including any such amounts constituting Prepayment
Proceeds) allocable to principal, (ii) the portion of all Liquidation Proceeds,
Recoveries and Purchase Amounts received during such Collections Period
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allocable to principal and (iii) the portion of the Available Interest Amount
deposited in the Principal Funding Account pursuant to Section 5.04(b)(i)(D),
but excluding (x) all payments and proceeds (including Liquidation Proceeds) of
any Purchased Receivables the principal portion of which has been included in
the Principal Distribution Amount in a prior Collection Period and (y) and
certain other amounts as provided in the Transfer and Servicing Agreement.
"Class A Note Interest Rate" means __% per annum [in excess of _________].
"Class B Note Interest Rate" means __% per annum [in excess of _________].
"Class B Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date with respect to the Amortization Period, the
lesser of (a) the Class A Noteholders' Percentage of the Principal Distribution
Amount and (b) the outstanding principal balance of the Class A Notes.
"Class A Noteholders' Percentage" means the percentage equivalent of a fraction,
the numerator of which is the principal balance of the Class A Notes and the
denominator of which will be the sum of the Pool Balance and the Principal
Funding Account Balance, in each case as of the close of business on the last
day of the Revolving Period [; provided, that if the amount on deposit in the
Reserve Account is less than ____% of the Pool Balance, then for each
Distribution Date thereafter the Class A Noteholders' Percentage shall be 100%].
"Class A Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date with respect to the Amortization Period, the excess of (a)
the sum of (i) the Class A Noteholders' Monthly Principal Distributable Amount
for such Distribution Date and (ii) any outstanding Class A Noteholders'
Principal Carryover Shortfall as of the preceding Distribution Date over (b) the
amount in respect of principal that is actually deposited in the Note
Distribution Account and allocated to the Class A Notes for such Distribution
Date.
"Class A Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date with respect to the Amortization Period, the sum of (a) the
Class A Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (b) the Class A Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date; provided, however, that the
sum of (a) and (b) shall not exceed the outstanding principal amount of the
Class A Notes, and on the Class A Final Scheduled Distribution Date, the Class A
Noteholders' Principal Distributable Amount will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the outstanding principal amount of the Class A Notes to zero.
"Class B Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date with respect to the Amortization Period, the
Class B Noteholders' Percentage of the Principal Distribution Amount [;
provided, however, that if, as described in the proviso to the definition of
Class A Noteholders' Percentage, 100% of the Principal Distribution Amount is
required to be allocated to the Class A Notes, then no portion of the Principal
Distribution Amount will be allocated to the Class B Notes until the Class A
Notes have been paid in full].
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"Class B Noteholders' Percentage" means 100% minus the Class A Noteholders'
Percentage (if any Class A Notes are outstanding); provided, that after the
Distribution Date on which the Class A Notes are paid in full, the Class B
Noteholders' Percentage shall equal 100%.
"Class B Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date with respect to the Amortization Period, the excess of (a)
the sum of (i) the Class B Noteholders' Monthly Principal Distributable Amount
for such Distribution Date and (ii) any outstanding Class B Noteholders'
Principal Carryover Shortfall as of the close of business on the preceding
Distribution Date over (b) the amount in respect of principal that is actually
deposited in the Principal Funding Account and allocated to the Class B Notes.
"Class B Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date with respect to the Amortization Period, the sum of (a) the
Class B Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (b) the Class B Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date.
"Collection Period" means, with respect to the first Distribution Date, the
calendar month ending on ________ __, 199_, and with respect to each subsequent
Distribution Date, the preceding calendar month. See "Description of the
Transaction Agreements--Distributions" herein.
"Liquidation Proceeds" means, with respect to any Defaulted Receivable, the
moneys collected in respect thereof, from whatever source (including any
insurance proceeds) during the Collection Period in which such Receivable became
a Defaulted Receivable, net of the sum of any amounts expended by the Servicer
in connection with such liquidation and any amounts required by law to be
remitted to the Obligor on such Defaulted Receivable.
"Monthly Class A Note Interest" means, with respect to any Distribution Date, an
amount equal to one-twelfth of the product of (a) the Class A Note Interest Rate
and (b) the outstanding principal balance of the Class A Notes as of the close
of business on the preceding Distribution Date after giving effect to all
payments of principal made to the Class A Noteholders on such preceding
Distribution Date; provided, however, that with respect to the first
Distribution Date, interest on the outstanding principal balance of the Class A
Notes will accrue from and including the Closing Date to but excluding the
[__________ ____] Distribution Date and will be calculated on the basis of a
360-day year of twelve 30-day months.
"Monthly Class B Note Interest" means, with respect to any Distribution Date, an
amount equal to one-twelfth of the product of (a) the Class B Note Interest Rate
and (b) the outstanding principal balance of the Class B Notes as of the close
of business on the preceding Distribution Date after giving effect to all
payments of principal made to the Class B Noteholders on such preceding
Distribution Date; provided, however, that with respect to the first
Distribution Date, interest on the outstanding principal balance of the Class B
Notes will accrue from and including the Closing Date to but excluding the
[__________ ____] Distribution Date and will be calculated on the basis of a
360-day year of twelve 30-day months.
"Noteholders' Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the sum of (a) the excess of (i) the sum of (A) the Monthly
Class A Note Interest for the
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preceding Distribution Date and (B) any outstanding Noteholders' Class A
Interest Carryover Shortfall on such preceding Distribution Date, over (ii) the
amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus (b) interest on
the amount of interest due but not paid to the Class A Noteholders on the
preceding Distribution Date, to the extent permitted by law, at the Class A Note
Interest Rate from and including such preceding Distribution Date to but
excluding the current Distribution Date.
"Noteholders' Class A Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Monthly Class A Note Interest for such
Distribution Date and (b) the Noteholders' Class A Interest Carryover Shortfall
for such Distribution Date.
"Noteholders' Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the sum of (a) the excess of (i) the sum of (A) the Monthly
Class B Note Interest for the preceding Distribution Date and (B) any
outstanding Noteholders' Class B Interest Carryover Shortfall on such preceding
Distribution Date, over (ii) the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution Date,
plus (b) interest on the amount of interest due but not paid to the Class B
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the Class B Note Interest Rate from and including such preceding Distribution
Date to but excluding the current Distribution Date.
"Noteholders' Class B Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of (a) the Monthly Class B Note Interest for such
Distribution Date and (b) the Noteholders' Class B Interest Carryover Shortfall
for such Distribution Date.
"Purchase Amount" means the amount, as of the close of business on the last day
of a Collection Period, required to prepay in full the respective Receivable
under the terms thereof (including interest at the related APR to the end of the
month of purchase).
"Purchased Receivable" means a Receivable purchased as of the close of business
on the last day of a Collection Period by the Servicer pursuant to the Transfer
and Servicing Agreement or repurchased as of such time by the Transferor
pursuant to the Transfer and Servicing Agreement.
"Realized Losses" means, with respect to any Collection Period, for any
Liquidated Receivable the excess of (a) the Principal Balance of such Liquidated
Receivable over (b) the Liquidation Proceeds with respect to such Receivable for
such Collection Period to the extent allocable to principal.
"Recoveries" means, with respect to any Defaulted Receivable, (a) monies
collected in respect thereof, from whatever source, but after (i) such
Receivable became a Defaulted Receivable and (ii) the proceeds from the sale or
other disposition of the related Financed Equipment have been received by the
Servicer for deposit in the Collection Account, net of (b) the sum of any
out-of-pocket costs and expenses of collection (including attorneys fees and
expenses deducted
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therefrom) expended by the Servicer in connection with such Defaulted Receivable
and any amounts required by law to be remitted to the Obligor.
On each Distribution Date, all amounts on deposit in the Note Distribution
Account will be distributed to the Noteholders.
[Early Amortization Events
As described above, the Revolving Period will continue until the close of
business on __________ ____ and the Amortization Period will begin on __________
____ and continue to the earlier of the payment in full of the Notes and the
termination of the Trust, unless an Early Amortization Event occurs prior to any
of such dates, thereby commencing the Amortization Period. An "Early
Amortization Event" will mean any of the following events:
(i) The failure of the Transferor or Servicer to make any required
payment or deposit required under the Contribution and Sale
Agreement or Transfer and Servicing Agreement.
(ii) The failure of the Transferor or Servicer to duly observe or
perform in any material respect any of its covenants or agreements
as described in the Contribution and Sale Agreement or Transfer
and Servicing Agreement which failure materially and adversely
affects the rights of the holders of the Class A Notes.
(iii) The failure to cure the inaccuracy of certain representations and
warranties made by the Transferor and Servicer in the Contribution
and Sale Agreement and/or the Transfer and Servicing Agreement
which failure materially and adversely affects the rights of the
holders of the Class A Notes and which continues uncured for a
period of [60] days after notice is given to the Servicer.
(iv) The occurrence of Insolvency Events with respect to the Transferor
or the Servicer.
(v) The Transferor or the Trust becomes subject to registration as an
"investment company" for purposes of the Investment Company Act of
1940, as amended.
(vi) If, on the 10th day following any Distribution Date, the amount
remaining on deposit in the Principal Funding Account (consisting
of the Available Principal Amount from the previous Collection
Period) is greater than $[25,000,000].
(vii) A Servicing Termination Event occurs.
(viii) The amount on deposit in the Reserve Account is less than the
Specified Reserve Account Balance on [three] consecutive
Distribution Dates.
(ix) Failure to transfer Subsequent Receivables when Pool Balance is
less than principal balance of Notes.
(x) An Event of Default occurs under the Indenture and the Notes are
declared due and payable.
The Amortization Period will commence on the day as of which an Early
Amortization Event is deemed to have occurred. In such event, distributions of
principal to the Class A Noteholders will begin on the Distribution Date in the
month following the month in which the Early Amortization Event occurs. If,
because of the occurrence of an Amortization Event, the Amortization Period
begins earlier than the Amortization Date, Class A Noteholders will begin
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receiving distributions of principal earlier than they would otherwise have
under the Agreement, which may shorten the final maturity of the related Class
of Class A Notes.
Reserve Account
The rights of the Class B Noteholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of the
Class A Noteholders in the event of defaults and delinquencies on the
Receivables, as provided in the Indenture, the Trust Agreement and the Transfer
and Sale Agreement. The protection afforded to the Class A Noteholders through
subordination will be effected by the preferential right of the Class A
Noteholders to receive both current distributions with respect to the
Receivables and withdrawals from the Reserve Account. The Reserve Account will
be created with an initial deposit by the Transferor on the Closing Date of the
Reserve Account Initial Deposit and will be augmented on each Distribution Date
by deposit therein of the Available Interest Amount remaining after the payment
of the Servicing Fee, the Administration Fee, the deposit of the Noteholders'
Class A Interest Distributable Amount and the Noteholders' Class B Interest
Distributable Amount in the Note Distribution Account, and the deposit of the
certain Available Interest Amounts in the Principal Funding Account, in each
case as described above under "--Distributions." Amounts on deposit in the
Reserve Account will be released on each Distribution Date to the Transferor or
to the [Class A-2 Noteholders], as described herein, to the extent that the
amount on deposit in the Reserve Account (after giving effect to withdrawals
made on such Distribution Date) exceeds the Specified Reserve Account Balance on
such Distribution Date.
The "Specified Reserve Account Balance" with respect to any Distribution
Date means the greater of (i) [____]% of the Pool Balance as of the close of
business on the last day of the preceding Collection Period and (ii)
[$__________].
[If the amount on deposit in the Reserve Account prior to the ________
199_ Distribution Date (or following the payment of the Notes in full) is
greater than the Specified Reserve Account Balance for such Distribution Date,
the Servicer shall instruct the Indenture Trustee to distribute the amount of
the excess to the Transferor; provided, however, that if, after giving effect to
all payments made on the Notes on such Distribution Date, the Pool Balance as of
the end of the preceding Collection Period is less than the sum of the
outstanding principal amount of the Notes, such excess amount shall not be
distributed to the Transferor and shall be retained in the Reserve Account
available for application in accordance with the Transfer and Sale Agreement. On
any Distribution Date on and after the ________ 199_ Distribution Date, if the
amount on deposit in the Reserve Account (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date, other than withdrawals
described in this sentence) is greater than the Specified Reserve Account
Balance for such Distribution Date, the Servicer shall instruct the Indenture
Trustee to deposit the amount of the excess in the Note Distribution Account for
distribution to the A-2 Noteholders as principal on such Distribution Date (to
the extent of the principal amount of the Class A-2 Notes).] Upon the Class [A]
Final Scheduled Distribution Date or the date of the optional purchase of the
Receivables by the Servicer (but only after payment of all interest and
principal of the Notes), the Servicer shall instruct the Indenture Trustee to
distribute the Reserve Account balance to the Transferor. Upon any
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distribution to the Transferor of amounts from the Reserve Account, the
Noteholders will not have any rights in, or claims to, such amounts.
Funds will be withdrawn from the amount on deposit in the Reserve Account
to the extent that (a) Available Interest Amount is insufficient to pay the sum
of the Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods, the Administration Fee and the Monthly Class A Note Interest or (b)
[during the Amortization Period] Available Principal Amount is insufficient to
pay the Class A Principal Distributable Amount and funds in the amount of such
deficiency will be deposited in the Note Distribution Account. Notwithstanding
the foregoing, if on any Distribution Date on which any Notes are outstanding
the amount on deposit in the Reserve Account is less than [___]% of the Pool
Balance as of the end of the preceding Collection Period, then funds will be
withdrawn from the Reserve Account only to the extent needed to pay any
Servicing Fee, Administration Fee or Monthly Class A Note Interest and no funds
from the Reserve Account will be applied on such Distribution Date to principal
of the Notes.
The availability of funds in the Reserve Account is intended to enhance
the likelihood of receipt by the Class A Noteholders of the full amount of
principal and interest due them and to decrease the likelihood that the Class A
Noteholders will experience losses. In addition, the subordination of the Class
B Notes to the Class A Notes is intended to provide the Class A Noteholders with
these same protections. However, because in certain circumstances the Reserve
Account could be depleted and/or the aggregate amount of Realized Losses could
exceed the amount of the Class B Notes, these protections are limited.
[LEGAL INVESTMENT
The A-1 Notes will be eligible securities for purchase by money market
funds under paragraph (a)(5) of Rule 2a-7 under the Investment Company Act of
1940, as amended.]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code, impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively, "Plans"), and
on persons who are fiduciaries with respect to Plans, in connection with the
investment of "plan assets" of any Plan ("Plan Assets"). ERISA generally imposes
on Plan fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary with respect to
such Plan Assets.
S-40
<PAGE>
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("Parties in Interest" under ERISA and
"Disqualified Persons" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Person that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
Subject to the considerations described below, the Class A Notes are
eligible for purchase with Plan Assets of any Plan.
Any fiduciary or other Plan investor considering whether to purchase the
Class A Notes with Plan Assets of any Plan should determine whether such
purchase is consistent with its fiduciary duties and whether such purchase would
constitute or result in a non-exempt prohibited transaction under ERISA and/or
Section 4975 of the Code because any of the Transferor or the Servicer, (as
subsidiaries of Metropolitan Life Insurance Company or as affiliates of [The New
England] and The New England Investment Companies), the Indenture Trustee, the
Owner Trustee or any other party may be Parties in Interest or Disqualified
Person with respect to the investing Plan and may be deemed to be benefiting
from the issuance of the Class A Notes. Any fiduciary or other Plan investor
considering whether to purchase or hold the Class A Notes should consult with
its counsel regarding (a) the applicability of the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code to such
investment, and (b) if the Transferor or the Servicer is a Party in Interest or
Disqualified Person with respect to the investing Plan, the availability of
exemptive relief under U.S. Department of Labor ("DOL") Prohibited Transaction
Class Exemption ("PTCE") 96-23 (relating to transactions determined by "in-house
asset managers"), 95-60 (relating to transactions involving insurance company
general accounts), 91-38 (relating to transactions involving bank collective
investment funds), 90-1 (relating to transactions involving insurance company
pooled separate accounts) or 84-14 (relating to transactions determined by
independent "qualified professional asset managers") or any other prohibited
transaction exemption issued by the DOL. A purchaser of the Class A Notes should
be aware, however, that even if the conditions specified in one or more of the
above-referenced exemptions are met, the scope of the exemptive relief provided
by the exemption might not cover all acts which might be construed as prohibited
transactions.
In addition, under DOL Regulation Section 2510.3-101 (the "Plan Asset
Regulation"), the purchase with Plan Assets of equity interests in the Trust
could, in certain circumstances, cause the Receivables and other assets of the
Trust to be deemed Plan Assets of the investing Plan which, in turn, would
subject the Trust and its assets to the fiduciary responsibility provisions of
ERISA and the prohibited transaction provisions of ERISA and Section 4975 of the
Code. Nevertheless, because the Class A Notes (a) will be treated as
indebtedness under local law and debt, rather than equity, for tax purposes (see
"Federal Income Tax Considerations -- Tax Consequences to Holders of the Notes
- -- Treatment of the Class A Notes as Indebtedness" in the Prospectus, and (b)
should not be deemed to have any "substantial equity features," purchases of the
Class A Notes with Plan Assets should not be treated as equity investments and,
therefore, the Receivables and other assets included as assets of the Trust
S-41
<PAGE>
should not be deemed to be Plan Assets of the investing Plans. Those conclusions
are based, in part, upon the traditional debt features of the Class A Notes,
including the reasonable expectation of purchasers of the Class A Notes that the
Class A Notes (which are highly rated by the Rating Agencies) will be repaid
when due, as well as the absence of conversion rights, warrants and other
typical equity features. Before purchasing or holding the Class A Notes, a
fiduciary or other Plan investor should itself confirm that the Class A Notes
constitute indebtedness, and have no substantial equity features, for purposes
of the Plan Asset Regulation.
The Class A Notes may not be purchased or held by any Plan, or any person
investing Plan Assets of any Plan, if any of the Transferor, the Servicer, the
Indenture Trustee, the Owner Trustee or any of their respective affiliates (a)
has investment or administrative discretion with respect to the Plan Assets used
to effect such purchase; (b) has authority or responsibility to give, or
regularly gives, investment advice with respect to such Plan Assets, for a fee
and pursuant to an agreement or understanding that such advice (1) will serve as
a primary basis for investment decisions with respect to such Plan Assets, and
(2) will be based on the particular investment needs of such Plan; or (c) is an
employer maintaining or contributing to such Plan. Each purchaser or holder of
the Class A Notes or any interest therein will be deemed to have represented by
its purchase and holding thereof that it is not subject to the foregoing
limitation.
Any fiduciary or other Plan investor considering whether to purchase any
Class A Notes on behalf of or with Plan Assets of any Plan should consult with
its counsel and refer to this Prospectus Supplement and the Prospectus for
guidance regarding the ERISA Considerations applicable to the Class A Notes
offered hereby.
For further information, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Class A Note Underwriting Agreement"), the Transferor has agreed to cause
the Trust to sell to the underwriters named below (the "Underwriters"), and each
of the Underwriters has severally agreed to purchase, the principal amount of
Class A Notes set forth opposite its name below:
Principal Amount Principal Amount of
Underwriters of A-1 Notes A-2 Notes
------------ ------------ ---------
Total
In the Class A Note Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions therein, to purchase all the Class A
Notes offered hereby if any of such Class A Notes are purchased. The Transferor
has been advised by the Underwriters
S-42
<PAGE>
that they propose initially to offer the [A-1 Notes and the A-2] Notes to the
public at the prices set forth herein, and to certain dealers at such price less
a concession not in excess of [____% per A-1 Note and ____]% per [A-2] Note. The
Underwriters may allow and such dealers may re-allow a concession not in excess
of [____% per A-1 Note and] ____% per [A-2] Note to certain other dealers. After
the initial public offering, such prices and such concessions may be changed.
The Class A Note Underwriting Agreement provides that the Transferor and
MCC will indemnify the Underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
Underwriters may be required to make in respect thereof.
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Trust Accounts in Eligible
Investments acquired from the Class A Underwriters.
The closings of the sale of the Notes are conditioned on the closing of
the sale of each other.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for the
Trust, the Transferor and the Servicer by Davis Wright Tremaine and by
_________________________, and for the Class A Underwriters by Orrick,
Herrington & Sutcliffe LLP, Washington, D.C. Certain federal income tax and
other matters will be passed upon for the Trust by Orrick, Herrington &
Sutcliffe LLP, Washington, D.C. [Certain Washington state tax matters will be
passed upon the Trust by Davis Wright Tremaine.]
S-43
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered MetLife
Capital Equipment Loan Trust 199_-_ [Class A-1 ____% Asset Backed Notes and
Class A-2] ____% Asset Backed Notes (collectively, the "Global Securities") will
be available only in book-entry form. Investors in the Global Securities may
hold such Global Securities through any of The Depository Trust Company ("DTC"),
Cedel Bank, societe anonyme ("Cedel") or the Euroclear System ("Euroclear"). The
Global Securities will be tradeable as home market instruments in both the
European and U.S. domestic markets. Initial settlement and all secondary trades
will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel 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 (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Notes will be effected on a delivery against payment basis
through the respective Depositaries of Cedel and Euroclear (in such capacity)
and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, Cedel and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with their holdings against payment
in same-day funds on the settlement date.
A-1
<PAGE>
Investors electing to hold their Global Securities through Cedel 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 Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and 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 U.S. corporate
debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary, as the case may be, to receive the
Global Securities against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date, calculated on the basis of a year of 360 days, in
each case for the actual number of days occurring in the period for which such
interest is payable. Payment will then be made by the respective Depositary to
the DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Cedel Participant's or Euroclear Participant's account.
The securities credit will appear the next day (European time) and the cash
debit will be back- valued to, and the interest on the Global Securities 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 or Euroclear cash debit will be valued
instead as of the actual settlement date.
Cedel 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 pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global
Securities are credited to their accounts one day later.
A-2
<PAGE>
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-position
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each Cedel Participant's or
Euroclear 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 Securities to
the respective Depositary for the benefit of Cedel 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 or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, Cedel or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date, calculated on the basis of a year of 360
days, in each case for the actual number of days occurring in the period for
which such interest is payable. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel 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
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 the 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 Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action was taken. At least three techniques should be
readily available to eliminate this potential problem:
A-3
<PAGE>
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global Securities
sufficient time to be reflected in their Cedel or Euroclear account in order to
settle the sale side of the trade; or
(c) 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 Participant or Euroclear
Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
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 U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Notes that
are non-U.S. Persons 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-U.S. Person, including a non-U.S. corporation or bank with a U.S.
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-U.S. Persons that are Noteholders residing in a
country that has a tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the treaty terms) 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 Noteholder or his
agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
A-4
<PAGE>
U.S. Federal Income Tax Reporting Procedure. The holder of a Global
Security 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 whom it 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.
The term "U.S. 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 tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
A-5
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and defined herein and the pages on which the definitions of such
terms may be found herein. Certain defined terms used in this Prospectus
Supplement are defined in the Prospectus. See "Index of Terms" in the
Prospectus.
A-1 Note Rate...............................................................S-29
A-2 Note Pool Factor........................................................S-27
Administration Agreement....................................................S-17
Administration Fee..........................................................S-17
Administrator...............................................................S-17
Amortization Date...........................................................S-12
Amortization Period.........................................................S-12
APR ...........................................................S-6, S-21
Available Interest Amount...................................................S-34
Available Principal Amount..................................................S-34
Cede .................................................................S-3
Cedel .................................................................A-1
Class A Note Interest Rate..................................................S-35
Class A Note Underwriting Agreement.........................................S-42
Class A Noteholders..........................................................S-8
Class A Noteholders' Monthly Principal Distributable Amount.................S-35
Class A Noteholders' Percentage.............................................S-35
Class A Noteholders' Principal Carryover Shortfall..........................S-35
Class A Noteholders' Principal Distributable Amount.........................S-35
Class A Notes................................................................S-2
Class A-1 Notes.........................................................S-1, S-4
Class A-2 Final Scheduled Distribution Date..................................S-9
Class A-2 Note Rate..........................................................S-7
Class A-2 Noteholders........................................................S-8
Class A-2 Notes.........................................................S-2, S-4
Class B Note Interest Rate..................................................S-35
Class B Note Pool Factor....................................................S-27
Class B Note Rate............................................................S-7
Class B Noteholders..........................................................S-8
Class B Noteholders' Monthly Principal Distributable Amount.................S-35
Class B Noteholders' Percentage.............................................S-36
Class B Noteholders' Principal Carryover Shortfall..........................S-36
Class B Noteholders' Principal Distributable Amount.........................S-36
Class B Notes...........................................................S-2, S-4
Class [A-1] Note Pool Factor................................................S-27
Class [A-1] Note Rate........................................................S-7
Class [A-1] Noteholders......................................................S-8
Class [A] Notes..............................................................S-4
Closing Date.................................................................S-1
Collection Account..........................................................S-15
<PAGE>
Collection Period.....................................................S-12, S-36
Commission .................................................................S-3
Contribution and Sale Agreement..............................................S-6
Cut-Off Date...........................................................S-6, S-21
Cut-Off Date APR.............................................................S-6
Determination Date..........................................................S-33
Distribution Date.................................................S-2, S-8, S-29
DOL ................................................................S-41
DTC ............................................................S-3, A-1
Early Amortization Event....................................................S-38
ERISA Considerations........................................................S-18
Euroclear .................................................................A-1
Exchange Act.................................................................S-3
Financed Equipment...........................................................S-5
Global Securities............................................................A-1
Indenture .................................................................S-5
Indenture Trustee............................................................S-4
Initial Pool Balance.........................................................S-6
Investment company..........................................................S-38
Issuer ............................................................S-2, S-4
Leases .................................................................S-5
Liquidation Proceeds........................................................S-36
Loan Contracts...............................................................S-5
MCC .................................................................S-4
Monthly Class A Note Interest...............................................S-36
Monthly Class B Note Interest...............................................S-36
Noteholders' Class A Interest Carryover Shortfall...........................S-36
Noteholders' Class A Interest Distributable Amount..........................S-37
Noteholders' Class B Interest Carryover Shortfall...........................S-37
Noteholders' Class B Interest Distributable Amount..........................S-37
Notes ............................................................S-2, S-4
Owner Trustee................................................................S-4
Plan Asset Regulation.......................................................S-41
Plan Assets ................................................................S-40
Plans ................................................................S-40
Pool Balance.................................................................S-6
Principal Balance......................................................S-7, S-21
PTCE ................................................................S-41
Purchase Amount.............................................................S-37
Purchased Receivable........................................................S-37
Rating Agency...............................................................S-18
Realized Losses.............................................................S-37
Receivables ............................................................S-2, S-6
Receivables Pool............................................................S-21
Record Date .................................................................S-8
Recoveries ................................................................S-37
Redemption Date..............................................................S-9
Redemption Price.............................................................S-9
<PAGE>
Remaining Available Principal Amounts.................................S-11, S-34
Reserve Account.............................................................S-13
Reserve Account Initial Deposit.............................................S-13
Revolving Period............................................................S-12
Servicer .................................................................S-4
Servicer's Yield............................................................S-16
Servicing Fee...............................................................S-16
Servicing Fee Rate..........................................................S-16
Specified Reserve Account Balance.....................................S-14, S-39
Transfer and Sale Agreement..................................................S-6
Transferor .................................................................S-4
Trust ............................................................S-2, S-4
Trust Agreement..............................................................S-4
U.S. Person .................................................................A-5
Underwriters................................................................S-42
[A-2] Note Rate.............................................................S-30
[Class A-1] Final Scheduled Distribution Date................................S-9
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus Supplement or in the accompanying
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Transferor, the Servicer or the
Underwriters. This Prospectus Supplement and the accompanying Prospectus do not
constitute an offer or solicitation by anyone in any state 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
Supplement or the accompanying Prospectus, nor any sale made hereunder or
thereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Transferor or the Receivables since the
date hereof or thereof or that the information contained or incorporated by
reference herein or therein is correct as of any time subsequent to its date.
---------------
TABLE OF CONTENTS
Prospectus Supplement
Page
Reports to Class A Noteholders...............................................
Summary of Terms.............................................................
Risk Factors.................................................................
Formation of the Trust.......................................................
The Receivables Pool.........................................................
Weighted Average Life of the Securities......................................
Pool Factors and Trading Information.........................................
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................
Use of Proceeds..............................................................
The Transferor and the Servicer..............................................
Description of the Notes.....................................................
Description of the Transaction Agreements....................................
Certain Legal Aspects of the Receivables.....................................
Legal Investment.............................................................
ERISA Considerations.........................................................
Underwriting ................................................................
Legal Opinions...............................................................
Annex I - Global Clearance, Settlement and
Tax Documentation Procedures...............................................
Prospectus
Page
Reports to Class A Noteholders ..............................................
Available Information........................................................
Incorporation of Certain Documents by Reference..............................
Summary of Terms.............................................................
Risk Factors.................................................................
The Trusts...................................................................
The Trust Property...........................................................
The Receivables Pools........................................................
Weighted Average Life of the Securities......................................
Pool Factors and Trading Information.........................................
Use of Proceeds..............................................................
The Transferor and the Servicer..............................................
Description of the Notes
Certain Information Regarding the Securities.................................
Issuance of the Securities...................................................
Description of the Transaction Agreements....................................
Certain Legal Aspects of the Receivables.....................................
Certain Federal Income Tax Considerations....................................
Certain State Tax Considerations.............................................
ERISA Considerations.........................................................
Plan of Distribution.........................................................
Ratings......................................................................
Legal Opinions...............................................................
Index of Terms...............................................................
Until ____________ __, 199_ (90 days after the date of this Prospectus
Supplement), all dealers effecting transactions in the Securities, whether or
not participating in this distribution, may be required to deliver a Prospectus
Supplement and a Prospectus. This delivery requirement is in addition to the
obligation of dealers to deliver a Prospectus Supplement and a Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
METLIFE CAPITAL
EQUIPMENT LOAN
TRUST 199[_]-[_]
$_________________
___% Asset Backed Notes
METLIFE CAPITAL
FUNDING CORP. III
Transferor
METLIFE CAPITAL CORPORATION
Servicer
-------------------
PROSPECTUS SUPPLEMENT
-------------------
[Underwriters]
______ __, 199_
<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 without the delivery of a final prospectus supplement
and accompanying prospectus. 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.
SUBJECT TO COMPLETION, DATED MARCH 14, 1997
PROSPECTUS
METLIFE CAPITAL EQUIPMENT LOAN TRUSTS
Class A Asset Backed Notes
MetLife Capital Funding Corp. III, Transferor
METLIFE CAPITAL CORPORATION, Servicer
--------------
The Class A Asset Backed Notes (the "Class A Notes") described herein may
be issued from time to time in one or more series (each, a "Series"), in
amounts, at prices and on terms to be determined at the time of sale and to be
set forth in a supplement to this Prospectus (a "Prospectus Supplement"). Each
Series, which will include one or more classes of Class A Notes (each, a
"Class"), will be issued by a limited purpose Delaware business trust to be
formed with respect to such Series (each, a "Trust"). Each Trust will be formed
pursuant to a Trust Agreement to be entered into between MetLife Capital Funding
Corp. III, as transferor (the "Transferor"), and the owner trustee specified in
the related Prospectus Supplement (the "Owner Trustee"). The Class A Notes of
each Series will be issued and secured pursuant to an Indenture between a Trust
and the indenture trustee specified in the related Prospectus Supplement (the
"Indenture Trustee") and will represent indebtedness of the related Trust. Each
Trust will also issue Class B Asset Backed Notes (the "Class B Notes and,
together with the Class A Notes, the "Notes"). Only the Class A Notes will be
offered by this Prospectus and any related Prospectus Supplement. The property
of each Trust will include a pool of commercial loan contracts and/or equipment
finance lease contracts, including the rights to receive certain payments made
with respect to such contracts (collectively, the "Receivables") secured by new
and/or used commercial and/or industrial equipment (the "Financed Equipment"),
certain monies due or received thereunder on and after the applicable Cut-off
Date set forth in the related Prospectus Supplement, security interests in such
Financed Equipment and certain other property, all as described herein and in
the related Prospectus Supplement. In addition, if so specified in the related
Prospectus Supplement, the property of a Trust will include monies on deposit in
a trust account (the "Pre-Funding Account") to be established in the name of the
Indenture Trustee on behalf of the related Noteholders, which will be used to
acquire additional Receivables (the "Subsequent Receivables") from the
Transferor from time to time during the Funding Period specified in the related
Prospectus Supplement.
Except as otherwise provided in the related Prospectus Supplement, each
Class of Notes of any Series will represent the right to receive a specified
amount of payments of principal and interest determined with respect to the
related Receivables, at the rates, on the dates and in the manner described
herein and in the related Prospectus Supplement.
(continued on following page)
Potential investors should consider, among other things, the information set
forth in "Risk Factors" commencing on page 14 herein.
--------------
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.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Class A Notes offered hereby unless accompanied by a
Prospectus Supplement.
--------------
The date of this Prospectus is _______________ __, 1997
<PAGE>
(continued from previous page)
The right of each Class of Notes to receive payments may be senior or
subordinate to the rights of one or more of the other Classes of such Series.
Distributions on Class B Notes of a Series may be subordinated in priority to
payments due on the related Class A Notes to the extent described herein and in
the related Prospectus Supplement. A Series may include one or more Classes of
Class A Notes and one or more Classes of Class B Notes which differ as to the
timing and priority of payments, allocations of losses, interest rate or amount
of distributions in respect of principal or interest or both. A Series may also
include one or more Classes of Class A Notes and one or more Classes of Class B
Notes entitled to distributions in respect of principal, with disproportionate,
nominal or no interest distributions, or to distributions in respect of
interest, with disproportionate, nominal or no principal distributions. The rate
of payment in respect of principal of each Class of Notes will depend on the
length of the Revolving Period, if any, with respect to such Class, the priority
of payment of such Class and the rate and timing of payments (including
prepayments, defaults, liquidations and repurchases of Receivables) on the
related Receivables. A rate of payment on the related Receivables lower or
higher than that anticipated may affect the weighted average life of each Class
of Notes in the manner described herein and in the related Prospectus
Supplement.
The Notes of a given Series will represent obligations of the related
Trust only and will not represent recourse obligations of or interests in, and
will not be guaranteed or insured by, MetLife Capital Funding Corp. III or
MetLife Capital Corporation or any of their respective affiliates. Prospective
investors should consider the factors set forth under "Risk Factors" herein.
Certain capitalized terms used herein are defined elsewhere in this
Prospectus. A listing of the pages on which such terms are defined is found in
the "Index of Terms for Prospectus" beginning on page [___].
Each Series of Class A Notes offered hereby will be rated in one of the
four highest rating categories by at least one nationally recognized statistical
rating organization.
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REPORTS TO NOTEHOLDERS
Unless and until Definitive Class A Notes are issued, periodic and annual
unaudited reports containing information concerning the Receivables of the
related Trust will be prepared by the Servicer and sent on behalf of such Trust
to Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC") and
registered holder of the related Class A Notes. To the extent specified in the
related Prospectus Supplement, such periodic and annual unaudited reports will
also be sent on behalf of any such Trust to any registered holders of the Class
A Notes. See "Issuance of the Notes-Book-Entry Registration" and "Description of
the Transaction Agreements--Reports to Noteholders" herein. Such reports will
not constitute financial statements that have been examined and reported upon
by, with an opinion expressed by, an independent public accountant or certified
public accountant. Each Trust will file with the Securities and Exchange
Commission (the "Commission") such periodic reports as are required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (the "Exchange Act") or as are otherwise agreed to by
the Commission. Copies of such periodic reports may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W, Washington, D.C.
20549, at prescribed rates.
AVAILABLE INFORMATION
The Transferor, as originator of each Trust, has filed with the Commission
a Registration Statement (together with all amendments and exhibits thereto,
referred to herein as the "Registration Statement") under the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder
(the "Securities Act"), with respect to the Class A Notes offered pursuant to
this Prospectus. For further information, reference is made to the Registration
Statement which may be inspected and copied, at prescribed rates, at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W,
Washington, D.C. 20549; at the Commission's Midwest Regional Office at 500 West
Madison Street, Chicago, Illinois 60661-2511; and at the Commission's Northeast
Regional Office at 7 World Trade Center, 13th Floor, New York, New York 10048.
In addition, the Commission maintains a public access site on the internet
through the world wide web, at which site reports, information statements and
other information, including all electronic filings, may be reviewed. The
internet address of the Commission's world wide web site is http://www.SEC.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed with the Commission by the Transferor, as originator
of any Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of any offering
of the Class A Notes made by this Prospectus shall be deemed to be incorporated
by reference in this Prospectus and to be a part of this Prospectus from the
date of the filing of such documents.
The Servicer on behalf of any Trust will provide without charge to each
person to whom this Prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the documents referred to above that have
been or may be incorporated by reference in this Prospectus, other than exhibits
to such documents unless such exhibits are specifically requested. Such written
or oral requests should be directed to the Servicer at: MetLife Capital
Corporation, 10900 N.E. 4th Street, Suite 500, Bellevue, Washington 98004,
Attention Legal Department (telephone (206) 451-0090).
3
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus, and by reference to
the information with respect to the Notes of any Series contained in the related
Prospectus Supplement to be prepared and delivered in connection with the
offering of related Class A Notes. Certain capitalized terms used in this
summary are defined elsewhere in the Prospectus on the pages indicated in the
"Index of Terms."
Issuer...................... With respect to each Series of Notes, the Delaware
business trust formed by the Transferor and the
Owner Trustee specified in the related Prospectus
Supplement pursuant to a Trust Agreement (as
amended and supplemented from time to time, a
"Trust Agreement") between the Transferor and such
Owner Trustee, acting thereunder not in its
individual capacity but solely as Owner Trustee
for such trust (the "Trust" or the "Issuer").
Transferor.................. MetLife Capital Funding Corp. III (the
"Transferor"), a Delaware corporation and a
wholly-owned subsidiary of MetLife Capital
Corporation. The principal executive offices of
the Transferor are located at 15915 Katy Freeway,
Suite 150, Houston, TX 77094 and its telephone
number is (713) 398-8881.
Servicer.................... MetLife Capital Corporation (the "Servicer" or
"MCC"), a Delaware corporation.
Indenture Trustee........... With respect to each Series of Notes, the Indenture
Trustee specified in the related Prospectus
Supplement.
Owner Trustee............... With respect to each Series of Notes, the Owner
Trustee specified in the related Prospectus
Supplement.
The Notes................... Each Series of Notes will include one or more
Classes of Class A Notes and one or more Classes
of Class B Notes, which will be issued pursuant to
an indenture between the related Trust and
Indenture Trustee (as amended and supplemented
from time to time, an "Indenture").
Unless otherwise specified in the related
Prospectus Supplement, the Class A Notes will be
available for purchase in denominations of $1,000
and integral multiples thereof and will be
available in book-entry form only. Unless
otherwise specified in the related Prospectus
Supplement, holders of Class A Notes ("Class A
Noteholders") will be able to receive Definitive
Class A Notes only under the limited
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circumstances described herein or in the related
Prospectus Supplement. See "Issuance of the
Notes--Definitive Notes."
Unless otherwise specified in the related
Prospectus Supplement, each Class of Notes will
have a stated principal amount specified in the
related Prospectus Supplement and will bear
interest at a rate or at rates (with respect to
each Class of Notes, the "Interest Rate")
specified in the related Prospectus Supplement.
Each Class of Notes may have a different Interest
Rate, which may be a fixed, a variable or an
adjustable Interest Rate, or any combination of
the foregoing. The related Prospectus Supplement
will specify the Interest Rate for each Class of
Notes, or the method for determining the Interest
Rate.
With respect to a Series that includes two or more
Classes of Class A Notes and/or two or more
Classes of Class B Notes, each Class may differ as
to the timing and priority of payments, seniority,
allocations of losses, Interest Rate or amount of
or method of determining payments of principal or
interest as described in the related Prospectus
Supplement. Payments of principal or interest in
respect of any such Class or Classes may or may
not be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the Receivables in the
related Trust. In addition, a Series may include
one or more Classes of Notes ("Strip Notes")
entitled to (i) principal payments with
disproportionate, nominal or no interest payments
or (ii) interest payments with disproportionate,
nominal or no principal payments.
If the Servicer exercises its option to purchase
the Receivables of a Trust in the manner and on
the respective terms and conditions described
under "Description of the Transaction
Agreements--Termination," the related outstanding
Notes will be prepaid on the terms specified in
the related Prospectus Supplement. In addition, if
the related Prospectus Supplement provides that
the property of a Trust will include a Pre-Funding
Account, the outstanding Notes may be subject to
partial prepayment on or immediately following the
end of the related Funding Period (as such term is
defined in the related Prospectus Supplement, the
"Funding Period") in an amount and manner
specified in the related Prospectus Supplement. In
the event of a partial prepayment, the Noteholders
may, but will not necessarily, be entitled to
receive a prepayment premium from the related
Trust, in the
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amount and to the extent provided in the related
Prospectus Supplement.
The Trust Property.......... The property of each Trust will include a pool of
Receivables which may consist of (i) fixed and/or
floating rate commercial loan contracts (each, a
"Loan Contract") and/or equipment finance lease
contracts (each, a "Lease") secured by new and/or
used commercial and/or industrial equipment (the
"Financed Equipment"), including rights to receive
certain payments made with respect to such
contracts (collectively, the "Receivables") and
all monies (including accrued interest) due or
received thereunder on or after the applicable
Cut-off Date and (ii) security interests in the
Financed Equipment. With respect to each Trust as
to which the related Trust Property includes both
Loan Contracts and Leases, the related Prospectus
Supplement will set forth the percentages of the
related Receivables constituting Loan Contracts
and Leases. MCC and the Transferor will represent
that all Leases are "net leases" and contain
provisions which unconditionally obligate each
Obligor thereunder (the "Obligor") to make all
payments scheduled under its Lease without any
right of setoff. No Lease contract requires any
additional performance obligations by MCC.
The property of each Trust will also include (i)
amounts on deposit in certain trust accounts,
including a related Collection Account, any
Reserve Account, any Pre-Funding Account and any
other account identified in the related Prospectus
Supplement, and the proceeds thereof, (ii) the
rights to proceeds from claims on physical damage,
credit life, liability, and disability insurance
policies, if any, covering Financed Equipment or
Obligors, as the case may be, (iii) any net
proceeds of repossessed Financed Equipment, (iv)
the rights of the Transferor under the related
Contribution and Sale Agreement (as defined
below), (v) the interest earned on short-term
investments made by such Trust and (vi) any
proceeds of the foregoing. On or prior to the
Closing Date specified in the Prospectus
Supplement with respect to a Trust, MCC will
transfer and convey Receivables to the Transferor
pursuant to a Contribution and Sale Agreement (the
"Contribution and Sale Agreement"), between MCC
and the Transferor, and the Transferor will
transfer the Receivables to the related Trust
pursuant to a Transfer and Servicing Agreement
(the "Transfer and Servicing Agreement") among the
Transferor, the Servicer and such Trust. Such
Receivables (the "Initial Receivables") shall
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have an aggregate principal balance specified in
the related Prospectus Supplement as of a date
specified therein (such date, the "Initial Cut-off
Date").
If and to the extent provided in the related
Prospectus Supplement, the Transferor will be
obligated to transfer and the related Trust will
be obligated to acquire (subject to the
availability of Receivables, and to the
satisfaction of certain conditions described in
the related Transfer and Servicing Agreement), the
Subsequent Receivables from time to time during
the Funding Period specified in the related
Prospectus Supplement, which Subsequent
Receivables will have an aggregate principal
balance as of the date determined therein (each, a
"Subsequent Cut-off Date", and together with the
Initial Cut-off Date, a "Cut-off Date") not in
excess of the amount on deposit in the Pre-Funding
Account (the "Pre-Funded Amount") on the related
Closing Date. If the related Prospectus Supplement
so provides for a Pre-Funding Account, the funds
on deposit in such Pre-Funding Account on the
related Closing Date will not exceed 25% of the
related Trust Property, and the related
Pre-Funding Period shall not exceed three months
from the related Closing Date.
If and to the extent provided in the related
Prospectus Supplement, the Transferor will be
obligated to transfer and the related Trust will
be obligated to acquire (subject to the
availability of Receivables, and to the
satisfaction of certain conditions described in
the related Transfer and Servicing Agreement), the
Subsequent Receivables from time to time during
the Revolving Period, if any, specified in the
related Prospectus Supplement, which Subsequent
Receivables will have an aggregate principal
balance as of the Subsequent Cut-off Date not in
excess of the amount available for such purpose on
deposit in the Principal Funding Account on the
related Distribution Date.
The Receivables will arise from various commercial
loan and/or lease products originated or acquired
by MCC in its ordinary course of business and
subsequently conveyed to the Transferor. The
Receivables transferred to a Trust will be
selected from the portfolio of commercial loans
and leases owned by MCC based on criteria
specified in the related Contribution and Sale
Agreement and Transfer and Servicing Agreement and
described herein and in the related Prospectus
Supplement.
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Credit and Cash
Flow Enhancement.......... If and to the extent provided in the related
Prospectus Supplement, credit enhancement with
respect to a Trust or any Class or Classes of
Notes may include any one or more of the
following: subordination of one or more Classes of
Notes to other Classes of Notes, Reserve Accounts,
over collateralization, letters of credit, credit
or liquidity facilities, surety bonds, guaranteed
investment contracts, swaps or other interest rate
protection agreements, repurchase obligations,
other agreements with respect to third party
payments or other support, cash deposits or other
arrangements. Any form of credit enhancement may
have certain limitations and exclusions from
coverage thereunder, which will be described in
the related Prospectus Supplement, and may be
replaced with another form of credit enhancement,
provided that the Rating Agency Condition has been
satisfied with respect to such substitution. See
"Description of the Transaction Agreements --
Credit and Cash Flow Enhancement" herein.
Reserve Account............. Unless otherwise specified in the related
Prospectus Supplement, a Reserve Account will be
established and maintained by the Transferor for
each Trust in the name of the Indenture Trustee
with an initial deposit, if any, by the Transferor
of cash or certain investments having a value
equal to the amount specified in the related
Prospectus Supplement. To the extent specified in
the related Prospectus Supplement, funds in the
Reserve Account will thereafter be supplemented by
the deposit of amounts remaining on any
Distribution Date after making all other
distributions required on such date and, if
applicable, any amounts deposited from time to
time from the Pre-Funding Account in connection
with the acquisition of Subsequent Receivables.
Amounts in the Reserve Account may be available to
cover shortfalls in amounts due to the holders of
those Classes of Notes specified in the related
Prospectus Supplement, in the manner and under the
circumstances specified therein. The related
Prospectus Supplement will also specify to whom
and the manner and circumstances under which
amounts on deposit in the Reserve Account (after
giving effect to all other required distributions
to be made by the related Trust) in excess of the
"Specified Reserve Account Balance" (as defined in
the related Prospectus Supplement) will be
distributed.
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Principal and Interest
Funding Accounts.......... Collections or other amounts (or the portion
thereof) allocable to each Series or Class will be
deposited in one or more trust accounts
established for the benefit of Noteholders and
used to make interest payments and principal
payments to Noteholders of such Series or Class on
the appropriate Distribution Date.
Revolving Period............ The Revolving Period, if any, (the "Revolving
Period") for each Trust will be the period
beginning on the related Initial Cut-Off Date and
ending at the commencement of the Amortization
Period. See "The Transaction Agreements -- Early
Amortization Events" and the related Prospectus
Supplement for a discussion of certain events that
might lead to the early termination of the
Revolving Period, if any, with respect to each
Trust that has a Revolving Period, unless
otherwise provided in the related Prospectus
Supplement, during the Revolving Period, no
payments of principal will be made on the Notes
and no amounts will be set aside for such
purposes.
Amortization Period......... With respect to each Trust, that has a Revolving
Period, the related Amortization Period will
commence upon the earlier of (a) the occurrence of
any event listed in the related Prospectus
Supplement (an "Early Amortization Event") which
commences the Amortization Period for such Trust
and (b) the date specified in the related
Prospectus Supplement (the "Scheduled Revolving
Period Termination Date"). Once commenced, the
Amortization Period will continue until the
earlier of (a) the maturity or other liquidation
of the last related Receivables and the
disposition of any amounts received upon
liquidation of any such remaining Receivables and
(b) the payment to Noteholders of the related
Series of all amounts required to be paid to them
pursuant to the related Indenture. With respect to
each Trust that has a Revolving Period, when the
related Amortization Period begins, the Revolving
Period will terminate, and Available Trust
Principal will thereafter be paid to the related
Noteholders to the extent described in the related
Prospectus Supplement on each Distribution Date
beginning with the Distribution Date in the month
following the commencement of the Amortization
Period. See "The Transaction Agreements -- Early
Amortization Events" in the related Prospectus
Supplement.
Pre-Funding Account......... If so specified in the related Prospectus
Supplement, the related Trust Property may include
monies on deposit in a trust
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account (the "Pre-Funding Account") to be
established by the Transferor in the name of the
Indenture Trustee on behalf of the related
Noteholders, which monies will be used to acquire
Subsequent Receivables from the Transferor from
time to time during the Funding Period specified
in the related Prospectus Supplement. The amount
that may be initially deposited into a Pre-Funding
Account, and the length of a Pre-Funding Period,
shall be limited as described herein.
Transaction Agreements...... With respect to each Trust, pursuant to a
Contribution and Sale Agreement, MCC will transfer
and convey and, pursuant to the Transfer and
Servicing Agreement, the Transferor will transfer
the related Receivables, together with its rights
under the Contribution and Sale Agreement, to such
Trust. In addition, the Servicer will agree with
such Trust to be responsible for servicing,
managing and making collections on the
Receivables. The rights and benefits of the
Transferor under the Contribution and Sale
Agreement and of such Trust under the Transfer and
Servicing Agreement will be assigned to the
related Indenture Trustee as collateral for the
Notes. The obligations of the Transferor and the
Servicer under such Transaction Agreements include
those specified below. See "Risk Factors -- Risks
Relating to Perfection of Interests in Receivables
and in Financed Equipment" herein.
Unless otherwise specified in the related
Prospectus Supplement, the Transferor will be
obligated to reacquire any Receivable if (i) the
interest of the related Trust therein is
materially adversely affected by a breach of any
representation or warranty made by the Transferor
or MCC with respect to such Receivable (other than
certain specified representations and warranties)
and (ii) such breach has not been cured within the
time period specified herein following the
discovery by or notice to the Transferor of the
breach. See "Description of Transaction Agreements
-- Transfer and Assignment of Receivables" herein.
If such breach arises from a representation or
warranty made by MCC in the Contribution and Sale
Agreement, MCC will be obligated to reacquire such
Receivable from the Transferor pursuant to the
related Contribution and Sale Agreement
contemporaneously with the Transferor's reacquire
from such Trust. The obligation of the Transferor
to reacquire any Receivable with respect to which
MCC has breached a representation or warranty is
subject to MCC's reacquisition of such Receivable.
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Consistent with its normal servicing procedures,
the Servicer may, in its discretion, arrange with
the Obligor on a Receivable to extend or modify
its payment schedule. To the extent provided in
the related Prospectus Supplement, some of such
extensions or modifications may result in the
Servicer purchasing such Receivable.
Unless otherwise specified in the related
Prospectus Supplement, the Servicer shall receive
a servicing fee for each Collection Period (the
"Servicing Fee"), which Servicing Fee shall equal
the sum of (a) a fixed percentage per annum to be
specified in the related Prospectus Supplement
(the "Servicing Fee Rate") of the Pool Balance as
of the first day of such Collection Period, plus
(b) any late fees, extension fees, prepayment
penalties and other administrative fees or similar
charges allowed by applicable law with respect to
such Receivables (collectively, the "Servicer's
Yield"). With respect to each Trust, the Servicing
Fee for each Collection Period will decline over
the term of the related Notes as the aggregate
principal balance of the related Receivables
decreases. See "Description of the Transaction
Agreements-- Servicing Compensation and Payment of
Expenses" herein and in the related Prospectus
Supplement.
Administration Agreement.... With respect to each Trust, MCC, in its capacity as
administrator (the "Administrator"), will enter
into an agreement (an "Administration Agreement")
with such Trust and the related Indenture Trustee
pursuant to which the Administrator will agree, to
the extent provided in such Administration
Agreement, to provide the notices and to perform
certain other administrative obligations required
by the related Indenture. As compensation for the
performance of the Administrator's obligations
under its Administration Agreement and as
reimbursement for its expenses related thereto,
the Administrator will be entitled to a monthly
administration fee in an amount to be set forth in
the related Prospectus Supplement (the
"Administration Fee").
Certain Legal Aspects of the
Receivables; Repurchase
Obligations................. With respect to any Trust, unless the related
Prospectus Supplement specifies otherwise, the
transfer of the Receivables from MCC to the
Transferor and from the Transferor to such Trust,
and the granting of the security interest in the
related Receivables by such Trust to the related
Indenture Trustee, will in each case be perfected
by filing Uniform Commercial Code ("UCC")
financing statements.
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To facilitate servicing and reduce administrative
costs, the Receivables Files will be retained by
the Servicer and will not be physically segregated
from other similar documents that are in the
Servicer's possession or otherwise stamped or
marked to reflect the transfer to the related
Trust so long as MCC is servicing the Receivables.
The Servicer's accounting records and computer
files will be marked to reflect such sales and
assignments. Because the Receivables Files will
remain in the Servicer's possession and will not
be stamped or otherwise marked to reflect the
assignment to the Indenture Trustee, if a
subsequent purchaser were able to take physical
possession of the Receivables Files without
knowledge of such assignment, the Indenture
Trustee's interest in the Receivables could be
defeated. In such event, distributions to
Noteholders may be adversely affected. See "Risk
Factors -- Risks relating to Perfection of
Interests in Receivables and in Financed
Equipment" herein.
With respect to each Series of Notes, in connection
with the transfer of the Receivables to the
related Trust, security interests in the Financed
Equipment securing the Receivables will be
assigned by MCC to the Transferor and by the
Transferor to such Trust. Unless otherwise
specified in the related Prospectus Supplement,
the Transferor will be obligated to reacquire any
Receivable transferred to the related Trust
(subject to MCC's acquisition thereof) in the
event it is determined that a first perfected
security interest in the name of MCC in the
Financed Equipment securing such Receivable did
not exist as of the related Closing Date or, if
applicable, any related Subsequent Closing Date,
if (i) such breach shall materially adversely
affect the interest of such Trust in such
Receivable and (ii) such failure or breach shall
not have been cured by the last day of the second
(or, if the Transferor elects, the first) month
following the discovery by or notice to the
Transferor of such breach, and MCC will be
obligated to reacquire such Receivable from the
Transferor contemporaneously with the Transferor's
reacquisition from such Trust. To the extent the
security interest of MCC in the related Financed
Equipment is perfected, subject to the exceptions
set forth in the following sentence, such Trust
will have a prior claim over subsequent purchasers
of such Financed Equipment and holders of
subsequently perfected security interests.
However, as against liens for repairs ("Mechanics'
Liens") on an item of Financed Equipment or for
taxes unpaid by an Obligor under a Receivable, or
through fraud or negligence of MCC or such Trust
could lose the priority of its security interest
or its
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security interest in the related Financed
Equipment. Neither the Transferor nor the Servicer
will have any obligation to reacquire a Receivable
if liens for repairs or taxes unpaid by an Obligor
result in such Trust losing the priority of its
security interest or its security interest in such
Financed Equipment after the related Closing Date
or, if applicable, any related Subsequent Closing
Date.
Tax Status.................. Upon the issuance of each Series of Notes, unless
otherwise provided in the related Prospectus
Supplement, Orrick, Herrington & Sutcliffe LLP, as
special tax counsel to the related Trust, will
deliver its opinion to the effect that, for
federal income tax purposes: (i) the Notes of such
Series will be characterized as debt and (ii) such
Trust will not be characterized as an association
(or a publicly traded partnership) taxable as a
corporation. See "Federal Income Tax
Considerations" for additional information
concerning the application of federal tax laws.
ERISA Considerations........ See "ERISA Considerations" herein and in the
applicable Prospectus Supplement.
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RISK FACTORS
Investors should consider, among other things, the matters discussed,
under "Risk Factors" in the Prospectus Supplement, if any, and the following
risk factors in connection with the purchase of the Class A Notes of any Series.
Risks Relating to Perfection of Interests in Receivables and in Financed
Equipment. With respect to any Trust, unless the related Prospectus Supplement
specifies otherwise, the transfer of the Receivables from MCC to the Transferor
and from the Transferor to such Trust, and the granting of the security interest
in the related Receivables by such Trust to the related Indenture Trustee, will
in each case be perfected by filing Uniform Commercial Code ("UCC") financing
statements. To facilitate servicing and reduce administrative costs, the
documentation constituting the Loan Contracts and/or Leases (together, the
"Receivables Files") will be retained by the Servicer and will not be physically
segregated from other similar documents that are in the Servicer's possession or
otherwise stamped or marked to reflect the transfer to the related Trust so long
as MCC is servicing the Receivables. However, the Servicer's accounting records
and computer files will be marked to reflect such sales and assignments. Because
the Receivables Files will remain in the Servicer's possession and will not be
stamped or otherwise marked to reflect the assignment to the Indenture Trustee,
if a subsequent purchaser were able to take physical possession of the
Receivables Files without knowledge of such assignment, the Indenture Trustee's
interest in the Receivables could be defeated. In such event, distributions to
Noteholders may be adversely affected.
In connection with the transfer of the Receivables to any Trust, MCC's
security interests in Financed Equipment securing the Receivables, will be
assigned by MCC to the Transferor and by the Transferor to such Trust. Some of
the Financed Equipment may constitute "fixtures" under the real estate or UCC
provisions of the jurisdiction in which such Financed Equipment is located. In
order to perfect a security interest in such Financed Equipment, the holder of
the security interest must file either a "fixture filing" under the provisions
of the UCC or a real estate mortgage under the real estate laws of the state
where the Financed Equipment is located. These filings must be made in the real
estate records office of the county in which such Financed Equipment is located.
So long as the Obligor does not permanently attach the Financial Equipment to
the real estate, a security interest in the Financed Equipment will be governed
by the UCC, and the filing of a UCC-1 financing statement will be effective to
maintain the priority of MCC's security interest in the Financed Equipment. If,
however any Financed Equipment is permanently attached to the real estate in
which it is located, other parties could obtain an interest in the Financed
Equipment which is prior to the security interest originally obtained by MCC and
transferred to the Transferor. With respect to a Series of Notes and as
described in the related Prospectus Supplement, the Servicer may be required to
perfect a security interest in the Financed Equipment under applicable real
estate laws. Based on the representation of MCC, the Transferor, however,
believes that with respect to Financed Equipment which may constitute a
"fixture", it has obtained a perfected first priority security interest by
proper filing of UCC-1 financing statements in the real estate records office of
the county in which the Financed Equipment is located with respect to
substantially all of the Financed Equipment that constitutes fixtures securing
the Receivables. The Transferor will be obligated to reacquire any Receivable
transferred to any Trust (subject to MCC's reacquisition thereof) in the event
it is determined that a first priority perfected security interest in the name
of MCC in the Financed Equipment securing such Receivable did not exist as of
the related Closing Date or, if an Additional Receivable, any related Subsequent
Closing Date if (i) such breach shall materially adversely affects the interest
of such Trust in such Receivable and (ii) such failure or breach shall not have
been cured by the last day of the second (or, if the Transferor elects, the
first) month following the discovery by or notice to the Transferor of such
breach, and MCC will be obligated to reacquire such Receivable from the
Transferor
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contemporaneously with the Transferor's reacquisition from such Trust. If there
is any Financed Equipment as to which MCC failed to perfect its security
interest, MCC's security interest, and the security interests of the Transferor
and the related Trust, would be subordinate to, among others, subsequent
purchasers of the Financed Equipment and holders of perfected security interests
with respect thereto. To the extent the security interest of MCC in the related
Financed Equipment is perfected, subject to the exceptions set forth in the
following sentence, the related Trust will have a prior claim over subsequent
purchasers from the Obligor of such Financed Equipment and holders of
subsequently perfected security interests granted by Obligors. However, as
against Mechanics' Liens or liens for taxes and other non-consensual liens
unpaid by an Obligor under a Receivable, or in the event of fraud or negligence
of MCC, such Trust could lose the priority of its security interest or its
security interest in such Financed Equipment following the pledge of the related
Receivable. Neither the Transferor nor the Servicer will have any obligation to
reacquire a Receivable if any of the occurrences described in the foregoing
sentence (other than fraud or negligence of MCC) result in such Trust's losing
the priority of its security interest or its security interest in such Financed
Equipment after the related Closing Date or, if applicable, any related
Subsequent Closing Date.
Risks Relating to Substantive Consolidation of MCC and the Transferor. The
Transferor has taken and will take steps in structuring the transactions
contemplated hereby and in any related Prospectus Supplement that are intended
to ensure that a voluntary or involuntary petition for relief by or against MCC
under the United States Bankruptcy Code or similar applicable state laws
("Insolvency Laws") will not result in the substantive consolidation of the
assets and liabilities of the Transferor with those of MCC. These steps will
include the creation of the Transferor as a separate, limited-purpose entity
pursuant to articles of incorporation containing (i) certain limitations
(including restrictions on the nature of the Transferor's business and a
restriction on the Transferor's ability to commence a voluntary case or
proceeding under any Insolvency Law without the prior unanimous affirmative vote
of all its directors) and (ii) a requirement that at least one of the
Transferor's directors be independent of MCC and its affiliates. However, there
can be no assurance that the activities of the Transferor would not result in a
court's concluding that the assets and liabilities of the Transferor should be
substantively consolidated with those of MCC in a proceeding under any
Insolvency Law.
True Sale Risks. With respect to any Trust, MCC will warrant to the
Transferor in the related Contribution and Sale Agreement that the sale of the
related Receivables by it to the Transferor is an absolute sale of such
Receivables to the Transferor. In addition, MCC and the Transferor will treat
the transactions described herein and in the related Prospectus Supplement as a
sale of such Receivables to the Transferor, and the Transferor has taken and
will take all actions (other than delivering the original contract) that are
required to perfect the Transferor's ownership interest in such Receivables by
filing UCC financing statements. Notwithstanding the foregoing, if MCC were to
become a debtor in a bankruptcy case, and a creditor or trustee-in-bankruptcy of
MCC or MCC itself were to take the position that the sale of Receivables to the
Transferor should be recharacterized as a pledge of such Receivables to secure a
borrowing of MCC, then delays in payments of collections of Receivables to the
Transferor could occur or, should the court rule in favor of any such trustee,
debtor or creditor, reductions in the amount of such payments, or a reduction in
the amount of Receivables securing such a borrowing, could result. If the
transactions contemplated herein and in the related Prospectus Supplement are
treated as a sale, the related Receivables would not be part of MCC's bankruptcy
estate and would not be available to MCC's creditors.
The U.S. Court of Appeals for the Tenth Circuit issued an opinion in
Octagon Gas System, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May
27, 1993) in which it concluded (noting that its position is in contrast to that
taken by another court) that "accounts" (as defined under the UCC) sold by the
debtor prior to the filing for bankruptcy remain property of the debtor's
bankruptcy estate. Although the Receivables relating to any Series are likely to
be viewed as "chattel paper," as defined under the
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UCC, rather than as accounts, the rationale behind the Octagon ruling could be
applied to chattel paper. The circumstances under which the Octagon ruling would
apply are not fully known, and the extent to which the Octagon decision will be
followed by other courts or outside of the Tenth Circuit, if at all, is not
certain. If the holding in the Octagon case were applied in a MCC bankruptcy,
however, even if the transfers of Receivables to the Transferor and to a Trust
were treated as sales, the Receivables could be considered part of MCC's
bankruptcy estate and would be subject to claims of certain creditors and delays
and reductions in payments to the Transferor and holders of the related Notes,
or a reduction in the amount of Receivables supporting such Notes, could result.
The Transferor will warrant in each Transfer and Servicing Agreement that the
sale of the Receivables to the related Trust is an absolute sale of such
Receivables to such Trust. For a further discussion of certain consequences of
characterization of the transaction as a sale or a pledge, see "Certain Legal
Aspects of the Receivables--Bankruptcy" herein.
Risk Relating to Commingling. Unless the related Prospectus Supplement so
provides, and the below described conditions are met, the Servicer will deposit
all amounts collected with respect to the Receivables during each Collection
Period into the related Collection Account within two business days of receipt
and identification thereof. Normally, collections are identified within one day
of receipt. The Servicer will also deposit any Transfer Amounts (as defined
herein) into the Collection Account when due. With respect to each Trust, if MCC
is the Servicer and provided that (i) there exists no Servicer Default (as
defined herein) and (ii) each other condition to making monthly or less frequent
deposits as may be specified by the Rating Agencies and described in the related
Prospectus Supplement is satisfied, the Servicer will not be required to deposit
payments on the related Receivables (from whatever source) and all proceeds of
such Receivables collected during each Collection Period into the related
Collection Account until on or before the business day preceding each related
Distribution Date. Pending deposit into such Collection Account, the Servicer
will be under no obligation to segregate collections from its funds and such
collections may be invested by the Servicer at its own risk, for its own benefit
and without being subject to any investment restrictions and will not be
segregated from the funds of the Servicer. If the Servicer were unable to remit
such funds, or if the Servicer became insolvent, the holders of Notes might
incur a loss with respect to collections not deposited in the Collection
Account. To the extent set forth in the related Prospectus Supplement, the
Servicer may, in order to satisfy the requirements for monthly remittances
described above, obtain a letter of credit or other security for the benefit of
the related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Transfer Amount with respect to
Receivables purchased by the Servicer.
Risks Relating to a Servicer Default. Unless otherwise provided in the
related Prospectus Supplement, in the event a Servicer Default occurs, the
related Indenture Trustee or Class A Noteholders of the related Series
evidencing not less than 25% of the outstanding principal amount of the Class A
Notes with respect to such Series (without the consent of the related Indenture
Trustee), as described under "Description of the Transaction Agreements--Rights
Upon Servicer Default" herein, may remove the Servicer without the consent of
the related Owner Trustee. The related Owner Trustee will not have the ability
to remove the Servicer if a Servicer Default occurs. In addition, Class A
Noteholders of such Series evidencing not less than a majority of the
outstanding principal amount of the related Class A Notes will have the ability
(without the consent of the related Indenture Trustee), with certain specified
exceptions, to waive defaults by the Servicer, including defaults that could
materially adversely affect the Class B Noteholders. See "Description of the
Transaction Agreements--Waiver of Past Defaults" herein.
Risks Relating to Trusts' Relationship to the Transferor and MCC. Neither
the Transferor nor MCC will generally be obligated to make any payments in
respect of the Notes or the Receivables of a given Trust. However, if MCC were
to cease acting as Servicer, delays in processing payments on the Receivables of
the related Trust and information in respect thereof could occur and result in
delays in payments and distribution of reports to the Noteholders of such Trust.
In addition, under certain
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circumstances the Servicer may be required to purchase Receivables, and
therefore if MCC were to cease acting as Servicer, delays in repurchases and
consequently the receipt by such Trust of funds respecting such Receivables
could result.
In connection with the sale of Receivables by MCC to the Transferor, MCC
will make representations and warranties with respect to the characteristics of
such Receivables. In certain circumstances, MCC and the Transferor will be
required to reacquire Receivables with respect to which such representations and
warranties have been breached. See "Description of the Transaction Agreements-
- -Transfer and Assignment of Receivables."
If the related Prospectus Supplement provides for a Pre-Funding Account,
the Transferor will be required to transfer Subsequent Receivables to the
related Trust in an amount up to the amount then on deposit in the Pre-Funding
Account (the "Pre-Funded Amount"). If the related Prospectus Supplement provides
for a Revolving Period, the Transferor will be required to transfer Subsequent
Receivables to the related Trust in an amount not in excess of the amount
available for such purpose on deposit in the Principal Funding Account on the
related Distribution Date. The ability of the Transferor to convey Subsequent
Receivables on Subsequent Closing Dates will be completely dependent on the
generation of additional receivables by MCC. There can be no assurance that MCC
will continue to generate receivables at the same rate as in prior years or that
Subsequent Receivables will be generated in an amount up to the amount required
to be transferred pursuant to the related Transfer and Servicing Agreement. If
the related Prospectus Supplement provides for a Pre-Funding Account, the funds
on deposit in such Pre-Funding Account on the related Closing Date will not
exceed 25% of the related Trust Property, and the related Pre-Funding Period,
shall not exceed three months from the related Closing Date.
For additional information regarding the Transferor and MCC, see "The
Transferor and the Servicer" herein and in the related Prospectus Supplement.
Risks Relating to Limited Assets. No Trust will have, nor will any Trust
be permitted or expected to have, any significant assets or sources of funds
other than the related Receivables and, to the extent set forth in the related
Prospectus Supplement, the Trust Accounts. The Notes of a Series will represent
obligations solely of the related Trust, and the Notes of any such Series will
not be insured or guaranteed by MCC, the Transferor, the Servicer, the related
Owner Trustee, the related Indenture Trustee or any other person or entity.
Consequently, holders of the Notes of a Series must rely for repayment upon
payments received by the Servicer relating to the related Receivables and, if
and to the extent available, amounts on deposit in the Reserve Account (if any),
the Pre-Funding Account (if any) and any other credit enhancement, all as
specified in the related Prospectus Supplement. Amounts to be deposited in any
Reserve Account with respect to any Trust will be limited in amount, and the
amount required to be on deposit in such Reserve Account will be reduced as the
Pool Balance is reduced. In addition, funds in any such Reserve Account will be
available on each Distribution Date to cover shortfalls in distributions of
interest and principal on the related Notes. If such Reserve Account is
depleted, the related Trust will depend solely on current payments on its
Receivables to make payments on the related Notes. Although each Trust will
covenant to sell the Receivables if directed to do so by the related Indenture
Trustee in accordance with the related Indenture following an acceleration of
the related Notes upon an Event of Default, there is no assurance that the
market value of such Receivables will at any time be equal to or greater than
the aggregate principal amount of such outstanding Notes. Therefore, upon an
Event of Default with respect to the Notes of any Series, there can be no
assurance that sufficient funds will be available to repay the related
Noteholders in full. In addition, the amount of principal required to be
distributed to Noteholders under each Indenture will generally be limited to
amounts available therefor in the related Note Distribution Account, and the
failure to pay principal on the Notes of any Series may not result in the
occurrence of an Event of Default until the Final Scheduled Distribution Date of
such
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Notes; provided, that principal of the Notes of any Series is immediately due
and payable upon any acceleration of such Notes. To the extent specified in the
related Prospectus Supplement, the Class B Notes of any Series will be
subordinated to the Class A Notes of such Series.
[Maturity and Prepayment Considerations. Although the Receivables relating
to Leases are generally not optionally prepayable by their terms, Lessees
generally are permitted to prepay a Lease upon payment of the aggregate
remaining Lease Scheduled Payments due (which amount would include an implicit
interest amount). Each prepayment will shorten the weighted average remaining
term of the Receivables of any Trust and the weighted average life of the
related Notes. (For this purpose the term "prepayments" includes voluntary
prepayments, liquidations due to default, receipts of proceeds from insurance
policies and Receivables acquired for administrative or other reasons, and the
term "weighted average life" means the average amount of time in which each
dollar of principal is repaid.) With respect to any Trust, the related
Prospectus Supplement will set forth the allocations of prepayments of principal
among the related Noteholders. See "Description of the Transaction
Agreements--Distributions" in the related Prospectus Supplement.]
The rate of prepayments on the Receivables may be influenced by a variety
of economic, financial, climatic and other factors. In addition, under certain
circumstances, MCC will be obligated to reacquire Receivables pursuant to the
Contribution and Sale Agreement, and the Transferor will be obligated to
reacquire Receivables pursuant to the Transfer and Servicing Agreement, in each
case as a result of breaches of representations and warranties, and under
certain circumstances, the Servicer will be obligated to acquire Receivables
pursuant to the Transfer and Servicing Agreement as a result of breaches of
certain covenants. Consistent with its normal procedures, the Servicer may, in
its discretion and on a case-by basis, arrange with the Obligor respecting a
Receivable to extend or modify the payment schedule. Some of such arrangements
(including, without limitation, any extension of the payment schedule beyond the
applicable Final Scheduled Distribution Date set forth in the related Prospectus
Supplement) will result in the Servicer's purchasing the Receivable for the
Transfer Amount. See "Description of the Transaction Agreements--Transfer and
Assignment of Receivables" and "--Servicing Procedures" herein. A higher than
anticipated rate of prepayments will reduce the aggregate principal balance of
the Receivables more quickly than expected and thereby reduce anticipated
aggregate interest payments respecting the related Notes. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables [during
the Amortization Period] will be borne entirely by the related Noteholders as
set forth in the priority of distributions in the related Prospectus Supplement.
Such reinvestment risks may include the risk that interest rates are lower at
the time such holders receive payments from the related Trust than interest
rates would otherwise have been had such prepayments not been made or had such
prepayments been made at a different time. See "Description of the Transaction
Agreements--Termination" herein regarding the Servicer's option to purchase the
Receivables of a Trust.
If the related Prospectus Supplement provides for a Reserve Account, and
if the amount required to be withdrawn from such Reserve Account to cover
shortfalls in collections on the Receivables exceeds the amount of cash in such
Reserve Account, a temporary shortfall in the amounts distributed to the
Noteholders of the related Series could result, which could, in turn, increase
the average life of such Notes.
Noteholders of any Series should consider, in the case of Notes purchased
at a discount, the risk that a slower than anticipated rate of principal
payments on the related Receivables could result in an actual yield that is less
than the anticipated yield and, in the case of any Notes purchased at a premium,
the risk that a faster than anticipated rate of principal payments on the
related Receivables could result in an actual yield that is less than the
anticipated yield.
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[Certain UCC Considerations. Certain 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 precedent regarding
how Article 2A will be interpreted, it may, among other things, limit
enforceability of any "unconscionable" lease or "unconscionable" provision in a
lease, provide a lessee with remedies, including the right to cancel the lease
contract, for certain lessor breaches or defaults, and may add to or modify the
terms of "consumer leases" and leases where the lessee is a "merchant lessee."
However, with respect to each Lease conveyed to a Trust, MCC will represent that
(i) such Lease is not a "consumer lease" and (ii) to the best of its knowledge,
the related Obligor has accepted the related Financed Equipment leased to it
and, after reasonable opportunity to inspect and test, has not notified MCC of
any defects therein. Article 2A also 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. Moreover, Article
2A recognizes the concept of freedom of contract and permits the parties in a
commercial context a wide degree of latitude to vary provisions of the law.
Risks Relating to Book-Entry Registration. As may be set forth in the
related Prospectus Supplement, the Class A Notes may be initially represented by
one or more physical notes registered in the name of Cede or any successor
nominee for DTC and will not be registered in the names of the beneficial owners
of such Class A Notes or their nominees. Accordingly, unless and until
Definitive Notes are issued for such Class A Notes, holders of beneficial
interests in such Class A Notes will not be recognized by the applicable
Indenture Trustees as Noteholders and will only be able to exercise the rights
of Noteholders indirectly through DTC Cedel or Euroclear and their respective
participating organizations and its Participants. See "Issuance of the Notes --
Book-Entry Registration" herein.
THE TRUSTS
General
With respect to each Series of Notes, the Transferor will establish a
separate Trust for the transactions described herein and in the related
Prospectus Supplement. After its formation, each Trust will not engage in any
activity other than (i) acquiring, holding and managing the Receivables and the
other assets of such Trust and proceeds therefrom, (ii) issuing and making
payments on the related Notes, and (iii) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith. On the related Closing Date, simultaneously with
the issuance of the Notes of a given Series, the Transferor will transfer the
Initial Receivables and its security interests in any Financed Equipment to the
related Trust. To the extent so provided in the related Prospectus Supplement,
Subsequent Receivables may, if at all, be conveyed to the related Trust as
frequently as daily during the related Funding Period, if any, or the related
Revolving Period, if any. Any Subsequent Receivables so conveyed also will be
assets of the related Trust, subject to the prior rights of the related
Indenture Trustee and Noteholders therein. The amount that may be initially
deposited into a Pre-Funding Account, and the length of a Pre-Funding Period, if
any, with respect to a Trust, shall be limited as described herein. The length
of a Revolving Period, if any, with respect to a Trust, will be described in the
related Prospectus Supplement.
The Servicer will continue to service the Receivables held by each Trust
and will receive fees for such services. See "Description of the Transaction
Agreements--Servicing Compensation and Payment of Expenses" herein and in the
related Prospectus Supplement. To facilitate servicing and to minimize
administrative burden and expense, the Servicer will maintain possession of the
related Receivables Files as custodian on behalf of such Trust and the related
Indenture Trustee, but the Servicer will not stamp the related Loan and/or
Leases to reflect the ultimate assignment of the Receivables to such Trust.
Financing
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statements previously filed to perfect the security interests in the Financed
Equipment in favor of MCC will not be assigned to such Trust or amended. See
"Certain Legal Aspects of the Receivables" and "Description of the Transaction
Agreements--Transfer and Assignment of Receivables" herein.
If the credit enhancement provided to the investment of the Class A
Noteholders of a given Series by the subordination of the related Class B Notes
and the protection provided to the holders of the Notes by the availability of
the funds in the related Reserve Account or any other credit enhancement is
insufficient, the related Trust and such Noteholders must rely solely on the
payments from the Obligors on the related Receivables, and the proceeds from the
repossession and sale of Financed Equipment which secure defaulted Receivables.
In such event, certain factors, such as such Trust's not having first perfected
security interests in some of the Financed Equipment and the risk of fraud or
negligence of MCC, may affect such Trust's ability to realize on the collateral
securing the Receivables, and thus the proceeds to be distributed to Noteholders
with respect to the Notes, may be reduced. See "Description of the Transaction
Agreements--Distributions", "--Credit and Cash Flow Enhancement" and "Certain
Legal Aspects of the Receivables" herein and "Description of the Transaction
Agreements--Distributions" in the related Prospectus Supplement.
The principal offices of each Trust and of the related Owner Trustee will
be specified in the related Prospectus Supplement.
The Owner Trustee
The Owner Trustee for each Trust will be specified in the related
Prospectus Supplement. An Owner Trustee's liability in connection with the
issuance and sale of the Notes of the related Series will be limited solely to
the express obligations of such Owner Trustee set forth in the related Trust
Agreement and the related Transfer and Servicing Agreement. An Owner Trustee may
resign at any time, in which event the Servicer will be obligated to appoint a
successor owner trustee. The Administrator of a trust may also remove the Owner
Trustee if the Owner Trustee ceases to be eligible to continue as Owner Trustee
under the related Trust Agreement or if the Owner Trustee becomes insolvent. In
such circumstances, the Administrator will be obligated to appoint a successor
owner trustee. Any resignation or removal of an Owner Trustee and appointment of
a successor owner trustee will not become effective until acceptance of the
appointment by the successor owner trustee.
THE TRUST PROPERTY
The Notes of any Series will be collateralized by the assets of the
related Trust (the "Trust Property"). The Trust Property of any Trust will
include (i) the Receivables, (ii) all monies (including accrued interest) due or
received thereunder on or after the applicable Cut-off Date, (iii) such amounts
as from time to time may be held in one or more accounts established and
maintained by the Servicer pursuant to the related Transfer and Servicing
Agreement, as described below and in the related Prospectus Supplement, (iv)
security interests in the Financed Equipment, (v) the rights to proceeds from
claims on physical damage, credit life, liability and disability insurance
policies, if any, covering such Financed Equipment or Obligors, as the case may
be, (vi) the net proceeds of any repossessed Financed Equipment, (vii) the
rights of the Transferor under the related Contribution and Sale Agreement,
(viii) interest earned on short-term investments made by such Trust and (ix) any
proceeds of the foregoing. The Receivables will be originated directly by MCC
and acquired by MCC from certain vendors who originate loans and leases. Subject
to the provisions of the related Transfer and Servicing Agreement, the related
Receivables will continue to be serviced by the Servicer and will evidence
direct or indirect financing made available by MCC to the Obligors. Unless
otherwise specified in the related Prospectus Supplement, the related
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Reserve Account, if any, and any other Trust Accounts, shall be maintained in
the name of the Indenture Trustee on behalf of the Noteholders of the related
Series.
THE RECEIVABLES POOLS
The Receivables of any Trust will be originated by MCC in the ordinary
course of its commercial loan and lease transactions business will either be
purchased by MCC from vendors which originated the Receivables in the ordinary
course of business in connection with various commercial loan and/or lease
transactions. MCC purchases or originates contracts in accordance with its
credit standards which are based primarily on the Obligor's credit and only
secondarily on the value of MCC's security interest in the related equipment.
The Receivables to be held by each Trust will be selected from MCC's
portfolio of loan contracts and leases not previously sold meeting several
criteria. As of the applicable Cut-off Date, among the criteria to be met
(except as described under "Certain Legal Aspects of the Receivables" herein)
are that each Receivable: (i) will be secured by a first priority perfected
security interest in the related Financed Equipment (which Financed Equipment is
located in the United States), (ii) will have been originated in the United
States, (iii) will have an Obligor which has a United States billing address,
(iv) in the case of a Loan Contract, will provide for scheduled payments (which
may include balloon payments) that fully amortize the amount borrowed over its
original term to maturity, (v) will not be more than 61 days past due, and (vi)
will satisfy the other criteria, if any, set forth in the related Prospectus
Supplement. As of the applicable Cut-off Date, no Obligor on any related
Receivable will be noted on the related records of the Servicer as being in
default under the related Loan Contract or Lease or as being the subject of a
bankruptcy proceeding. No selection procedures believed by the Transferor to be
adverse to the Noteholders of any Series will be used in selecting the related
Receivables.
Information with respect to each pool of Receivables will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition of the Receivables, the distribution by annual percentage rate
("APR") (as such term is defined in the related Prospectus Supplement), type of
equipment, Principal Balance of the Receivables and the geographic location of
each Obligor of the Receivables, industry application and payment frequency. See
"The Receivables Pool" in the related Prospectus Supplement.
If the related Prospectus Supplement provides for a Pre-Funding Period or
a Revolving Period, each Subsequent Receivable of the related Trust must satisfy
the eligibility criteria specified in the related Transfer and Servicing
Agreement at the time of its addition. However, except for such criteria, there
will be no required characteristics of such Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the related Trust, the
characteristics of the entire Receivables Pool (as defined in the related
Prospectus Supplement) included in such Trust may vary from those of the Initial
Receivables.
MCC's Credit Review and Underwriting Process
MCC performs a thorough credit review of all prospective obligors. Rather
than employing a standardized credit scoring model, the credit review process
relies on the extensive credit experience of MCC's management and staff. The
entire credit review process is performed in the Middle Market Credit
Department, or with respect to franchise related transactions, the Franchise
Credit Department, in each case located in MCC's corporate headquarters in
Bellevue, Washington. The Credit Department consists of four regional credit
managers, nine senior credit analysts and two credit associates.
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MCC's credit philosophy is that of a cashflow lender and accordingly, a
prospective customer's historical and projected operating cashflows are the
primary consideration for credit approval decisions. MCC maintains a credit
policy manual which formally documents the Credit Department's policies and
procedures. Typically, the credit review process begins when an account
executive has bid for a transaction or the Credit Department is asked to
prescreen a potential obligor before a bid goes out. The first step in this
process is a preliminary review of the credit by one of the Credit Staff. The
information that is reviewed typically includes (i) 5 years audited financial
statements, (ii) information regarding the equipment to be financed (obtained in
consultation with MCC's Asset Management department), (iii) various third party
sources of information, internal industry studies as well as internet sources,
and (iv) description of the proposed transaction structure and the assets to be
financed.
The Credit Analyst then makes the initial decision whether or not to
proceed with the credit approval process. Authority to make credit decisions is
based on seniority and lending experience.
Each loan on MCC's books is assigned a "quality code" based on the
financial health of the obligor. MCC uses a scale of 1 through 6 with 1 being
the highest credit quality and 6 being the lowest.
All new loans originated by MCC will begin in category 1 or 2. An
individual loan's classification is reviewed annually or more frequently if
warranted. Loans in categories 4, 5 and 6 are referred to as "classified
credits" by MCC and are assigned to a specific credit analyst for close
monitoring and administration and reporting.
Annual Credit Review Process
All Obligors are required to submit audited financial statements annually
and each customer's financial condition payment history and compliance with
covenants (if applicable) is reviewed by junior level credit personnel. The work
of these individuals is reviewed by the regional credit manager responsible for
managing the annual review process. For accounts that are in good standing and
under $2 million, a short form review is performed. Accounts that have
deteriorated and accounts over $2 million are subject to a long form review. If
an account status has deteriorated, a credit review will commence immediately.
Loan/Lease Documentation
Once a credit has been approved and the obligor has agreed to MCC's
proposed terms, the credit application is passed on to contract administration.
Contract administration determines what documents will be required and what
filings will need to be made.
Servicing
Servicing the loan portfolio is the responsibility of Portfolio
Administration.
Most of the loans in MCC's portfolio are monthly pay and all of the
Receivables to be included in any Trust are monthly pay obligations. Monthly due
dates are dispersed throughout the month with roughly one third falling between
the 25th and 30th day of each month. MCC sends invoices to each obligor
approximately 25 days before each due date. One invoice will be sent to each
obligor for each product that has the same due date (for example, if a customer
has a loan and a lease with the same due date, they will receive one invoice; if
the loan and lease have different due dates, two invoices will be sent).
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Obligors are granted a 10 day grace period after the due date within which
to make their payments without incurring any penalties. If an obligor fails to
make its payment by the end of the grace period, one of five collectors will
begin to call the delinquent obligor. Calls will be placed each day until the
collector extracts a promise to pay from the obligor. All discussions with
delinquent obligors are documented and are stored on-line. Obligors are charged
a late fee for all payments received after the end of the grace period. The late
fee is generally 5% of the payment due. As policy, MCC does not grant extensions
to delinquent customers as a toll for curing the delinquency.
Once an Obligor has become 30 to 60 days delinquent, the credit analyst
that initially reviewed and approved the loan will become involved. It is the
credit analyst's decision to continue to work with the delinquent obligor or to
default the account and attempt to repossess the equipment. An account will not
be written off until the credit analyst has determined that there is no other
way for MCC to recover its investment. Once a decision has been made to default
an account, the credit analyst prepares a default letter and the Asset
Management group is called upon to assist in the valuation and disposal of the
equipment.
Commercial Loans. MCC offers loans to commercial obligors with a variety
of repayment schedules tailored to the obligor's anticipated cash flows. These
commercial loans are secured by the equipment purchased with the proceeds of
such loans. In connection with the equipment, the obligor is required to provide
all physical damage insurance on the equipment, including loss by burglary,
theft and malicious mischief. Such insurance must be for full replacement value
and name MCC as the payee.
While the terms of the commercial loans vary, generally the term of each
loan is from between two and seven years. Interest accrues on the loans at
either a fixed or a floating rate and each loan may be scheduled as a fully
amortizing loan or as a balloon loan. Under the terms of each loan the obligor
may prepay the loan by paying any amount equal to the unpaid principal balance
of the loan plus accrued and unpaid interest and the applicable prepayment
premium, if any.
Quasi-Leases. MCC offers quasi-leases, which are essentially loan
contracts that are structured as direct finance leases, to commercial obligors.
For federal tax purposes, quasi-leases are treated by MCC and by the obligor as
a secured loan from MCC to the obligor, and the obligor, at its own expense, is
required to maintain the equipment and pay all fees, property and use taxes and
other expenses of a similar nature relating to the leased equipment.
Quasi-leases are secured by the leased equipment and the obligor is required to
provide all physical damage insurance on the equipment, including loss by
burglary, theft and malicious mischief. Such insurance must be for full
replacement value and name MCC as the payee.
While the terms of these quasi-leases vary, generally the term of each
loan is from between two and seven years. Quasi-leases may be structured (i) to
amortize the cost of the leased equipment to a nominal amount (equivalent to a
fully amortizing loan) or (ii) to only partially amortize the cost of the
equipment (equivalent to a balloon loan). In either case, at the end of the
quasi-lease term, the obligor is required to purchase the leased equipment. The
lessee may terminate a quasi-lease prior to the end of the scheduled lease term
by paying an amount equal to the sum of the unamortized equipment cost, accrued
and unpaid rentals, plus a prepayment premium.
Non-Tax Oriented Operating Leases. MCC offers non-tax oriented operating
leases ("NTOOLS") that, like quasi-leases described above, are essentially loan
contracts structured as direct finance leases. For federal tax purposes, NTOOLS
are treated as a secured loan by MCC and as either a loan or an operating lease
by the obligor. The obligor, at its own expense, is required to maintain the
equipment and pay all fees, property and use taxes and other expenses of a
similar nature relating to the leased
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equipment. Quasi-leases are secured by the leased equipment and the obligor is
required to provide all physical damage insurance on the equipment, including
loss by burglary, theft and malicious mischief. Such insurance must be for full
replacement value and name MCC as the payee.
While the terms of the NTOOLS vary, generally the initial term is for
three years with the option for the obligor to renew annually for a term of
seven years. At the end of each lease term, other than the end of the maximum
term, the obligor has the option to (i) purchase the leased equipment (in which
case the underlying lease would be equivalent to a balloon loan) or (ii) extend
the lease for another one-year term. At the end of the maximum term, the lessee
must either purchase or sell the equipment for a predetermined minimum price.
If that the obligor does not extend the lease to its maximum term, the
obligor will make a payment to MCC similar to a prepayment premium. The lessee
may terminate a quasi-lease prior to the scheduled lease term by paying an
amount equal to the sum of the unamortized equipment cost, accrued and unpaid
rentals and the applicable prepayment premium.
WEIGHTED AVERAGE LIFE OF THE NOTES
The weighted average life of the Notes of any Series will generally be
influenced by the rate at which the principal balances of the related
Receivables are paid. (For this purpose, the term "prepayments" includes
prepayments in full, partial prepayments, liquidations due to default, and
receipts of proceeds from physical damage and term life insurance policies and
the reacquisition of Receivables by the Transferor or the Servicer or for other
administrative reasons set forth herein). Although Leases are generally not
optionally prepayable by their terms, Obligors generally are permitted to prepay
a Lease upon payment of the aggregate remaining Lease Scheduled Payments due
(which amount would include an implicit interest amount) in the case of a fixed
rate transaction, plus a prepayment premium. Each prepayment will shorten the
weighted average remaining term of the Receivables and the weighted average life
of the related Notes. If the related Prospectus Supplement provides for the
distribution to Noteholders of amounts on account of principal in excess of the
Principal Distribution Amount on any Distribution Date, this effect would be
greater upon the prepayment of a Lease, since the amount prepaid would be
greater than the related Principal Balance. The related Prospectus Supplement
will set forth the allocation of prepayments among the various Classes of Notes
of the related Series. See "Description of the Transaction
Agreements--Distributions" in the related Prospectus Supplement.
The rate of prepayments on the Receivables is influenced by a variety of
economic, financial, climatic and other factors. In addition, under certain
circumstances, the Transferor will be obligated to reacquire Receivables from a
Trust pursuant to the related Transfer and Servicing Agreement, as a result of
breaches of representations and warranties, and the Servicer will be obligated
to purchase Receivables from a Trust pursuant to the related Transfer and
Servicing Agreement, as a result of breaches of certain covenants. See
"Description of the Transaction Agreements -- Transfer and Assignment of
Receivables" and " -- Servicing Procedures" herein. See also "Description of the
Transaction Agreements -- Termination" herein regarding the Servicer's option to
purchase the Receivables from a Trust. On the other hand, the payment schedule
under a contract related to a Receivable may be extended or revised by the
Servicer under certain circumstances. An extension or revision may lengthen the
weighted average remaining term of the Receivables and the weighted average life
of the Notes.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Notes on a given Series on each
Distribution Date, since such amount will depend, in part, on the amount of
principal collected on the related Receivables during the applicable
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Collection Period. Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne entirely by the Noteholders
of a given Series, as set forth in the related Prospectus Supplement. Such
reinvestment risks may include the risk that interest rates are lower at the
time such holders receive payments from the related Trust than interest rates
would otherwise have been had such prepayments not been made or had such
prepayments been made at a different time.
The related Prospectus Supplement may set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to the particular Receivables and any Class of Notes of the related
Series.
POOL FACTORS AND TRADING INFORMATION
Unless otherwise provided in the related Prospectus Supplement with
respect to each Series, the Noteholders of record will receive reports on or
about each Distribution Date concerning the Receivables, the "Pool Balance" (as
such term is defined in the related Prospectus Supplement), each Note Pool
Factor and various other items of information. In addition, Noteholders of
record during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by law.
With respect to each Series of Notes, the related Prospectus Supplement
will set forth the calculation of each "Note Pool Factor", as applicable, with
respect to each Class of related Notes.
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Notes of a given Series will be applied by the
related Trust (i) to acquire the Receivables from the Transferor, (ii) to make
the initial deposit into the Reserve Account, if any, and (iii) to make the
deposit of the Pre-Funded Amount into the Pre-Funding Account, if any. The
amount that may be initially deposited into a Pre-Funding Account, and the
length of a Pre-Funding Period, are limited as described herein. Unless
otherwise specified in the related Prospectus Supplement, the Transferor will
use that portion of such net proceeds paid to it with respect to any such Trust
to purchase the related Receivables from MCC.
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THE TRANSFEROR AND THE SERVICER
MetLife Capital Funding Corp. III
The Transferor is a wholly-owned subsidiary of MCC. The Transferor was
incorporated in the State of Delaware on March 7, 1997. The Transferor is
organized for the limited purpose of purchasing receivables from MCC,
transferring such receivables, to third parties and any activities incidental to
and necessary or convenient for the accomplishment of the foregoing purposes.
The principal executive offices of the Transferor are located at 15915 Katy
Freeway, Suite 150, Houston, TX 77094 and its telephone number is (713)
398-8881.
The Transferor has taken and will take steps in structuring the
transactions contemplated hereby that are intended to ensure that a voluntary or
involuntary petition for relief by or against MCC under any Insolvency Law will
not result in the substantive consolidation of the assets and liabilities of the
Transferor with those of MCC. These steps include the creation of the Transferor
as a separate limited-purpose entity pursuant to articles of incorporation
containing (i) certain limitations (including restrictions on the nature of the
Transferor's business and a restriction on the Transferor's ability to commence
a voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all of its directors) and (ii) a requirement that
at least one of the Transferor's directors be independent of MCC and its
affiliates. However, there can be no assurance that the activities of the
Transferor would not result in a court's concluding that the assets and
liabilities of the Transferor should be substantively consolidated with those of
MCC in a proceeding under any Insolvency Law. See "Risk Factors -- Risks
Relating to Substantive Consolidation of MCC and the Transferor" herein.
In addition, each Owner Trustee, each Indenture Trustee and all
Noteholders will covenant that they will not at any time institute against the
Transferor any bankruptcy, reorganization or other proceeding under any federal
or state bankruptcy or similar law.
MCC will warrant to the Transferor in each Contribution and Sale Agreement
that the transfer and conveyance of the related Receivables by it to the
Transferor is an absolute transfer and conveyance of such Receivables to the
Transferor. In addition, MCC and the Transferor will treat the transactions
described herein and in the related Prospectus Supplement as an absolute
transfer and conveyance of the related Receivables to the Transferor, and the
Transferor has taken and will take all actions (other than delivering the
original contract) that are required to perfect the Transferor's ownership
interest in the related Receivables by the Transferor filing UCC financing
statements. Notwithstanding the foregoing, if MCC were to become a debtor in a
bankruptcy case, and a creditor or trustee-in-bankruptcy of MCC or MCC itself
were to take the position that a transfer and conveyance of Receivables to the
Transferor should be recharacterized as a pledge of such Receivables to secure a
borrowing of MCC, then delays in payments of collections of such Receivables to
the Transferor could occur or, should the court rule in favor of any such
trustees, debtor or creditor, reductions in the amount of such payments, or a
reduction in the amount of Receivables securing such a borrowing, could result.
If the transactions contemplated herein and in the related Prospectus Supplement
are treated as a transfer and conveyance, the related Receivables would not be
part of MCC's bankruptcy estate and would not be available to MCC's creditors.
See "Risk Factors -- True Sale Risks" herein.
MetLife Capital Corporation
MCC is an indirectly and wholly owned subsidiary of the Metropolitan Life
Insurance Company, engaged in the business of secured lending principally to
middle market American businesses. MCC operates as a separate and independent
investment subsidiary of the Metropolitan Life Insurance Company.
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The principal executive offices of MCC are located at 10900 NE 4th Street, Suite
500, Bellevue WA 98004 and its telephone number is (206) 451-0090.
MCC is a Delaware corporation which was formed when Metropolitan Life
Insurance Company acquired the leasing business of a state banking corporation.
MCC's products include loans secured by equipment, equipment leases, and loans
secured by commercial real estate. MCC has approximately 4,100 customers.
Approximately 97% of MCC's assets represent obligations of companies based
throughout the United States.
Certain current information regarding MCC will be set forth in the related
Prospectus Supplement.
DESCRIPTION OF THE NOTES
General
With respect to each Trust, one or more Classes of Class A Notes and one
or more Classes of Class B Notes of a given Series will be issued pursuant to
the terms of an indenture between the related Trust and the related indenture
trustee (the "Indenture Trustee"), which Indenture will be substantially in the
form filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The following summary, as well as other pertinent information
included elsewhere in this Prospectus and in the related Prospectus Supplement,
describes the material terms generally applicable to the Notes, but does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the provisions of the Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, the Class
A Notes will initially be represented by one or more Class A Notes registered in
the name of the nominee of DTC (together with any successor depositors selected
by the related Trust, the "Depository") except as set forth below. Unless
otherwise specified in the related Prospectus Supplement, the Class A Notes will
be available for purchase in denominations of $1,000 and integral multiples
thereof and will be available in book-entry form only. See "Issuance of the
Notes--Definitive Notes" and "--Book-Entry Registration" herein. Unless
otherwise specified in the related Prospectus Supplement, the Class B Notes will
be issued in fully registered certificated form.
Principal and Interest on the Notes
The timing and priority of payments, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each Class of Notes of a given Series will be as described in the
related Prospectus Supplement. The rights of Noteholders to receive payments of
principal and interest may be senior or subordinate to the rights of Noteholders
of another Class or Series, as described in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, payments of
interest on the Notes of such Series will be made prior to payments of principal
thereon. To the extent provided in the related Prospectus Supplement, a Series
may include one or more Classes of Strip Notes entitled to (i) principal
payments with disproportionate, nominal or no interest payments or (ii) interest
payments with disproportionate, nominal or no principal payments. Each Class of
Notes may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain Classes of Strip
Notes), or any combination of the foregoing. The related Prospectus Supplement
will specify the Interest Rate for each Class of Notes of a given Series or the
method for determining such Interest Rate. See also "Certain Information
Regarding the Notes--Fixed Rate Notes" and "--Floating Rate Notes." One or more
Classes of Notes of a Series may be prepayable
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in whole or in part under the circumstances specified in the related Prospectus
Supplement, including at the end of the Funding Period (if any) or as a result
of the Servicer's exercising its option to purchase the Receivables of the
related Trust in the manner and on the respective terms and conditions described
under "Description of the Transaction Agreements--Termination" herein.
To the extent specified in any Prospectus Supplement, one or more Classes
of Notes of a given Series may have fixed principal payment schedules.
Noteholders of such Notes would be entitled to receive as payments of principal
on any given Distribution Date the applicable amounts set forth on such schedule
with respect to such Notes, in the manner and to the extent set forth in the
related Prospectus Supplement.
Under certain circumstances, the amount available for payments to
Noteholders in respect of interest could be less than the amount of interest
payable on the Notes on any of the dates specified for payments on Notes in the
related Prospectus Supplement (each, a "Distribution Date"), in which case,
unless otherwise provided in the related Prospectus Supplement, each Class of
Noteholders will receive its ratable share (based upon the aggregate amount of
interest due to such Class of Noteholders) of the aggregate amount available to
be distributed in respect of interest on the Notes of such Series. See
"Description of the Transaction Agreements--Distributions" in the related
Prospectus Supplement.
In the case of a Series of Notes which includes two or more Classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such Class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
Class of Notes will be made on a pro rata basis among all the Noteholders of
such Class.
If the Servicer exercises its option to purchase the Receivables of a
Trust in the manner and on the respective terms and conditions described under
"Description of the Transaction Agreements--Termination" herein, the related
outstanding Notes will be prepaid as set forth in the related Prospectus
Supplement. In addition, if the related Prospectus Supplement provides that the
property of a Trust will include a Pre-Funding Account, the related outstanding
Notes may be subject to partial prepayment on or immediately following the end
of the related Funding Period in an amount and manner specified in the related
Prospectus Supplement. In the event of such partial prepayment, the Noteholders
of the related Series may be entitled to receive a prepayment premium from the
related Trust, in the amount and to the extent provided in the related
Prospectus Supplement.
The Indenture
Modification of Indenture. With respect to each Trust, with the consent of
the holders of a majority of the outstanding principal amount of the Class A
Notes of the related Series, the related Indenture Trustee and the related Trust
may execute a supplemental indenture to add provisions to, or change in any
manner or eliminate any provisions of, the Indenture with respect to the Notes,
or to modify (except as provided below) in any manner the rights of the
Noteholders.
Notwithstanding the foregoing, unless otherwise specified in the related
Prospectus Supplement, without the consent of the holder of each outstanding
Note of the related Series affected thereby, no supplemental indenture shall (i)
change the due date of any installment of principal of or interest on any Note
of such Series or reduce the principal amount thereof, the interest rate
specified thereon or the prepayment price with respect thereto or change 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 related Indenture regarding payment,
(iii) reduce the percentage of the
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aggregate amount of the outstanding Notes of such Series 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 the related Indenture or of certain defaults thereunder and their
consequences as provided for in such Indenture, (iv) modify or alter the
provisions of the related Indenture regarding the voting of Notes held by the
related Trust, the Transferor, an affiliate of either of them or any obligor on
such Notes, (v) reduce the percentage of the aggregate outstanding amount of the
Notes of such Series the consent of the holders of which is required to direct
the related Indenture Trustee to sell or liquidate the related Receivables if
the proceeds of such sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes of such Series, (vi)
decrease the percentage of the aggregate principal amount of such Notes required
to amend the sections of the related Indenture which specify the applicable
percentage of the aggregate principal amount of the Notes of such Series
necessary to amend the related Indenture or certain of the other Transaction
Agreements or (vii) permit the creation of any lien ranking prior to or on a
parity with the lien of the related Indenture with respect to any of the
collateral for such Notes or, except as otherwise permitted or contemplated in
the Indenture, terminate the lien of the related Indenture on any such
collateral or deprive the holder of any such Note of the security afforded by
the lien of such Indenture.
Unless otherwise provided in the related Prospectus Supplement a Trust and
the related Indenture Trustee may also enter into supplemental indentures,
without obtaining the consent of Noteholders of the related Series, for the
purpose of, among other things, adding any provisions to or changing in any
manner or eliminating any of the provisions of the related Indenture or of
modifying in any manner the rights of such Noteholders, including curing any
ambiguity or correcting or supplementing any inconsistent provision therein:
provided, however, that such action will not, in the opinion of counsel
satisfactory to the Indenture Trustee, materially and adversely affect the
interest of any such Noteholder.
In addition, unless otherwise provided in the related Prospectus
Supplement, a Trust and the related Indenture Trustee may enter into
supplemental indentures, without obtaining the consent of the Noteholders of the
related Series, to substitute credit enhancement for any Class of Notes,
provided the Rating Agencies confirm in writing that such substitution will not
result in the reduction or withdrawal of the rating for such Class of Notes or
any other Class of Notes of the related Series.
Events of Default; Rights upon Event of Default. With respect to the Notes
of a given Series, unless otherwise specified in the related Prospectus
Supplement, an "Event of Default" with respect to such Notes will be defined in
the related Indenture as being: (i) a default for five days or more in the
payment of any interest on any Class A Note of such Series; (ii) a default in
the payment of the principal of or any installment of the principal of any such
Note when the same becomes due and payable; (iii) a default in the observance or
performance of any covenant or agreement of the related Trust made in the
related Indenture and the continuation of any such default for a period of 30
days after notice thereof is given to such Trust by the related Indenture
Trustee or to such Trust and such Indenture Trustee by the holders of at least
25% in principal amount of the Class A Notes of such Series then outstanding;
(iv) any representation or warranty made by such Trust in the related Indenture
or in any certificate delivered pursuant thereto or in connection therewith
having been incorrect in a material respect as of the time made, and such breach
not having been cured within 30 days after notice thereof is given to such Trust
by such Indenture Trustee or to such Trust and such Indenture Trustee by the
holders of at least 25% in principal amount of the Class A Notes of such Series
then outstanding; or (v) certain events of bankruptcy, insolvency, receivership
or liquidation of the Transferor or the related Trust. However, the amount of
principal required to be distributed to the Noteholders of such Series under the
related Indenture will be generally limited to amounts available therefor in the
related Note Distribution Account absent acceleration of such Notes. Therefore,
unless otherwise specified in the related Prospectus Supplement, the failure to
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pay principal on such Notes may not result in the occurrence of an Event of
Default until the applicable Final Scheduled Distribution Date.
If an Event of Default should occur and be continuing with respect to the
Notes of any Series, the related Indenture Trustee or holders of a majority in
principal amount of such Class A Notes then outstanding may declare the
principal of such Notes to be immediately due and payable. Unless otherwise
specified in the related Prospectus Supplement, such declaration may, under
certain circumstances, be rescinded by the holders of a majority in principal
amount of such Class A Notes then outstanding.
Subject to the conditions specified below, if the Notes of any Series have
been declared to be due and payable following an Event of Default with respect
thereto, the related Indenture Trustee may, in its discretion, to the extent
permitted by applicable law, either sell the related Receivables or elect to
have the related Trust maintain possession of such Receivables and continue to
apply distributions on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
the related Indenture Trustee is prohibited from selling the related Receivables
following an Event of Default, other than a default in the payment of any
principal or a default for five days or more in the payment of any interest on
any such Note, unless (i) all the holders of the outstanding Notes of such
Series consent to such sale, (ii) the proceeds of such sale are sufficient to
pay in full the principal of and the accrued interest on the outstanding Notes
of such Series at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of the related Receivables would not be sufficient
on an ongoing basis to make all payments on such Notes as such payments would
have become due if such obligations had not been declared due and payable, and
such Indenture Trustee obtains the consent of the holders of 662/3% of the
aggregate outstanding amount of such Class A Notes.
Subject to the provisions of the related Indenture relating to the duties
of the related Indenture Trustee, in case an Event of Default shall occur and be
continuing with respect to a Series of Notes, such Indenture Trustee shall be
under no obligation to exercise any of the rights or powers under such Indenture
if requested or directed by any of the holders of such Notes if such 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 such provisions for indemnification and certain
limitations contained in the related Indenture, the holders of a majority (or 66
2/3% if an Event of Default has occurred and is continuing) in principal amount
of the outstanding Class A Notes of a Series will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the related Indenture Trustee, and the holders of a majority in principal amount
of such Class A Notes then outstanding 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 such Indenture that cannot
be modified without the waiver or consent of all of the holders of such
outstanding Class A Notes.
Unless otherwise specified in the related Prospectus Supplement, no Class
A Noteholder of any Series will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such Class A Noteholder previously
has given to the related Indenture Trustee written notice of a continuing Event
of Default, (ii) the holders of not less than 25% in principal amount of the
outstanding Class A Notes of such Series have made written request of such
Indenture Trustee to institute such proceeding in its own name as Indenture
Trustee, (iii) such Class A Noteholder or Class A Noteholders have offered such
Indenture Trustee reasonable indemnity, (iv) such Indenture Trustee has for 60
days failed to institute such proceeding and (v) no direction inconsistent with
such written request has been given to such Indenture Trustee during such 60-day
period by the holders of a majority in principal amount of the outstanding Class
A Notes.
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In addition, with respect to any Trust, the related Indenture Trustee and
the related Noteholders will covenant that they will not at any time institute
against such Trust any bankruptcy, reorganization or other proceeding under any
federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of an ownership
interest in such Trust, nor any of their respective owners, beneficiaries,
agents, officers, directors, employees, successors or assigns shall, in the
absence of an express agreement to the contrary, be personally liable for the
payment of the principal of or interest on the Notes or for the agreements of
such Trust contained in the related Indenture.
Certain Covenants. With respect to any Trust, the related Indenture will
provide that such 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, any state thereof or the District
of Columbia, (ii) such entity expressly assumes such Trust's obligation to make
due and punctual payments upon the Notes of the related Series and the
performance or observance of every agreement and covenant of such Trust under
the related Indenture, (iii) no Event of Default shall have occurred and be
continuing immediately after such merger or consolidation, (iv) such Trust has
been advised that the ratings of the Notes of such Series would be reduced or
withdrawn by the applicable Rating Agencies as a result of such merger or
consolidation, (v) such Trust has received an opinion of counsel to the effect
that such consolidation or merger would have no material adverse tax consequence
to such Trust or to any related Noteholder, (vi) any action as is necessary to
maintain the lien and security interest created by the related Indenture shall
have been taken and (vii) such Trust has received an opinion of counsel and
officer's certificate each stating that such consolidation or merger satisfies
all requirements under the related Indenture.
Each Trust will not, among other things (i) except as expressly permitted
by the related Indenture, the related Transaction Agreements or certain related
documents (collectively, the "Related Documents"), sell, transfer, exchange or
otherwise dispose of any of the assets of such Trust, (ii) claim any credit on
or make any deduction from the principal and interest payable in respect of the
Notes of the related Series (other than amounts withheld under the Code or
applicable state law) or assert any claim against any present or former holder
of Notes because of the payment of taxes levied or assessed upon such Trust,
(iii) except as contemplated by the Related Documents, dissolve or liquidate in
whole or in part or (iv) (y) permit the validity or effectiveness of the related
Indenture to be impaired or permit any person to be released from any covenants
or obligations with respect to such Notes under such Indenture except as may be
expressly permitted thereby or (z) 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 such Trust or any part thereof,
or any interest therein or the proceeds thereof, except as may be created by the
terms of the related Indenture.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "Formation of the Trust."
No Trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes and the related Indenture or
otherwise in accordance with the Related Documents.
If so specified in the related Prospectus Supplement, the related Trust
will not make any payments, distributions or dividends to Class B Noteholders in
respect of their Class B Notes for any Collection Period unless the conditions
set forth in such Prospectus Supplement have been satisfied.
Each Trust will or will cause the Servicer to deliver to the related
Indenture Trustee on each Determination Date the Servicer's certificate as
required by the related Transaction Agreement.
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List of Noteholders. Three or more holders of the Class A Notes of any
Series (each of whom has owned a Class A Note for at least six months) may, by
written request to the related Indenture Trustee, obtain access to the list of
all Class A Noteholders of such Series maintained by such Indenture Trustee for
the purpose of communicating with other Class A Noteholders of such Series with
respect to their rights under such Indenture or such Class A Notes. Such
Indenture Trustee may elect not to afford the requesting Class A Noteholders
access to the list of such Class A Noteholders if it agrees to mail the desired
communication or proxy, on behalf and at the expense of the requesting Class A
Noteholders, to all Class A Noteholders of record.
Annual Compliance Statement. The Administrator on behalf of each Trust
will be required to file annually with the related Indenture Trustee a written
statement as to the fulfillment of its obligations under the related Indenture.
Indenture Trustee's Annual Report. If required by law, the Indenture
Trustee for each Trust will mail each year to all related Noteholders a brief
report relating to its eligibility and qualification to continue as the
Indenture Trustee under the related Indenture, any amounts advanced by it under
such Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to such Indenture Trustee in its individual
capacity, the property and funds physically held by such Indenture Trustee as
such and any action taken by it that materially affects such Notes and that has
not been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be discharged
with respect to the Trust Property securing the related Notes upon the delivery
to such Indenture Trustee for cancellation of all such Notes or, with certain
limitations, upon deposit with such Indenture Trustee of funds sufficient for
the payment in full of all of such Notes.
The Indenture Trustee. The Indenture Trustee for a Series of Notes will be
specified in the related Prospectus Supplement. The Indenture Trustee for any
Series may resign at any time, in which event the related Trust will be
obligated to appoint a successor Indenture Trustee for such Series. A Trust may
also remove the related Indenture Trustee if such Indenture Trustee ceases to be
eligible to continue as such under the related Indenture or if such Indenture
Trustee becomes insolvent in such circumstances, such Trust will be obligated to
appoint a successor Indenture Trustee for the related Series of Notes. Any
resignation or removal of an Indenture Trustee and appointment of a successor
Indenture Trustee for any Series of Notes does not become effective until
acceptance of the appointment by the successor Indenture Trustee for such
Series.
CERTAIN INFORMATION REGARDING THE NOTES
Fixed Rate Notes
Each Class of Notes (other than certain Classes of Strip Notes) may bear
interest at a fixed rate per annum ("Fixed Rate Notes") or at a variable or
adjustable rate per annum ("Floating Rate Notes"), as more fully described below
and in the related Prospectus Supplement. Each Class of Fixed Rate Notes will
bear interest at the applicable per annum Interest Rate or Pass-Through Rate, as
the case may be, specified in the related Prospectus Supplement. Unless
otherwise set forth in the related Prospectus Supplement, interest on each Class
of Fixed Rate Notes will be computed on the basis of a 360-day year of twelve
30-day months. See "Description of the Notes--Principal and Interest on the
Notes" herein.
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Floating Rate Notes
Each Class of Floating Rate Notes will bear interest for each applicable
Interest Reset Period (with respect to a Class of Floating Rate Notes, the
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the related Prospectus Supplement as being applicable to such
Class, and the "Spread Multiplier" is the percentage that may be specified in
the related Prospectus Supplement as being applicable to such Class.
The related Prospectus Supplement will designate a Base Rate for a given
Floating Rate Note based on LIBOR, commercial paper rates, federal funds rates,
U.S. Government treasury securities rates, negotiable certificates of deposit
rates or another rate as set forth in such Prospectus Supplement.
As specified in the related Prospectus Supplement, Floating Rate Notes of
a given Class may also have either or both of the following (in each case
expressed as a rate per annum): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period and (ii) a minimum
limitation, or floor, on the rate at which interest may accrue during any
interest period. In addition to any maximum interest rate that may be applicable
to any Class of Floating Rate Notes, the interest rate applicable to any Class
of Floating Rate Notes will in no event be higher than the maximum rate
permitted by applicable law, as the same may be modified by United States law of
general application.
Each Trust with respect to which a Class of Floating Rate Note will be
issued will appoint, and enter into agreements with, a calculation agent (each,
a "Calculation Agent") to calculate interest rates on each such Class of
Floating Rate Notes issued with respect thereto. The related Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
Class of Floating Rate Notes of a given Series, which may be either the Owner
Trustee or Indenture Trustee with respect to such Series. All determinations of
interest by the Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of Floating Rate Notes of
a given Class. Unless otherwise specified in the related Prospectus Supplement,
all percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward.
ISSUANCE OF THE NOTES
Definitive Notes
The Prospectus Supplement related to each Series will specify whether the
various Classes of Notes of such Series will be issued in fully registered,
certificated form ("Definitive Notes") to the Noteholders or their respective
nominees.
Distributions of principal of and interest on such Definitive Notes will
be made by the Indenture Trustee in accordance with the procedures set forth in
the related Indenture or the related Trust Agreement, as applicable, directly to
holders of Definitive Notes in whose names the Definitive Notes were registered
at the close of business on the applicable "Record Date" (as defined in the
related Prospectus Supplement) specified for such Notes in the related
Prospectus Supplement. Such distributions will be made by check mailed to the
address of such holder as it appears on the register maintained by
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the Indenture Trustee. The final payment on any such Definitive Note, however,
will be made only upon presentation and surrender of such Definitive Note at the
office or agency specified in the notice of final distribution to the applicable
Noteholders.
Definitive Notes will be transferable and exchangeable at the offices of
the applicable Indenture Trustee or of a certificate registrar named in a notice
delivered to holders of Definitive Notes. No service charge will be imposed for
any registration of transfer or exchange, but the applicable Indenture Trustee
may require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.
Book-Entry Registration
The Prospectus Supplement related to a given Series will specify whether
the holders of the Notes of such Series may hold their Notes through DTC (in the
United States) or Cedel Bank, societe anonyme ("Cedel") or Euroclear (as defined
below) (in Europe) if they are participants of such systems, or indirectly
through organizations that are participants in such systems ("Book-Entry
Notes").
The Transferor has been informed by DTC that DTC's nominee will be Cede,
unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the Notes of
any Series held through DTC. Cede, as nominee for DTC, or such other nominee
specified in the related Prospectus Supplement, will hold the global Notes.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositories (collectively the "Depositaries"), which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its participants ("Participants") and to facilitate the clearance
and settlement of securities transactions between Participants through
electronic book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel 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, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; 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 Depositary 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
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settlement applicable to DTC. Cedel Participants and Euroclear Participants may
not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel 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
Participant or Euroclear Participant on such business day. Cash received by
Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
Cedel or Euroclear cash account only as of the business day following settlement
in DTC.
The Noteholders that are not Participants or Indirect Participants but who
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Notes may do so only through Participants and Indirect Participants. In
addition, Noteholders will receive all distributions of principal and interest
from the applicable Indenture Trustee through the Participants who in turn will
receive them from DTC. Under a book-entry format, Noteholders may experience
some delay in their receipt of payments, since such payments will be forwarded
by the applicable Indenture Trustee to Cede, as nominee for DTC. DTC will
forward such payments to its Participants, which thereafter will forward them to
Indirect Participants or Noteholders. To the extent the related Prospectus
Supplement provides that Book-Entry Notes will be issued, the only "Noteholder"
will be Cede, as nominee of DTC. Noteholders will not be recognized by the
applicable Indenture Trustee as "Noteholders" as such term is used in the
related Indenture, as applicable, and Noteholders 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 principal of, and interest on, the
Notes. Participants and Indirect Participants with which the Noteholders have
accounts with respect to their respective Notes similarly are required to make
book-entry transfers and receive and transmit such payments on behalf of their
respective Noteholders. Accordingly, although the Noteholders will not possess
their respective Notes, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Noteholder
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 will advise the Administrator in respect of each Trust that it will
take any action permitted to be taken by a Noteholder under the related
Indenture or Trust Agreement, as applicable, only at the direction of one or
more Participants to whose accounts with DTC such 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.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. Cedel holds securities for its participating organizations ("Cedel
Participants") and facilitates the clearance and settlement of securities
transactions between Cedel Participants through electronic book-entry changes in
accounts of Cedel Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedel in any of 34
currencies, including United States dollars. Cedel
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provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulation by the Luxembourg Monetary Institute. Cedel 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 with respect to
any Series of Notes. Indirect access to Cedel is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Cedel Participant, either directly or indirectly.
The Euroclear System ("Euroclear" or the "Euroclear System") was created
in 1968 to hold securities for its participants ("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 certificates and the risk from transfers of
securities and cash that are not simultaneous.
The Euroclear System has subsequently been extended to clear and settle
transactions between Euroclear Participants and counterparties both in Cedel and
in many domestic securities markets. Transactions may be settled in any of 34
settlement currencies. In addition to safekeeping (custody) and securities
clearance and settlement the Euroclear System includes securities lending and
borrowing and money transfer services. The Euroclear System is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euroclear Clearance System S.C., a
Belgian cooperative corporation that establishes policy on behalf of Euroclear
Participants. 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.
All operations are conducted by the Euroclear Operator and all Euroclear
securities clearance accounts and cash accounts are accounts with the Euroclear
Operator. They 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 all transfers of securities and cash, both within the
Euroclear System and receipts and withdrawals of securities and cash. All
securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
Euroclear Participants include banks (including central banks), securities
brokers and dealers and other professional financial intermediaries and may
include any of the Underwriters of any Series of Notes. 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 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.
Unless and until Definitive Notes are issued under the limited
circumstances described herein or in the related Prospectus Supplement, no
Noteholder will be entitled to receive a physical certificate representing a
Book-Entry Note. All references herein and in the related Prospectus Supplement
to actions by Noteholders shall refer to actions taken by DTC upon instructions
from its Participants, and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to Noteholders
shall refer to distributions, notices, reports and statements to DTC or its
nominee as the
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registered holder of the Book-Entry Notes, as the case may be, for distribution
to Book-Entry Noteholders in accordance with DTC's procedures with respect
thereto.
If (i) (A) the Administrator advises the applicable Indenture Trustee in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Notes and (B) the
Administrator is unable to locate a qualified successor, (ii) the Administrator,
at its option, elects to terminate the book-entry system through DTC or (iii)
after the occurrence of an Event of Default or a Servicer Default, Class A
Noteholders representing at least a majority of the outstanding principal amount
of the Class A Notes of such Series advise the applicable Indenture Trustee
through DTC in writing that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the best interest of such Noteholders
of such Series, then any Notes held in book-entry form will be issued as
Definitive Notes to the applicable Noteholders or their respective nominees.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Indenture Trustee will be required to notify all
applicable Noteholders through Participants of the availability of Definitive
Notes. Upon surrender by DTC of the definitive certificates representing the
corresponding Notes and receipt of instructions for re-registration, the
applicable Indenture Trustee will reissue such Notes as Definitive Notes to such
Noteholders.
Except as required by law, neither the Administrator nor the applicable
Indenture Trustee with respect to any Trust will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Notes held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DESCRIPTION OF THE TRANSACTION AGREEMENTS
The following summary, as well as other pertinent information included
elsewhere in this Prospectus and the related Prospectus Supplement, describes
the material terms with respect to each Series of Notes relating to each of (i)
the Transfer and Servicing Agreement pursuant to which a Trust will acquire
Receivables from the Transferor and the Servicer will undertake to service such
Receivables, (ii) the Contribution and Sale Agreement pursuant to which the
Transferor will acquire such Receivables from MCC, (iii) the Administration
Agreement pursuant to which MCC will undertake certain administrative duties
with respect to such Trust and (iv) the Trust Agreement pursuant to which such
Trust will be created collectively, the "Transaction Agreements"). Forms of the
Transaction Agreements have been filed as exhibits to the Registration Statement
of which this Prospectus forms a part. This summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the applicable provisions of the related Transaction Agreements.
Transfer and Assignment of Receivables
On the initial Closing Date specified in the related Prospectus Supplement
with respect to a Trust (the "Closing Date"), MCC will sell and assign to the
Transferor, without recourse, its entire interest in the related Receivables
(the "Initial Receivables"), including its security interests in the related
Financed Equipment, pursuant to a Contribution and Sale Agreement (the
"Contribution and Sale Agreement"). On such Closing Date, the Transferor will
assign to the related Trust, without recourse, its interest in such Receivables,
including its security interests in the related Financed Equipment, pursuant to
the related Transfer and Servicing Agreement. Each such Receivable will be
identified in a schedule (each, a "Schedule of Receivables") appearing as an
exhibit to the Transfer and Servicing Agreement. The related Owner Trustee, on
behalf of such Trust, will, concurrently with such sale and assignment on the
related
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Closing Date, execute, and the Indenture Trustee will authenticate and deliver
the related Notes. The net proceeds received from the sale of such Notes will be
applied to the acquisition of the related Initial Receivables and, if so
specified in the Prospectus Supplement, to the deposit of the Pre-Funded Amount
into the Pre-Funding Account and to the initial deposit into the Reserve
Account. If applicable, the related Prospectus Supplement for a given Trust will
specify the terms, conditions and manner under which subsequent Receivables
("Subsequent Receivables") will be transferred by the Transferor to the related
Trust from time to time during the Funding Period on each date specified as a
transfer date in the related Prospectus Supplement (each, a "Subsequent Closing
Date"). If the related Prospectus Supplement so provides for a Pre-Funding
Account, the funds on deposit in such Pre-Funding Account on the related Closing
Date will not exceed 25% of the related Trust Property, and the related
Pre-Funding Period shall not exceed three months from the related Closing Date.
In each Contribution and Sale Agreement, MCC will represent and warrant to
the Transferor, among other things, that (i) the information provided with
respect to the related Receivables is correct in all material respects; (ii) the
Obligor on each Receivable is required to maintain physical damage insurance
and/or liability insurance, as applicable, covering the Financed Equipment in
accordance with MCC's normal requirements; (iii) as of the related Closing Date
or related Subsequent Closing Date, if any, the related Receivables are free and
clear of all security interests, liens, charges and encumbrances and no offsets,
defenses, or counterclaims have been asserted or threatened; (iv) as of the
related Closing Date or related Subsequent Closing Date, if any, each of such
Receivables is secured by a first perfected security interest in the Financed
Equipment in favor of MCC; (v) each Receivable, at the time it was originated,
complied and, as of the related Closing Date or related Subsequent Closing Date,
if any, complies in all material respects with applicable federal and state laws
including, without limitation, consumer credit, truth in lending, equal credit
opportunity and disclosure laws; and (vi) each Lease, if any, (A) is a "lease
intended as security" under the UCC, (B) is not a "consumer lease" within the
meaning of Article 2A of the UCC in any jurisdiction where said Article 2A has
been adopted and governs the construction thereof, and (C) constitutes "chattel
paper", as defined under the UCC. Unless otherwise specified in the related
Prospectus Supplement, if the Transferor breaches any of its representations and
warranties made in the related Transfer and Servicing Agreement, and such breach
has not been cured by the last day of the second (or, if the Transferor elects,
the first) month following the discovery by or notice to the Transferor of such
breach, the Transferor will reacquire any Receivable materially and adversely
affected by such breach from the related Trust, and if such breach arises from
the breach of a representation and warranty by MCC in the related Contribution
and Sale Agreement, MCC will reacquire such Receivable from the Transferor, in
each case at a price (the "Transfer Amount") at least equal to the "Principal
Balance" (as such term is defined in the related Prospectus Supplement) plus
interest thereon at the respective "Cut-off Date APR" (as such term is defined
in the related Prospectus Supplement). The obligation of the Transferor to
reacquire any Receivable with respect to which any such representation or
warranty of MCC has been breached is subject to MCC's reacquisition of such
Receivable for the Transfer Amount. The reacquisition obligation will constitute
the sole remedy available to the Noteholders, the Indenture Trustee or the Owner
Trustee in respect of such Trust for any such uncured breach.
MCC's accounting records and computer systems will reflect the assignments
described above, and the Servicer will maintain possession of the related Loan
and/or Leases to facilitate servicing and to minimize administrative burden and
expense. The Servicer will not stamp the Loan and/or Leases to reflect
assignment of the Receivables to the related Trust or Indenture Trustee.
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Accounts
With respect to each Trust, the Servicer will establish and maintain at
the office of the related Indenture Trustee one or more accounts, in the name of
such Indenture Trustee on behalf of the related Noteholders, into which all
payments made on or with respect to the related Receivables will be deposited
(collectively, the "Collection Account"). The Servicer will also establish and
maintain at the office of such Indenture Trustee an account, in the name of such
Indenture Trustee on behalf of the related Noteholders, into which amounts of
principal collections released from the Collection Account will be deposited and
from which (i) payments to the Transferor in respect of Subsequent Receivables
in connection with the Revolving Period, if any, and (ii) principal amounts due
to Noteholders will be made (the "Principal Funding Account"). The Servicer will
establish and maintain at the office of such Indenture Trustee an account, in
the name of such Indenture Trustee on behalf of the related Noteholders, in
which amounts of interest collections released from the Collection Account will
be deposited and from which interest amounts due to Noteholders will be made
(the "Interest Payment Account"). The Servicer will establish and maintain at
the office of such Indenture Trustee an account, in the name of such Indenture
Trustee on behalf of the related Noteholders, in which amounts released from the
Interest Payment Account, the Principal Funding Account and the Reserve Account,
if any, or any other credit enhancement for payment to Noteholders will be
deposited and from which all payments to Noteholders will be made (the "Note
Distribution Account"). If so specified in the related Prospectus Supplement,
the Transferor may also establish and maintain a Pre-Funding Account, in the
name of such Indenture Trustee on behalf of the related Noteholders, which will
be used to acquire Subsequent Receivables from the Transferor from time to time
during the Funding Period. The amount that may be initially deposited into the
Pre-Funding Account, and the length of a Pre-Funding Period, shall be limited as
described herein.
Any other accounts to be established with respect to a Trust will be
described in the related Prospectus Supplement.
With respect to any Series of Notes, funds in the Collection Account, the
Note Distribution Account, any Reserve Account, any Pre-Funding Account,
Interest Payment Account, Principal Funding Account and in any accounts
identified as such in the related Prospectus Supplement (collectively, the
"Trust Accounts") shall be invested as provided in the related Transfer and
Servicing Agreement in Eligible Investments. "Eligible Investments" are
generally limited to investments acceptable to the Rating Agencies as being
consistent with the ratings of such Notes. Except as described below or in the
related Prospectus Supplement, Eligible Investments are limited to obligations
or securities that mature on or before the business day preceding the day of the
next distribution. However, to the extent permitted by the Rating Agencies and
provided in the related Transfer and Servicing Agreement, funds in any Reserve
Account may be invested in securities that will not mature prior to the next
Distribution Date and will not be sold to meet any shortfalls. Thus, the amount
of cash in any Reserve Account at any time available for withdrawal may be less
than the balance of the Reserve Account at such time. If the amount required to
be withdrawn from any Reserve Account to cover shortfalls in collections on the
related Receivables (as provided in the related Prospectus Supplement) exceeds
the amount of cash in such Reserve Account, a temporary shortfall in the amounts
distributed to the related Noteholders could result, which could, in turn,
increase the average life of the related Notes. Except as otherwise specified in
the related Prospectus Supplement, investment earnings on funds deposited in the
Trust Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be deposited in the related Collection Account on each
Distribution Date and shall be treated as collections of interest on the related
Receivables.
The Trust Accounts of all Series will be maintained as Eligible Deposit
Accounts. "Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of
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the United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution have a credit rating from each
Rating Agency in one of its generic rating categories which signifies investment
grade. "Eligible Institution" means, with respect to any Series, (a) the
corporate trust department of the related Indenture Trustee, the related Owner
Trustee or such other institution acceptable to the Rating Agencies, or (b) a
depository institution organized under the laws of the United States of America
or any one of the states thereof or the District of Columbia (or any domestic
branch of a foreign bank), (i) (A) which has either a long-term or short-term
unsecured debt rating acceptable to the Rating Agencies and (B) whose deposits
are insured by the Federal Deposit Insurance Corporation or (ii) (A) the parent
corporation of which has either a long-term or short-term unsecured debt rating
acceptable to the Rating Agencies and (B) whose deposits are insured by the
Federal Deposit Insurance Corporation.
Servicing Procedures
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by any Trust and, in a manner consistent with
the related Transfer and Servicing Agreement will continue such collection
procedures as the Servicer follows with respect to loan contracts and leases it
services for itself and others. Consistent with its normal procedures, the
Servicer may, in its discretion and on a case-by-case basis, arrange with the
Obligor of a Receivable to extend or modify the payment schedule. Some of such
arrangements (including, without limitation, any extension of the payment
schedule beyond the latest Final Scheduled Distribution Date specified for the
related Series of Notes in the related Prospectus Supplement) will result in the
Servicer purchasing the Receivable for the Transfer Amount. The Servicer may
sell the Financed Equipment securing the respective Receivable at a public or
private sale, or take any other action permitted by applicable law. See "The
Receivables Pools--The Retail Equipment Financing Business and "Certain Legal
Aspects of the Receivables" herein.
Payments on Receivables
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each Collection Period specified in the related Prospectus
Supplement into the related Collection Account; provided, however, that when a
Receivable becomes a Liquidated Receivable (as defined in the related Prospectus
Supplement), the Receivable will be reassigned to the Transferor (to the extent
of receipt by the holders of Notes on the related Distribution Date of an amount
representing the principal balance with respect to such Liquidated Receivable),
and any proceeds after such date (deficiency proceeds) would not be proceeds of
Receivables in the related Trust. Unless the related Prospectus Supplement so
provides, and the below described conditions are met, the Servicer will deposit
all such amounts collected during each Collection Period into the related
Collection Account within two business days of receipt and identification
thereof. Normally, collections are identified within one day of receipt. The
Servicer will also deposit any Amounts (as defined herein) into the Collection
Account when due. With respect to each Trust, if MCC is the Servicer and
provided that (i) there exists no Servicer Default (as defined herein) and (ii)
each other condition to making monthly or less frequent deposits as may be
specified by the Rating Agencies and described in the related Prospectus
Supplement is satisfied, the Servicer will not be required to deposit payments
on the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each Collection Period into the related Collection
Account until on or before the business day preceding each related Distribution
Date. Pending deposit into the Collection Account, regardless of frequency of
deposit, collections may be invested by the Servicer at its own risk, for its
own benefit and without being subject to any investment restrictions, and will
not be segregated from funds of the Servicer. If the Servicer were unable to
remit such funds, or if the Servicer were to become insolvent, the Noteholders
might incur a
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loss. To the extent set forth in the related Prospectus Supplement, the
Servicer, in order to satisfy the requirements described above for monthly
remittances, may obtain a letter of credit or other security for the benefit of
the related Trust to secure the timely remittances of collections on the related
Receivables and the payment of the aggregate Transfer Amount with respect to
such Receivables purchased by the Servicer.
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the Prospectus Supplement with respect to
any Trust, the Servicer will be entitled to receive a Servicing Fee for each
Collection Period in an amount equal to a specified percentage per annum (as set
forth in the related Prospectus Supplement, the "Servicing Fee Rate") of the
Pool Balance as of the first day of the related Collection Period (the
"Servicing Fee"). The Servicing Fee with respect to any Trust (together with any
portion of such Servicing Fee that remains unpaid from prior Distribution Dates)
will be paid solely to the extent of the funds available therefor as set forth
in the related Prospectus Supplement under "Description of the Transaction
Agreements -- Distributions." However, the Servicing Fee will be paid prior to
the distribution of any portion of the "Total Distribution Amount" (as such term
is defined in the related Prospectus Supplement) to the related Noteholders and
prior to payment of the related Administration Fee. The Servicing Fee with
respect to each Collection Period will decline over the life of the Notes as the
Pool Balance decreases.
Unless otherwise specified in the Prospectus Supplement with respect to
any Trust, the Servicer will also collect any late fees, extension fees,
prepayment penalties and other administrative fees or similar charges allowed by
applicable law with respect to the related Receivables (collectively, the
"Servicer's Yield"), and will be entitled to amounts of Servicer's Yield
collected as such amounts are received. Payments by or on behalf of Obligors
will be allocated first to scheduled payments, second to other charges (except
for late fees) and third, to late fees, all in accordance with the Servicer's
normal practices and procedures.
The Servicing Fee with respect to any Trust will compensate the Servicer
for performing the functions of a third party servicer of receivables, including
collecting and posting all payments, responding to inquiries of Obligors on the
related Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, paying costs of disposition of
defaults, and policing the collateral. Such Servicing Fee also will compensate
the Servicer for administering the related Receivables, accounting for
collections and furnishing monthly and annual statements to the Transferor, the
related Owner Trustee and the related Indenture Trustee with respect to
distributions. Such Servicing Fee also will reimburse the Servicer for certain
taxes, accounting fees, outside auditor fees, data processing costs and other
costs incurred in connection with administering the Receivables of each Trust.
Distributions
With respect to each Series of Notes, beginning on the Distribution Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each Class of
such Notes entitled thereto will be made by the applicable Indenture Trustee to
the Noteholders of such Series. The timing, calculation, allocation, order,
source, priorities of and requirements for all payments to each Class of
Noteholders of such Series will be set forth in the related Prospectus
Supplement.
With respect to each Trust, on each Distribution Date, collections on the
related Receivables will be transferred from the related Collection Account to
the related Note Distribution Account for distribution to Noteholders of the
related Series to the extent provided in the related Prospectus Supplement.
Credit
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enhancement, such as a Reserve Account, will be available to cover any
shortfalls in the amount available for distribution on such date to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Notes of a given Series will
be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Class B Notes of such Series may be subordinate
to payments in respect of the Class A Notes of such Series.
Principal Collections
Revolving Period. During the Revolving Period for a Trust, if any, unless
otherwise provided in the related Prospectus Supplement, no amount is required
to be set aside to make principal payments on the Notes. Accordingly, all Trust
principal collections processed on any date during the Revolving Period, if any,
will be available for reinvestment in Subsequent Receivables to be acquired from
the Transferor and will be paid to the Transferor to the extent so reinvested,
provided that such amounts will be held by the Trust to the extent Subsequent
Receivables are not available.
Amortization Period. During an Amortization Period for any Trust, Trust
principal collections will be retained by the Trust and not paid to Transferor
to the extent required to be set aside for the purpose of making payments of
principal on the related Notes, all as more fully set forth in the related
Prospectus Supplement. During an Amortization Period for a Trust, Trust
principal collections will be applied to make the required payments of principal
on the related Notes, all as more fully set forth in the related Prospectus
Supplement. The relative priorities of such payments for any Distribution Date
will be set forth in the related Prospectus Supplement.
Credit and Cash Flow Enhancement
The amounts and types of credit enhancement arrangements and the provider
thereof, if applicable, with respect to each Class of Notes of a given Series,
if any, will be set forth in the related Prospectus Supplement. If and to the
extent provided in the related Prospectus Supplement, credit enhancement may be
in the form of subordination of one or more Classes of Notes, Reserve Accounts,
over-collateralization, letters of credit, credit or liquidity facilities,
surety bonds, guaranteed investment contracts, swaps or other interest rate
protection agreements, repurchase obligations, other agreements with respect to
third party payments or other support, cash deposits or such other arrangements
as may be described in the related Prospectus Supplement or any combination of
two or more of the foregoing. If specified in the related Prospectus Supplement,
credit enhancement for a Class of Notes may cover one or more other Classes of
Notes of the same Series, and credit enhancement for a Series of Notes may cover
one or more other Series of Notes. In addition, if specified in the related
Prospectus Supplement, credit enhancement for one or more Classes of Notes of a
Series may cover all or a portion of the outstanding amount of such Classes or
may cover losses incurred from all or a portion of the related Receivables.
The presence of a Reserve Account and other forms of credit enhancement
for the benefit of all or any portion of any Class or Series of Notes is
intended to enhance the likelihood of receipt by the Noteholders of such Class
or Series of the full amount of principal and interest due thereon and to
decrease the likelihood that such Noteholders will experience losses. Unless
otherwise specified in the related Prospectus Supplement the credit enhancement
for all or any portion of a Class or Series of Notes will not provide protection
against all risks of loss and will not guarantee repayment of the entire
principal balance and interest thereon. If losses occur which exceed the amount
covered by any credit enhancement or which are not covered by any credit
enhancement, Noteholders of any Class or Series will bear their allocable share
of deficiencies, as described in the related Prospectus Supplement. In addition,
if a form of credit enhancement covers more than one Series of Notes,
Noteholders of any such Series will be
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subject to the risk that such credit enhancement will be exhausted by the claims
of Noteholders of other Series.
Unless otherwise provided in the related Prospectus Supplement, the
Transferor may replace the credit enhancement for any Class of Notes with
another form of credit enhancement without the consent of Noteholders, provided
the applicable Rating Agencies confirm in writing that substitution will not
result in the reduction or withdrawal of the rating of such Class of Notes or
any other Class of Notes of the related Series.
Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Transfer and Servicing Agreement, the Transferor will
establish for a Series or Class of Notes an account, as specified in the related
Prospectus Supplement (the "Reserve Account"), which will be maintained in the
name of the related Indenture Trustee. Unless otherwise provided in the related
Prospectus Supplement, the Reserve Account will be funded by an initial deposit,
if any, by the Transferor on the related Closing Date in the amount set forth in
the related Prospectus Supplement. As further described in the related
Prospectus Supplement, the amount on deposit in the Reserve Account will be
increased on each Distribution Date thereafter up to the "Specified Reserve
Account Balance" (as such term is defined in the related Prospectus Supplement)
by the deposit therein of the amount of collections on the related Receivables
remaining on each such Distribution Date after the payment of all other required
payments and distributions on such date and, if applicable, any amounts
deposited from time to time from the Pre-Funding Account in connection with the
acquisition of Subsequent Receivables. The related Prospectus Supplement will
describe the circumstances and manner under which distributions may be made out
of the Reserve Account, either to holders of the Notes covered thereby, to the
Transferor or to any transferee or assignee of the Transferor.
The Transferor may at any time, without consent of the Noteholders, sell,
transfer, convey or assign in any manner its rights to and interests in
distributions from the Reserve Account, including interest earnings thereon,
provided that (i) the Rating Agencies confirm in writing that such action will
not result in a reduction or withdrawal of the rating of any Class of Notes,
(ii) the Transferor provides to the related Owner Trustee and the related
Indenture Trustee an opinion of counsel from independent counsel that such
action will not cause the related Trust to be treated as an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes or cause Notes properly characterized as debt at the time of their
issuance to not be so characterized for such purposes and (iii) such transferee
or assignee agrees in writing to take positions for tax purposes consistent with
the tax positions agreed to be taken by the Transferor.
Reports to Noteholders
With respect to each Series of Notes, on or prior to each Distribution
Date, the Servicer will prepare and provide to the related Indenture Trustee a
statement to be delivered to the related Noteholders on such Distribution Date.
With respect to each Series of Notes, each such statement to be delivered to
Noteholders will include (to the extent applicable) the following information
(and any other information so specified in the related Prospectus Supplement) as
to the Notes of such Series with respect to such Distribution Date or the period
since the previous Distribution Date, as applicable.
(i) the amount of the distribution allocable to principal of each
Class of Notes of such Series;
(ii) the amount of the distribution allocable to interest on or with
respect to each Class of Notes of such Series;
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(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each Class of such Notes, each after giving effect to all
payments reported under clause (i) above on such date;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the Interest Rate or Pass-Through Rate for the next period for
any Class of Notes of such Series with variable or adjustable rates;
(vii) the amount of the Administration Fee paid to the Administrator
in respect of the related Collection Period;
(viii) the amount of the aggregate "Realized Losses" (as defined in
the related Prospectus Supplement), if any, for such Collection Period;
(ix) the aggregate Transfer Amounts for Receivables, if any, that
were reacquired or purchased in such Collection Period;
(x) the balance of the Reserve Account (if any) on such Distribution
Date, after giving effect to withdrawals therefrom and deposits thereto on
such Distribution Date, and the Specified Reserve Account Balance on such
date;
(xi) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following
the end of the Funding Period (if any), the amount of any remaining
Pre-Funded Amount that has not been used to fund the acquisition of
Subsequent Receivables and is being passed through as payments of
principal on the Notes of such Series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vii) with
respect to the Class A Notes of any Series will be expressed as a dollar amount
per $1,000 of the initial principal balance of such Class A Notes.
Within the prescribed period of times for tax reporting purposes after the
end of each calendar year during the term of each Trust, the Indenture Trustee
will mail to each person who at any time during such calendar year has been a
Noteholder with respect to such Trust and received any payment thereon, a
statement containing certain information for the purposes of such Noteholder's
preparation of federal income tax returns. See "Federal Income Tax
Considerations" herein.
Statements to Trustees and Trust
Prior to each Distribution Date with respect to each Series of Notes, the
Servicer will provide to the related Indenture Trustee and the related Owner
Trustee as of the close of business on the last day of the preceding Collection
Period a statement setting forth substantially the same information as is
required
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to be provided in the periodic reports provided to Noteholders of such Series
described under "--Reports to Noteholders" above.
Evidence as to Compliance
Each Transfer and Servicing Agreement will provide that a firm of
independent public accountants will furnish to the related Trust and Indenture
Trustee annually a statement as to compliance by the Servicer during the
preceding 12 months ended [December 31] (or, in the case of the first such
certificate, the period from the related Closing Date to [December 31] of the
same year) with certain standards relating to the servicing of the related
Receivables, the Servicer's accounting records with respect thereto (including,
if necessary, any computer files) and certain other matters.
Each Transfer and Servicing Agreement will also provide for delivery to
the related Trust and Indenture Trustee, substantially simultaneously with the
delivery of the accountants' statement referred to above, of a certificate
signed by an officer of the Servicer stating that the Servicer either has
fulfilled its obligations under such Transfer and Servicing Agreement in all
material respects throughout the preceding 12 months ended [December 31] (or, in
the case of the first such certificate, the period from the related Closing Date
to [December 31] of the same year) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. The Servicer will agree to give each Indenture Trustee and each Owner
Trustee notice of certain Servicer Defaults under the related Transfer and
Servicing Agreement.
Copies of such statements and certificates may be obtained by Noteholders
by a request in writing addressed to the applicable Indenture Trustee.
Certain Matters Regarding the Servicer
Each Transfer and Servicing Agreement will provide that MCC may not resign
from its obligations and duties as Servicer thereunder, except upon
determination that MCC's performance of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related Indenture Trustee or a successor servicer has assumed MCC's servicing
obligations and duties under such Transfer and Servicing Agreement.
Each Transfer and Servicing Agreement will further provide that neither
the Servicer nor any of its directors, officers, employees and agents shall be
under any liability to the related Trust, the related Noteholders for taking any
action or for refraining from taking any action pursuant to such Transfer and
Servicing Agreement, or for errors in judgment; provided, however, that neither
the Servicer nor any such person will be protected against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Transfer and Servicing
Agreement will provide that the Servicer is under no obligation to appear in,
prosecute, or defend any legal action that is not incidental to its servicing
responsibilities under such Transfer and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability.
Under the circumstances specified in such Transfer and Servicing Agreement
(including confirmation by the Rating Agencies that such succession will not
result in the reduction or withdrawal of the rating of any Class of Notes of the
related Series) (a) any entity into which the Servicer may be merged or
consolidated, (b) any entity resulting from any merger or consolidation to which
the Servicer is a party, (c) any entity succeeding to the business of the
Servicer or, (d) any corporation 50% or more of the voting stock of which is
owned, directly or indirectly, by MetLife, which corporation or other entity
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in each of the foregoing cases assumes the obligations of the Servicer, will be
the successor of the Servicer under such Transfer and Servicing Agreement.
Servicer Default
With respect to each Trust, "Servicer Default" under each Transfer and
Servicing Agreement will consist of (i) any failure by the Servicer to make any
required payment or deposit required under the related Transfer and Servicing
Agreement which failure continues unremedied for three business days after
written notice from such Indenture Trustee or the related Owner Trustee is
received by the Servicer or after discovery by the Servicer; (ii) any failure by
the Servicer or the Transferor, as the case may be, duly to observe or perform
in any material respect any other covenant or agreement in any Transfer and
Servicing Agreement, which failure materially and adversely affects the rights
of Class A Noteholders of the related Series and which continues unremedied for
60 days after the giving of written notice of such failure (A) to the Servicer
or the Transferor, as the case may be, by such Indenture Trustee or such Owner
Trustee or (B) to the Servicer or the Transferor, as the case may be, and to
such Indenture Trustee and such Owner Trustee by holders of Class A Notes of
such Series, as applicable, evidencing not less than 25% in aggregate principal
amount of the outstanding Class A Notes of the related Series; (iii) certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations (each an "Insolvency
Event"); and (iv) with respect to any Trust, the additional event or events, if
any, specified in the related Prospectus Supplement.
Rights Upon Servicer Default
Unless otherwise provided in the related Prospectus Supplement, as long as
a Servicer Default under a Transfer and Servicing Agreement remains unremedied,
the related Indenture Trustee or the Class A Noteholders of the related Series
(without the consent of the related Indenture Trustee) evidencing not less than
25% of the outstanding principal amount of such Class A Notes may terminate all
the rights and obligations of the Servicer under such Transfer and Servicing
Agreement, whereupon a successor servicer appointed by such Indenture Trustee or
such Indenture Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Transfer and Servicing Agreement and will
be entitled to similar compensation arrangements. If, however, a bankruptcy
trustee or similar official has been appointed for the Servicer, and no Servicer
Default other than such appointment has occurred, such trustee or official may
have the power to prevent such Indenture Trustee or such Noteholders from
effecting a transfer of servicing. In the event that the Indenture Trustee is
unwilling or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor with a net worth of at least
$50,000,000 and whose regular business includes the servicing of receivables
similar to the related Receivables. Such Indenture Trustee may make such
arrangements for compensation to be paid, which in no event may be greater than
the servicing compensation payable to the Servicer under such Transfer and
Servicing Agreement. An Owner Trustee does not have the right to remove the
Servicer if a Servicer Default occurs.
Waiver of Past Defaults
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, the holders of Class A Notes evidencing not less than a
majority of the outstanding principal amount of the then outstanding Class A
Notes of the related Series may, on behalf of all Noteholders of such Series
waive any default by the Servicer in the performance of its obligations under
the related Transfer and Servicing Agreement and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with such Transfer and Servicing Agreement.
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Therefore, the Class A Noteholders of any Series have the ability, as limited
above, to waive defaults by the Servicer which could materially and adversely
affect the related Class B Noteholders. With respect to any Series, no such
waiver shall impair the Noteholders' rights with respect to subsequent defaults.
Amendment
Unless otherwise provided in the related Prospectus Supplement, each of
the Transaction Agreements may be amended by the parties thereto, without the
consent of the related Noteholders, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of any such
Transaction Agreement or of modifying in any manner the rights of such
Noteholders; provided however, that such action will not, in the opinion of
counsel satisfactory to the related Indenture Trustee, materially and adversely
affect the interest of any such Noteholder. In addition, unless otherwise
provided in the related Prospectus Supplement, each of the Transaction
Agreements may be amended by the parties thereto, without the consent of the
related Noteholders, to substitute credit enhancement for any Class of Notes,
provided the applicable Rating Agencies confirm in writing that such will not
result in a reduction or withdrawal of the rating of such Class of Notes or any
Class of Notes of the related Series. In addition, unless otherwise provided in
the related Prospectus Supplement, each of the Transaction Agreements may be
amended by the Transferor, the Servicer, the related Owner Trustee and the
related Indenture Trustee with the consent of the holders of Class A Notes
evidencing at least a majority of the then outstanding principal amount of such
Class A Notes for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Transaction Agreements or of
modifying in any manner the rights of Noteholders of the related Series;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or payments or distributions that are required to be
made for the benefit of the Noteholders or (ii) reduce the aforesaid percentage
of the Notes of such Series which are required to consent to any such amendment,
without the consent of the holders of all the outstanding Notes, as the case may
be, of such Series.
Payment of Notes
Upon the payment in full of all outstanding Notes of a given Series and
the satisfaction and discharge of the related Indenture, the related Owner
Trustee will succeed to all the rights of the related Indenture Trustee under
the related Transfer and Servicing Agreement, except as otherwise provided
therein.
Termination
With respect to each Trust, the obligations of the Servicer, the
Transferor, the related Owner Trustee and the related Indenture Trustee pursuant
to the related Transaction Agreements will terminate upon (i) the maturity or
other liquidation of the last related Receivables and the disposition of any
amounts received upon liquidation of any such remaining Receivables and (ii) the
payment to Noteholders of the related Series of all amounts required to be paid
to them pursuant to such Transaction Agreements.
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, in order to avoid excessive administrative expense, if as
of the last day of any Collection Period after the payment in full of the Class
A Notes, the then outstanding Pool Balance with respect to the Receivables held
by such Trust is 10% or less of the "Initial Pool Balance" (as such term is
defined in the related Prospectus Supplement), the Servicer shall have the
option to purchase all remaining related Receivables as of such last day at a
price equal to the aggregate Transfer Amount for the Receivables (including
defaulted Receivables but not including liquidated Receivables).
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As more fully described in the related Prospectus Supplement, any
outstanding Class B Notes of the related Series will be prepaid concurrently
upon either of the events specified above.
Administration Agreement
MCC, in its capacity as administrator (the "Administrator"), will enter
into an agreement (as amended and supplemented from time to time, the
"Administration Agreement") with each Trust and the related Indenture Trustee
pursuant to which the Administrator will agree, to the extent provided in such
Administration Agreement, to provide the notices and to perform on behalf of the
related Trust certain other administrative obligations required by the related
Indenture. As compensation for the performance of the Administrator's
obligations under the Administration Agreement and as reimbursement for its
expenses related thereto the Administrator will be entitled to a monthly
administration fee in an amount to be set forth in the related Prospectus
Supplement (the "Administration Fee").
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Sale and Transfer of Receivables
Unless the related Prospectus Supplement provides otherwise the transfer
of the Receivables of each Trust from MCC to the Transferor and from the
Transferor to such Trust, and the granting of the security interest in such
Receivables by such Trust to the related Indenture Trustee, will in each case be
perfected by filing UCC financing statements. If UCC financing statements are
filed to perfect such transfers of ownership or grants of security interests, to
facilitate servicing and reduce administrative costs, the Receivables Files will
be retained by the Servicer and will not be physically segregated from other
similar documents that are in the Servicer's possession or otherwise stamped or
marked to reflect the transfer to the related Trust so long as MCC is servicing
the Receivables. However, UCC financing statements will be filed reflecting the
sale and assignment of the Receivables by MCC to the Transferor, and the
transfer by the Transferor to such Trust, and the Servicer's accounting records
and computer files will be marked to reflect such sales and assignments. Because
the Receivables Files will remain in the Servicer's possession and will not be
stamped or otherwise marked to reflect the assignment to the Indenture Trustee,
if a subsequent purchaser were able to take physical possession of the
Receivables Files without knowledge of such assignment, the Indenture Trustee's
interest in the Receivables could be defeated. In such event, distributions to
Noteholders may be adversely affected.
Bankruptcy
The Transferor has taken and will take steps in structuring the
transactions contemplated hereby that are intended to ensure that a voluntary or
involuntary petition for relief by or against MCC under any Insolvency Law will
not result in the substantive consolidation of the assets and liabilities of the
Transferor with those of MCC. These steps include the creation of the Transferor
as a separate limited-purpose entity pursuant to Articles of Incorporation
containing (i) certain limitations (including restrictions on the nature of the
Transferor's business and a restriction on the Transferor's ability to commence
a voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all of its directors) and (ii) a requirement that
at least one of the Transferor's directors be independent of MCC and its
affiliates. However, there can be no assurance that the activities of the
Transferor would not result in a court's concluding that the assets and
liabilities of the Transferor should be substantively consolidated with those of
MCC in a proceeding under any Insolvency Law.
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MCC will warrant to the Transferor in each Contribution and Sale Agreement
that the sale of the related Receivables by it to the Transferor is an absolute
sale of such Receivables to the Transferor. In addition, MCC and the Transferor
will treat the transactions described herein and in the related Prospectus
Supplement as a sale of the related Receivables to the Transferor, and the
Transferor has taken and will take all actions (other than delivering the
original contract) that are required to perfect the Transferor's ownership
interest in the related Receivables by the Transferor filing UCC financing
statements. Notwithstanding the foregoing, if MCC were to become a debtor in a
bankruptcy case, and a creditor or trustee-in-bankruptcy of MCC or MCC itself
were to take the position that a sale of Receivables to the Transferor should be
recharacterized as a pledge of such Receivables to secure a borrowing of MCC,
then delays in payments of collections of such Receivables to the Transferor
could occur or, should the court rule in favor of any such trustees, debtor or
creditor, reductions in the amount of such payments, or a reduction in the
amount of Receivables securing such a borrowing, could result. If the
transactions contemplated herein and in the related Prospectus Supplement are
treated as a sale, the related Receivables would not be part of MCC's bankruptcy
estate and would not be available to MCC's creditors.
However, the U.S. Court of Appeals for the Tenth Circuit issued its
opinion in Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.)
(decided May 27, 1993) in which it concluded (noting that its position is in
contrast to that taken by another court) that accounts receivable sold by the
debtor prior to the filing for bankruptcy remain property of the debtor's
bankruptcy estate. Although the Receivables are likely to be viewed as "chattel
paper," as defined under the UCC, rather than as accounts, the rationale behind
the Octagon ruling could be applied to chattel paper. The circumstances under
which the Octagon ruling would apply are not fully known, and the extent to
which the Octagon decision will be followed in other courts or outside of the
Tenth Circuit is not certain. If the holding in the Octagon case were applied in
a MCC bankruptcy, however, even if the transfers of Receivables to the
Transferor and to a Trust were treated as sales, the related Receivables would
be part of MCC's bankruptcy estate and would be subject to claims of certain
creditors and delays and reductions in payments to the Transferor and holders of
the related Notes, or a reduction in the amount of Receivables supporting such
Notes, could result. The Transferor will warrant in each Transfer and Servicing
Agreement that the sale of the related Receivables to the related Trust is an
absolute sale of such Receivables to such Trust.
Security Interest in Equipment
The documents contained in the Receivables Files will constitute personal
property security agreements and will include or constitute grants of security
interests in the related Financed Equipment under the applicable UCC. Perfection
of security interests in the equipment is generally governed by the laws of the
state in which such equipment (or the Obligor, if the equipment constitutes
mobile goods under the UCC) is located. The UCC generally governs the perfection
of such interests.
All of such Loans and Leases originated or acquired by MCC will name MCC
as obligee or assignee and as the secured party of a first priority security
interest in the related Financed Equipment. Pursuant to the Transaction
Agreements, MCC will contractually agree to take all actions (other than
delivering the original contract) necessary under the laws of the state in which
the Financed Equipment is located to perfect its security interests in the
Financed Equipment in its name, including the filing of UCC financing statements
in the appropriate offices. However, because the Servicer continues to service
the Loan and Leases, the Obligors will not be notified of the sale from MCC to
the Transferor and, in the ordinary course, no action will be taken to record
the transfer of the security interest from MCC to the Transferor by amendment or
assignments of the UCC financing statements or otherwise.
Pursuant to each Contribution and Sale Agreement, MCC will sell and assign
its security interests in the Financed Equipment securing Receivables to the
Transferor and, pursuant to each Transfer and
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Servicing Agreement, the Transferor will assign its security interests in the
Financed Equipment to the related Trust. However, because of the administrative
burden and expense, none of the Transferor, the Servicer, MCC or the related
Owner Trustee will amend or file any UCC financing statement to identify the
related Trust as the new secured party on the financing statement relating to
the Financed Equipment. See "Description of the Transaction Agreements
- --Transfer and Assignment of Receivables" herein. There are certain limited
circumstances under the UCC and applicable federal law in which prior or
subsequent transferees of Receivables could have an interest in such Receivables
with priority over the related Trust's interest. In addition, while MCC is the
Servicer, cash collections on the Receivables of any Trust will, under certain
circumstances, be commingled with the funds of MCC prior to deposit into the
related Collection Account and in the event of the bankruptcy of MCC, such Trust
may not have a perfected interest in such collections.
In most states, an assignment of a security interest in Financed Equipment
such as that under a Contribution and Sale Agreement and a Transfer and
Servicing Agreement is an effective conveyance of a security interest without
amendment of any UCC financing statement relating to such Financed Equipment,
and the assignee succeeds thereby to the assignor's rights as secured party. By
not identifying a Trust as the secured party on the financing statement, the
security interest of such Trust in the related Financed Equipment could be
defeated through fraud or negligence by MCC. In the absence of error, fraud or
forgery by the related Obligor or administrative error by state or local
agencies, the proper initial filing of the financing statement relating to such
Financed Equipment will be sufficient to protect a Trust against the rights of
subsequent purchasers of such Financed Equipment or subsequent lenders who take
a security interest in the Financed Equipment related to a Receivable. If there
is any Financed Equipment as to which the original secured party, if any, failed
to obtain and assign to MCC a perfected security interest, the security interest
of MCC would be subordinated to, among others, subsequent purchasers of the
equipment and holders of perfected security interests. Such a failure, however,
would constitute a breach of the warranties of MCC under each Contribution and
Sale Agreement and would create an obligation of MCC to reacquire the related
Receivables unless the breach is cured. The Transferor will assign its rights
pursuant to each Contribution and Sale Agreement to the related Trust. See
"Description of the Transaction Agreements -- Transfer and Assignment of
Receivables" herein.
Some of the Financed Equipment may constitute "fixtures" under the real
estate or UCC provisions of the jurisdiction in which such Financed Equipment is
located. In order to perfect a security interest in such Financed Equipment, the
holder of the security interest must file either a "fixture filing" under the
provisions of the UCC or a real estate mortgage under the real estate laws of
the state where the Financed Equipment is located. These filings must be made in
the real estate records office of the county in which such Financed Equipment is
located. So long as the Obligor does not permanently attach the Financial
Equipment to the real estate, a security interest in the Financed Equipment will
be governed by the UCC, and the filing of a UCC-1 financing statement will be
effective to maintain the priority of MCC's security interest in the Financed
Equipment. If, however any Financed Equipment is permanently attached to the
real estate in which it is located, other parties could obtain an interest in
the Financed Equipment which is prior to the security interest originally
obtained by MCC and transferred to the Transferor. With respect to a Series of
Notes and as described in the related Prospectus Supplement, the Servicer may be
required to perfect a security interest in the Financed Equipment under
applicable real estate laws. Based on the representation of MCC, the Transferor,
however, believes that with respect to Financed Equipment which may constitute a
"fixture", it has obtained a perfected first priority security interest by
proper filing of UCC-1 financing statements in the real estate records office of
the county in which the Financed Equipment is located with respect to
substantially all of the Financed Equipment that constitutes fixtures securing
the Receivables
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Under each Transfer and Servicing Agreement, the Servicer will be
obligated to take appropriate steps, at its own expense, to maintain perfection
of security interests in each item of Financed Equipment and is obligated to
reacquire the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on the
equipment and liens for unpaid taxes may take priority over even a perfected
security interest in such goods. The Servicer will represent that, as of the
related Closing Date or Subsequent Closing Date, as applicable, each security
interest in Financed Equipment is prior to all other present liens upon and
security interests in such Financed Equipment. However, liens for repairs or
taxes unpaid by an Obligor could arise at any time during the term of a
Receivable. Neither the Transferor nor the Servicer will have any obligation to
reacquire a Receivable if any such lien results in a Trust losing the priority
of its security interest or its security interest in any Financed Equipment
after the related Closing Date, or, if applicable, any related Subsequent
Closing Date. No notice will be given to the related Owner Trustee, Indenture
Trustee or Noteholders of any Series in the event such a lien arises.
Repossession
In the event of default by the obligor, the holder of the loan contract or
finance lease has all the remedies of a secured party under the UCC, except
where specifically limited by other state laws. Among the UCC remedies the
secured party has the right to perform self-help repossession unless such act
would constitute a breach of the peace. Self-help is the method employed by the
Servicer in most cases and is accomplished simply by retaking possession of the
financed equipment. In the event of default by the obligor some jurisdictions
require that the obligor be notified of the default and be given a time period
within which he may cure the default prior to repossession. In cases where the
obligor objects or raises a defense to repossession or if otherwise required by
applicable state law, a court order must be obtained from the appropriate state
court, and the equipment must then be repossessed in accordance with that order.
Notice of Sale; Redemption Rights
The UCC and other state laws generally require the secured party to
provide the obligor 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. The obligor generally has the right to redeem the collateral prior to
actual sale by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing holding and preparing the
collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees. In some states, the obligor may cure
the default or reinstate the loan contract or finance lease by payment of
delinquent amounts or the unpaid balance.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of any Financed Equipment generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness a deficiency judgment can be sought in those states
that do not prohibit or limit such judgments. However, the deficiency judgment
would be a personal judgment against the obligor for the shortfall, and a
defaulting obligor can be expected to have very little capital 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.
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Occasionally, after resale of the equipment and payment of all expenses
and all indebtedness, there is a surplus of funds. In that case, the UCC
requires the lender to remit the surplus to any holder of a junior lien with
respect to the equipment or, if no such lienholder exists or there are remaining
funds, the UCC requires the lender to remit the surplus to the obligor.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to consumers.
MCC will warrant under each Contribution and Sale Agreement that each
Receivable complies with all requirements of applicable law in all material
respects. Accordingly, if an Obligor has a claim against a Trust for violation
of any law and such claim materially and adversely affects such Trust's interest
in a Receivable, such violation would constitute a breach of the warranties of
MCC under the related Contribution and Sale Agreement and would create an
obligation of MCC to reacquire such Receivable unless the breach is cured. See
"Description of the Transaction Agreements--Transfer and Assignment of
Receivables" herein.
Leases
Certain 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 precedent regarding how Article 2A will be interpreted,
it may, among other things, limit enforceability of any "unconscionable" lease
or "unconscionable" provision in a lease, provide a lessee with remedies,
including the right to cancel the lease, for certain lessor breaches or
defaults, and may add to or modify the terms of "consumer leases" and leases
where the lessee is a "merchant lessee." However, with respect to any Lease
conveyed to a Trust, MCC will represent in the related Contribution and Sale
Agreement that (i) such Lease contract is not a "consumer lease" and (ii) to the
best of its knowledge, the related Obligor has accepted the related Financed
Equipment leased to it and, after reasonable opportunity to inspect and test,
has not notified MCC of any defects therein. Article 2A also 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. Moreover, Article 2A recognizes the concept of freedom of contract and
permits the parties in a commercial context a wide degree of latitude to vary
provisions of the law.
Other
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a case
under the federal bankruptcy law, a court may prevent a lender from repossessing
the equipment, and, as part of the rehabilitation plan, reduce the amount of the
secured indebtedness to the market value of the equipment at the time of
bankruptcy (as determined by the court), leaving the party providing financing
as a general unsecured creditor for the remainder of the indebtedness. A
bankruptcy court may also reduce the monthly payments due under a contract or
change the rate of interest and time of repayment of the
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indebtedness. For a discussion of other legal aspects relating to Receivables of
a Trust, if any, see "Certain Legal Aspects of the Receivables" in the related
Prospectus Supplement.
FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes certain United States federal income tax
consequences of an investment in the Notes as of the date hereof. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), and
existing final, temporary and proposed Treasury Regulations, Revenue Rulings and
judicial decisions, all of which are subject to prospective and retroactive
changes. The summary is addressed only to original purchasers of the Notes,
deals only with Notes held as capital assets within the meaning of Section 1221
of the Code and does not address tax consequences of holding Notes that may be
relevant to investors in special tax situations, such as certain financial
institutions, tax-exempt organizations, life insurance companies, dealers in
securities or currencies, or investors holding the Notes as part of a conversion
transaction, as part of a hedge or hedging transaction, or as a position in a
straddle for tax purposes. Each Trust will be provided with an opinion of
counsel to each Trust specified in the related Prospectus Supplement ("Special
Tax Counsel") regarding certain federal income tax matters discussed below. An
opinion of Special Tax Counsel, however, is not binding on the Internal Revenue
Service ("IRS") or the courts, and no ruling on any of the issues discussed
below will be sought from the IRS. Moreover, there are no authorities on similar
transactions involving interests issued by a trust with terms similar to those
of the Notes described herein and in the related Prospectus Supplement.
Accordingly, persons considering the purchase of Notes should consult their own
tax advisors with regard to the United States federal income tax consequences of
an investment in the Notes and the application of United States federal income
tax laws, as well as the laws of any state, local or foreign taxing
jurisdictions, to their particular situations.
For purposes of the following summary, references to the Trust, the Notes
and related terms, parties and documents shall be deemed to refer, unless
otherwise specified herein, to each Trust and the Notes and related terms,
parties and documents applicable to such Trust.
Tax Characterization of the Trust
Special Tax Counsel will deliver its opinion that the Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation for United States federal income tax purposes. This opinion is based
on the assumption that the terms of the Trust Agreement and related documents
will be complied with.
If the Trust were taxable as a corporation for United States federal
income tax purposes, the Trust would be subject to corporate income tax on its
taxable income. The Trust's taxable income would include all its income on the
Receivables and other assets of the Trust, reduced by allowable deductions and
possibly reduced by its interest expense on the Notes. Any such corporate income
tax could materially reduce cash available to make payments on the Notes.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. The Transferor will agree by
entering into the Transaction Agreements, and the Noteholders will agree by
their purchase of Notes, to treat the Notes as debt for United States federal
income tax purposes. Special Tax Counsel will, except as otherwise provided in
the related Prospectus Supplement, advise the Trust that the Notes will be
classified as debt
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for United States federal income tax purposes. The discussion below assumes that
the characterization of the Notes as debt is correct.
OID, Strip Notes, etc. The discussion below assumes that the payments on
the Notes are denominated in U.S. dollars, and the Notes are not Strip Notes.
Moreover, the discussion assumes that the interest formula for the Notes meets
the requirements for "qualified stated interest" under Treasury regulations (the
"OID Regulations") relating to original issue discount ("OID"), and that any OID
on the Notes (i.e., any excess of the principal amount of the Notes over their
issue price) does not exceed a de minimis amount (ie., 1/4% of their principal
amount multiplied by their weighted average life, calculated using the
prepayment assumption used in pricing the Notes and weighting each payment by
reference to the number of complete years from the issue date to the day of such
payment, all within the meaning of the OID Regulations). If these conditions are
not satisfied with respect to any given Series of Notes and, as a result, the
Notes are treated as issued with OID, additional tax considerations with respect
to such Notes will be disclosed in the related Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed below, the Notes will not be considered to have been issued with
original issue discount. Accordingly, the stated interest on a Note will be
taxable to a Noteholder as ordinary interest income at the time it accrues or is
received in accordance with the Noteholder's regular method of accounting for
tax purposes. A purchaser who buys a Note for more or less than its principal
amount will generally be subject, respectively, to the premium amortization or
market discount rules of the Code.
However, because a failure to pay interest currently on the Notes is not a
default and does not give rise to a penalty, under Treasury Regulations relating
to the treatment of debt instruments issued with OID, the Notes might be viewed
as having been issued with original issue discount. Holders of the Notes would
be required to include the original issue discount in gross income for federal
income tax purposes as it accrues, in accordance with a constant interest method
based on a compounding of interest, in advance of receipt of the cash payments
attributable to such income.
Sale of the Notes. Upon the sale of a Note, the Noteholder will recognize
taxable gain or loss in an amount equal to the difference between the amount
realized on the sale (other than amounts attributable to accrued interest) and
the Noteholders adjusted tax basis in the Note. The Noteholders adjusted tax
basis in the Note will equal the cost of the Note to such Noteholder, increased
by any market discount previously included in income by such Noteholder with
respect to the Note, and decreased by the amount of any bond premium previously
amortized and any principal payments previously received by such Noteholder with
respect to such Note. Any such gain or loss will be capital gain or loss, except
to the extent of accrued market discount not previously included in income (or,
in the case of a prepayment or redemption, any OID not yet accrued), and will be
long term capital gain or loss if at the time of sale the Note has been held for
more than one year.
Foreign Holders. Under United States federal income tax law now in effect,
payments of interest by the Trust to a Noteholder who, as to the United States,
is a nonresident alien individual, a foreign corporation or other non-United
States person (a "foreign person") generally will be considered "portfolio
interest," and generally will not be subject to United States federal income tax
and withholding tax, provided the interest is not effectively connected with the
conduct of a trade or business within the United States by the foreign person
and the foreign person (i) is not actually or constructively a "10 percent
shareholder" of the Trust or the Transferor, is not for United States federal
income tax purposes a "controlled foreign corporation" with respect to which the
Trust or the Transferor is a "related person" within the meaning of the Code, or
is not a bank extending credit pursuant to a loan agreement entered into in the
ordinary course of its trade or business, and (ii) provides the person who is
otherwise required
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to withhold United States tax with respect to the Notes with an appropriate
statement (on IRS Form W-8 or a substitute form), signed under penalties of
perjury, certifying that the beneficial owner of the Note is a foreign person
and providing the foreign person's name and address. If a Note is held through a
securities clearing organization or certain other financial institutions (as is
expected to be the case unless Definitive Notes are issued), the organization or
institution may provide the relevant signed statement to the withholding agent;
in that case, however, the signed statement must be accompanied by an IRS Form
W-8 or substitute form provided by the foreign person that owns the Note. If
such interest is not portfolio interest, then it will be subject to United
States federal income and withholding tax at a rate of 30%, unless reduced or
eliminated pursuant to an applicable tax treaty or such interest is effectively
connected with the conduct of a trade or business within the United States and,
in either case, the appropriate statement has been provided.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income tax and withholding tax, provided that (i) such gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Payments of principal and interest, as well as
payments of proceeds from the sale, retirement or disposition of a Note, may be
subject to "backup withholding" tax under Section 3406 of the Code at a rate of
31% if a recipient of such payments fails to furnish to the payor certain
identifying information. Any amounts deducted and withheld would be allowed as a
credit against such recipient's United States federal income tax, provided
appropriate proof is provided under rules established by the IRS. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
Backup withholding will not apply with respect to payments made to certain
exempt recipients, such as corporations and financial institutions. Noteholders
should consult their tax advisors regarding their qualification for exemption
from backup withholding and the procedure for obtaining such an exemption.
Possible Alternative Treatments of the Notes. If, contrary to the opinion
of Special Tax Counsel, the IRS successfully asserted that one or more Classes
of the Notes did not represent debt for United States federal income tax
purposes, the Notes might be treated as equity interests in the Trust. If so
treated, the Trust might be taxable as a corporation with the adverse
consequences described above (and the taxable corporation would not be able to
reduce its taxable income by deductions for interest expense on Notes
recharacterized as equity). Further, treatment of the Notes as equity interests
in a partnership could have other adverse tax consequences to certain holders.
For example, income to foreign persons generally would be subject to United
States tax and United States tax return filing and withholding requirements, and
individual holders might be subject to certain limitations on their ability to
deduct their share of Trust expenses.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S
PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
AND DISPOSITION OF THE NOTES INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR
OTHER TAX LAWS.
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STATE TAX CONSIDERATIONS
BECAUSE EACH STATE'S INCOME TAX LAWS VARY, IT IS IMPOSSIBLE TO PREDICT THE
INCOME TAX CONSEQUENCES TO THE HOLDERS OF THE NOTES IN ALL OF THE STATE TAXING
JURISDICTIONS IN WHICH SUCH HOLDERS WILL BE SUBJECT TO TAX. FURTHER, IT IS
IMPOSSIBLE TO PREDICT THE INCOME TAX CONSEQUENCES TO THE TRUST IN ALL TAXING
JURISDICTIONS. NOTEHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX AND OTHER
ADVISORS.]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
impose certain requirements on employee benefit plans and certain other plans
and arrangements, including individual retirement accounts and annuities, Keogh
plans and certain collective investment funds or insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to the fiduciary responsibility provisions of ERISA and/or
Section 4975 of the Code (collectively, "Plans"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of "plan
assets" of any Plan ("Plan Assets"). ERISA generally imposes on Plan fiduciaries
certain general fiduciary requirements, including those of investment prudence
and diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. Generally, any person who
provides investment advice with respect to Plan Assets for a fee, is a fiduciary
with respect to such Plan Assets.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("Parties in Interest" under ERISA and
"Disqualified Persons" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed pursuant to Section
4975 of the Code, unless a statutory or administrative exemption is available.
These prohibited transactions generally are set forth in Section 406 of ERISA
and Section 4975 of the Code.
Any fiduciary or other Plan investor considering whether to purchase any
Notes on behalf of or with Plan Assets of any Plan should consult with its
counsel and refer to the related Prospectus Supplement for guidance regarding
the ERISA Considerations applicable to the Notes offered thereby.
Certain employee benefit plans, such as 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 the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of such plans may be invested in the Notes of any
Series without regard to the ERISA considerations described herein and in the
applicable Prospectus Supplement, subject to the provisions or other applicable
federal and state law. However, any such plan that is qualified and exempt from
taxation under Sections 401(a) and 501(a) of the Code is subject to the
prohibited transaction rules set forth in Section 503 of the Code.
PLAN OF DISTRIBUTION
The Notes of each Series may be sold to or through underwriters (the
"Underwriters") by a negotiated firm commitment underwriting and public
reoffering by the Underwriters or such other underwriting arrangement as may be
specified in the related Prospectus Supplement or may be placed either directly
or through agents. The Transferor intends that the Notes will be offered through
such
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various methods from time to time and that offerings may be made concurrently
through more than one of such methods or that an offering of a particular Series
of Notes may be made through a combination of such methods.
Each Prospectus Supplement will either (i) set forth the price at which
each Class of Notes being offered thereby will be offered to the public and any
concessions that may be offered to certain dealers participating in the offering
of such Notes or (ii) specify that the related Notes are to be resold by the
underwriters in negotiated transactions at varying prices to be determined at
the time of such sale. After the initial public offering of any such Notes, such
public offering prices and such concessions may be changed.
Each Underwriting Agreement (as defined in the related Prospectus
Supplement) will provide that the Transferor and MCC will indemnify the related
Underwriters against certain civil liabilities, including liabilities under the
Securities Act, or contribute to payments the several underwriters may be
required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust Accounts
in Eligible Investments acquired from such underwriters.
Pursuant to each of the Underwriting Agreements with respect to a given
Series of Notes, the closing of the sale of each Class of Notes will be
contingent on the closing of the sale of all other such Classes. The place and
time of delivery for the Securities in respect of which this Prospectus is
delivered will be set forth in the related Prospectus Supplement.
RATINGS
Each Class of Notes of a Series offered pursuant to this Prospectus and a
related Prospectus Supplement will be rated at its initial issuance in one of
the four highest categories by at least one nationally recognized statistical
rating organization (each, a "Rating Agency").
A security rating is not a recommendation to buy, sell or hold Notes and
may be subject to revision or withdrawal at any time by the assigning Rating
Agency. No person is obligated to maintain the rating on any Note, and,
accordingly, there can be no assurance that the ratings assigned to a Note upon
initial issuance will not be lowered or withdrawn by a Rating Agency at any time
thereafter. In general, ratings address credit risk and do not represent any
assessment of the likelihood of rate of principal prepayments.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for each
Trust, the Transferor and the Servicer by Davis Wright Tremaine, Seattle, WA and
with respect to certain federal tax matters, by Special Tax Counsel. Certain
legal matters relating to the Notes will be passed upon for the Underwriters by
Orrick, Herrington & Sutcliffe LLP, Washington, D.C.
57
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein:
Administration Agreement.................................................... 11
Administration Fee.......................................................... 11
Administrator............................................................... 11
APR......................................................................... 21
Article 2A.................................................................. 19
Base Rate................................................................... 33
Book-Entry Notes............................................................ 34
Calculation Agent........................................................... 33
Cede........................................................................ 3
Cedel....................................................................... 34
Cedel Participants.......................................................... 36
Certificate Pool Factor..................................................... 25
Certificateholder,.......................................................... 35
Certificateholders.......................................................... 35
Certificates................................................................ 2
Class....................................................................... 2
Class A Noteholders......................................................... 4
Closing Date................................................................ 37
Code........................................................................ 55
Collection Account.......................................................... 40
Commission.................................................................. 3
Contribution and Sale Agreement............................................. 6
Cut-off Date................................................................ 7
Cut-off Date APR............................................................ 38
Definitive Notes............................................................ 33
Depositaries................................................................ 34
Depository.................................................................. 27
Distribution Date........................................................... 28
DTC......................................................................... 3
Early Amortization Event.................................................... 9
Eligible Deposit Account.................................................... 41
Eligible Institution........................................................ 41
Eligible Investments........................................................ 40
ERISA....................................................................... 59
Euroclear................................................................... 36
Euroclear Operator.......................................................... 36
Euroclear Participants...................................................... 36
Euroclear System............................................................ 36
Event of Default............................................................ 29
Exchange Act................................................................ 3
Financed Equipment.......................................................... 2
Fixed Rate Securities....................................................... 32
Floating Rate Securities.................................................... 32
Funding Period.............................................................. 5
Indenture................................................................... 4
58
<PAGE>
Indenture Trustee........................................................... 2
Indirect Participants....................................................... 34
Initial Cut-off Date........................................................ 7
Initial Pool Balance........................................................ 50
Initial Receivables......................................................... .6
Insolvency Event............................................................ 48
Insolvency Laws............................................................. 15
Interest Payment Account.................................................... 40
Interest Rate............................................................... .5
Interest Reset Period....................................................... 33
Investment Earnings......................................................... 40
IRS......................................................................... 55
Issuer...................................................................... 4
Lease....................................................................... 6
Loan Contract............................................................... 6
MCC......................................................................... 4
Mechanics' Liens............................................................ 13
Note Distribution Account................................................... 40
Note Pool Factor............................................................ 25
Noteholder.................................................................. 35
Noteholders................................................................. 35
Notes....................................................................... 2
Obligor..................................................................... 6
OID......................................................................... 57
OID Regulations............................................................. 57
Owner Trustee............................................................... 2
Participants................................................................ 34
Plan Assets................................................................. 59
Plans....................................................................... 59
Pool Balance................................................................ 25
Pooling and Servicing Agreement............................................. 6
Pre-Funded Amount......................................................... 7, 17
Pre-Funding Account......................................................... 2
Principal Balance........................................................... 38
Principal Funding Account................................................... 40
Prospectus Supplement....................................................... 2
Purchase Agreement.......................................................... 37
Purchase Amount............................................................. 38
Rating Agency............................................................... 60
Realized Losses............................................................. 45
Receivables ................................................................ 2
Receivables Files........................................................... 14
Record Date ................................................................ 34
Registration Statement...................................................... 3
Related Documents........................................................... 31
Reserve Account............................................................. 44
Revolving Period............................................................ 9
Rules....................................................................... 35
Schedule of Receivables..................................................... 38
Scheduled Revolving Period Termination Date................................. 9
59
<PAGE>
Securities ................................................................ 2
Securities Act.............................................................. 3
Series ................................................................ 2
Servicer ................................................................ 4
Servicer Default............................................................ 48
Servicer's Yield............................................................ 11
Servicing Fee............................................................... 11
Special Tax Counsel......................................................... 55
Specified Reserve Account Balance........................................... 44
Spread ................................................................ 33
Spread Multiplier........................................................... 33
Strip Notes ................................................................ 5
Subsequent Closing Date..................................................... 38
Subsequent Cut-off Date..................................................... 7
Subsequent Receivables...................................................... 2
Terms and Conditions........................................................ 36
Total Distribution Amount................................................... 42
Transfer and Servicing Agreements........................................... 37
Transferor ................................................................ 2
Trust ................................................................ 2
Trust Accounts.............................................................. 40
Trust Agreement............................................................. 4
Trust Property.............................................................. 20
Trustee ................................................................ 34
UCC ................................................................ 12
Underwriters................................................................ 60
60
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder other
than underwriting discounts and commissions.
Registration Statement Fee.................................. *
Printing and Engraving Expenses............................. *
Trustee's Fees and Expenses................................. *
Legal Fees and Expenses..................................... *
Blue Sky Fees and Expenses.................................. *
Accountants' Fees and Expenses.............................. *
Rating Agency Fees.......................................... *
Miscellaneous Fees and Expenses............................. *
-------
Total..................................................... $ *
========
----------
* To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
The Transfer and Servicing Agreement will provide that any director,
officer, employee or agent of the Registrant will be indemnified by the Servicer
from and against (a) certain liabilities arising in connection with the Financed
Equipment, (b) taxes levied against such person in connection with the
transaction (including costs and expenses in defending against the same) and (c)
certain liabilities arising in connection with the Servicer's gross negligence,
willful misfeasance or bad faith in the performance of its duties.
Article XI of the Certificate of Incorporation for MetLife Capital Funding
Corp. III (the "Corporation") provides that the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended, a director of this Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for a breach of fiduciary
duty as a director. Any repeal or modification of this Article XI shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
Article V of the By-Laws of the Corporation provides:
Indemnification of Officers, Directors and Others
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another Corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to
II-1
<PAGE>
provide broader indemnification rights than said law permitted the Corporation
to provide prior to such amendment) against all expense, liability and loss
(including attorneys' fees actually and reasonably incurred by such person in
connection with such proceeding) and such indemnification shall inure to the
benefit of his heirs, executors and administrators; provided, however, that,
except as provided in Section 2 hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the board of directors of the
Corporation. The right to indemnification conferred in this Article V shall be a
contract right and, subject to Sections 2 and 5 hereof, shall include the right
to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The Corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V or
advance of expenses under Section 5 of this Article V shall be made promptly,
and in any event within thirty (30) days, upon the written request of the
director or officer. If a determination by the Corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the Corporation fails to respond within sixty (60) days to a written request
for indemnity, the Corporation shall be deemed to have approved the request. If
the Corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within thirty (30) days, the right to indemnification or advances as
granted by this Article V shall be enforceable by the director or officer in any
court of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such action shall also be indemnified by the Corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the Corporation. Neither the failure of the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual determination by the
Corporation (including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the Corporation or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the Corporation would have the power to indemnify such
person against such liability under this Article V.
II-2
<PAGE>
Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the Corporation
in advance of such proceeding's final disposition unless otherwise determined by
the board of directors in the specific case upon receipt of an undertaking by or
on behalf of the director or officer to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
Corporation. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the Corporation, or who are or were serving at the request of the Corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the Corporation" shall include, in addition to the resulting
Corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under Article V with
respect to the resulting or surviving corporation as he or she would have with
respect to such constituent corporation if its separate existence had continued.
Item 16. Exhibits.
1.1 - Form of Underwriting Agreement for the Notes.
3.1 - Form of Certificate of Trust of a Trust.
4.1 - Form of Indenture (including Form of Asset Backed Note).
4.2 - Form of Trust Agreement.
4.3 - Form of Transfer and Servicing Agreement.
5.1 - Opinion of Orrick, Herrington & Sutcliffe with respect to legality.
8.1 - Opinion of Orrick, Herrington & Sutcliffe with respect to federal tax
matters.
10.1 - Form of Contribution and Sale Agreement.
10.2 - Form of Administration Agreement.
23.1 - Consents of Orrick, Herrington & Sutcliffe (included in its opinions
filed as Exhibits 5.1 and 8.1).
23.2 - Consent of Davis, Wright, Tremaine.*
24.1 - Powers of Attorney (included on page II-5 of this Registration
Statement).
25.1 - Statement of eligibility of trustee.*
- ----------
* To be filed by amendment.
Item 17. Undertakings.
II-3
<PAGE>
The undersigned Registrant on behalf of the MetLife Capital Equipment Loan
Trusts (the "Trusts") hereby undertakes as follows:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement; (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that (a)(1)(i) and
(a)(1)(ii) will not apply if the information required to be included in a
post-effective amendment thereby is contained in periodic reports filed pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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 hereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) 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 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) with respect to any Trust 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.
(c) That 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 provisions described under Item 15
above, 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 Securities Act of 1933 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
Securities Act of 1933 and will be governed by the final adjudication of each
issue.
(d) (1) That, 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 of 1933 shall be deemed to
be part of this Registration Statement as of the time it was declared effective.
II-4
<PAGE>
(2) That, 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.
(e) To file an application for the purpose of determining the eligibility
of the Indenture Trustee for each Trust to act under subsection (a) of Section
310 of the Trust Indenture Act of 1939 in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of such Act.
II-5
<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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bellevue, State of Washington, on March 14, 1997.
METLIFE CAPITAL FUNDING CORP. III
as originator of the Trusts and as
Registrant
By: /s/ Joseph G. Rooney
----------------------------------
Name: Joseph G. Rooney
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Joseph G. Rooney and Linda Foley as his or her
true and lawful attorney-in-fact and agent, with full power of substitution, for
him or her and in his or her name, place and stead, in any and all capacities,
to sign any and all amendments and post-effective amendments to this
Registration Statement, and to file the same with all exhibits thereto, unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or either of them or their substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on March 14, 1997 by the following
persons in the capacities indicated.
Signature Title
--------- -----
/s/ Joseph G. Rooney Director, President
- ---------------------------- (Chief Executive Officer)
Joseph G. Rooney
/s/ Paul J. Graf Director
- ----------------------------
Paul J. Graf
/s/ Cynthia L. Pope Director
- ----------------------------
Cynthia L. Pope
/s/ John J. Reiner Vice President, Treasurer,
- ---------------------------- (Chief Financial Officer)
John J. Reiner
/s/ Linda Foley Vice President
- ---------------------------- (Chief Accounting Officer)
Linda Foley
<PAGE>
EXHIBIT INDEX
Sequential
Exhibit Page
Number Description Number
- ------ ----------- ------
1.1 - Form of Underwriting Agreement for the Notes.
3.1 - Form of Certificate of Trust of a Trust.
4.1 - Form of Indenture (including Form of Asset Backed Note).
4.2 - Form of Trust Agreement.
4.3 - Form of Transfer and Servicing Agreement.
5.1 - Opinion of Orrick, Herrington & Sutcliffe with respect
to legality.
8.1 - Opinion of Orrick, Herrington & Sutcliffe with respect to
federal tax matters.
10.1 - Form of Contribution and Sale Agreement.
10.2 - Form of Administration Agreement.
23.1 - Consents of Orrick, Herrington & Sutcliffe (included in
its opinions filed as Exhibits 5.1 and 8.1).
23.2 - Consent of Davis Wright Tremaine.*
24.1 - Powers of Attorney (included on page II-5 of this
Registration Statement).
25.1 - Statement of eligibility of trustee.*
- ----------
* To be filed by amendment.
FORM OF CERTIFICATE OF TRUST OF
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
THIS Certificate of Trust of METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES
DESIGNATION] (the "Trust"), dated [________ __, 19__], is being duly executed
and filed by [owner trustee], a Delaware [form of organization], as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code, ss.
3801 et seq.).
1. Name. The name of the business trust formed hereby is METLIFE CAPITAL
EQUIPMENT LOAN TRUST [SERIES DESIGNATION].
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is [owner trustee] [address], Attention:
[____________________________].
3. Effective Date. This Certificate of Trust shall be effective as
of its filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
[Owner Trustee], not in its
individual capacity but solely
as Owner Trustee,
By:__________________________________
Name:
Title:
- --------------------------------------------------------------------------------
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
Class A [rate]% Asset Backed Notes and
Class B [rate]% Asset Backed Notes
------------------------
FORM OF INDENTURE
Dated as of [__________ ____, 1997]
------------------------
[TRUSTEE]
Indenture Trustee
- --------------------------------------------------------------------------------
<PAGE>
------------------------
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE
ACT OF 1939 AND INDENTURE PROVISIONS*
Trust Indenture
Act Section Indenture Section
--------------- -----------------
310(a)(1).................................. 6.11
(a)(2)................................... 6.11
(a)(3)................................... 6.10
(a)(4)................................... Not Applicable
(b)...................................... 6.08(a)(1)
(c)...................................... Not Applicable
311(a)..................................... 6.12
(b)...................................... 6.12
312(a)..................................... 7.01(a)
(b)...................................... 7.02(b)
(c)...................................... 7.02(c)
313(a)..................................... 7.04
(b)...................................... 7.04
(c)...................................... 7.04
(d)...................................... 7.04
314(a)..................................... 3.09, 7.03(a)
(b)..................................... 3.06
(c)(1)................................... 2.09, 8.04(b)
(c)(2)................................... 2.09, 8.04(b), 11.01(a)
(c)(3)................................... 2.09, 8.04(b), 11.01(a)
(d)(1)................................... 2.09, 8.04(b), 11.01(a)
(d)(2)................................... Not Applicable
(d)(3)................................... Not Applicable
(e)...................................... 11.01(a)
315(a)..................................... 6.01(b)
(b)...................................... 6.05
(c)...................................... 6.01(b)
(d)...................................... 6.01(b)
(d)(1)................................... 6.01(b)
(d)(2)................................... 6.01(c)
(d)(3)................................... 6.01(c)
(e)...................................... 5.13
316(a)(1)(A)............................... 5.11
316(a)(1)(B)............................... 5.12
316(a)(2).................................. Not Applicable
316(b)..................................... 5.07
317(a)(1).................................. 5.03
317(a)(2).................................. 5.03
317(b)..................................... 5.03
318(a)..................................... 11.07
- ----------
* This reconciliation and tie shall not, for any purpose, be deemed to be part
of the within indenture.
i
<PAGE>
TABLE OF CONTENTS
Page
GRANTING CLAUSE
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. (a) Definitions.......................................... 2
(b) Other Definitional Provisions........................ 8
SECTION 1.02. Incorporation by Reference of Trust Indenture Act........ 9
SECTION 1.03. Calculations of Interest................................. 9
ARTICLE II
THE NOTES
SECTION 2.01. Form..................................................... 10
SECTION 2.02. Execution, Authentication and Delivery................... 10
SECTION 2.03. Temporary Notes.......................................... 10
SECTION 2.04. Registration; Registration of Transfer and Exchange...... 11
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes............... 12
SECTION 2.06. Persons Deemed Owner..................................... 13
SECTION 2.07. Payment of Principal and Interest; Defaulted
Interest................................................. 13
SECTION 2.08. Cancellation............................................. 14
SECTION 2.09. Release of Collateral.................................... 14
SECTION 2.10. Book-Entry Notes......................................... 14
SECTION 2.11. Notices to Clearing Agency............................... 15
SECTION 2.12. Definitive Notes......................................... 15
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest........................ 16
SECTION 3.02. Maintenance of Office or Agency.......................... 16
SECTION 3.03. Money for Payments To Be Held in Trust................... 16
SECTION 3.04. Existence................................................ 18
SECTION 3.05. Protection of Trust Estate............................... 18
SECTION 3.06. Opinions as to Trust Estate.............................. 19
ii
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Page
SECTION 3.07. Performance of Obligations; Servicing of
Receivables.............................................. 19
SECTION 3.08. Negative Covenants....................................... 21
SECTION 3.09. Statements as to Compliance.............................. 22
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain
Terms.................................................... 22
SECTION 3.11. Successor or Transferee.................................. 23
SECTION 3.12. No Other Business........................................ 24
SECTION 3.13. No Borrowing............................................. 24
SECTION 3.14. Servicer's Obligations................................... 24
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities........ 24
SECTION 3.16. Capital Expenditures..................................... 24
SECTION 3.17. Removal of Administrator................................. 24
SECTION 3.18. Restricted Payments...................................... 24
SECTION 3.19. Notice of Events of Default.............................. 25
SECTION 3.20. Further Instruments and Acts............................. 25
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.................. 25
SECTION 4.02. Application of Trust Money............................... 26
SECTION 4.03. Repayment of Moneys Held by Paying Agent................. 26
ARTICLE V
REMEDIES
SECTION 5.01. Events of Default........................................ 27
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment................................................ 28
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee..................................... 28
SECTION 5.04. Remedies; Priorities..................................... 30
SECTION 5.05. Optional Preservation of the Receivables................. 32
SECTION 5.06. Limitation of Suits...................................... 32
SECTION 5.07. Unconditional Rights of Noteholders to Receive
Principal and Interest................................... 33
SECTION 5.08. Restoration of Rights and Remedies....................... 33
SECTION 5.09. Rights and Remedies Cumulative........................... 33
SECTION 5.10. Delay or Omission Not a Waiver........................... 33
SECTION 5.11. Control by Noteholders................................... 33
SECTION 5.12. Waiver of Past Defaults.................................. 34
SECTION 5.13. Undertaking for Costs.................................... 34
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Page
SECTION 5.14. Waiver of Stay or Extension Laws......................... 35
SECTION 5.15. Action on Notes.......................................... 35
SECTION 5.16. Performance and Enforcement of Certain
Obligations.............................................. 35
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee.............................. 36
SECTION 6.02. Rights of Indenture Trustee.............................. 37
SECTION 6.03. Individual Rights of Indenture Trustee................... 38
SECTION 6.04. Indenture Trustee's Disclaimer........................... 38
SECTION 6.05. Notice of Defaults....................................... 38
SECTION 6.06. Reports by Indenture Trustee to Holders.................. 38
SECTION 6.07. Compensation and Indemnity............................... 39
SECTION 6.08. Replacement of Indenture Trustee......................... 39
SECTION 6.09. Successor Indenture Trustee by Merger.................... 40
SECTION 6.10. Appointment of Co-Trustee or Separate Indenture
Trustee.................................................. 41
SECTION 6.11. Eligibility; Disqualification............................ 42
SECTION 6.12. Preferential Collection of Claims Against Issuer......... 42
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders................................. 42
SECTION 7.02. Preservation of Information; Communications to
Noteholders.............................................. 42
SECTION 7.03. Reports by Issuer........................................ 43
SECTION 7.04. Reports by Indenture Trustee............................. 43
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money...................................... 43
SECTION 8.02. Trust Accounts........................................... 44
SECTION 8.03. General Provisions Regarding Accounts.................... 45
SECTION 8.04. Release of Trust Estate.................................. 46
SECTION 8.05. Opinion of Counsel....................................... 46
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Page
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders.............................................. 47
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders.............................................. 48
SECTION 9.03. Execution of Supplemental Indentures..................... 49
SECTION 9.04. Effect of Supplemental Indenture......................... 49
SECTION 9.05. Conformity With Trust Indenture Act...................... 50
SECTION 9.06. Reference in Notes to Supplemental Indentures............ 50
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption............................................... 50
SECTION 10.02. Form of Redemption Notice................................ 50
SECTION 10.03. Notes Payable on Redemption Date......................... 51
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions etc................. 51
SECTION 11.02. Form of Documents Delivered to Indenture Trustee......... 53
SECTION 11.03. Acts of Noteholders...................................... 53
SECTION 11.04. Notices, etc. to Indenture Trustee, Issuer and Rating
Agencies................................................. 54
SECTION 11.05. Notices to Noteholders; Waiver........................... 55
SECTION 11.06. Alternate Payment and Notice Provisions.................. 55
SECTION 11.07. Conflict with Trust Indenture Act........................ 55
SECTION 11.08. Effect of Headings and Table of Contents................. 56
SECTION 11.09. Successors and Assigns................................... 56
SECTION 11.10. Separability............................................. 56
SECTION 11.11. Benefits of Indenture.................................... 56
SECTION 11.12. Legal Holidays........................................... 56
SECTION 11.13. GOVERNING LAW............................................ 56
SECTION 11.14. Counterparts............................................. 56
SECTION 11.15. Recording of Indenture................................... 56
SECTION 11.16. Trust Obligation......................................... 57
SECTION 11.17. No Petition.............................................. 57
SECTION 11.18. Inspection............................................... 57
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EXHIBITS
EXHIBIT A - Schedule of Receivables........................................A-1
EXHIBIT B - Form of Transfer and Servicing Agreement.......................B-1
EXHIBIT C - Form of Depository Agreement...................................C-1
EXHIBIT D - Form of Note...................................................D-1
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This INDENTURE dated as of [__________ ____, 1997] is hereby executed by and
between METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION], a Delaware
business trust (the "Issuer" or the "Trust"), and [TRUSTEE], as trustee and not
in its individual capacity (the "Indenture 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 Class A [rate]%
Asset Backed Notes and Class B [rate]% Asset Backed Notes (the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the Closing Date, as
Indenture Trustee for the benefit of the Holders of the Notes, all of the
Issuer's right, title and interest, whether now owned or hereafter acquired, in,
to and under (a) the Receivables and all obligations of the Obligors thereunder,
including all moneys (including accrued interest) due thereon on or after the
Cut-off Date; (b) the security interests in the Financed Equipment granted by
Obligors pursuant to the Receivables and any other interest of the Issuer in the
Financed Equipment; (c) any proceeds with respect to the Receivables from claims
on any physical damage, credit life and/or disability insurance policies
covering Financed Equipment or Obligors; (d) the Contribution and Sale
Agreement, including the right assigned to the Issuer to cause MCC to repurchase
Receivables from the Transferor under certain circumstances described therein;
(e) all money on deposit from time to time in the Trust Accounts, including the
Reserve Account Initial Deposit, and in all investments and all income from the
investment of funds therein (including any accrued discount realized on
liquidation of any investment purchased at a discount); (f) the Transfer and
Servicing Agreement (including all rights of the Transferor under the
Contribution and Sale Agreement assigned to the Issuer pursuant to the Transfer
and Servicing Agreement); and (g) 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, products, rents, receipts
or profits of the conversion, voluntary or involuntary, into cash or other
property, all cash and non-cash proceeds, accounts, accounts receivable, notes,
drafts, contract rights, general intangibles, documents, money, certificates of
deposit, letters of credit, advances of credit, goods, uncertificated
securities, 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 consisting
of, arising from or relating to all or any part of any of the foregoing or any
proceeds thereof (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
<PAGE>
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties as required in this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. (a) Definitions. 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.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement dated as of
[__________ ____, 1997], among the Administrator, the Issuer and the Trustee.
"Administrator" means MCC or any successor Administrator under the
Administration Agreement.
"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.
"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,
containing the specimen signature of each such Person, delivered by the Owner
Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter) and, so long as the
Administration Agreement is in effect, any Vice President or more senior officer
of the Administrator who is authorized to act for the Administrator in matters
relating to the Issuer and to be acted upon by the Administrator pursuant to the
Administration Agreement and who is identified on the list of Authorized
Officers (containing the specimen signatures of such officers) delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter); provided, however, that
for purposes of Section 3.09 such officer of the Administrator must be any of
the chief executive officer, chief financial officer or chief accounting
officer.
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Contribution and Sale Agreement, the Transfer and Servicing Agreement, the
Administration Agreement, the Depository Agreement, the Underwriting Agreement
and other documents and certificates delivered in connection therewith.
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"Book-Entry Notes" means a beneficial interest in the Class A Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in The City of New York, [Trustee
city] and Seattle, Washington or in such other location as the Corporate Trust
Office may be located are authorized or obligated by law, regulation or
executive order to remain closed.
"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Class A Note" means any Note, substantially in the form of Exhibit D,
designated therein as a Class A [rate]% Asset Backed Note.
"Class A Note Interest Rate" means, for a Distribution Date, [ ]% per
annum.
"Class A Note Owner" means, with respect to a Book-Entry Note, the Person
who is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing Agency).
"Class A Noteholders' Principal Distributable Amount" with respect to any
Distribution Date has the meaning specified in the Transfer and Servicing
Agreement.
"Class B Note" means any Note, substantially in the form of Exhibit D,
designated therein as a Class B [rate]% Asset Backed Note.
"Class B Note Interest Rate" means, for a Distribution Date, [ ]% per
annum.
"Class B Noteholders' Principal Distributable Amount" with respect to any
Distribution Date has the meaning specified in the Transfer and Servicing
Agreement.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means [__________ ____, 19__.]
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
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"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office" means the principal office of the Indenture
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 Services Division, except
that for purposes of Section 3.02, such term shall mean the office or agency of
the Indenture Trustee in the Borough of Manhattan, the City of New York, which
office at the date hereof is located at [____________________], New York, New
York [________], or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders and the Transferor, or the
principal corporate trust office of any successor Indenture Trustee (the address
of which the successor Indenture Trustee will notify the Noteholders and the
Transferor); provided, that for the purposes of Section 3.02, the address of any
such office shall be in the Borough of Manhattan of the City of New York.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Depository Agreement" means the agreement among the Issuer, the Indenture
Trustee, the Administrator, and The Depository Trust Company, as the initial
Clearing Agency, dated as of the Closing Date, substantially in the form of
Exhibit C.
"Distribution Date" means the [25]th day of each calendar month, or, if
any such date is not a Business Day, the next succeeding Business Day,
commencing [__________ ____, 199__].
"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, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"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 Collateral or of any other agreement or
instrument shall include all rights, powers 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 Collateral 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
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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.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Indenture Trustee" means [Trustee], a national banking association, as
Indenture Trustee under this Indenture, or any successor Indenture Trustee under
this Indenture.
"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 Transferor 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 Transferor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Transferor 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 Indenture 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 Indenture 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.
"Issuer" means MetLife Capital Equipment Loan Trust [Series Designation]
or any successor thereto 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 Indenture Trustee.
"MCC" means MetLife Capital Corporation, a [state] corporation, and its
successors.
"Net APR" means, with respect to a Receivable, its APR less the Servicing
Fee Rate.
"Note Interest Rate" means the per annum interest rate borne by a Note.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Notes" means, collectively, the Class A Notes and the Class B Notes.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements
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of Section 11.01, and delivered to the Indenture Trustee. Unless otherwise
specified, any reference in this Indenture to an Officer's Certificate shall be
to an Officer's 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 MCC and who shall be satisfactory to the Indenture Trustee, and
which opinion or opinions shall be addressed to the Indenture Trustee as
Indenture Trustee, shall comply with any applicable requirements of Section
11.01, and shall be in form and substance satisfactory to the Indenture Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled 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 Indenture 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 Indenture 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 Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided 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 Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Transferor or any Affiliate of
any of the foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Indenture Trustee knows to be so
owned shall be so disregarded; provided, however, that at anytime following an
Event of Default, 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 Basic Document,
Class B Notes shall be disregarded and deemed not to be Outstanding. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture 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 Transferor or any Affiliate of any
of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
a class of Notes, as applicable, Outstanding at the date of determination.
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"Owner Trustee" means [Owner Trustee], not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, or any successor Owner
Trustee under the Trust Agreement.
"Paying Agent" means the Indenture Trustee or any Person that meets the
eligibility standards for the Indenture Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"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.
"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.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency" means Moody's and Standard & Poor's. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by the Issuer, notice of which designation shall be given to the
Indenture Trustee, the Owner Trustee and the Servicer.
"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 Transferor, the Servicer and the
Issuer in writing that such action will not result in a reduction or withdrawal
of the then current rating of any Class of the Notes.
"Receivable" means any Contract listed on the Schedule of Receivables.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, (i) if the Notes are held in book-entry form, the close of business on the
calendar day immediately preceding such Distribution Date or Redemption Date or
(ii) if the Notes are held in definitive form, the last calendar day of the
month preceding the month in which such Distribution Date or Redemption Date
occurs.
"Redemption Date" means the Distribution Date specified by the Servicer or
the Issuer pursuant to Section 10.01, as applicable.
"Redemption Price" means in the case of a redemption of the Notes pursuant
to Section 10.01, an amount equal to the principal amount of the Notes redeemed
plus accrued and unpaid interest thereon at the related Note Interest Rate to
but excluding the Redemption Date.
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"Registered Holder" means the Person in whose name a Note is registered in
the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Trust Officer, Secretary,
Assistant Secretary, or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Schedule Of Receivables" means the listing of the Receivables set forth
in Exhibit A (which Exhibit may be in the form of microfiche).
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.07(e).
"Transfer and Servicing Agreement" means the Transfer and Servicing
Agreement dated as of [__________ ____, 199__], among the Issuer, the Transferor
and the Servicer.
"Trust" means MetLife Capital Equipment Loan Trust [Series Designation].
"Trust Agreement" means the Trust Agreement, as amended and restated as of
[__________ ____, 19__], between the Transferor and the Owner Trustee.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, all property and interests Granted to the Indenture Trustee),
including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
in force on the date hereof, unless otherwise specifically provided.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
(b) Other Definitional Provisions. (1) Capitalized terms used herein and
not otherwise defined have the meanings assigned to them in the Transfer and
Servicing Agreement or, if not defined therein, in the Trust Agreement.
(2) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
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(3) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(4) The words "hereof," "herein," "hereunder," and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(5) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
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 Indenture
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.
SECTION 1.03. Calculations of Interest. All calculations of interest made
hereunder shall be made on the basis of a year of 360 days of twelve 30-day
months.
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ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A Notes and Class B Notes, in each case
together with the Indenture Trustee's certificate of authentication, shall be in
substantially the forms set forth in Exhibit D, 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 Definitive 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.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibit D 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 Indenture Trustee shall, upon written order of the Transferor,
authenticate and deliver Notes for original issue in an aggregate principal
amount of $[amount]. The aggregate principal amount of Notes outstanding at any
time may not exceed such 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
Indenture 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 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 Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or
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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 Indenture 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
Indenture Trustee shall be the initial "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. 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 Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture 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 Indenture Trustee shall have the
right to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture 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, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, in the 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 of the
same class 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, if the requirements of
Section 8-401(1) of the UCC are met, the Issuer shall execute, and the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
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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 Indenture 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 Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer 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 Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the Indenture Trustee
harmless, then, in the absence of notice to the Issuer, the Note Registrar or
the Indenture Trustee that such Note has been acquired by a bona fide purchaser,
and provided that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute and upon its request the Indenture Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Note, a replacement Note of the same class; 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 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 Indenture 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 Indenture Trustee in connection therewith.
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Upon the issuance of any replacement Note under this Section, the Issuer
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 Indenture
Trustee) connected therewith.
Except as set forth in the first paragraph of this Section 2.05, 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. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture 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 neither the Issuer, the Indenture Trustee nor any agent of the
Issuer or the Indenture 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 form of the Note set forth in
Exhibit D and such interest shall be payable on each Distribution Date as
specified therein, subject to Section 3.01. Any installment of interest or
principal, if any, or any other amount, payable on any Note which is punctually
paid or duly provided for by the Issuer on the applicable Distribution 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, (i) except that with respect to Class A Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and (ii) except for
(A) the final installment of principal payable with respect to such Note on a
Distribution Date and (B) the Redemption Price for any Note called for
redemption pursuant to Section 10.01, in each case 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
Distribution Date as provided in the form of Note set forth in Exhibit D.
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, if the Indenture Trustee or
the Holders of the Notes representing a majority of the Outstanding Amount of
the Notes have declared the Notes to be immediately due and payable in the
manner provided in
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Section 5.02. All principal payments on each class of Notes shall be made pro
rata to the Noteholders of such Class entitled thereto. Upon notice to the
Indenture Trustee by the Issuer, the Indenture Trustee shall notify the Person
in whose name a Note is registered at the close of business on the Record Date
preceding the Distribution 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 Business Days prior to such final
Distribution 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.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Note Interest Rate in any lawful manner.
The Issuer may pay such defaulted interest to the persons who are Noteholders on
a subsequent special record date, which date shall be fixed or caused to be
fixed by the Issuer and shall be at least five Business Days prior to the
payment date. The Issuer shall fix or cause to be fixed any such payment date,
and, at least 15 days before any such special record date, the Issuer shall mail
to each Noteholder a notice that states the special record date, the payment
date and the amount of defaulted interest to be paid.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture 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 cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Indenture 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 Indenture Trustee.
SECTION 2.09. Release of Collateral. Subject to Section 11.01, the
Indenture Trustee shall release property from the lien of this Indenture only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and Independent Certificates in accordance with TIA ss.ss.
314(c) and 314 (d)(1) or an Opinion of Counsel in lieu of such Independent
Certificates to the effect that the TIA does not require any such Independent
Certificates.
SECTION 2.10. Book-Entry Notes. The Class A 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
Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Class A Note Owner will receive a Definitive
Note representing such Class A Note Owner's interest in such Note, except as
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provided in Section 2.12. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Class A Note Owners pursuant to
Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled
to deal with the Clearing Agency 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 Class A 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 Class A Note Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Class A Note Owners and the Clearing
Agency and/or the Clearing Agency Participants pursuant to the Depository
Agreement. Unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit payments
of principal of and interest on the Notes to such Clearing Agency
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 Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Class A Note Owners
and/or Clearing Agency Participants owning or representing, respectively,
such required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
SECTION 2.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Class A Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Holders of the Notes to the
Clearing Agency, and shall have no obligation to the Class A Note Owners.
SECTION 2.12. Definitive Notes. (a) The Class B Notes shall be issued in
definitive, fully-registered form and (b) if (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect to the Notes, and
the Administrator is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Indenture Trustee in writing that it
elects to terminate the book-entry system through the Clearing Agency or (iii)
after the occurrence of an Event of Default or a Servicer Default, Class A Note
Owners representing beneficial interests aggregating a majority of the
Outstanding Amount of the Class A Notes advise the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Class A Note Owners, then the Clearing
Agency shall notify all Class A Note Owners and the Indenture Trustee of the
occurrence of any such event and of the
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availability of Definitive Notes to Class A Note Owners requesting the same.
Upon surrender to the Indenture Trustee of the typewritten Note or Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
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 to Class A Note Owners, the Indenture
Trustee shall recognize the Holders of such Definitive Notes as Noteholders.
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest. The Issuer will duly and
punctually pay the principal of and interest, if any, 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 Distribution Date pursuant to Section 8.02(c). Amounts
properly withheld under the Code by any Person from a payment to any Noteholder
of interest and/or principal and/or premium 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
the Borough of Manhattan, in the City of New York 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 Corporate
Trust Office to serve as its agent for the foregoing purposes. The Issuer will
give prompt written notice to the Indenture 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
Indenture 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 Indenture 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 8.02(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.02(c) shall be made on
behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no
amounts so withdrawn from the Collection Account and the Note Distribution
Account for payments of Notes shall be paid over to the Issuer except as
provided in this Section.
On or before 12:00 noon (New York time) on each Distribution Date and the
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 under the Notes, such sum to
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be held in trust for the benefit of the Persons entitled thereto and (unless the
Paying Agent is the Indenture Trustee) shall promptly notify the Indenture
Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
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;
(ii) give the Indenture Trustee notice of any default by the Issuer
of which it has actual knowledge (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 Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture 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 Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture 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 Indenture 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 Indenture 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 the Indenture Trustee or such Paying Agent, as the case may be, shall
give prompt notice of such occurrence to the Issuer and shall release such money
to the Issuer on Issuer Request; and the Holder of such Note shall thereafter,
as an unsecured general creditor, look only to the Issuer for payment thereof
(but only to the extent of the amounts so paid to the Issuer), and all liability
of the Indenture Trustee or such Paying
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Agent with respect to such trust money shall thereupon cease; provided, however,
that the Indenture Trustee or such Paying Agent, before being required to make
any such repayment, shall at the expense and direction 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 the Issuer.
The Indenture Trustee shall 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 Indenture 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, rights and franchises as a business trust under the laws of the State
of Delaware (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 Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer will from time to
time take all actions necessary, including without limitation preparing,
executing, delivering and filing all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, if applicable, and will take such other action
necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture:
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee and the Noteholders in such Trust Estate against the
claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section.
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SECTION 3.06. Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken to
perfect the lien and security interest of this Indenture, including without
limitation 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 so necessary and reciting the details of such action, or
stating that, in the opinion of such counsel, no such action is necessary to
maintain the perfection of such lien and security interest.
(b) On or before [April] 30 in each calendar year, beginning in [19__],
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken to
perfect the lien and security interest of this Indenture, including without
limitation 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 so necessary and reciting the
details of such action or stating that in the opinion of such counsel no such
action is necessary to maintain the perfection of 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 perfection of the lien and security
interest of this Indenture until [April] 30 in the following calendar year.
SECTION 3.07. Performance of Obligations; Servicing of Receivables. (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 Indenture Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Basic 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. Except as otherwise expressly provided
therein, the Issuer shall not waive, amend, modify, supplement or terminate any
Basic Document or any provision thereof without the consent of the Indenture
Trustee or the Holders of a majority of the Outstanding Amount of the Notes.
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(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Transfer and Servicing Agreement, the Issuer shall promptly
notify the Indenture 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 Default 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 Receivables, the Issuer shall take all reasonable
steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 8.01 of the
Transfer and Servicing Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Servicer has not been appointed and
accepted its appointment at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer. The Indenture Trustee may resign as the
Servicer by giving written notice of such resignation to the Issuer and in such
event will be released from such duties and obligations, such release not to be
effective until the date a new servicer enters into a servicing agreement with
the Issuer as provided below. Upon delivery of any such notice to the Issuer,
the Issuer shall obtain a new servicer as the Successor Servicer under the
Transfer and Servicing Agreement. Any Successor Servicer other than the
Indenture Trustee shall (i) be an established financial institution having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of equipment receivables and (ii) enter into a servicing agreement
with the Issuer having substantially the same provisions as the provisions of
the Transfer and Servicing Agreement applicable to the Servicer. If within 30
days after the delivery of the notice referred to above, the Issuer shall not
have obtained such a new servicer, the Indenture Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a Successor Servicer. In
connection with any such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor as it and such successor
shall agree, subject to the limitations set forth below and in the Transfer and
Servicing Agreement, and in accordance with Section 8.02 of the Transfer and
Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Receivables (such agreement to be in form and
substance satisfactory to the Indenture Trustee). If the Indenture Trustee shall
succeed to the Servicer's duties as servicer of the Receivables as provided
herein, it shall do so in its individual capacity and not in its capacity as
Indenture Trustee and, accordingly, the provisions of Article VI hereof shall be
inapplicable to the Indenture Trustee in its duties as the successor to the
Servicer and the servicing of the Receivables. In case the Indenture Trustee
shall become successor to the Servicer under the Transfer and Servicing
Agreement, the Indenture Trustee shall be entitled to appoint as Servicer any
one of its Affiliates, provided that it shall be fully liable for the actions
and omissions of such Affiliate in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Transfer and Servicing Agreement, the Issuer shall promptly notify the
Indenture Trustee. As soon as a Successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee of such appointment, specifying in such
notice the name and address of such Successor Servicer.
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(g) Without derogating from the absolute nature of the assignment granted
to the Indenture Trustee under this Indenture or the rights of the Indenture
Trustee hereunder, the Issuer agrees that it will not, without the prior written
consent of the Indenture Trustee or the Holders of a majority in Outstanding
Amount of the Notes, amend, modify, waiver, supplement, terminate or surrender,
or agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral (except to the extent otherwise
permitted pursuant to the terms of the Transfer and Servicing Agreement) or the
Basic Documents, or waive timely performance or observance by the Servicer or
the Transferor under the Transfer and Servicing Agreement or by MCC under the
Contribution and Sale Agreement; provided, however, that no such amendment shall
(i) except to the extent otherwise provided in the Transfer and Servicing
Agreement, increase or reduce in any manner the amount of, or accelerate or
delay the timing of, collections of payments on Receivables or distributions
that are required to be made for the benefit of the Noteholders or (ii) reduce
the aforesaid percentage of the Notes which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes. If
any such amendment, modification, supplement or waiver shall be so consented to
by the Indenture Trustee or such Holders, the Issuer agrees, promptly following
a request by the Indenture Trustee to do so, to execute and deliver, in its own
name and at its own expense, such agreements, instruments, consents and other
documents as the Indenture Trustee may reasonably deem necessary or appropriate
under the circumstances.
SECTION 3.08. Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture, the
Contribution and Sale Agreement or the Transfer and Servicing 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 Indenture 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; or
(iv) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of 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, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of 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, in each case on a Financed Equipment and arising solely as a result
of an action or omission of the related Obligor) or (C) permit the lien of
this
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Indenture not to constitute a valid first priority perfected security
interest in the Trust Estate (other than with respect to any such tax,
mechanics' or other lien).
SECTION 3.09. Statements as to Compliance. (a) The Issuer will deliver to
the Indenture Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing within 120 days after the end of the fiscal year [19__]), an
Officer's Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that
(i) a review of the activities of the Issuer during the 12-month
period ending at the end of such fiscal year (or in the case of the fiscal
year ending December 31, 1996, the period from the Closing Date to
December 31, [19__]) 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, etc., 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 Indenture Trustee, in form satisfactory to the Indenture
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 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 (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse tax consequence to any
Noteholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation or merger and such supplemental indenture comply with this
Article III and that all conditions precedent
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herein provided for relating to such transaction have been complied with
(including any filing required by the Exchange Act).
(b) The Issuer shall not convey or transfer any of its properties or
assets, including those included in the Trust Estate, to any Person, unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted 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 assumes, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory to
the Indenture 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 on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agrees 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 agrees 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 agrees 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 such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Indenture Trustee) to the effect that
such transaction will not have any material adverse tax consequence to any
Noteholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel 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).
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
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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), MetLife Capital Equipment Loan Trust [Series
Designation] 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 to the Indenture Trustee of the
Officer's Certificate and Opinion of Counsel specified in Section 3.10(b)(vi)
stating that MetLife Capital Equipment Loan Trust [Series Designation] is to be
so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than the purposes and powers set forth in Section 2.03 of the
Trust Agreement.
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 the Notes.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the Servicer
to comply with all of its obligations under the Basic Documents, including
without limitation those set forth in Sections 4.09, 4.10, 4.11 and 5.06 of the
Transfer and Servicing Agreement.
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 assuring 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, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Removal of Administrator. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection with such
removal.
SECTION 3.18. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or 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;
provided, however, that the Issuer may make, or cause to be made, (x)
distributions to the Servicer, the Owner Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Transfer and Servicing Agreement and the Trust Agreement and (y) payments to the
Indenture Trustee
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pursuant to Section 1(a)(ii) of the Administration Agreement. The Issuer will
not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Basic
Documents.
SECTION 3.19. Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and, immediately after obtaining knowledge of any of the
following occurrences, written notice of each default on the part of the
Servicer or the Transferor of its obligations under the Transfer and Servicing
Agreement and each default on the part of MCC of its obligations under the
Contribution and Sale Agreement.
SECTION 3.20. Further Instruments and Acts. Upon request of the Indenture
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.
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 thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them for a
period of one year after clauses (A), (B) and (C) below have occurred), and the
Indenture 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 Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation:
(i) have become due and payable;
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(ii) will become due and payable at (A) the Class A Final
Scheduled Distribution Date with respect to the Class A Notes and
(B) the Class B Final Scheduled Distribution Date with respect to
the Class B Notes; or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture 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 Indenture Trustee
cash or direct obligations of or obligations guaranteed by the United
States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered
to the Indenture Trustee for cancellation when due to the Class A Final
Scheduled Distribution Date or Class B Final Scheduled Distribution Date
or the Redemption Date (if Notes shall have been called for redemption
pursuant to Section 10.01), as the case may be;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the Indenture
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.
SECTION 4.02. Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.01 hereof 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
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; provided 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 Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture 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.
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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 or any installment
of the principal of any Note when the same becomes due and payable; or
(iii) default in the observance or performance 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
representation 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 Indenture
Trustee or to the Issuer and the Indenture 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 filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Issuer or for
any substantial part of the Trust Estate, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall remain
unstayed and in effect for a period of 90 consecutive days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of
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any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking
of action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within five days after
the occurrence thereof, written notice in the form of an Officer's 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 clause (v), its status and what action
the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Indenture Trustee or the Holders of Notes representing not less than a majority
of the Outstanding Amount of the Notes may declare all the Notes to be
immediately due and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if declared by Noteholders), and upon any such declaration the
unpaid principal amount of the Notes, together with accrued and unpaid interest
thereon through the date of acceleration, shall become immediately due and
payable.
At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter in this Article V provided, the
Holders of Notes representing not less than a majority of the Outstanding Amount
of the Notes, by written notice to the Issuer and the Indenture Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee a
sum sufficient to pay
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel;
and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes due and payable, and
such default continues for a period of five days, or (ii) default is made in the
payment of the principal of or any installment of the principal of any Note when
the same becomes due and payable, the Issuer will, upon demand
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of the Indenture Trustee, pay to it, for the benefit of the Holders of the
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 Note Interest Rate borne by the Notes, and in
addition thereto will pay 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 Indenture Trustee and its agents and
counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or other obligor upon such Notes and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.04, in its discretion, proceed
to protect and enforce its rights and the rights of the Noteholders, by such
appropriate Proceedings as the Indenture 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 Indenture Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer 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 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 or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture 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 Indenture 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 Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each predecessor
Indenture Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
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(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 Indenture 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 Indenture
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 Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
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 Indenture 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 trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Indenture 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 Indenture 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 Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture 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; Priorities. (a) If an Event of Default shall have
occurred and be continuing, the Indenture Trustee may do one or more of the
following (subject to Section 5.05):
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(i) institute Proceedings in its own name and as 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
take any other appropriate action to protect and enforce the rights and
remedies of the Indenture Trustee and the Holders of the Notes; and
(iv) in the event that all the Notes have been declared due and
payable pursuant to Section 5.02, 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 Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default, other than an Event of
Default described in Section 5.01(i) or (ii) 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 are sufficient to discharge
in full all amounts then due and unpaid upon such Notes for principal and
interest or (C) the Indenture Trustee determines that the Trust Estate will not
continue to provide sufficient funds for the payment of principal of and
interest on the Notes as they would have become due if the Notes had not been
declared due and payable, and the Indenture Trustee obtains the consent of
Holders of at least 66-2/3% of the Outstanding Amount of the Notes. In
determining such sufficiency or insufficiency with respect to clause (B) and
(C), the Indenture 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.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V following the acceleration of the maturities of the Notes
pursuant to Section 5.02 (so long as such declaration shall not have been
rescinded or annulled), it shall pay out the money or property (other than the
Servicer's Yield, which may be retained by the Servicer in accordance with
Section 5.07 of the Transfer and Servicing Agreement) in the following order:
FIRST: to the Indenture Trustee for amounts due under Section 6.07;
SECOND: to Holders of the Notes for amounts due and unpaid on the
Notes for interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest;
THIRD: to Holders of the Notes for amounts due and unpaid on the
Notes for principal, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal; and
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FOURTH: to the Issuer for distribution pursuant to the Trust
Agreement.
The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
SECTION 5.05. Optional Preservation of the Receivables. If the 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 Indenture 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 Indenture 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
Indenture 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. 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 Indenture
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 Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture 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 Indenture 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 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.
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In the event the Indenture 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 Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.07. 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, if any, 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 Redemption Date) 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 5.08. Restoration of Rights and Remedies. If the Indenture 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 Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture 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 Indenture Trustee and the Noteholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture 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 5.10. Delay or Omission Not a Waiver. No delay or omission of the
Indenture 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 Indenture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.11. 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 Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
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(ii) subject to the express terms of Section 5.04, any direction to
the Indenture Trustee to sell or liquidate the Trust Estate shall be by
the Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of
the Notes to sell or liquidate the Trust Estate shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed proper
by the Indenture Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.01, the Indenture 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 5.12. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, 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 Indenture Trustee and the Holders of the Notes shall be restored
to their former positions and rights hereunder, respectively; provided that 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; provided that no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
SECTION 5.13. 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 Indenture Trustee for any action taken, suffered or omitted by it as
Indenture 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; provided that
the provisions of this Section shall not apply to (a) any suit instituted by the
Indenture 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
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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 5.14. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, 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 advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Indenture
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture 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 Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture 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. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.04(b).
SECTION 5.16. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Transferor's expense, the Issuer agrees to take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by (x) the Transferor and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Transfer and Servicing
Agreement or (y) MCC of its obligations under or in connection with the
Contribution and Sale 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 Indenture Trustee, including the
transmission of notices of default on the part of the Transferor or the Servicer
thereunder and the institution of legal or administrative actions or proceedings
to compel or secure performance by the Transferor 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 Indenture
Trustee may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of at least
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Transferor 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 Transferor 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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(c) Promptly following a request from the Indenture Trustee to do so and
at the Transferor's expense, the Issuer agrees to take all such lawful action as
the Indenture Trustee may request to compel or secure the performance and
observance by MCC of each of its obligations to the Transferor under or in
connection with the Contribution and Sale 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 Contribution
and Sale Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Transferor thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by MCC of each of its obligations
under the Contribution and Sale Agreement.
(d) If an Event of Default has occurred and is continuing, the Indenture
Trustee may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of at least
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Transferor against MCC under or
in connection with the Contribution and Sale Agreement, including the right or
power to take any action to compel or secure performance or observance by MCC of
each of its obligations to the Transferor thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Contribution
and Sale Agreement, and any right of the Transferor to take such action shall be
suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use 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 Indenture 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
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture 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 Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, the Indenture Trustee
shall examine the certificates and opinions to determine whether or not
they conform on their face to the requirements of this Indenture.
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The Indenture Trustee shall not be required to determine, confirm or
recalculate the information contained in the Servicer's Certificate delivered to
it pursuant to the Transfer and Servicing Agreement.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(i) this paragraph does not limit the effect of subsection 6.01(b);
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture 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 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to subsections 6.01(a), (b) and (c);
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Transfer and Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture 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 Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.02. Rights of Indenture Trustee. (a) The Indenture Trustee may
rely on any document believed by it to be genuine and to have been signed or
presented by the proper person. The Indenture Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officer's Certificate or Opinion of Counsel.
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(c) The Indenture 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 Indenture 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 Indenture 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 Indenture Trustee's conduct does
not constitute wilful misconduct, negligence or bad faith.
(e) The Indenture 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.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture
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 Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of the Trust Estate, this Indenture 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 Indenture 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 Indenture Trustee, the
Indenture 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 Indenture 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 Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns, which
shall include the information required to be distributed pursuant to the second
to last paragraph of Section 5.06 of the Transfer and Servicing Agreement. The
Indenture Trustee shall only be required to provide to the Noteholders the
information given to it by the Servicer. The Indenture Trustee shall not be
required to determine, confirm or recompute any such information.
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SECTION 6.07. Compensation and Indemnity. The Issuer shall cause the
Administrator to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall cause the Administrator to reimburse the Indenture Trustee for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Indenture Trustee's agents, counsel, accountants and experts.
The Issuer shall cause the Administrator to indemnify the Indenture Trustee
against any and all loss, liability or expense (including the fees of either
in-house counsel or outside counsel, but not both) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer and the Administrator
promptly of any claim for which it may seek indemnity. Failure by the Indenture
Trustee to so notify the Issuer and the Administrator shall not relieve the
Issuer or the Administrator of its obligations hereunder. The Issuer shall cause
the Administrator to defend the claim and the Indenture Trustee may have
separate counsel and the Issuer shall or shall cause the Administrator to pay
the fees and expenses of such counsel. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own wilful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Indenture
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 herein to the contrary, the Indenture Trustee's
right to enforce any of the Issuer's payment obligations pursuant to this
Section 6.07 shall be subject to the provisions of Section 11.17.
SECTION 6.08. Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer. The Holders of a majority in
Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying
the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer
shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of acting.
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If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee, which successor shall be,
if MCC is the Servicer, reasonably acceptable to the Transferor.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The successor Indenture Trustee
shall mail a notice of its succession to Noteholders. The retiring Indenture
Trustee shall promptly transfer all property held by it as Indenture Trustee to
the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer or the Holders of not less than a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any Noteholder
may petition any court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's and the Administrator's obligations under Section 6.07
shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09. Successor Indenture Trustee by Merger. If the Indenture
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 or
banking association without any further act shall be the successor Indenture
Trustee. The Indenture Trustee shall provide the Rating Agencies prior written
notice of any such transaction; provided that such corporation or banking
association shall be otherwise qualified and eligible under Section 6.11.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture 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 Indenture Trustee 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 Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture 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 Indenture Trustee shall have.
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SECTION 6.10. Appointment of Co-Trustee or Separate Indenture 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 Indenture Trustee shall have the
power and may execute and deliver all instruments to appoint one or more Persons
reasonably acceptable to the Issuer 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 Indenture 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 hereof.
(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 Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture 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 Indenture
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 Indenture 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
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Indenture 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 Indenture 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 estates or
property specified in its instrument of appointment, either jointly with the
Indenture 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 Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law,
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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 Indenture Trustee, to the
extent permitted by law, without the appointment of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Indenture 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 and its long-term
unsecured debt shall be rated at least Baa3 by Moody's and BBB- by Standard &
Poor's. The Indenture Trustee shall comply with TIA ss. 310(b), including the
optional provision permitted by the second sentence of TIA ss. 310(b)(9);
provided, however, that there shall be excluded from the operation of TIA ss.
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 ss.
310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
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
Indenture 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
Indenture 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 Indenture 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 Indenture 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 Indenture Trustee as provided in Section 7.01
and the names and addresses of Holders of Notes received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture 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 ss. 312(b), with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
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(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture 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 Indenture 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
(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA ss. 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 Section
7.03(a) 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 Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each March 31 beginning with March 31, 1997, the Indenture
Trustee shall mail to each Noteholder as required by TIA ss. 313(c) a brief
report dated as of such date that complies with TIA ss. 313(a). The Indenture
Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Indenture 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 Indenture Trustee pursuant to this Indenture. The
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Indenture 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 the Trust Estate, the Indenture 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. Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Servicer to establish and maintain, in the name of the
Indenture Trustee, for the benefit of the Noteholders the Trust Accounts as
provided in Section 5.01 of the Transfer and Servicing Agreement.
(b) On or before the Business Day preceding each Distribution Date, the
Noteholders' Distributable Amount with respect to the preceding Collection
Period will be transferred from the Principal Funding Account, the Interest
Payment Account and/or the Reserve Account, as applicable, to the Note
Distribution Account as provided in Sections 5.04 and 5.05 of the Transfer and
Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the Indenture Trustee
shall distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.04(b)):
(i) during the Revolving Period, to the Holders of the Class A
Notes, accrued and unpaid interest on the Class A Notes; provided that if
there are not sufficient funds in the Note Distribution Account to pay the
entire amount of accrued and unpaid interest then due on the Class A
Notes, the amount in the Note Distribution Account shall be applied to the
payment of such interest on the Class A Notes pro rata on the basis of the
total of such interest due on the Class A Notes;
(ii) during the Revolving Period, to the Holders of the Class B
Notes, accrued and unpaid interest on the Class B Notes; provided that if
there are not sufficient funds remaining in the Note Distribution Account
to pay the entire amount of accrued and unpaid interest then due on the
Class B Notes after giving effect to the distribution in clause (i) above,
the amount in the Note Distribution Account shall be applied to the
payment of such interest on the Class B Notes pro rata on the basis of the
total of such interest due on the Class B Notes;
(iii) during the Amortization Period, to the Holders of the Class A
Notes, accrued and unpaid interest on the Class A Notes; provided that if
there are not sufficient funds in the Note Distribution Account to pay the
entire amount of accrued and unpaid interest then due on the Class A
Notes, the amount in the Note Distribution Account shall be applied to the
payment of such interest on the Class A Notes pro rata on the basis of the
total of such interest due on the Class A Notes;
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(iv) during the Amortization Period, to the Holders of the Class B
Notes, accrued and unpaid interest on the Class B Notes; provided that if
there are not sufficient funds remaining in the Note Distribution Account
to pay the entire amount of accrued and unpaid interest then due on the
Class B Notes after giving effect to the distribution in clause (iii)
above, the amount in the Note Distribution Account shall be applied to the
payment of such interest on the Class B Notes pro rata on the basis to the
total of such interest due on the Class B Notes;
(v) during the Amortization Period, to the Holders of the Class A
Notes principal in an amount equal to the Class A Noteholders' Principal
Distributable Amount with respect to such Distribution Date; provided that
if there are not sufficient funds remaining in the Note Distribution
Account to pay the entire amount of such Class A Noteholders' Principal
Distributable Amount after giving effect to the distribution in clause
(iv) above, the amount remaining in the Note Distribution Account shall be
applied to the payment of such Class A Noteholders' Principal
Distributable Amount pro rata on the basis to the total of such Class A
Noteholders' Principal Distributable Amount due on the Class A Notes; and
(vi) during the Amortization Period, to the Holders of the Class B
Notes principal in an amount equal to the Class B Noteholders' Principal
Distributable Amount with respect to such Distribution Date; provided that
if there are not sufficient funds remaining in the Note Distribution
Account to pay the entire amount of such Class B Noteholders' Principal
Distributable Amount after giving effect to the distribution in clause
(iv) above, the amount remaining in the Note Distribution Account shall be
applied to the payment of such Class B Noteholders' Principal
Distributable Amount pro rata on the basis to the total of such Class B
Noteholders' Principal Distributable Amount due on the Class B Notes;
SECTION 8.03. General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and (except with respect to the Certificate Distribution Account)
reinvested by the Indenture Trustee upon Issuer Order, subject to the provisions
of Section 5.01(b) of the Transfer and Servicing Agreement (which Issuer Order
may be upon direction of the Servicer). All income or other gain from
investments of moneys deposited in the Trust Accounts shall be deposited by the
Indenture Trustee in the Collection Account, and any loss resulting from such
investments shall be charged to such account. The Issuer will not direct the
Indenture Trustee to make any investment of any funds or to sell any investment
held in any of the Trust Accounts unless the security interest granted and
perfected in such account will continue to be perfected in such investment or
the proceeds of such sale, and, in connection with any direction to the
Indenture Trustee to make any such investment or sale, if requested by the
Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion
of Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's
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failure to make payments on such Eligible Investments issued by the Indenture
Trustee, in its commercial capacity as principal obligor and not as trustee, in
accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts to the Indenture Trustee by 12:00
noon New York Time (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day; or (ii) a Default or Event of Default
shall have occurred and be continuing with respect to the Notes but the Notes
shall not have been declared due and payable pursuant to Section 5.02, or, if
such Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Trust Estate are being applied
in accordance with Section 5.05 as if there had not been such a declaration;
then the Indenture Trustee shall, to the fullest extent practicable, invest and
reinvest funds in the Trust Accounts in Eligible Investments maturing prior to
the succeeding Distribution Date in accordance with Section 5.01(b) of the
Transfer and Servicing Agreement.
SECTION 8.04. Release of Trust Estate. (a) Subject to the payment of its
fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and when
required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article VIII
shall be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid, release any remaining portion of the Trust Estate that secured the
Notes from the lien of this Indenture and release to the Issuer or any other
Person entitled thereto any funds then on deposit in the Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.04(b) 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 ss.ss. 314(c) and
314(d)(1) meeting the applicable requirements of Section 11.01.
SECTION 8.05. Opinion of Counsel. The Indenture Trustee shall receive at
least seven days' notice when requested by the Issuer to take any action
pursuant to Section 8.04(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee,
stating the legal effect of any such action, outlining the steps required to
complete the same, and concluding that all conditions precedent to the taking of
such action have been complied with and such action will not materially and
adversely impair the security for the Notes or the rights of the Noteholders in
contravention of the provisions of this Indenture; provided, however, that such
Opinion of Counsel shall not be required to express an opinion as to the fair
value of the Trust Estate. Counsel rendering any such opinion may rely, without
independent investigation, on the accuracy and validity of any certificate or
other instrument delivered to the Indenture Trustee in connection with any such
action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies, the Issuer and the Indenture 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 TIA
as in force at the date of the execution thereof), in form satisfactory to the
Indenture 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 Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
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 Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of the Holders of the Notes;
(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; or
(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.
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The Indenture 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 Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies, 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. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies and with the consent of the Holders of
not less than a majority of the Outstanding Amount of the Notes, by Act of such
Holders delivered to the Issuer and the Indenture Trustee, 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 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 with respect thereto, change the
provisions 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 Redemption Date);
(ii) 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;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
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(v) modify any provision of this Section 9.02 except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security provided by the
lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
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.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes 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 Indenture 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 Indenture 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 Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture 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 affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities
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under this Indenture of the Indenture Trustee, the Issuer and the Holders of the
Notes 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 TIA as then in effect so long as this
Indenture shall then be qualified under the TIA.
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 Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption. The Notes are subject to redemption in whole,
but not in part, at the direction of the Servicer pursuant to Section 9.01(a) of
the Transfer and Servicing Agreement, on any Distribution Date on which the
Servicer exercises the option to purchase the Owner Trust Estate pursuant to
said Section 9.01(a) of the Transfer and Servicing Agreement; provided, however,
that such purchase is subject to such payment resulting in the Issuer having
available funds sufficient to pay the Redemption Price for the Notes. The
Servicer or the Issuer shall furnish the Rating Agencies notice of such
redemption. If the Notes are to be redeemed pursuant to this Section 10.01, the
Servicer or the Issuer shall furnish notice of such election to the Indenture
Trustee not later than 15 days prior to the Redemption Date, and the Issuer
shall deposit with the Indenture 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.
SECTION 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01 shall be given by the Indenture 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 preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register.
All notices of redemption shall state:
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(i) the Redemption Date;
(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 Indenture 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.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption as required by
Section 10.02 (in the case of redemption pursuant to Section 10.01), on the
Redemption Date 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.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions etc. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (i) an Officer's 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;
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(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 Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.01(a) or elsewhere in this Indenture, furnish to the Indenture
Trustee an Officer's 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 Collateral or other property or
securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's 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 Indenture Trustee an Independent Certificate as
to the same matters, if the fair value to the Issuer of the securities to
be so deposited and of all other such securities 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 securities so deposited if the fair value
thereof to the Issuer as set forth in the related Officer's Certificate is
less than $25,000 or less than one percent of the Outstanding Amount of
the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or securities
are to be released from the lien of this Indenture, the Issuer shall also
furnish to the Indenture Trustee an Officer's 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 under this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's 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 Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than Purchased Receivables and
Liquidated Receivables, or securities released from the lien of this
Indenture since the commencement of the then current calendar 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
Officer's
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Certificate is less than $25,000 or less than one percent of the then
Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.09 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables and Financed Equipment as and to the extent permitted or
required by the Basic Documents and (B) make cash payments out of the
Trust Accounts as and to the extent permitted or required by the Basic
Documents.
SECTION 11.02. Form of Documents Delivered to Indenture 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
Transferor, the Issuer or the Administrator, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Transferor, the Issuer or the Administrator, 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 Indenture 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 Indenture 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
53
<PAGE>
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 Indenture 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 (subject to Section 6.01) conclusive in
favor of the Indenture 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 Indenture 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 Indenture
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 Indenture 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 Indenture 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 Indenture Trustee and received at its
Corporate Trust Office, or
(b) the Issuer by the Indenture 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: MetLife Capital
Equipment Loan Trust [Series Designation], in care of [Owner Trustee], as
Owner Trustee, [Address], Attention: Corporate Trust Administration
Department, with a copy to the Administrator, at the following address:
MetLife Capital Corporation, 10900 N.E. 4th Street, Suite 500, Bellevue,
Washington 98004 or at any other address previously furnished in writing
to the Indenture Trustee by Issuer or the Administrator. The Issuer shall
promptly transmit any notice received by it from the Noteholders to the
Indenture Trustee.
(c) the Rating Agencies by the Issuer, the Indenture Trustee or the
Owner Trustee shall be sufficient for every purpose hereunder if 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 and (ii) in the case of Standard & Poor's,
54
<PAGE>
at the following address: Standard & Poor's Ratings Services, 26 Broadway
(10th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department; 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 (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at such Noteholder's 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 Indenture 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 to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture 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, to the
extent satisfactory to the Indenture Trustee, the Issuer may enter into any
agreement with any Holder of a Note providing for a method of payment, or notice
by the Indenture 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 Indenture Trustee a copy of each such agreement
and the Indenture 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 TIA, such required
provision shall control.
55
<PAGE>
The provisions of TIA ss.ss. 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.
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 covenants and agreements of the Indenture Trustee in this Indenture
shall bind its successors, co-trustees and agents of the Indenture Trustee.
SECTION 11.10. Separability. 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
CONFLICT 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 Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
56
<PAGE>
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture 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 Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture 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, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture 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 Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17. No Petition. The Indenture 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 Transferor or the Trust, or
voluntarily join in any institution against the Transferor 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 Notes, this
Indenture or any of the Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture 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 Indenture
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 Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
SECTION 11.19. Restrictions on Transfer of Class B Notes.
(a) The Class B Notes have not been registered under the Securities
Act or any state securities law. None of the Transferor, the Owner, the
Owner Trustee, the Servicer or the Indenture Trustee is obligated to
register the Class B Notes under the Securities Act or any other
securities or "Blue Sky" laws or to take any other action not otherwise
57
<PAGE>
required under this Indenture to permit the transfer of any Class B Note
without registration.
(b) No transfer of any Class B Note or any interest therein shall be
made except (i) pursuant to an effective registration under the Securities
Act and applicable state securities or "Blue Sky" laws or (ii) in a
transaction exempt from the registration requirements of the Securities
Act and applicable state securities or "Blue Sky" laws, to a person who
the transferor reasonably believes is a Qualified Institutional Buyer
within the meaning thereof in Rule 144A under the Securities Act that is
aware that the resale or other transfer is being made in reliance on Rule
144A. The Class B Notes shall bear a legend to the effect set forth in
Exhibit D.
(c) Each Class B Noteholder by its acceptance thereof, respectively,
will be deemed to have acknowledged, represented to and agreed with the
Transferor and the Initial Purchaser as follows:
(i) It understands and acknowledges that the Class B Notes
have not been and will not be registered under the Securities Act or
any other applicable securities law, are being offered for resale by
the Initial Purchaser in sales pursuant to Rule 144A, and, unless so
registered, may not be offered, sold or otherwise transferred except
in compliance with the registration requirements of the Securities
Act and any other applicable securities law, pursuant to Rule 144A
and in each case in compliance with the conditions for transfer set
forth in paragraph (iv) below.
(ii) It is a "qualified institutional buyer" (a "QIB"), as
defined in Rule 144A, and it is aware that any sale of the Class B
Notes to it will be made in reliance on its representation that it
is a QIB. Such acquisition will be for its own account or for the
account of another QIB.
(iii) It acknowledges that none of the Transferor or the
Initial Purchaser or any person representing the Transferor or the
Initial Purchaser has made any representation to it with respect to
the Transferor or the offering or sale of any Class B Notes. It has
had access to such financial and other information concerning the
Transferor and the Class B Notes as it has deemed necessary in
connection with its decision to purchase the Class B, including an
opportunity to ask questions of and request information from the
Transferor and the Initial Purchaser.
(iv) It is purchasing the Class B Notes, as the case may be,
for its own account, or for one or more investor accounts for which
it is acting as fiduciary or agent, in each case for investment, and
not with a view to, or for offer or sale in connection with, any
distribution thereof in violation of the Securities Act, subject to
any requirements of law that the disposition of its property or the
property of such investor account or accounts be at all times within
its or their control and subject to its or their ability to resell
such Class B Notes pursuant to
58
<PAGE>
Rule 144A or subject to any other available exemption from the
registration requirement of the Securities Act. It agrees on its own
behalf and on behalf of any investor account for which it is
purchasing such Note and each subsequent holder of such Notes, by
its acceptance thereof will agree to offer, sell or otherwise
transfer such Notes only for so long as such Notes are eligible for
resale under Rule 144A, to a person it reasonably believes is a QIB
that purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in reliance on
Rule 144A, subject in each of the foregoing cases to any requirement
of law that the disposition of its property or the property of such
investor account or accounts be at all times within its or their
control. Each purchaser of a Class B Notes acknowledges that such
Note will contain a legend substantially to the following effect:
THE CLASS B NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS CLASS B NOTES NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CLASS B NOTES BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH CLASS B NOTES ONLY (A)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT OR (B) FOR SO LONG AS THE CLASS B
NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A.
THE HOLDER OF THIS CLASS B NOTE BY ITS ACCEPTANCE HEREOF REPRESENTS
AND WARRANTS, FOR THE BENEFIT OF [], THAT SUCH PURCHASER IS NOT (1)
AN EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, (2) A PLAN OR OTHER
ARRANGEMENT (INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH
PLAN) THAT IS SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (3) AN ENTITY WHOSE UNDERLYING ASSETS
INCLUDE "PLAN ASSETS" UNDER THE PLAN ASSET REGULATION BY REASON OF
ANY SUCH PLAN'S INVESTMENT IN THE ENTITY.
59
<PAGE>
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF COVENANTS AND
AGREES THAT IT WILL NOT AT ANY TIME INSTITUTE AGAINST THE TRUST, OR
JOIN IN ANY INSTITUTION AGAINST THE TRUST OF, ANY BANKRUPTCY
PROCEEDINGS UNDER ANY UNITED STATES FEDERAL OR STATE BANKRUPTCY OR
SIMILAR LAW IN CONNECTION WITH ANY OBLIGATIONS RELATING TO THE NOTES
OR THE INDENTURE.
(v) It is not and will not be (a) an employee benefit plan
that is subject to ERISA, (b) a plan or other arrangement (including
an individual retirement account or keogh plan) that is subject to
Section 4975 of the Code, or (c) an entity whose underlying assets
include "plan assets" under a statutory, regulatory or
administrative exemption available or an exception applicable under
a regulation issued by the United States Department of Labor by
reason of any such plan's investment in the entity.
(vi) It acknowledges that the Transferor, the Initial
Purchaser and others will rely upon the truth and accuracy of the
foregoing acknowledgements, representations and agreements and
agrees that, if any of the acknowledgements, representations or
warranties deemed to have been made by it by its purchase of the
applicable Class B Notes are no longer accurate, it shall promptly
notify the Initial Purchaser. If it is acquiring any Class B Notes
as a fiduciary or agent for one or more investor accounts, it
represents that it has sole investment discretion with respect to
each such account and that it has full power to make the foregoing
acknowledgements, representations and agreements on behalf of each
such account.
(d) Notwithstanding anything to the contrary contained herein, each
Class B Note may be amended or supplemented to modify the restrictions on
and procedures for resale and other transfers of the Class B Notes to
reflect any change in applicable law or regulation (or the interpretation
thereof) or in practices relating to the resale or transfer of restricted
securities generally. Each Class B Noteholder shall by its acceptance of
its Class B Note, have agreed to any such amendment or supplement.
60
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture 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.
METLIFE CAPITAL EQUIPMENT LOAN
TRUST [SERIES DESIGNATION]
By: [OWNER TRUSTEE], not in
its individual capacity but
solely as Owner Trustee,
By:______________________________________
Name:
Title:
[TRUSTEE],
not in its individual capacity but as
Indenture Trustee,
By:______________________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared [officer] known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said national banking
association and that she/he executed the same as the corporation for the purpose
and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the [____]th day of
[__________], [19__].
______________________________
Notary Public
[Seal]
My commission expires:
________________________
62
<PAGE>
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
County and State, on this day personally appeared [officer] known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said Delaware banking
corporation and that she/he executed the same as the corporation for the purpose
and consideration therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the [____]th day of
[__________], [19__].
______________________________
Notary Public
[Seal]
My commission expires:
________________________
63
<PAGE>
EXHIBIT A
SCHEDULE OF RECEIVABLES
A-1
<PAGE>
EXHIBIT B
FORM OF TRANSFER AND SERVICING AGREEMENT
B-1
<PAGE>
EXHIBIT C
FORM OF DEPOSITORY AGREEMENT
C-1
<PAGE>
EXHIBIT D
FORM OF CLASS [A] [B] NOTE
REGISTERED $___________*
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 CLASS B NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS CLASS B NOTES NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CLASS B NOTES BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CLASS B NOTES ONLY (A) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT OR (B) FOR SO LONG AS THE CLASS B NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A.
- ----------
* Denominations of $1,000 and integral multiples thereof.
D-1
<PAGE>
THE HOLDER OF THIS CLASS B NOTE BY ITS ACCEPTANCE HEREOF REPRESENTS AND
WARRANTS, FOR THE BENEFIT OF [], THAT SUCH PURCHASER IS NOT (1) AN EMPLOYEE
BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, (2) A PLAN OR OTHER ARRANGEMENT (INCLUDING AN INDIVIDUAL
RETIREMENT ACCOUNT OR KEOGH PLAN) THAT IS SUBJECT TO SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED, OR (3) AN ENTITY WHOSE UNDERLYING
ASSETS INCLUDE "PLAN ASSETS" UNDER THE PLAN ASSET REGULATION BY REASON OF ANY
SUCH PLAN'S INVESTMENT IN THE ENTITY.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF COVENANTS AND AGREES THAT
IT WILL NOT AT ANY TIME INSTITUTE AGAINST THE TRUST, OR JOIN IN ANY INSTITUTION
AGAINST THE TRUST OF, ANY BANKRUPTCY PROCEEDINGS UNDER ANY UNITED STATES FEDERAL
OR STATE BANKRUPTCY OR SIMILAR LAW IN CONNECTION WITH ANY OBLIGATIONS RELATING
TO THE NOTES OR THE INDENTURE.]**
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.
[THIS NOTE WAS ISSUED ON [__________ ____, 199__]. IT IS POSSIBLE THAT
APPLICABLE LAW AND PROPOSED TREASURY REGULATIONS COULD BE INTERPRETED TO PROVIDE
THAT ALL INTEREST PAYMENTS ON THIS NOTE ARE TO BE TREATED AS PART OF THE STATED
REDEMPTION PRICE AT MATURITY OF THIS NOTE (I.E., PRINCIPAL) THEREBY CAUSING THIS
NOTE TO BE TREATED AS HAVING BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID")
FOR FEDERAL INCOME TAX PURPOSES. IN SUCH CASE, THE FOLLOWING INFORMATION WOULD
BE APPLICABLE, ASSUMING THAT THIS NOTE PAYS IN ACCORDANCE WITH PROJECTED CASH
FLOWS BASED ON CERTAIN ASSUMPTIONS USED IN PRICING THE NOTES: (I) THE AMOUNT OF
OID AS A PERCENTAGE OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS NOTE WOULD BE
APPROXIMATELY ____%; AND (II) THE ANNUAL YIELD OF THIS NOTE FOR PURPOSES OF
COMPUTING OID WOULD BE APPROXIMATELY ___% PER ANNUM. THE ACTUAL YIELD TO
MATURITY AND OID ON THIS NOTE MAY DIFFER FROM THE PROJECTED AMOUNTS. THE
PREPAYMENT ASSUMPTION USED IN DETERMINING THE ANNUAL YIELD FOR FEDERAL INCOME
TAX PURPOSES IS ___% OF CPR.]
- ----------
** For Class B Note only
D-2
<PAGE>
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
[rate%] [rate%]
[CLASS A] [CLASS B]
ASSET BACKED NOTES
MetLife Capital Equipment Loan Trust [Series Designation], a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to
[_________], or registered assigns, the principal sum of [____________] DOLLARS
payable on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is [$________ [for Class A Notes]]
[$__________[for Class B Notes]] by (ii) the aggregate amount, if any, payable
from the Note Distribution Account in respect of principal on the [Class A]
[Class B] Notes pursuant to Section 8.02(c) of the Indenture; provided, however,
entire unpaid principal amount of this Note shall be due and payable on the
earlier of the [[month] [19__] Distribution Date for the Class A] [[month]
[19__] Distribution Date for the Class B] Notes and the Redemption Date, if any,
pursuant to Section 10.01 of the Indenture. No payments of principal of the
Class B Notes shall be made until the principal of the Class A Notes has been
paid in its entirety. The Issuer will pay interest on this Note at the [Class A]
[Class B] Note Interest Rate on each Distribution 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 Distribution Date after giving effect to all
payments of principal made on such preceding Distribution Date (or in the case
of the first Distribution Date, on the initial principal amount of this Note).
Interest on this Note will accrue for each Distribution Date from and including
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, for the initial Distribution Date from
[__________ ____, 19__] to but excluding such Distribution Date. Interest will
be computed on the basis of a 360-day year 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
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
D-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: METLIFE CAPITAL EQUIPMENT LOAN
TRUST [SERIES DESIGNATION],
By: [Owner Trustee], not in
its individual capacity but
solely as Owner Trustee under
the Trust Agreement,
By: _________________________________
Name:
Title:
D-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
[TRUSTEE],
not in its individual capacity but
solely as Indenture Trustee,
By:____________________________________
Name:
Title:
D-5
<PAGE>
[REVERSE OF NOTE]
This Note is one of the [Class A] [Class B] Notes of a duly authorized
issue of Notes of the Issuer, designated as its [rate] [rate%] [Class A] [Class
B] Asset Backed Notes (herein called the "Notes"), all issued under an Indenture
dated as of [__________ ____, 19__] (such indenture, as supplemented or amended,
is herein called the "Indenture"), between the Issuer and [Trustee], as trustee
(the "Indenture Trustee", which term includes any successor Indenture 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 Indenture 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 Notes are and will be equally and ratably secured by the collateral
pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in an
amount described on the face hereof. "Distribution Date" means the [25th] day of
each calendar month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing [__________ ____, 19__].
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the [[________ 19__] Distribution Date [for
Class A] [_______ 19__] Distribution Date [for Class B]] and the Redemption
Date, if any, pursuant to Section 10.01 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 and the Indenture Trustee or the Holders of the Notes representing a
majority 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 Notes of a Class shall be made pro rata
to the Noteholders of such Class entitled thereto.
Payments of interest on this Note due and payable on each Distribution
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 Clearing Agency (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) effected by any payments made on any
Distribution Date shall be binding 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 noted
D-6
<PAGE>
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
Distribution Date, then the Indenture 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 preceding such Distribution Date by notice mailed within five
days of such Distribution Date and the amount then due and payable shall be
payable only upon presentation and surrender of this Note at the Indenture
Trustee's principal Corporate Trust Office or at the office of the Indenture
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] [Class B] Note Interest Rate to the extent lawful.
[As provided in the Indenture, the Class B Notes may be redeemed in whole,
but not in part, at the option of the Servicer, on any Distribution Date on or
after the date on which the Pool Balance is less than or equal to ten percent of
the Initial Pool 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
Indenture 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 of New
York or 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
Indenture 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 Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture 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 Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture 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 contribution or failure to pay any
installment or call owing to such entity.
D-7
<PAGE>
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 that such Noteholder will not at any
time institute against the Trust or the Transferor, or join in any institution
against the Trust or the Transferor of, 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 Basic Documents.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
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 Indenture 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 all Notes at the time Outstanding. The
Indenture also contains provisions permitting the Holders of Notes representing
specified percentages of the Outstanding Amount of the 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 of more Predecessor Notes) shall be conclusive and binding upon such
Holder 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 Indenture 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 under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holders 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.
D-8
<PAGE>
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 Basic Documents, neither [Trustee] in its individual capacity,
any owner of a beneficial 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 purposes 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 Basic 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.
D-9
<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.
D-10
________________________________________________________________________________
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
FORM OF TRUST AGREEMENT
between
METLIFE CAPITAL FUNDING CORP. III,
as Transferor
and
[OWNER TRUSTEE],
as Owner Trustee
Dated as of [________ __, 19__]
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms........................................ 1
SECTION 1.02. Other Definitional Provisions............................ 2
ARTICLE II
ORGANIZATION
SECTION 2.01. Name..................................................... 3
SECTION 2.02. Office................................................... 3
SECTION 2.03. Purpose and Powers....................................... 3
SECTION 2.04. Appointment of Owner Trustee............................. 4
SECTION 2.05. Initial Capital Contribution of Trust Estate............. 4
SECTION 2.06. Declaration of Trust..................................... 4
SECTION 2.07. Title to Trust Property.................................. 4
SECTION 2.08. Situs of Trust........................................... 5
SECTION 2.09. Representations and Warranties of Transferor............. 5
ARTICLE III
CERTIFICATE
SECTION 3.01. Initial Ownership........................................ 6
SECTION 3.02. Form of Certificates..................................... 6
SECTION 3.03. Authentication of Certificate............................ 6
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Owner and Transferor with Respect to Certain
Matters ................................................. 7
SECTION 4.02. Action By Owner and Transferor with Respect to Certain
Matters ................................................. 7
SECTION 4.03. Restrictions on Power.................................... 7
i
<PAGE>
Page
----
ARTICLE V
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 5.01. General Authority........................................ 8
SECTION 5.02. General Duties........................................... 8
SECTION 5.03. Action Upon Instruction.................................. 8
SECTION 5.04. No Duties Except as Specified in This Agreement or in
Instructions ............................................ 9
SECTION 5.05. No Action Except under Specified Documents or Instructions 9
SECTION 5.06. Restrictions............................................. 10
ARTICLE VI
CONCERNING THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties.......................... 10
SECTION 6.02. Furnishing of Documents.................................. 11
SECTION 6.03. Representations and Warranties........................... 11
SECTION 6.04. Reliance; Advice of Counsel.............................. 11
SECTION 6.05. Not Acting in Individual Capacity........................ 12
SECTION 6.06. Owner Trustee Not Liable for Certificate, Notes or
Receivables ............................................. 12
SECTION 6.07. Owner Trustee May Own Notes.............................. 13
ARTICLE VII
COMPENSATION OF OWNER TRUSTEE
SECTION 7.01. Owner Trustee's Fees and Expenses........................ 13
SECTION 7.02. Indemnification.......................................... 13
SECTION 7.03. Payments to the Owner Trustee............................ 13
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.01. Termination of Trust Agreement........................... 14
ii
<PAGE>
ARTICLE IX
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 9.01. Eligibility Requirements for Owner Trustee............... 14
SECTION 9.02. Resignation or Removal of Owner Trustee.................. 14
SECTION 9.03. Successor Owner Trustee.................................. 15
SECTION 9.04. Merger or Consolidation of Owner Trustee................. 16
SECTION 9.05. Appointment of Co-Trustee or Separate Trustee............ 16
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Supplements and Amendments............................... 17
SECTION 10.02. No Legal Title to Owner Trust Estate in Owner............ 18
SECTION 10.03. Limitations on Rights of Others.......................... 18
SECTION 10.04. Notices.................................................. 18
SECTION 10.05. Severability............................................. 18
SECTION 10.06. Separate Counterparts.................................... 19
SECTION 10.07. Successors and Assigns................................... 19
SECTION 10.08. Covenant of the Transferor............................... 19
SECTION 10.09. No Petition.............................................. 19
SECTION 10.10. No Recourse.............................................. 19
SECTION 10.11. Headings................................................. 19
SECTION 10.12. GOVERNING LAW............................................ 19
SECTION 10.13. Certificate Transfer Restrictions........................ 20
SECTION 10.14. Transferor Payment Obligation............................ 20
EXHIBITS
EXHIBIT A FORM OF CERTIFICATE......................................A-1
EXHIBIT B FORM OF CERTIFICATE OF TRUST.............................B-1
iii
<PAGE>
TRUST AGREEMENT dated as of [________ __, 19__], between METLIFE CAPITAL
FUNDING CORP. III, a Delaware corporation, as Transferor, and [owner trustee], a
Delaware [form of organization], as Owner Trustee.
ARTICLE I
DEFINITIONS
SECTION 1.01. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Administration Agreement" means the Administration Agreement dated as of
[_________ __, 19__], among the Administrator, the Trust, the Transferor and the
Indenture Trustee, as the same may be amended, modified or supplemented from
time to time.
"Administrator" means Metlife Capital Corporation, a Delaware corporation,
or any successor Administrator under the Administration Agreement.
"Agreement" shall mean this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Basic Documents" shall mean the Contribution and Sale Agreement, the
Transfer and Servicing Agreement, the Indenture, the Administration Agreement,
the Depository Agreement, the Notes, the Certificate and the other documents and
certificates delivered in connection therewith.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from time to
time.
"Certificate" shall mean the certificate evidencing the beneficial interest
of the Owner in the Trust, substantially in the form attached hereto as Exhibit
A.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B which has been filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
"Certificateholder" or "Holder" shall mean the Owner.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Corporate Trust Office" shall mean, with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee located at [address]; or
at such other address as the Owner Trustee may designate by notice to the
Transferor, or the principal corporate trust office of any successor Owner
Trustee (the address of which the successor owner trustee will notify the
Transferor).
<PAGE>
"Depository Agreement" means the agreement among the Trust, the Indenture
Trustee, the Administrator and The Depository Trust Company, dated as of the
Closing Date, substantially in the form of Exhibit C to the Indenture.
"Expenses" shall have the meaning assigned to such term in Section 7.02.
"Indenture Trustee" shall mean [indenture trustee], not in its individual
capacity but solely as Indenture Trustee under the Indenture, and any successor
Indenture Trustee under the Indenture.
"Owner" shall mean [______________________________].
"Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Transfer and Servicing Agreement, all funds on deposit from time to time
in the Trust Accounts and all other property of the Trust from time to time,
including any rights of the Owner Trustee and the Trust pursuant to the Transfer
and Servicing Agreement and the Administration Agreement.
"Owner Trustee" shall mean [owner trustee], a Delaware [form of
organization], not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement among the Trust, the Transferor, as transferor, and Metlife Capital
Corporation, as servicer, dated as of [________ __, 19__], as the same may be
amended, modified or supplemented from time to time.
"Transferor" shall mean Metlife Capital Funding Corp. III in its capacity
as Transferor hereunder.
"Trust" shall mean the trust established by this Agreement.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the
Transfer and Servicing Agreement or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective
2
<PAGE>
meanings given to them under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder," and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
ORGANIZATION
SECTION 2.01. Name. The Trust created hereby shall be known as "Metlife
Equipment Loan Trust [Series designation]," in which name the Owner Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address in the State of
Delaware as the Owner Trustee may designate by written notice to the Transferor.
SECTION 2.03. Purpose and Powers. (a) The purpose of the Trust is to engage
in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Certificate
pursuant to this Agreement, and to sell $[__________] aggregate principal
amount of the Notes to [initial note purchasers] upon the written order of
the Transferor and to issue $1.00 aggregate principal amount of the
Certificate to the Owner upon the written order of the Transferor;
(ii) with the proceeds of the sale of the Notes, to pay the Transferor
the amounts owed pursuant to Section 2.01 of the Transfer and Servicing
Agreement, by directing [__________] as representative of the Transferor to
wire transfer such proceeds in accordance with instructions received from
the Transferor;
(iii) with the proceeds from the sale of the Notes, to fund the
Reserve Account;
3
<PAGE>
(iv) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate pursuant to the Indenture and to hold, manage and distribute to the
Owner pursuant to the terms of the Transfer and Servicing Agreement any
portion of the Trust Estate released from the Lien of, and remitted to the
Trust pursuant to, the Indenture;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(vi) 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
(vii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Owner Trust Estate and the making of distributions to the Noteholders.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the Basic Documents.
SECTION 2.04. Appointment of Owner Trustee. The Transferor 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.
SECTION 2.05. Initial Capital Contribution of Trust Estate. The Transferor
hereby sells, assigns, transfers, conveys and sets over to the Owner Trustee, as
of the date hereof, the sum of $1 received from the Owner. The Owner Trustee
hereby acknowledges receipt in trust from the Transferor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Owner Trust
Estate and shall be held by the Owner Trustee. The Transferor 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 2.06. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owner, subject to the
obligations of the Trust under the Basic Documents. It is the intention of the
parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, for income
and franchise tax purposes, the Trust shall be disregarded as an entity and
treated as owned in whole by the Transferor. The parties hereto agree that they
will take no action contrary to the foregoing intention. Effective as of the
date hereof, the Owner Trustee shall have all rights, powers and duties set
forth herein and in the Business Trust Statute with respect to accomplishing the
purposes of the Trust.
SECTION 2.07. Title to Trust Property. Legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any
4
<PAGE>
jurisdiction requires title to any part of the Owner Trust Estate to be vested
in a trustee or trustees, in which case title shall be deemed to be vested in
the Owner Trustee, a co-trustee and/or a separate trustee, as the case may be.
SECTION 2.08. Situs of Trust. The Trust will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State of
New York. The Trust shall not have any employees in any state other than
Delaware; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having employees within or without the State of Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.09. Representations and Warranties of Transferor. The Transferor
hereby represents and warrants to the Owner Trustee that:
(a) The Transferor is duly organized and 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 presently
conducted.
(b) The Transferor 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 failure to so qualify or to
obtain such license or approval would render any Receivable unenforceable
that would otherwise be enforceable by the Transferor, the Servicer or the
Owner Trustee.
(c) The Transferor has the power and authority to execute and deliver
this Agreement and to carry out its terms; the Transferor has full power
and authority to sell and assign the property to be sold and assigned to
and deposited with the Trust and the Transferor shall have duly authorized
such sale and assignment and deposit to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Transferor by all necessary
corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do 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) a default under, the certificate
of incorporation or by-laws of the Transferor, or any indenture, agreement
or other instrument to which the Transferor is a party or by which it is
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of the Transferor's knowledge, any order, rule or
regulation applicable to the Transferor of any court, federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its properties.
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(e) There are no proceedings or investigations pending, or, to the
best of Transferor's knowledge, threatened, before any court, federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its properties
which (i) assert the invalidity of this Agreement or any of the Basic
Documents, (ii) seek to prevent the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, or (iii) seek
any determination or ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents.
ARTICLE III
CERTIFICATE
SECTION 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution pursuant to Section 2.05, the Owner shall be the sole beneficiary
of the Trust.
SECTION 3.02. Form of Certificates. The Certificate shall be issued in
registered form in substantially the form of Exhibit A. The Certificate shall be
executed on behalf of the Trust by manual or facsimile signature of a Trust
Officer of the Owner Trustee. The Certificate bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall, when duly
authenticated pursuant to Section 3.03, be validly issued and entitled to the
benefits of this Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of the Certificate or did not hold such offices at the date of authentication
and delivery of the Certificate.
SECTION 3.03. Authentication of Certificate. Concurrently with the initial
sale of the Receivables to the Trust pursuant to the Transfer and Servicing
Agreement, the Owner Trustee shall cause a single Certificate in an aggregate
principal amount equal to the initial Certificate Balance to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Transferor, signed by its Chairman of the Board, its President, any Vice
President, its Treasurer, its Secretary or any Assistant Treasurer, without
further corporate action by the Transferor. The Certificate shall not entitle
its holder to any benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on the Certificate a certificate of
authentication substantially in the form set forth in Exhibit A, executed by the
Owner Trustee or the Owner Trustee's authentication agent, by manual signature;
such authentication shall constitute conclusive evidence that the Certificate
shall have been duly authenticated and delivered hereunder. The Certificate
shall be dated the date of its authentication.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. Prior Notice to Owner and Transferor with Respect to Certain
Matters. With respect to the following matters, the Owner Trustee shall not take
action unless the Owner Trustee shall have notified the Owner and Transferor and
the Owner and Transferor shall have given its prior written consent:
(a) the initiation of any claim or lawsuit by the Trust (other than an
action to collect on a Receivable) and the compromise of any action, claim
or lawsuit brought by or against the Trust (other than an action to collect
on a Receivable);
(b) the election by the Trust to file an amendment to the Certificate
of Trust;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owner and
Transferor;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner that would not materially adversely affect the
interests of the Owner and Transferor; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar or Trustee, or the consent to the assignment by the Note
Registrar or Trustee of its obligations under the Indenture.
SECTION 4.02. Action By Owner and Transferor with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Owner and Transferor, to (a) remove the Administrator under the
Administration Agreement pursuant to Section 8 thereof, (b) appoint a successor
Administrator pursuant to Section 8 of the Administration Agreement, (c) remove
the Servicer under the Transfer and Servicing Agreement pursuant to Section 8.01
thereof or (d) except as expressly provided in the Basic Documents, sell the
Receivables after the termination of the Indenture. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Owner and Transferor.
SECTION 4.03. Restrictions on Power. The Owner and Transferor shall not
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Basic Documents or would be contrary
to Section 2.03 nor shall the Owner Trustee be obligated to follow any such
direction, if given.
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ARTICLE V
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 5.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Trust is to be
a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party, or any
amendment thereto or other agreement, in each case, in such form as the
Transferor shall approve as evidenced conclusively by the Owner Trustee's
execution thereof. 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 Basic Documents. The Owner Trustee is further authorized
from time to time to take such action as the Administrator directs in writing
with respect to the Basic Documents.
SECTION 5.02. General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Basic Documents and to administer the Trust
in the interest of the Owner, subject to the Basic Documents and in accordance
with the provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the Administrator has
agreed in the Administration Agreement to perform any act or to discharge any
duty of the Owner Trustee hereunder or under any Basic Document, and the Owner
Trustee shall not be liable for the default or failure of the Administrator to
carry out its obligations under the Administration Agreement.
SECTION 5.03. Action Upon Instruction. (a) Subject to Article IV, the Owner
may, by written instruction, and with the written consent of the Transferor,
direct the Owner Trustee in the management of the Trust. Such direction may be
exercised at any time by written instruction of the Owner and the Transferor
pursuant to Article IV. The Owner shall, with respect to any action not directed
by the Transferor, act in the capacity as Owner in the best interests of the
Transferor.
(b) The Owner Trustee shall not be required to take any action hereunder or
under any Basic Document if the Owner Trustee shall have reasonably determined,
or shall have been advised by counsel, that such action is likely to result in
liability on the part of the Owner Trustee or is contrary to the terms hereof or
of any Basic 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
Basic Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Owner 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 of
the Owner received, 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
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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
Basic Documents, as it shall deem to be in the best interest of the Owner, 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 Basic 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 Owner 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 Basic Documents,
as it shall deem to be in the best interests of the Owner, and shall have no
liability to any Person for such action or inaction.
SECTION 5.04. 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 Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 5.03; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Basic Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.
SECTION 5.05. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate 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 Basic Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 5.03.
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SECTION 5.06. Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of the Trust set forth in Section 2.03 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.
Neither the Owner nor the Transferor shall direct the Owner Trustee to take
action that would violate the provisions of this Section.
ARTICLE VI
CONCERNING THE OWNER TRUSTEE
SECTION 6.01. Acceptance of Trusts 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 moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Basic Documents and this
Agreement. The Owner Trustee shall not be answerable or accountable hereunder or
under any Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 6.03 expressly made by the Owner
Trustee. 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 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 accordance with the instructions of
the Administrator or any Owner;
(c) no provision of this Agreement or any Basic 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 Basic 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 not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by the Transferor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate or for or
in respect of the validity or sufficiency of the Basic Documents, other
than the certificate of authentication on the Certificate, and the Owner
Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to any Owner, other than as expressly
provided for herein and in the Basic Documents;
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(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Indenture Trustee or the Servicer
under any of the Basic 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 Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, 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 Basic Document, at the request, order or
direction of any of the Owner, unless the Owner has 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 Basic Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of any
such act.
SECTION 6.02. Furnishing of Documents. The Owner Trustee shall furnish to
Noteholders promptly upon written request therefor, copies of the Contribution
and Sale Agreement, the Transfer and Servicing Agreement, the Administration
Agreement and the Trust Agreement.
SECTION 6.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Transferor, for the benefit of the Owner, that:
(a) It is a [form of organization] duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement 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 Delaware 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.
SECTION 6.04. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent,
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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 Basic
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 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 Basic Document.
SECTION 6.05. Not Acting in Individual Capacity. Except as provided in this
Article VI, in accepting the trusts hereby created [owner trustee] 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 Basic Document shall look only to the
Owner Trust Estate for payment or satisfaction thereof.
SECTION 6.06. Owner Trustee Not Liable for Certificate, Notes or
Receivables. The recitals contained herein and in the Certificate (other than
the signature and counter-signature of the Owner Trustee on the Certificate and
its representations and warranties in Section 6.03) shall be taken as the
statements of the Transferor 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, or of the Certificate (other than the
signature and countersignature of the Owner Trustee on the Certificate) or the
Notes or of any other Basic Document or of any Receivable 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 Receivable, or
the perfection and priority of any security interest created by any Receivable
in any Financed Equipment or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Owner Trust Estate or
its ability to generate the payments to be distributed to the Certificateholder
under this Agreement or the Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of any Financed Equipment;
the existence and enforceability of any insurance thereon; the existence and
contents of any Receivable on any computer or other record thereof; the validity
of the assignment of any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; the performance or enforcement
of any Receivable; the compliance by the Transferor or the
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Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation or
any action of the Administrator, the Indenture Trustee or the Servicer or any
subservicer taken in the name of the Owner Trustee.
SECTION 6.07. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the Owner or pledgee of Notes and
may deal with the Transferor, the Administrator, the Indenture Trustee and the
Servicer in banking transactions with the same rights as it would have if it
were not Owner Trustee.
ARTICLE VII
COMPENSATION OF OWNER TRUSTEE
SECTION 7.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Transferor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Transferor for its other reasonable expenses hereunder, 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's right to enforce such obligation shall be
subject to the provisions of Section 10.09.
SECTION 7.02. Indemnification. The Transferor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (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 Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that the Transferor 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 6.01; provided, however, that the Owner Trustee's right to enforce such
obligation shall be subject to the provisions of Section 10.09. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel shall be subject to the
approval of the Transferor, which approval shall not be unreasonably withheld.
SECTION 7.03. Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
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ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.01. Termination of Trust Agreement. (a) This Agreement (other
than Article VIII) and the Trust shall terminate and be of no further force or
effect, upon the final distribution by the Owner Trustee of all moneys or other
property or proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture and the Transfer and Servicing Agreement. Any money or other
property held as part of the Owner Trust Estate following such distribution
shall be distributed to the Transferor. The bankruptcy, liquidation,
dissolution, death or incapacity of the Owner shall not (x) operate to terminate
this Agreement or the Trust, or (y) entitle the Owner'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 Owner Trust
Estate or (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) Except as provided in Section 8.01(a), neither the Transferor nor the
Owner shall be entitled to revoke or terminate the Trust.
(c) Upon the winding up of the Trust and its termination, the Owner Trustee
shall cause the Certificate of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with the provisions of
Section 3810 of the Business Trust Statute.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 9.01. Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times be a corporation satisfying the provisions of Section 3807(a)
of the Business Trust Statute; authorized to exercise corporate trust powers;
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; and having (or
having a parent which has) a rating of at least Baa3 by Moody's and at least
BBB- 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
9.02.
SECTION 9.02. 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 Administrator; provided, however, that such
resignation and discharge shall only be effective upon the appointment of a
successor Owner Trustee. Upon receiving such notice
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of resignation, the Administrator shall promptly appoint a successor Owner
Trustee 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. 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 9.01 and shall fail to resign after written
request therefor by the Administrator, 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 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 Administrator may remove the Owner Trustee. If the
Administrator shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Administrator shall promptly appoint a
successor Owner Trustee 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 acceptance of appointment by the successor Owner
Trustee pursuant to Section 9.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
SECTION 9.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 9.02 shall execute, acknowledge and deliver to the
Administrator 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 upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; and the Administrator 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 9.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies. If the Administrator shall fail to mail such notice within
10 days after acceptance of appointment by
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the successor Owner Trustee, the successor Owner Trustee shall cause such notice
to be mailed at the expense of the Administrator.
SECTION 9.04. 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 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 9.01, 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; provided,
further that the Owner Trustee shall mail notice of such merger or consolidation
to the Rating Agencies.
SECTION 9.05. 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 Owner Trust Estate or any Financed Equipment may at the time be located,
the Administrator and the Owner Trustee acting jointly 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
Owner Trust Estate, 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
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. 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 9.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 9.03.
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 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
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(iii) the Administrator and the Owner Trustee acting jointly 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 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 and a
copy thereof given to the Administrator.
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 X
MISCELLANEOUS
SECTION 10.01. Supplements and Amendments. This Agreement may be amended by
the Transferor and the Owner Trustee, with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders or the
Certificateholder, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholder; 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.
This Agreement may also be amended from time to time by the Transferor and
the Owner Trustee, with prior written notice to the Rating Agencies, with the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Certificateholder, 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 Noteholders or the Certificateholder; 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 Receivables or
distributions that shall be required to be made for the benefit of the holders
of the Class A Notes or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Class A Notes required to consent to any such amendment, without
the consent of the holders of all the outstanding Class A Notes.
17
<PAGE>
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 the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of the Noteholders or the
Indenture Trustee 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.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, 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. 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 10.02. No Legal Title to Owner Trust Estate in Owner. The Owner
shall not have legal title to any part of the Owner Trust Estate. No transfer,
by operation of law or otherwise, of any right, title, and interest of the Owner
to and in their ownership interest in the Owner Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
SECTION 10.03. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Transferor, the
Owner, the Administrator and, to the extent expressly provided herein, the
Indenture Trustee and the Noteholders, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 10.04. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices shall be in writing and shall be deemed given
upon receipt by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the Owner Trustee), if
to the Owner Trustee, addressed to the Corporate Trust Office; if to the
Transferor, addressed to Metlife Capital Funding Corp. III, [address]; if to the
Owner, addressed to [Owner], [address]; or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party.
SECTION 10.05. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
18
<PAGE>
SECTION 10.06. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Transferor, the Owner Trustee and its successors and the Owner and its
successors and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by the Owner shall bind
the successors and assigns of the Owner.
SECTION 10.08. Covenant of the Transferor. The Transferor agrees that prior
to the termination of the Trust it shall not revoke, modify or otherwise amend
any agreements with Metlife Capital Corporation in effect on the Closing Date in
any manner that would adversely affect the rights of the Transferor to receive
from Metlife Capital Corporation contributions of capital or payments on demand
pursuant to such agreements. The Transferor further covenants and agrees that it
will not enter into any transaction or take any action (other than any
transaction or action contemplated by this Agreement or any of the Basic
Documents) if, as a result of such transaction or action, any rating of either
the Notes by any of the Rating Agencies would be downgraded or withdrawn.
SECTION 10.09. No Petition. The Owner Trustee, by entering into this
Agreement (not in its individual capacity but solely as Owner Trustee), the
Certificateholder, by accepting the Certificate, and the Indenture Trustee and
each Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not, prior to the date which is one year and one day after
the termination of the Trust, institute against the Transferor, or join in any
institution against the Transferor 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 Certificate, the Notes, this Agreement or any of
the Basic Documents.
SECTION 10.10. No Recourse. The Certificateholder by accepting the
Certificate acknowledges that the Certificate represents the beneficial interest
in the Trust only and does not represent an interest in or obligation of the
Transferor, the Servicer, the Administrator, the Owner Trustee, the Indenture
Trustee or any Affiliate thereof, 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 Certificate or the other Basic Documents.
SECTION 10.11. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 10.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
19
<PAGE>
SECTION 10.13. Certificate Transfer Restrictions. The Certificate (or any
interest therein) may not be transferred to any Person.
SECTION 10.14. Transferor Payment Obligation. The Transferor shall be
responsible for payment of the Administrator's fees under the Administration
Agreement (to the extent not paid pursuant to Section 5.04 of the Transfer and
Servicing Agreement) and shall reimburse the Administrator for all expenses and
liabilities of the Administrator incurred thereunder.
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
[OWNER TRUSTEE],
not in its individual capacity
but solely as Owner Trustee,
By: ______________________________
Name:
Title:
METLIFE CAPITAL FUNDING CORP. III,
as Transferor,
By: ______________________________
Name:
Title:
Acknowledged and accepted
with respect to Section 9.02 of this Trust Agreement:
[INDENTURE TRUSTEE],
not in its individual capacity,
solely in its capacity as Indenture Trustee
By:_____________________________________________
Name:
Title:
<PAGE>
EXHIBIT A
No. ____ One Unit
[FORM OF CERTIFICATE]
THIS CERTIFICATE IS NOT TRANSFERRABLE.
A-1
<PAGE>
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
OWNER CERTIFICATE
(This Certificate does not represent an interest in or obligation of Metlife
Funding Corporation, Metlife Capital Corporation or any of their respective
affiliates, except to the extent described below.)
THIS CERTIFIES THAT [OWNER] is the registered Owner of the Metlife Capital
Equipment Loan Trust [Series Designation] (the "Trust") formed by Metlife
Funding Corporation, a Delaware corporation (the "Transferor").
The Trust was created pursuant to a Trust Agreement as of [_________ __,
19__] (the "Trust Agreement"), between the Transferor and [owner trustee], as
owner trustee (the "Owner Trustee"). To the extent not otherwise defined herein,
the capitalized terms used herein have the meanings assigned to them in the
Trust Agreement or the Transfer and Servicing Agreement dated as [_________ __,
19__] (the "Transfer and Servicing Agreement"), among the Trust, the Transferor
and Metlife Corporation, as servicer (the "Servicer"), as applicable.
This Certificate is the duly authorized Certificate evidencing ownership of
the Trust (herein called the "Certificate"). Also issued under the Indenture
dated as of [_______ __ 19__] between the Trust and the [indenture trustee], as
indenture trustee, are Notes designated as "Asset Backed Notes", (the "Notes").
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Owner by virtue
of the acceptance hereof assents and by which the Owner is bound.
Notwithstanding any prior termination of the Trust Agreement, the Owner, by
its acceptance of the Certificate, covenants and agrees that it shall not, prior
to the date which is one year and one day after the termination of the Trust
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to 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.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
A-2
<PAGE>
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual 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.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE.
A-3
<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.
METLIFE CAPITAL EQUIPMENT LOAN TRUST
[SERIES DESIGNATION],
By: [OWNER TRUSTEE],
as Owner Trustee
Dated: By: ___________________________
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Certificate referred to in the within-mentioned Trust
Agreement.
[OWNER TRUSTEE], or [OWNER TRUSTEE]
as Owner Trustee as Owner Trustee
By ______________________,
Authenticating Agent
By:___________________________ By:______________________________
Authorized Signatory Authorized Signatory
A-4
<PAGE>
EXHIBIT B
CERTIFICATE OF TRUST OF
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
THIS Certificate of Trust of METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES
DESIGNATION] (the "Trust"), dated [________ __, 19__], is being duly executed
and filed by [owner trustee], a Delaware [form of organization], as trustee, to
form a business trust under the Delaware Business Trust Act (12 Del. Code, ss.
3801 et seq.).
1. Name. The name of the business trust formed hereby is METLIFE CAPITAL
EQUIPMENT LOAN TRUST [SERIES DESIGNATION].
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is [owner trustee] [address], Attention:
[____________________________].
3. Effective Date. This Certificate of Trust shall be effective as of its
filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
[Owner Trustee], not in its
individual capacity but solely
as Owner Trustee,
By: ____________________________
Name:
Title:
B-1
[FORM OF TRANSFER AND SERVICING AGREEMENT]
================================================================================
TRANSFER AND SERVICING AGREEMENT
among
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION]
Issuer
METLIFE CAPITAL FUNDING CORP. III
Transferor
and
METLIFE CAPITAL CORPORATION
Servicer
Dated as of [_______ __, 19__]
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.............................................. 1
SECTION 1.02. Other Definitional Provisions............................ 17
SECTION 1.03. Calculations............................................. 18
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Initial Receivables........................ 18
SECTION 2.02. Conveyance of Subsequent Receivables..................... 19
SECTION 2.03. Closing.................................................. 21
SECTION 2.04. Books and Records........................................ 21
ARTICLE III
THE RECEIVABLES
SECTION 3.01. Representations and Warranties of Transferor............. 21
SECTION 3.02. Repurchase by Transferor or MCC Upon Breach.............. 22
SECTION 3.03. Duties of Servicer....................................... 23
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. Duties of Servicer....................................... 24
SECTION 4.02. Collection of Receivable Payments........................ 24
SECTION 4.03. Realization upon Receivables............................. 25
SECTION 4.04. Physical Damage Insurance................................ 25
SECTION 4.05. Maintenance of Security Interests in Financed Equipment.. 25
SECTION 4.06. Covenants of Servicer.................................... 25
SECTION 4.07. Purchase by Servicer of Receivables upon Breach.......... 25
SECTION 4.08. Servicing Fee............................................ 26
SECTION 4.09. Servicer's Certificate................................... 26
SECTION 4.10. Annual Statement as to Compliance; Notice of Default..... 26
SECTION 4.11. Annual Independent Certified Public Accountants' Report.. 27
i
<PAGE>
SECTION 4.12. Servicer Expenses........................................ 27
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 5.01. Establishment of Trust Accounts.......................... 27
SECTION 5.02. Collections.............................................. 30
SECTION 5.03. Additional Deposits...................................... 30
SECTION 5.04. Distributions............................................ 30
SECTION 5.05. Reserve Account.......................................... 32
SECTION 5.06. Statements to Noteholders................................ 33
SECTION 5.07. Net Deposits............................................. 34
ARTICLE VI
THE TRANSFEROR
SECTION 6.01. Representations of Transferor............................ 35
SECTION 6.02. Liability of Transferor; Indemnities..................... 36
SECTION 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Transferor............................... 37
SECTION 6.04. Limitation on Liability of Transferor and Others......... 37
SECTION 6.05. Transferor May Own Notes................................. 37
ARTICLE VII
THE SERVICER
SECTION 7.01. Representations of Servicer.............................. 38
SECTION 7.02. Indemnities of Servicer.................................. 39
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer................................. 40
SECTION 7.04. Limitation on Liability of Servicer and Others........... 41
SECTION 7.05. MCC Not To Resign as Servicer............................ 41
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Default......................................... 42
SECTION 8.02. Appointment of Successor................................. 43
SECTION 8.03. Notification to Noteholders.............................. 44
SECTION 8.04. Waiver of Past Defaults.................................. 44
ii
<PAGE>
ARTICLE IX
EARLY AMORTIZATION EVENTS; OPTIONAL PURCHASE
SECTION 9.01. Early Amortization Events................................ 45
SECTION 9.02. Optional Purchase of All Receivables......................46
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment................................................ 46
SECTION 10.02. Protection of Title to Trust............................. 47
SECTION 10.03. Notices.................................................. 49
SECTION 10.04. Assignment............................................... 50
SECTION 10.05. Limitations on Rights of Others.......................... 50
SECTION 10.06. Severability............................................. 50
SECTION 10.07. Separate Counterparts.................................... 50
SECTION 10.08. Headings................................................. 50
SECTION 10.09. Governing Law............................................ 50
SECTION 10.10. Assignment to Indenture Trustee.......................... 50
SECTION 10.11. Nonpetition Covenants.................................... 50
SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee........................................ 51
SCHEDULE A - Schedule of Receivables................................. A-1
SCHEDULE B - Location of Receivables Files........................... B-1
SCHEDULE C - Servicer's Certificate.................................. C-1
SCHEDULE D - Officers' Certificate................................... D-1
SCHEDULE E - Subsequent Transfer Assignment.......................... E-1
iii
<PAGE>
TRANSFER AND SERVICING AGREEMENT dated as of [_______ __], 19__, among
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES DESIGNATION], a Delaware business
trust (the "Issuer"), METLIFE CAPITAL FUNDING CORP. III, a Delaware corporation
(the "Transferor"), and METLIFE CAPITAL CORPORATION, a Delaware corporation (the
"Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables arising
in connection with commercial loan contracts and equipment finance lease
contracts secured by commercial and industrial equipment acquired or originated
by MetLife Capital Corporation in the ordinary course of its business;
WHEREAS the Transferor has purchased such portfolio of receivables from
MetLife Capital Corporation and desires to sell such portfolio of receivables to
the Issuer; and
WHEREAS MetLife Capital Corporation desires to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Administration Agreement" means the Administration Agreement dated as of
[________ __, 19__] among the Trust, the Transferor, MCC, as Administrator, and
[indenture trustee], as indenture trustee, as the same may be amended and
supplemented from time to time.
"Administration Fee" means the fee payable to the Administrator pursuant
to Section 3 of the Administration Agreement.
"Administrator" means the administrator under the Administration
Agreement.
"Affiliate" has the meaning assigned thereto in Section 1.01 of the
Indenture.
"Agreement" means this Transfer and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"Amortization Period" means the period commencing on the earlier to occur
of (a) the Scheduled Revolving Period Termination Date and (b) the day on which
an Early Amortization Event is deemed to occur and ending on the date that the
outstanding principal balance of the Notes is paid in full.
<PAGE>
"APR" or "Annual Percentage Rate" of a Receivable means the annual
percentage rate of interest of such Receivable set forth on the Schedule of
Receivables.
"Available Interest Amount" means, with respect to any Distribution Date,
the sum of the following amounts, without duplication, with respect to the
preceding Collection Period: (i) the portion of all Collections received during
such Collection Period (including any such amounts constituting Prepayment
Proceeds) allocable to interest, (ii) all Investment Earnings with respect to
such Distribution Date, and (iii) the portion of all Liquidation Proceeds,
Recoveries and Purchase Amounts received during such Collection Period allocable
to interest, but excluding (x) all payments and proceeds (including Liquidation
Proceeds) of any Purchased Receivables the principal portion of which has been
included in the Principal Distribution Amount in a prior Collection Period and
(y) any Excluded Amounts.
"Available Principal Amount" means, with respect to any Distribution Date,
the sum of the following amounts, without duplication, with respect to the
preceding Collection Period: (i) that portion of all Collections received during
such Collection Period (including any such amounts constituting Prepayment
Proceeds) allocable to principal, (ii) the portion of all Liquidation Proceeds,
Recoveries and Purchase Amounts received during such Collections Period
allocable to principal and (iii) the portion of the Available Interest Amount
deposited in the Principal Funding Account pursuant to Section 5.04(b)(i)(D),
but excluding (x) all payments and proceeds (including Liquidation Proceeds) of
any Purchased Receivables the principal portion of which has been included in
the Principal Distribution Amount in a prior Collection Period and (y) any
Excluded Amounts.
"Basic Documents" has the meaning assigned to such term in the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York, Seattle,
Washington, and Wilmington, Delaware are authorized or obligated by law,
regulation or executive order to remain closed.
"Class" means the Class A Notes or the Class B Notes, as applicable.
"Class A Final Scheduled Distribution Date" means the ______ ___
Distribution Date.
"Class A Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date with respect to the Amortization Period, the
lesser of (a) the Class A Noteholders' Percentage of the Principal Distribution
Amount and (b) the outstanding principal balance of the Class A Notes.
"Class A Noteholders' Percentage" means the percentage equivalent of a
fraction, the numerator of which is the principal balance of the Class A Notes
and the denominator of which will be the sum of the Pool Balance and the
Principal Funding Account Balance, in each case as of the close of business on
the last day of the Revolving Period [; provided, that if the amount
2
<PAGE>
on deposit in the Reserve Account is less than ____% of the Pool Balance, then
for each Distribution Date thereafter the Class A Noteholders' Percentage shall
be 100%].
"Class A Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date with respect to the Amortization Period, the
excess of (a) the sum of (i) the Class A Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) any outstanding Class A
Noteholders' Principal Carryover Shortfall as of the preceding Distribution Date
over (b) the amount in respect of principal that is actually deposited in the
Note Distribution Account and allocated to the Class A Notes for such
Distribution Date.
"Class A Noteholders' Principal Distributable Amount" means, with respect
to any Distribution Date with respect to the Amortization Period, the sum of (a)
the Class A Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (b) the Class A Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date; provided, however, that the
sum of (a) and (b) shall not exceed the outstanding principal amount of the
Class A Notes, and on the Class A Final Scheduled Distribution Date, the Class A
Noteholders' Principal Distributable Amount will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the outstanding principal amount of the Class A Notes to zero.
"Class A Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Class A Note Pool Factor" means 1.0000000 as of the Closing Date, and as
of the close of business on any Distribution Date thereafter means a seven-digit
decimal figure equal to the outstanding principal amount of the Class A Notes as
of such date (after giving effect to payments in reduction of the principal
amount of the Class A Notes on such date) divided by the original outstanding
principal amount of the Class A Notes.
"Class B Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date with respect to the Amortization Period, the
Class B Noteholders' Percentage of the Principal Distribution Amount [;
provided, however, that if, as described in the proviso to the definition of
Class A Noteholders' Percentage, 100% of the Principal Distribution Amount is
required to be allocated to the Class A Notes, then no portion of the Principal
Distribution Amount will be allocated to the Class B Notes until the Class A
Notes have been paid in full].
"Class B Noteholders' Percentage" means 100% minus the Class A
Noteholders' Percentage (if any Class A Notes are outstanding); provided, that
after the Distribution Date on which the Class A Notes are paid in full, the
Class B Noteholders' Percentage shall equal 100%.
"Class B Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date with respect to the Amortization Period, the
excess of (a) the sum of (i) the Class B Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) any outstanding Class B
Noteholders' Principal Carryover Shortfall as of the close of
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<PAGE>
business on the preceding Distribution Date over (b) the amount in respect of
principal that is actually deposited in the Principal Funding Account and
allocated to the Class B Notes.
"Class B Noteholders' Principal Distributable Amount" means, with respect
to any Distribution Date with respect to the Amortization Period, the sum of (a)
the Class B Noteholders' Monthly Principal Distributable Amount for such
Distribution Date and (b) the Class B Noteholders' Principal Carryover Shortfall
as of the close of the preceding Distribution Date.
"Class B Note Interest Rate" has the meaning assigned to such term in the
Indenture.
"Closing Date" means [_______ __, 19__].
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.01.
"Collection Period" means, with respect to the first Distribution Date,
the one calendar month period ending on and including [________ __, 19__] and,
with respect to each subsequent Distribution Date, the immediately preceding one
calendar month period. Any amount stated "as of the close of business on the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last day: (1) all applications of
collections and (2) all distributions to be made on the following Distribution
Date.
"Collections" means all payments received by the Servicer in respect of
any Receivable, other than Excluded Amounts.
"Commission" means the Securities and Exchange Commission.
"Component Lien" means any Lien, to the extent that it secures the payment
or performance of any Component Receivable (including the ownership or security
interest of the lessor pursuant to any lease transaction that is a Component
Receivable).
"Component Receivable" has the meaning specified in the definition of the
term "Master Receivable Agreement" in this Section 1.01.
"Contract" means, with respect to any Receivable, a commercial loan
contract or an equipment finance lease contract secured by commercial and/or
industrial equipment, and shall include all documents relating to an amendment
or modification of such Contract.
"Contribution and Sale Agreement" means the Contribution and Sale
Agreement dated as of [_______ __, 19__] between the Transferor and MCC, as the
same may be amended from time to time.
4
<PAGE>
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at [address of Indenture Trustee], except that for purposes of Section
3.02 of the Indenture, such term shall mean the office or agency of the
Indenture Trustee in the Borough of Manhattan, the City of New York which office
at the date hereof is located at [Manhattan address]; or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders, the Owner Trustee and the Transferor, or the principal corporate
trust office of any successor Indenture Trustee (the address of which the
successor Indenture Trustee will notify the Noteholders, the Owner Trustee and
the Transferor); provided that for purposes of Section 3.02 of the Indenture,
the address of any such office shall be in the Borough of Manhattan in the City
of New York.
"Cut-off Date" means, as applicable, the Initial Cut-off Date and each
Subsequent Cut-off Date.
"Defaulted Receivable" means any Receivable as to which all or any portion
of any unpaid Scheduled Payment has been charged off in accordance with the
Servicer's customary and normal collection and servicing procedures or as to
which the Servicer has repossessed the related Financed Equipment.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible to physical delivery, transfer thereof to the Indenture
Trustee or its nominee or custodian by physical delivery to the Indenture
Trustee or its nominee or custodian endorsed to, or registered in the name
of, the Indenture Trustee or its nominee or custodian or endorsed in
blank, and, with respect to a certificated security (as defined in Section
8-102 of the UCC) transfer thereof (i) by delivery of such certificated
security endorsed to, or registered in the name of, the Indenture Trustee
or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the UCC) and the making by
such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture
Trustee or its nominee or custodian and the sending by such financial
intermediary of a confirmation of the purchase of such certificated
security by the Indenture Trustee or its nominee or custodian, or (ii) by
delivery thereof to a "clearing corporation" (as defined in Section
8-102(3) of the UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate securities
account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated
security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the
financial intermediary, the maintenance of such certificated securities by
such clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture
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Trustee or its nominee or custodian of such securities and the making by
such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture
Trustee or its nominee or custodian (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in registered
form shall be in the name of the Indenture Trustee or its nominee or
custodian; and such additional or alternative procedures as may hereafter
become appropriate to effect the complete transfer of ownership of any
such Trust Account Property (as defined herein) to the Indenture Trustee
or its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Trust Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a financial intermediary
which is also a "depository" pursuant to applicable Federal regulations
and issuance by such financial intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Indenture
Trustee or its nominee or custodian of the purchase by the Indenture
Trustee or its nominee or custodian of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations as belonging to the
Indenture Trustee or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the
Indenture Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of the
issuer thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the
Indenture Trustee or its nominee or custodian of such uncertificated
security, and the making by such financial intermediary of entries on its
books and records identifying such uncertificated securities as belonging
to the Indenture Trustee or its nominee or custodian and such additional
or alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof.
"Determination Date" means, with respect to any Distribution Date, the
[fifth] Business Day prior to such Distribution Date.
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"Distribution Date" means the 20th day of each calendar month or, if such
day is not a Business Day, the immediately following Business Day, commencing on
[_____ 20, ____].
"Early Amortization Event" has the meaning assigned thereto in Section
9.01.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories which signifies investment
grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee, [indenture trustee], so long as it is a
paying agent under the Indenture, or (b) a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank) (i)(A)
which has either (1) a long-term unsecured debt rating of AAA or better by
Standard & Poor's and Aaa or better by Moody's or (2) a short-term unsecured
debt rating or a certificate of deposit rating of A-1+ by Standard & Poor's and
P-1 or better by Moody's, or any other long-term, short-term or certificate of
deposit rating acceptable to the Rating Agencies and (B) whose deposits-are
insured by the FDIC or (ii)(A) the parent of which has a long-term or short-term
unsecured debt rating acceptable to the Rating Agencies and (B) whose deposits
are insured by the FDIC. If so qualified, the Indenture Trustee, the Owner
Trustee, [owner trustee] or [indenture trustee] may be considered an Eligible
Institution for the purposes of clause (b) of this definition.
"Eligible Investments" mean book-entry securities, negotiable instruments
or securities (other than any such instrument or security issued by MCC or any
of its Affiliates) represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each Rating Agency in the
highest investment category granted thereby;
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(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating Agency
in the highest investment category granted thereby;
[(d) investments in money market funds having a rating from each
Rating Agency in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);]
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with (i) a depository institution or trust
company (acting as principal) described in clause (b) or (ii) a depository
institution or trust company the deposits of which are insured by FDIC; or
(g) any other investment permitted by each of the Rating Agencies.
"Excluded Amounts" means (i) any payments received from an Obligor in
connection with any insurance premiums or fees, or Taxes or other charges
imposed by any Governmental Authority, (ii) any indemnity payments made by an
Obligor pursuant to any Receivable, (iii) any Make-Whole Amount and (iv) all
Late Fees, extension fees, and other incidental charges (from whatever source)
collected with respect to any Receivable.
"Excluded Component Receivable" means any Component Receivable that is not
a Receivable that is part of the Trust Estate.
"Financed Equipment" means one or more pieces of commercial and/or
industrial equipment and any related asset that either secures the payment or
performance of any Receivable or is leased to an Obligor pursuant to any
Receivable that is a lease of property to an Obligor, but excluding all Master
Receivable Collateral securing Excluded Component Receivables.
"Governmental Authority" means the United States of America, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" or "Noteholder" has the meaning assigned to such term in Section
1.01 of the Indenture.
"Included Component Receivable" means any Component Receivable that is a
Receivable that is part of the Trust Estate.
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"Indenture" means the Indenture dated as of [______ __, 19__] between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
"Indenture Trustee" means [indenture trustee], in its capacity as trustee
under the Indenture, its successors in interest and any successor trustee under
the Indenture.
"Initial Cut-off Date" means, with respect to the Initial Receivables,
[_______ __, 19__].
"Initial Pool Balance" means the Pool Balance as of the Initial Cut-off
Date, which is [$_________].
"Initial Receivable" means each loan or lease Contract, including any
Included Component Receivable, which is identified in the initial Schedule of
Receivables delivered to the Owner Trustee and the Indenture Trustee on or prior
to the Closing Date pursuant to Section 2.01.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance Policy" means any insurance policy maintained by an Obligor (or
on an Obligor's behalf by the Servicer) covering physical damage to the Financed
Equipment relating to any Receivable or the related Obligor's ability to make
Scheduled Payments pursuant to such Receivable.
"Insurance Proceeds" means all payments made to the Servicer under an
Insurance Policy in respect of or in lieu of any amount that has or may become
due pursuant to any Receivable, including any such amount received in respect of
any Scheduled Payment or Make-Whole Amount.
"Interest Payment Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
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"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.01(b).
"Issuer" means MetLife Capital Equipment Loan Trust [Series Designation].
"Late Fees" means any interest or other amounts assessed by MCC and paid
by an Obligor in excess of the Scheduled Payment due to the delinquency of such
Scheduled Payment.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind with respect to any Receivable other than mechanics'
liens and any liens which attach to such Receivable by operation of law as a
result of any act or omission by the related Obligor.
"Liquidation Proceeds" means, with respect to any Defaulted Receivable,
the moneys collected in respect thereof, from whatever source (including any
Insurance Proceeds) during the Collection Period in which such Receivable became
a Defaulted Receivable, net of the sum of any amounts expended by the Servicer
in connection with such liquidation and any amounts required by law to be
remitted to the Obligor on such Defaulted Receivable.
"Make-Whole Amount" means, with respect to any Voluntary Prepayment, the
amount, if any by which the amount required (by the Contract evidencing such
Receivable, as in effect on the applicable Cut-off Date) to be paid by the
Obligor in connection with a Voluntary Prepayment exceeds the sum of (i) the
Scheduled Principal Payments that are the subject of such Voluntary Prepayment
and (i) any accrued and unpaid interest on such Receivable.
"Master Receivable Agreement" means any agreement or series of agreements
(including an agreement as to which an Obligor has entered into multiple
schedules or promissory notes) pursuant to which MCC has entered into more than
one loan and/or lease transaction (as lender or lessor) with a single Obligor
(each of which transactions is referred to as a "Component Receivable"), at any
time when
(a) at least one Component Receivable is a Receivable which is part of
the Trust Estate,
(b) at least one Component Receivable is not a Receivable that is part
of the Trust Estate, and
(c) (i) such Obligor's obligations pursuant to at least one Component
Receivable that is described in clause (a) above are secured by
assets directly or indirectly acquired with the proceeds of, or
leased by such Obligor as the lessee pursuant to, at least one
Component Receivable that is described in clause (b) above, or
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(ii) such Obligor's obligations pursuant to at least one
Component Receivable that is described in clause (b) above are
secured by assets directly or indirectly acquired with the proceeds
of, or leased by such Obligor as the lessee pursuant to, at least
one Component Receivable that is described in clause (a) above.
"Master Receivable Collateral" means any asset that secures the payment or
performance of one or more Component Receivables or any asset leased to the
Obligor pursuant to any lease transaction that is a Component Receivable.
"MCC" means MetLife Capital Corporation, a Delaware corporation.
"Monthly Class A Note Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the Class A Note
Interest Rate and (b) the outstanding principal balance of the Class A Notes as
of the close of business on the preceding Distribution Date after giving effect
to all payments of principal made to the Class A Noteholders on such preceding
Distribution Date; provided, however, that with respect to the first
Distribution Date, interest on the outstanding principal balance of the Class A
Notes will accrue from and including the Closing Date to but excluding the
[__________ ____] Distribution Date and will be calculated on the basis of a
360-day year of twelve 30-day months.
"Monthly Class B Note Interest" means, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the Class B Note
Interest Rate and (b) the outstanding principal balance of the Class B Notes as
of the close of business on the preceding Distribution Date after giving effect
to all payments of principal made to the Class B Noteholders on such preceding
Distribution Date; provided, however, that with respect to the first
Distribution Date, interest on the outstanding principal balance of the Class B
Notes will accrue from and including the Closing Date to but excluding the
[__________ ____] Distribution Date and will be calculated on the basis of a
360-day year of twelve 30-day months.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net APR" has the meaning assigned to such term in the Indenture.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
"Note Register" or "Note Registrar" have the meanings specified in Section
2.04 of the Indenture.
"Noteholders' Class A Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of (a) the excess of (i) the sum of (A) the
Monthly Class A Note Interest for the preceding Distribution Date and (B) any
outstanding Noteholders' Class A Interest Carryover Shortfall on such preceding
Distribution Date, over (ii) the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding
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Distribution Date, plus (b) interest on the amount of interest due but not paid
to the Class A Noteholders on the preceding Distribution Date, to the extent
permitted by law, at the Class A Note Interest Rate from and including such
preceding Distribution Date to but excluding the current Distribution Date.
"Noteholders' Class A Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of (a) the Monthly Class A Note Interest for
such Distribution Date and (b) the Noteholders' Class A Interest Carryover
Shortfall for such Distribution Date.
"Noteholders' Class B Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of (a) the excess of (i) the sum of (A) the
Monthly Class B Note Interest for the preceding Distribution Date and (B) any
outstanding Noteholders' Class B Interest Carryover Shortfall on such preceding
Distribution Date, over (ii) the amount in respect of interest that is actually
deposited in the Note Distribution Account on such preceding Distribution Date,
plus (b) interest on the amount of interest due but not paid to the Class B
Noteholders on the preceding Distribution Date, to the extent permitted by law,
at the Class B Note Interest Rate from and including such preceding Distribution
Date to but excluding the current Distribution Date.
"Noteholders' Class B Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of (a) the Monthly Class B Note Interest for
such Distribution Date and (b) the Noteholders' Class B Interest Carryover
Shortfall for such Distribution Date.
"Notes" means the Class A Notes and the Class B Notes, collectively.
"Notes of a Class" or "Class of Notes" means all Notes included in Class A
Notes or all Notes included in Class B Notes, whichever is appropriate.
"Obligor" with respect to any Receivable means any Person which is an
obligor, lessee or guarantor thereof.
"Officers' Certificate" of any Person means a certificate on behalf of
such Person that is signed by any Vice President or more senior officer of such
Person and states that the certifications set forth in such certificate are
based upon the results of a due inquiry into the matters in question conducted
by or under the supervision of the signing officer and that the facts stated in
such certifications are true and correct to the best of the signing officer's
knowledge.
"Opinion of Counsel" means one or more written opinions of counsel who may
be an employee of or counsel to the Transferor or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee and/or the
Rating Agencies, as applicable.
"Outstanding" has the meaning assigned to such term in Section 1.01 of the
Indenture.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
a Class of Notes, as applicable, outstanding at the date of determination.
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"Owner" means [owner of Owner Trust].
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means [owner trustee] in its capacity as Owner Trustee
under the Trust Agreement, its successors in interest and any successor owner
trustee under the Trust Agreement.
"Permitted Lien" means (i) any Component Lien, to the extent it secures an
Excluded Component Receivable, and (ii) any Lien for municipal or other local
Taxes and other governmental charges, so long as either (x) such Taxes or
governmental charges are not at the time due and payable or (y) the Transferor
or MCC is then contesting the validity of any such Taxes or charges in good
faith by appropriate proceedings and there has been set aside on the appropriate
entity's books any reserve that is required under generally accepted accounting
principles with respect to such Taxes or charges.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, at any time, the sum of (a) aggregate of the
Principal Balances of the Receivables at the end of the preceding Collection
Period, after giving effect to (i) all payments received from Obligors and
Purchase Amounts remitted by the Transferor or the Servicer, as the case may be,
for such Collection Period, and (ii) all Realized Losses on Defaulted
Receivables during such Collection Period and (b) with respect to any date of
determination during the Revolving Period, the Principal Funding Account
Balance.
"Pool Factor" means 1.0000000 as of the Initial Cut-off Date and, as of
the close of business on the last day of a Collection Period thereafter means a
seven digit decimal figure equal to the Pool Balance as of such date divided by
the Initial Pool Balance.
"Prepayment Proceeds" means all Collections that constitute part of any
Voluntary Prepayment or Insurance Proceeds.
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period or as of the applicable Cut-off Date, as
applicable, means the aggregate amount of all Scheduled Principal Payments that
have not been received by the Servicer (including all Scheduled Principal
Payments that are then due and payable); provided that the Principal Balance of
each Defaulted Receivable is zero.
"Principal Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts, without duplication, with respect to the
preceding Collection Period: (i) that portion of all Collections on the
Receivables (including any Liquidation Proceeds and any Recoveries) allocable to
principal; (ii) the amount of Realized Losses for the related Collection Period
(except to the extent included in (iii) below) and (iii) the Principal Balance
of each Receivable that the Servicer became obligated to purchase or that the
Transferor became
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obligated to repurchase during the related Collection Period (except to the
extent included in (i) above).
"Principal Funding Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
"Principal Funding Account Balance" means, as of any date of
determination, the principal amount on deposit in the Principal Funding Account.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay in full the respective
Receivable under the terms thereof (including interest at the related APR to the
end of the month of purchase).
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or repurchased as of such time by the Transferor pursuant to
Section 3.02.
"Rating Agencies" means Moody's and Standard & Poor's. If no such
organization or successor is in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Transferor, notice of which designation shall be given to the Indenture
Trustee, the Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Transferor, the Servicer, the Owner Trustee and
the Indenture Trustee in writing that such action will not result in a reduction
or withdrawal of the then current rating of the Class A Notes.
"Realized Loss" means, with respect to any Collection Period, for any
Defaulted Receivable the excess of (a) the Principal Balance of such Defaulted
Receivable over (b) the Liquidation Proceeds with respect to such Receivable for
such Collection Period to the extent allocable to principal.
"Receivable" means each Initial Receivable and each Subsequent Receivable;
provided, that from and after the date on which a Receivable becomes a Purchased
Receivable, such Purchased Receivable will no longer be a Receivable.
"Receivable Files" means the written agreements (including, as applicable,
schedules, subschedules, supplements, amendments, modifications and renewals
thereof or thereto), note(s), security agreement(s) and other instruments and
documents relating to the Receivables.
"Receivable Management System" means the computerized electronic
Receivable Management System maintained by MCC for all Receivables and other
assets similar to the Receivables.
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"Recoveries" means, with respect to any Defaulted Receivable, (a) monies
collected in respect thereof, from whatever source, but after (i) such
Receivable became a Defaulted Receivable and (ii) the proceeds from the sale or
other disposition of the related Financed Equipment have been received by the
Servicer for deposit in the Collection Account, net of (b) the sum of any
out-of-pocket costs and expenses of collection (including attorneys fees and
expenses deducted therefrom) expended by the Servicer in connection with such
Defaulted Receivable and any amounts required by law to be remitted to the
Obligor.
"Remaining Available Principal Amounts" has the meaning assigned thereto
in Section 5.04(b)(iii).
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.01(a).
"Reserve Account Initial Deposit" means the initial deposit by the
Transferor on the Closing Date of [$___________.]
"Revolving Period" means the period commencing on the Initial Cut-off Date
and ending on the day immediately preceding the commencement of the Amortization
Period.
"Schedule of Receivables" means each schedule of Receivables delivered to
the Owner Trustee and the Indenture Trustee (as supplemented from time to time
to reflect Subsequent Receivables and Purchased Receivables) marked as Schedule
A to this Agreement and incorporated into and made a part of this Agreement.
"Scheduled Interest Payment" means any payment of interest accruing on the
principal amount of any Receivable (other than Late Fees) that is scheduled to
be paid in accordance with the terms and conditions of such Receivable as in
effect on the applicable Cut-off Date.
"Scheduled Payment" on a Receivable means the Scheduled Principal Payment
or Scheduled Interest Payment for such Receivable.
"Scheduled Principal Payment" means any payment in respect of the
principal amount of any Receivable that is scheduled to be paid in accordance
with the terms and conditions of such Receivable as in effect on the applicable
Cut-off Date (other than by reason of acceleration of such Scheduled Principal
Payment in connection with a default under such Receivable or any other event
that causes a payment of the principal amount to become due prior to its
scheduled payment date pursuant to the terms of such Receivable as in effect on
the applicable Cut-off Date).
"Scheduled Revolving Period Termination Date" means [______ __, _____].
"Servicer" means MCC, as the servicer of the Receivables, and each
successor to MCC (in the same capacity) pursuant to Section 7.03 or 8.02.
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"Servicer Default" means an event specified as such in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Schedule C or
in such other form that is acceptable to the Indenture Trustee, the Owner
Trustee and the Servicer.
"Servicer Termination Event" means an event specified as such in Section
8.01.
"Servicer's Yield" means, with respect to any Receivable, (i) any
indemnity payments made by an Obligor pursuant to a Receivable (ii) any
Make-Whole Amount and (iii) all Late Fees, extension fees and other incidental
charges (from whatever source) collected with respect to any Receivable.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
4.08.
"Servicing Fee Rate" means 0.5% per annum.
"Specified Reserve Account Balance" with respect to any Distribution Date
means the greater of (i) [____]% of the Pool Balance as of the close of business
on the last day of the preceding Collection Period and (ii) [$__________].
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., or its successor.
"Subsequent Cut-off Date" means, with respect to any Transfer Date for any
Subsequent Receivables, the last day of the immediately preceding Collection
Period.
"Subsequent Receivable" means each loan or lease Contract, including any
Included Component Receivable, originated or acquired by MCC and transferred to
the Issuer pursuant to Section 2.02, and which is identified in a Schedule of
Receivables to the related Subsequent Transfer Assignment delivered to the Owner
Trustee and the Indenture Trustee pursuant to Section 2.02.
"Subsequent Transfer Assignment" has the meaning assigned thereto in
Section 2.02.
"Tax" with respect to any Person means each tax, assessment or other
governmental charge or levy imposed upon such Person, its income, any
transaction in which it engages, or any of its properties, franchises or assets.
"Transfer Date" has the meaning assigned thereto in Section 2.02.
"Transferor" means MetLife Capital Funding Corp. III, a Delaware
corporation, and its successors in interest to the extent permitted hereunder.
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"Trust" means the Issuer.
"Trust Accounts" has the meaning assigned thereto in Section 5.01(b).
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Agreement" means the Trust Agreement dated as of [______ __, 19__],
between the Transferor and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
the Indenture for the benefit of the Noteholders (including, without limitation,
all property and interests Granted (as defined in the Indenture) to the
Indenture Trustee), including all proceeds thereof.
"Trust Officer" means, (a) in the case of the Indenture Trustee, any
Officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Trust Officer, Secretary,
Assistant Secretary or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officers' knowledge of and
familiarity with the particular subject, and (b) with respect to the Owner
Trustee, any officer in the Corporate Trustee Administration Department of the
Owner Trustee with direct responsibility for the administration of the Trust
Agreement and the Basic Documents on behalf of the Owner Trustee.
"UCC" has the meaning assigned thereto in Section 1.01 of the Indenture.
"Voluntary Prepayment" means, with respect to any Receivable, any
Scheduled Payment (or portion thereof) which is received by the Servicer prior
to the Collection Period during which it first became due and payable.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings
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given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified; and the term
"including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
SECTION 1.03. Calculations. For all purposes of this Agreement, interest
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Initial Receivables. In consideration of the
Issuer's delivery to or upon the order of the Transferor of (i)
[$______________], and (ii) Class B Notes in the principal amount of
[$________], the Transferor does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse (subject to the obligations
herein) all right, title and interest of the Transferor in and to the following,
whether now owned or hereafter acquired:
(a) the Initial Receivables, and all moneys (including accrued
interest) due thereunder on or after the Initial Cut-off Date;
(b) the interest of the Transferor in the Trust Accounts and all
amounts credited thereto;
(c) the interest of the Transferor in the security interests in the
Financed Equipment granted by Obligors pursuant to the Initial Receivables
and any other interest of the Transferor in the Financed Equipment;
(d) the interest of the Transferor in any proceeds with respect to
the Initial Receivables from claims on any physical damage, credit life or
disability insurance policies covering Financed Equipment or Obligors;
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(e) all right, title and interest of the Transferor in and to the
Contribution and Sale Agreement, including the right of the Transferor to
cause MCC to repurchase Receivables from the Transferor under certain
circumstances; and
(f) the proceeds of any and all of the foregoing.
SECTION 2.02. Conveyance of Subsequent Receivables.
(a) Prior to the [twentieth] calendar day (x) in each month
(beginning [__________]) during the Revolving Period and (y) if no Early
Amortization Event has occurred, in the first month with respect to the
Amortization Period, on one or more days selected by the Servicer (each, a
"Transfer Date"), the Servicer shall direct the Indenture Trustee to reinvest
Available Principal Amounts on deposit in the Principal Funding Account in
additional loan or lease Contracts originated or acquired and selected by MCC
from its portfolio of loan and lease Contracts. Subject to the conditions set
forth in paragraph (b) below on each Transfer Date, upon transfer of the
applicable Subsequent Receivables from MCC to the Transferor pursuant to the
Contribution and Sale Agreement and payment to the Transferor from amounts on
deposit in the Principal Funding Account in an amount equal to the Principal
Balance of the Subsequent Receivables being transferred on such date as of the
related Subsequent Cut-off Date, the Transferor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Issuer, without recourse
(subject to the obligations herein) all right, title and interest of the
Transferor in and to the following, whether then owned or thereafter acquired:
(i) the Subsequent Receivables listed on the related Schedule of
Receivables and all moneys (including accrued interest) due thereunder on
or after the related Subsequent Cut-off Date;
(ii) the interest of the Transferor in the security interests in the
Financed Equipment granted by Obligors pursuant to such Subsequent
Receivables and any other interest of the Transferor in the Financed
Equipment;
(iii) the interest of the Transferor in any proceeds with respect to
such Subsequent Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Equipment or
Obligors; and
(iv) the proceeds of any and all of the foregoing.
(b) The Transferor shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions precedent on or prior to the related Transfer Date:
(i) the Transferor shall have delivered to the Owner Trustee and the
Indenture Trustee a duly executed written assignment in substantially the
form of Exhibit E (the
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"Subsequent Transfer Assignment"), which shall include supplements to the
Schedule of Receivables listing the Subsequent Receivables;
(ii) the Transferor shall, to the extent required by Section 5.02,
have deposited in the Collection Account all Collections in respect of the
Subsequent Receivables;
(iii) as of such Transfer Date, (A) the Transferor was not insolvent
and will not become insolvent as a result of the transfer of Subsequent
Receivables on such Transfer Date, (B) the Transferor did not intend to
incur or believe that it would incur debts that would be beyond the
Transferor's ability to pay as such debts matured, (C) such transfer was
not made with actual intent to hinder, delay or defraud any Person and (D)
the assets of the Transferor did not constitute unreasonably small capital
to carry out its business as conducted;
(iv) the Receivables then in the Trust, including the Subsequent
Receivables to be conveyed to the Trust on such Transfer Date, shall meet
the following criteria (based on the characteristics of the Initial
Receivables on the Initial Cut-off Date and the Subsequent Receivables on
the respective Subsequent Cut-off Dates): [insert applicable criteria]];
(v) each of the representations and warranties made by the
Transferor pursuant to Section 3.01 with respect to the Subsequent
Receivables shall be true and correct as of such Transfer Date, and the
Transferor shall have performed all obligations to be performed by it
hereunder on or prior to such Transfer Date;
(vi) the Transferor shall, at its own expense, on or prior to such
Transfer Date, indicate in its computer files that the Subsequent
Receivables identified in the Subsequent Transfer Assignment have been
sold to the Issuer pursuant to this Agreement and the Subsequent Transfer
Assignment;
(vii) the Transferor shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in the Trust
Estate and the first perfected security interest of the Indenture Trustee
in the Collateral;
(viii) no selection procedures believed by the Transferor to be
adverse to the interests of the Class A Noteholders shall have been
utilized in selecting the Subsequent Receivables; and
(ix) the Transferor shall have delivered to the Indenture Trustee
and the Owner Trustee an Officer's Certificate confirming the satisfaction
of each condition specified in this paragraph (b).
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SECTION 2.03. Closing. The conveyance of the Initial Receivables shall
take place at the offices of Orrick, Herrington & Sutcliffe, 666 Fifth Avenue,
New York, New York 10103, on the Closing Date, simultaneously with the closing
of the transactions contemplated by the Contribution and Sale Agreement, the
underwriting agreement related to the Class A Notes and the other Basic
Documents. Upon the acceptance by the Transferor of the Class B Note and the
proceeds of the sale of the Class A Notes on the Closing Date, and upon the
release of funds from the Principal Funding Account to the Transferor on each
Transfer Date in an amount equal to the aggregate Principal Balance of the
Subsequent Receivables being transferred on such Transfer Date, the ownership of
each Receivable transferred on such date and the contents of the related
Receivable File is vested in the Issuer, subject only to the lien of the
Indenture.
SECTION 2.04. Books and Records. The transfer of each Receivable shall be
reflected on the Transferor's balance sheets and other financial statements
prepared in accordance with generally accepted accounting principles as a
transfer of assets by the Transferor to the Issuer. The Transferor shall be
responsible for maintaining, and shall maintain, a complete and accurate set of
books and records and computer files for each Receivable which shall be clearly
marked to reflect the ownership of each Receivable by the Issuer.
ARTICLE III
THE RECEIVABLES
SECTION 3.01. Representations and Warranties of Transferor. The Transferor
makes the following representations and warranties as to the Receivables on
which the Issuer is deemed to have relied in acquiring the Receivables. Such
representations and warranties speak as of the execution and delivery of this
agreement and as of each Transfer Date, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Title. It is the intention of the Transferor that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Transferor to the Issuer and that the beneficial interest in and title to such
Receivables not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against the Transferor under any bankruptcy law. No
Receivable has been sold, transferred, assigned or pledged by the Transferor to
any Person other than the Issuer. Immediately prior to the transfer and
assignment herein contemplated, the Transferor had good and marketable title to
each Receivable, free and clear of all Liens and rights of others and,
immediately upon the transfer thereof, the Issuer shall have good and marketable
title to each such Receivable, free and clear of all Liens and rights of others;
and the transfer has been perfected under the UCC.
(b) All Actions Taken. All actions (other than delivering the Original
Contract) necessary under the applicable UCC in any jurisdiction to be taken (i)
to give the Issuer a first priority perfected ownership interest in the
Receivables, and (ii) to give the Indenture Trustee a first
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priority perfected security interest therein (including, without limitation, UCC
filings with the Delaware and Washington Secretaries of State [and precautionary
UCC filings with the [__________] Secretary of State]).
(c) Location of Receivable Files. The Receivables Files are kept at the
location specified in Schedule B hereto.
(d) No Consents Required. All approvals, authorizations, consents, orders
or other actions of any Person or of any Governmental Authority required in
connection with the execution and delivery by the Transferor of this Agreement
or any other Basic Document, the performance by the Transferor of the
transactions contemplated by this Agreement or any other Basic Document and the
fulfillment by the Transferor of the terms hereof or thereof, have been obtained
or have been completed and are in full force and effect (other than approvals,
authorizations, consents, orders or other actions which if not obtained or
completed or in full force and effect would not have a material adverse effect
on the Transferor or the Issuer or upon the collectibility of any Receivable or
upon the ability of the Transferor to perform its obligations under this
Agreement).
SECTION 3.02. Repurchase by Transferor or MCC Upon Breach.
(a) The Transferor, the Servicer, MCC or the Owner Trustee, as the case
may be, shall inform the other parties to the Agreement, MCC and the Indenture
Trustee promptly, in writing, upon the discovery of any breach of the
Transferor's representations and warranties made pursuant to Section 3.01 or any
breach of MCC's representations and warranties made pursuant to Section 3.02(b)
of the Contribution and Sale Agreement. Unless any such breach shall have been
cured by the last day of the second month following the month of the discovery
thereof by the Owner Trustee or receipt by the Owner Trustee of written notice
from the Transferor or the Servicer of such breach, the Transferor shall be
obligated, and, if necessary, the Transferor or the Owner Trustee shall enforce,
the obligation of MCC, if any, under Section 6.02(a) of the Contribution and
Sale Agreement to repurchase any Receivable materially and adversely affected by
any such breach as of such last day (or, at the Transferor's option, as of the
last day of the first month following the month of the discovery).
(b) In consideration of the repurchase of the Receivable, the Transferor
shall remit the Purchase Amount in the manner specified in Section 5.03;
provided, however, that the obligation of the Transferor to repurchase any
Receivable arising solely as a result of a breach of MCC's representations and
warranties pursuant to Section 3.02(b) of the Contribution and Sale Agreement is
subject to the receipt by the Transferor of the Purchase Amount from MCC.
Subject to the provisions of Section 6.03, the sole remedy of the Issuer, the
Owner Trustee, the Indenture Trustee or the Noteholders with respect to a breach
of representations and warranties pursuant to Section 3.01 and the agreement
contained in this Section shall be to require the Transferor to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein, or to enforce MCC's obligation, if any, to the Transferor to repurchase
such Receivables pursuant to the Contribution and Sale Agreement. The Owner
Trustee shall have no duty to
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conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Receivable pursuant to this Section.
SECTION 3.03. Duties of Servicer.
(a) Receivable Files. The Servicer shall maintain such accurate and
complete accounts, records and computer systems pertaining to each Receivable
File as shall enable itself and the Issuer to comply with this Agreement. In
performing its duties, the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic audits of the related accounts, records and computer
systems, in such a manner as shall enable the Issuer or the Indenture Trustee to
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and the Indenture Trustee any failure on its part
to maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer, the Owner Trustee or the Indenture Trustee.
(b) Access to Records. The Servicer shall notify the Owner Trustee and the
Indenture Trustee of any change in the location of its principal place of
business in writing not later than 90 days after any such change. The Servicer
shall make available to the Owner Trustee and the Indenture Trustee, or their
respective duly authorized representatives, attorneys or auditors, a list of
locations of the related accounts, records and computer systems maintained by
the Servicer at such times as the Owner Trustee or the Indenture Trustee shall
instruct. The Indenture Trustee shall have access to such accounts, records and
computer systems.
(c) Safekeeping. The Servicer shall hold on behalf of the Issuer (i) all
file stamped copies of UCC financing statements evidencing the security interest
of MCC in Financed Equipment, and (ii) any and all documents, other than the
Receivable Files, that MCC or the Transferor shall keep on file, in accordance
with its customary procedures, relating to a Receivable, an Obligor or Financed
Equipment, and shall maintain such accurate and complete records pertaining to
each Receivable as shall enable the Issuer to comply with this Agreement. Upon
instruction from the Indenture Trustee, the Servicer shall release any such UCC
Filing or other document to the Indenture Trustee, the Indenture Trustee's
agent, or the Indenture Trustee's designee, as the case may be, at such place or
places as the Indenture Trustee may designate, as soon as practicable.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. Duties of Servicer. The Servicer, as agent for the Issuer
(to the extent provided herein), shall manage, service, administer and make
collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable receivables that it services for itself
or others. The Servicer's duties shall include calculating, billing, collection
and posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, reporting tax information to Obligors
(to the extent required under the related Contracts), accounting for
collections, and furnishing monthly and annual statements to the Owner Trustee
and the Indenture Trustee with respect to distributions. Subject to the
provisions of Section 4.02, the Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Indenture Trustee and the Noteholders or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Equipment securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Issuer (in the case of a
Receivable other than a Purchased Receivable) shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the ground that it shall not
be a real party in interest or a holder entitled to enforce such Receivable, the
Owner Trustee shall, at the Servicer's expense and direction, take steps to
enforce such Receivable, including bringing suit in its name or the name of the
Owner Trustee, the Indenture Trustee or the Noteholders. The Owner Trustee shall
upon the written request of the Servicer furnish the Servicer with any powers of
attorney and other documents reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
SECTION 4.02. Collection of Receivable Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
commercial equipment receivables that it services for itself or others. In
connection therewith, the Servicer may grant extensions, rebates or adjustments
on a Receivable; provided, however, that if the Servicer extends the date for
final payment by the Obligor of any Receivable beyond the date one month prior
to the Class A Final Scheduled Distribution Date, it shall promptly purchase the
Receivable from the Issuer in accordance with the terms of Section 4.07. The
Servicer may in its discretion waive any other amounts of Servicer's Yield that
may be collected in the ordinary course of servicing a Receivable. The Servicer
shall not agree to any reduction of the underlying interest rate on any
Receivable or, subject to the foregoing, of the amount of any Scheduled Payment
on a Receivable. Notwithstanding anything in this Agreement to the contrary, any
Recoveries shall be paid to the Transferor and any Defaulted Receivables shall
be assigned by the Trust to the
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Transferor (to extent the Principal Balance thereof has been distributed as part
of the Principal Distribution Amount).
SECTION 4.03. Realization upon Receivables. On behalf of the Issuer, the
Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise realize upon the Financed Equipment
securing any Receivable as to which the Servicer shall have determined eventual
payment in full is unlikely. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of comparable receivables, which may include selling the Financed
Equipment at public or private sale. The foregoing shall be subject to the
provision that, in any case in which any item of Financed Equipment shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Equipment unless it shall determine
in its discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in accordance
with its customary servicing procedures, require that each Obligor shall have
obtained physical damage insurance covering the Financed Equipment as of the
execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Equipment. The
Servicer shall, in accordance with its customary servicing procedures, take such
steps as are necessary to maintain perfection of the security interest created
by each Receivable in the related Financed Equipment. The Servicer is hereby
authorized to take such steps as are necessary to re-perfect such security
interest or to maintain such perfected security interest on behalf of the Issuer
and the Indenture Trustee in the event of the relocation of Financed Equipment,
or for any other reason.
SECTION 4.06. Covenants of Servicer. The Servicer shall not: (i) release
the Financed Equipment securing any Receivable from the security interest
granted by such Receivable in whole or in part except (A) in accordance with
Section 4.03 above or (B) in the event of payment in full by the Obligor
thereunder; (ii) impair the rights of the Issuer, the Indenture Trustee or the
Noteholders in any Receivable; or (iii) increase the number of Scheduled
Payments due under a Receivable except in accordance with the terms thereof or
the terms of Section 4.02.
SECTION 4.07. Purchase by Servicer of Receivables upon Breach. The
Servicer or the Owner Trustee shall inform the other party and the Indenture
Trustee, the Transferor and MCC promptly, in writing, upon the discovery of any
breach pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have been
cured by the last day of the second month following such discovery (or, at the
Transferor's election, the last day of the first following month), the Servicer
shall purchase any Receivable materially and adversely affected by such breach.
If the Servicer takes any action pursuant to Section 4.02 that impairs the
rights of the Issuer, the Indenture Trustee or the Noteholders in any Receivable
or as otherwise provided in Section 4.02, the Servicer shall purchase such
Receivable. In consideration of the purchase of any such Receivable pursuant to
either of the two preceding sentences, the Servicer shall remit the
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Purchase Amount in the manner specified in Section 5.03. Subject to Section
7.02, the sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee or
the Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or 4.06
shall be to require the Servicer to purchase Receivables pursuant to this
Section. The Owner Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the purchase of
any Receivable pursuant to this Section. The parties hereto intend that the
Servicer will not intentionally breach or cause a breach pursuant to Section
4.02, 4.05 or 4.06 in order to provide direct or indirect assurance to the
Transferor, the Indenture Trustee, the Owner Trustee or the Noteholders, as
applicable, against loss by reason of the bankruptcy or insolvency (or other
credit condition) of, or default by, the Obligor on, or the uncollectibility of,
any Receivable.
SECTION 4.08. Servicing Fee. On each Determination Date, the Servicer
shall be entitled to receive the Servicing Fee in respect of the immediately
preceding Collection Period equal to the product of (a) one-twelfth of the
Servicing Fee Rate and (b) the Pool Balance as of the first day of such
preceding Collection Period. The Servicer shall also be entitled to any
Servicer's Yield with respect to Receivables, collected (from whatever source)
on the Receivables, which Servicer's Yield shall be paid to the Servicer
pursuant to Section 5.07.
SECTION 4.09. Servicer's Certificate. On each Determination Date, the
Servicer shall deliver to the Owner Trustee, the Indenture Trustee and the
Transferor, with a copy to the Rating Agencies, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.04 and 5.05 for the Collection Period preceding the date of such
Servicer's Certificate. Neither the Owner Trustee nor the Indenture Trustee
shall be required to determine, confirm or recalculate the information contained
in the Servicer's Certificate. Receivables to be purchased by the Servicer or to
be repurchased by the Transferor shall be identified by the Servicer by account
number with respect to such Receivable as specified in Schedule A.
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee and the Rating Agencies, on or before April 30 of each year beginning
April 30, [_______], an Officers' Certificate stating that (i) a review of the
activities of the Servicer during the preceding 12-month period ending on
December 31 (or, in the case of April 30, [_____], the period from the Closing
Date to December 31, [____]) and of its performance under this Agreement has
been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Servicer has fulfilled in all
material respects all its obligations under this Agreement throughout such
period or, if there has been a default in the fulfillment of any such obligation
in any material respect, specifying each such default known to such officers and
the nature and status thereof. The Indenture Trustee shall send a copy of such
certificate and the report referred to in Section 4.11 to the Rating Agencies. A
copy of such certificate and the report referred to in Section 4.11 may be
obtained by any Noteholder by a request in writing to the Owner Trustee at its
address in Section 10.03.
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(b) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and the Rating Agencies, promptly after having obtained knowledge thereof, but
in no event later than five (5) Business Days thereafter, written notice in an
Officers' Certificate of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Default under Section 8.01(a) or (b).
SECTION 4.11. Annual Independent Certified Public Accountants' Report. In
order to confirm that the servicing of the Receivables has been conducted in
compliance with the terms of this Agreement, the Servicer shall cause a firm of
independent certified public accountants, which may also render other services
to the Servicer, the Transferor or MCC, to deliver to the Owner Trustee and the
Indenture Trustee on or before April 30 of each year beginning April 30,
[_____], a report addressed to the Board of Directors of the Servicer, the Owner
Trustee and the Indenture Trustee, to the effect that such firm has examined the
financial statements of MCC and issued its report thereon and that such
examination (a) 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; and (b) discloses the results of such tests during the preceding
12-month period ended December 31 (or, in the case of the report due on or
before April 30, [____], the period from the Closing Date to December 31,
[____]) that, in the firm's opinion, such program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities under this Article,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to the Owner Trustee, the Indenture Trustee and the Noteholders.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 5.01. Establishment of Trust Accounts.
(a) (i) The Transferor, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Noteholders.
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(ii) The Transferor, for the benefit of the Noteholders, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Interest Payment Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Noteholders.
(iii) The Transferor, for the benefit of the Noteholders, shall establish
and maintain in the name of the Indenture Trustee and Eligible Deposit Account
(the "Principal Funding Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Noteholders.
(iv) The Transferor, for the benefit of the Class A Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Note Distribution Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Class A Noteholders.
(v) The Transferor, for the benefit of the Class A Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Reserve Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Class A Noteholders.
(b) Funds on deposit in the Collection Account, the Interest Payment
Account, the Principal Funding Account, the Note Distribution Account and the
Reserve Account (collectively the "Trust Accounts") shall be invested by the
Indenture Trustee in Eligible Investments selected by the Servicer; provided,
however, it is understood and agreed that the Indenture Trustee shall not be
liable for any loss arising from such investment in Eligible Investments. All
such Eligible Investments shall be held by the Indenture Trustee for the benefit
of the Noteholders; provided, however, that on each Distribution Date all
investment earnings (net of losses and investment expenses) on funds on deposit
therein shall be deposited into the Collection Account and shall be deemed to
constitute a portion of the Available Interest Amount. Other than as permitted
by the Rating Agencies, funds on deposit in the Trust Accounts shall be invested
in Eligible Investments that will mature so that such funds will be available at
the close of business on the Business Day preceding the immediately following
Distribution Date; provided, however, that funds on deposit in Trust Accounts
may be invested in Eligible Investments of the Indenture Trustee which may
mature so that such funds will be available on the Distribution Date. Funds
deposited in a Trust Account on a Business Day which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not required
to be invested overnight, but if so invested, such investments must meet the
conditions of the immediately preceding sentence.
(c) (i) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Trust Estate. The Trust Accounts shall
be under the sole dominion and control of the Indenture Trustee for the benefit
of the Noteholders. If, at any time, any of the Trust Accounts ceases to be an
Eligible Deposit Account, the Indenture Trustee (or the Servicer on its behalf)
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating
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Agency may consent) establish a new Trust Account as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Trust Account. So
long as [indenture trustee] is an Eligible Institution, any Trust Account may be
maintained with it in an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that if held in deposit accounts
shall be held solely in the Eligible Deposit Accounts; and each such
Eligible Deposit Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have
sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC) acting solely for
the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration
of such Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated security"
under Article 8 of the UCC and that is not governed by clause (C) above
shall be delivered to the Indenture Trustee in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its nominee's) ownership of
such security.
(iii) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee to make withdrawals and payments from the Trust
Accounts for the purpose of permitting the Servicer or the Owner Trustee to
carry out its respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
(iv) The Indenture Trustee is hereby authorized to execute purchase and
sales directed by the Servicer through the facilities of its own trading or
capital markets operations. The Indenture Trustee shall send statements to the
Servicer monthly reflecting activity for each amount created hereunder for the
preceding month. Although the Servicer recognizes that it may obtain a broker
confirmation at no additional cost, the Servicer hereby agrees that
confirmations of investments are not required to be issued by the Indenture
Trustee for each month in which
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a monthly statement is rendered. No statement need be rendered pursuant to the
provision hereof if no activity occurred in the account for such month.
SECTION 5.02. Collections. Subject to Section 5.03, the Servicer shall
remit to the Collection Account (i) all payments by or on behalf of the Obligors
with respect to the Receivables (other than Purchased Receivables) and (ii) all
Liquidation Proceeds (except to the extent of Recoveries applied in accordance
with Section 4.02), in each case as collected during each Collection Period
within two Business Days of receipt and identification thereof. Notwithstanding
the foregoing, if (i) MCC is the Servicer, (ii) a Servicer Default shall not
have occurred and be continuing and (iii) MCC (or any entity that guarantees the
servicing obligations of MCC) maintains a short-term rating of at least A-1 by
Standard & Poor's and P-1 by Moody's, the Servicer may remit such collections
with respect to each Collection Period to the Collection Account on or before
the second Business Day prior to the following Distribution Date. For purposes
of this Article V, the phrase "payments by or on behalf of Obligors" shall mean
payments made with respect to the Receivables by Persons other than the Servicer
or MCC.
SECTION 5.03. Additional Deposits. The Servicer and the Transferor shall
deposit or cause to be deposited in the Collection Account the Purchase Amounts
with respect to Purchased Receivables as set forth in the immediately following
sentence, and the Servicer shall deposit in the Collection Account all amounts
to be paid under Section 9.01 as set forth therein. The Servicer and the
Transferor will deposit the Purchase Amount with respect to each Purchased
Receivable when such obligations are due, unless, with respect to Purchase
Amounts to be remitted by the Servicer, the Servicer shall be permitted to make
deposits monthly prior to each Distribution Date pursuant to Section 5.02, in
which case such deposits shall be made in accordance with such Section. The
Servicer shall account for Purchase Amounts paid by itself and the Transferor
separately.
SECTION 5.04. Distributions.
(a) On each Determination Date, the Servicer shall calculate all amounts
required to determine the amounts to be deposited in the Interest Payment
Account, the Principal Funding Account and the Note Distribution Account.
(b) The rights of the Class B Noteholders to receive distributions of
Available Interest Amounts and Available Principal Amounts shall be and hereby
are subordinated to the rights of the Class A Noteholders to the extent provided
in this Section 5.04(b). On the second Business Day prior to each Distribution
Date, the Servicer shall instruct the Indenture Trustee, which instruction shall
be in the form of Exhibit B to Schedule D (or such other form that is acceptable
to the Indenture Trustee and the Servicer), to withdraw from the Collection
Account the Available Interest Amount and the Available Principal Amount for
deposit in the Interest Payment Account and the Principal Funding Account,
respectively, and to make the following deposits and distributions for receipt
by the Servicer or the Administrator or for deposit in the Note Distribution
Account by 12:00 Noon (New York time) on such following Distribution Date to the
extent of the Available Interest Amount and the Available Principal Amount:
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(i) from the Available Interest Amount on deposit in the Interest
Payment Account, in the following order of priority:
(A) to the Servicer, the Servicing Fee and all unpaid Servicing Fees
from prior Collection Periods;
(B) to the Administrator under the Administration Agreement, the
Administration Fee and all unpaid Administration Fees from prior
Collection Periods;
(C) to the Note Distribution Account, the Noteholders' Class A
Interest Distributable Amount;
(D) to the Principal Funding Account, the positive difference, if
any, between the Principal Distribution Amount and the Available Principal
Amount (not taking into account the amount of the Available Principal
Amount derived from clause (iii) of the definition thereof);
(E) to the Note Distribution Account, the Noteholders' Class B
Interest Distributable Amount; and
(F) to the Reserve Account, the remaining Available Interest Amount;
(ii) from the Available Principal Amount on deposit in the Principal
Funding Account, in the following order of priority:
(A) on Distribution Dates with respect to the Revolving Period, the
Available Principal Amount will be retained in the Principal Funding
Account and will be paid to the Transferor in connection with transfers of
Subsequent Receivables to the Issuer pursuant to Section 2.02; and
(B) on Distribution Dates with respect to the Amortization Period,
(1) first, to the Note Distribution Account, the Class A Noteholders'
Principal Distributable Amount and (2) second, to the Note Distribution
Account, the Class B Noteholders' Principal Distributable Amount;
(iii) on the first Distribution Date with respect to the
Amortization Period, from Available Principal Amounts deposited in the Principal
Funding Account on prior Distribution Dates that were not used to purchase
Subsequent Receivables from the Transferor on or prior to such Distribution Date
("Remaining Available Principal Amounts"), in the following order of priority:
(A) to the Note Distribution Account, the Class A Noteholders'
Percentage of the Remaining Available Principal Amounts; and
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(B) to the Note Distribution Account, the Class B Noteholders'
Percentage of the Remaining Available Principal Amounts.
(c) Notwithstanding anything in this Section 5.04 to the contrary, if an
Event of Default under the Indenture occurs and the maturities of the Notes are
accelerated pursuant to Section 5.02 of the Indenture, Collections on the
Receivables shall be applied by the Indenture Trustee in accordance with Section
5.04(b) of the Indenture.
SECTION 5.05. Reserve Account.
(a) On the Closing Date, the Transferor shall deposit the Reserve Account
Initial Deposit into the Reserve Account. The Servicer shall determine the
Specified Reserve Account Balance for each Distribution Date.
(b) If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance for
such Distribution Date, the Servicer shall instruct the Indenture Trustee to
distribute the amount of such excess to the Transferor; provided that if, after
giving effect to all payments made on the Notes on such Distribution Date, the
Pool Balance as of the end of the preceding Collection Period is less than the
outstanding principal amount of the Notes, such excess amount shall not be
distributed to the Transferor and shall be retained in the Reserve Account
available for application in accordance with Sections 5.05(c) and (d). Amounts
properly distributed to the Transferor pursuant to this Section 5.05(b) shall be
deemed released from the Trust and the security interest therein granted to the
Indenture Trustee, and the Transferor shall in no event thereafter be required
to refund any such distributed amounts.
(c) In the event that the sum of (x) the Service Fee, the Administration
Fee and the Monthly Class A Note Interest for a Distribution Date exceeds the
Available Interest Amount on such Distribution Date, the Indenture Trustee shall
withdraw from the Reserve Account on such Distribution Date, upon receipt of the
instruction from the Servicer pursuant to Section 5.04(b), to the extent of
funds available therein, an amount equal to such excess, and the Indenture
Trustee shall deposit such amount into the Note Distribution Account pursuant to
the terms of the Indenture and, if necessary, pay such amount to the Servicer
and the Administrator, as applicable.
(d) In the event that the Class A Noteholders' Principal Distributable
Amount for a Distribution Date exceeds the amount deposited in the Note
Distribution Account pursuant to Section 5.04(b)(ii)(A) on such Distribution
Date, the Indenture Trustee shall withdraw on such Distribution Date from the
Reserve Account, upon receipt of the instruction of the Servicer pursuant to
Section 5.04(b), to the extent of funds available therein after giving effect to
paragraph (c) above, an amount equal to such excess, and the Indenture Trustee
shall deposit such amount into the Note Distribution Account pursuant to the
terms of the Indenture.
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(e) Notwithstanding anything in Section (d) to the contrary, if on any
Distribution Date on which any Class A Notes are outstanding the amount on
deposit in the Reserve Account is less than the amount equal to [____] of the
Pool Balance as of the end of the immediately preceding Collection Period, then
amounts will be withdrawn from the Reserve Account on such Distribution Date
only to the extent needed to pay any Servicing Fee, Administration Fee or
Monthly Class A Note Interest otherwise unpaid on such date, and no funds may be
withdrawn from the Reserve Account on such Distribution Date to pay any portion
of the Class A Noteholders' Principal Distributable Amount otherwise unpaid on
such date.
(f) Notwithstanding anything in this Section 5.05 to the contrary, if an
Event of Default under the Indenture occurs and the maturities of the Notes are
accelerated pursuant to Section 5.02 of the Indenture, amounts on deposit in the
Reserve Account shall be applied by the Indenture Trustee in accordance with
Section 5.04(a) of the Indenture.
SECTION 5.06. Statements to Noteholders. On the second Business Day prior
to each Distribution Date, the Servicer shall provide to the Indenture Trustee
(with a copy to the Rating Agencies) for the Indenture Trustee to forward to
each Class A Noteholder of record, and to the Owner Trustee a statement
substantially in the form of Exhibit A to Schedule D (or such other form that is
acceptable to the Indenture Trustee, the Owner Trustee and the Servicer) setting
forth at least the following information as to the Notes (separately stating
such information as to the Class A Notes and the Class B Notes), to the extent
applicable:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period, the aggregate Principal Balance of the
Receivables and the amount on deposit in the Principal Funding Account;
(iv) the outstanding principal balance of each class of the Notes
and the Class A Note Pool Factor, in each case as of the close of business
on the last day of the preceding Collection Period, after giving effect to
payments allocated to principal reported under (i) above;
(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the amount of the Administration Fee paid to the Administrator
with respect to such Collection Period;
(vii) the aggregate amount of the Purchase Amounts for Purchased
Receivables with respect to the related Collection Period paid by each of
the Transferor and the Servicer (accounted for separately);
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(viii) the amount of Realized Losses, if any, for such Collection
Period;
(ix) the balance of the Reserve Account on such Distribution Date,
after giving effect to withdrawals made on such Distribution Date;
(x) the Specified Reserve Account Balance for such Distribution
Date; and
(xi) the Noteholders' Class A Interest Distributable Amount, the
Noteholders' Class B Interest Distributable Amount, the Class A
Noteholders' Principal Distributable Amount and the Class B Noteholders'
Principal Distributable Amount, the components of each thereof, and the
amount, if any, to be withdrawn from the Reserve Account and deposited
into the Note Distribution Account pursuant to Section 5.05(c) or (d);
Each amount set forth pursuant to paragraph (i) or (ii) above shall be
expressed as a dollar amount per $1,000 of original principal balance of a Note.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Indenture, the Indenture
Trustee shall mail to each Person who at any time during such calendar year
shall have been a Class A Noteholder and received any payment thereon, a
statement containing the amounts described in (i) and (ii) above and any other
information required by applicable tax laws, for the purposes of such
Noteholder's preparation of Federal income tax returns.
The Indenture Trustee shall only be required to provide to the Class A
Noteholders the information furnished to it by the Servicer. The Indenture
Trustee shall not be required to determine, confirm or recompute any such
information.
SECTION 5.07. Net Deposits. As an administrative convenience, so long as
MCC is the Servicer and the Administrator, if the Servicer is permitted to remit
collections monthly rather than within two Business Days of their receipt and
identification pursuant to Section 5.02, the Servicer will be permitted to make
the deposit of Collections on the Receivables and Purchase Amounts for or with
respect to the Collection Period net of distributions to be made to the Servicer
and the Administrator with respect to such Collection Period (and the Servicer
shall pay amounts owing to the Administrator directly); provided, that
regardless of the required frequency of remittances, the Servicer shall be paid
the Servicer's Yield by means of the Servicer making the deposit of such
Collections net of the Servicer's Yield. The Servicer, however, will account to
the Owner Trustee and the Indenture Trustee and the Noteholders as if the
Servicing Fee and Administration Fee was paid individually.
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ARTICLE VI
THE Transferor
SECTION 6.01. Representations of Transferor. The Transferor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of each Transfer Date and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Transferor is duly
organized and validly existing as a corporation in good standing 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 presently conducted, and had at all relevant
times, and has, the power, authority and legal right to acquire and own
the Receivables.
(b) Due Qualification. The Transferor 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
failure to so qualify or to obtain any such license or approval would
render any Receivable unenforceable that would otherwise be enforceable by
the Transferor or the Owner Trustee.
(c) Power and Authority. The Transferor has the power and
authority to execute and deliver this Agreement and to carry out its
terms; the Transferor has full power and authority to sell and assign the
Receivables and other property to be sold and assigned to and deposited
with the Issuer and the Transferor and has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Transferor by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Transferor enforceable in accordance
with its terms, except to the extent that such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally,
and the remedy of specific performance and injunctive relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do
not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of the Transferor,
or any indenture, agreement or other instrument to which the Transferor is
a party or by which it shall be bound; (ii) result in the creation or
imposition of any Lien
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upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic
Documents); or (iii) or violate any law or, to the best of the
Transferor's knowledge, any order, rule or regulation applicable to the
Transferor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or to the Transferor's best knowledge, threatened, before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Transferor or its properties:
(i) asserting the invalidity of this Agreement, the Indenture, the Notes
or any of the other Basic Documents, (ii) seeking to prevent the issuance
of the Notes or the consummation of any of the transactions contemplated
by this Agreement, the Indenture or any of the other Basic Documents;
(iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Transferor of its obligations
under, or the validity or enforceability of, this Agreement, the
Indenture, the Notes or any other of the Basic Documents or (iv) which
might adversely affect the Federal or state income tax attributes of the
Notes.
SECTION 6.02. Liability of Transferor; Indemnities. The Transferor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Transferor under this Agreement.
(a) The Transferor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee and their officers, directors and
agents from and against any taxes that may at any time be asserted against the
Issuer, the Owner Trustee or the Indenture Trustee or their respective officers,
directors, and agents with respect to the sale of the Receivables to the Issuer
or the issuance and original sale of the Notes, including any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to ownership of the Receivables or Federal or other income taxes arising
out of the transactions contemplated by this Agreement) and costs and expenses
in defending against the same.
(b) The Transferor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee and their officers, directors, and
agents from and against any loss, liability or expense incurred by reason of (i)
the Transferor's willful misfeasance, bad faith or gross negligence in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Transferor's or the Issuer's violation or alleged violation of Federal or state
securities laws in connection with the offering and sale of the Notes.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee, the Custodian or the Indenture Trustee and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Transferor shall have made any
indemnity payments pursuant to this Section 6.03 and the Person to or on
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behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to the
Transferor, without interest.
SECTION 6.03. Merger or Consolidation of, or Assumption of the Obligations
of, Transferor. Any Person (a) into which the Transferor may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Transferor shall be a party or (c) which may succeed to the properties and
assets of the Transferor substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Transferor under this Agreement, shall be the successor to the Transferor
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 3.01 shall have been breached and no Servicer Default, and
no event that, after notice or lapse of time, or both, would become a Servicer
Default shall have occurred and be continuing, (ii) the Transferor shall have
delivered to the Owner Trustee and the Indenture Trustee an Officers'
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, (iii) the Rating Agency
Condition shall have been satisfied with respect to such transaction and (iv)
the Transferor shall have delivered to the Owner Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all actions necessary to perfect the interests of the Owner Trustee and
the Indenture Trustee have been taken, including that all financing statements
and continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee and Indenture Trustee, respectively, in the Receivables and reciting the
details of such filings, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interests.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii), (iii) and (iv)
above shall be conditions to the consummation of the transactions referred to in
clause (a), (b) or (c) above.
SECTION 6.04. Limitation on Liability of Transferor and Others. The
Transferor and any director or officer or employee or agent of the Transferor
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.05. Transferor May Own Notes. The Transferor and any Affiliate
(other than MCC) thereof may in its individual or any other capacity become the
owner or pledgee of Class A Notes with the same rights as it would have if it
were not the Transferor or an Affiliate thereof, except as expressly provided
herein (including, without limitation, the definition of "Outstanding" contained
in the Indenture) or in any Basic Document.
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ARTICLE VII
THE SERVICER
SECTION 7.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of the Agreement and as of each Transfer Date (or as of the date a
Person (other than the Indenture Trustee) becomes Servicer pursuant to Sections
7.03 and 8.02, in the case of a successor to the Servicer) and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, and has the corporate power and
authority to own its properties and to conduct the business in which it is
currently engaged, and had at all relevant times, and has, the power,
authority and legal right to acquire, own, sell and service the
Receivables.
(b) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with its
terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and the
remedy of specific performance and injunctive relief may be subject to
certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
(d) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not
conflict with, result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time) a default under,
the articles of incorporation or by-laws of the Servicer, or any
indenture, agreement or other instrument to which the Servicer is a party
or by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this Agreement); nor
violate any law or, to the best of the Servicer's knowledge, any 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 its
properties.
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(e) No Proceedings. To the Servicer's best knowledge, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties:
(i) asserting the invalidity of this Agreement, the Indenture, the Notes
or any of the other Basic Documents; (ii) seeking to prevent the issuance
of the Notes or the consummation of any of the transactions contemplated
by this Agreement, the Indenture or any of the other Basic Documents;
(iii) 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, the Indenture, the
Notes or any of the other Basic Documents ; or (iv) relating to the
Servicer and which might adversely affect the Federal or state income tax
attributes of the Notes.
(f) No Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Servicer of
this Agreement or any other Basic Document, the performance by the
Servicer of the transactions contemplated by this Agreement or any other
Basic Document and the fulfillment by the Servicer of the terms hereof or
thereof, have been obtained or have been completed and are in full force
and effect (other than approvals, authorizations, consents, orders or
other actions which if not obtained or completed or in full force and
effect would not have a material adverse effect on the Servicer or the
Issuer or upon the collectibility of any Receivable or upon the ability of
the Servicer to perform its obligations under this Agreement).
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(a) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Transferor and any of the officers, directors and agents of the Issuer,
the Owner Trustee, the Indenture Trustee, and the Transferor from and
against any and all costs, expenses, losses, damages, claims and
liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate (other than the Transferor)
thereof of any Financed Equipment.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee and the Transferor and
their respective officers, directors and agents from and against (i) any
taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein, including any sales,
gross receipts, general corporation, tangible personal property, privilege
or license taxes (but, in the case of the Issuer, not including any taxes
asserted with respect to, and as of the date of, the sale of the
Receivables to the Issuer or the issuance and original sale of the Notes,
or asserted with respect to ownership of the Receivables, or Federal or
other income taxes arising out of distributions on the Notes) and (ii)
costs and expenses in defending against the same.
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(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Transferor and the
Noteholders and any of the officers, directors and agents of the Issuer,
the Owner Trustee, the Indenture Trustee and the Transferor from and
against any and all costs, expenses, losses, claims, damages and
liabilities to the extent that any such cost, expense, loss, claim, damage
or liability arose out of, or was imposed upon any such Person through,
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 or
on account of the failure of the Servicer to be qualified to do business
as a foreign corporation or to have obtained a license or approval in any
jurisdiction.
(d) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee and their respective officers, directors
and agents from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein, and in the case
of the Owner Trustee, in the Trust Agreement, and in the case of the
Indenture Trustee, the Indenture, except to the extent that any such cost,
expense, loss, claim, damage or liability: (i) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee or the Indenture Trustee, as applicable; or (ii) shall
arise from the breach by the Owner Trustee of any of its representations
or warranties set forth in Section 6.03 of the Trust Agreement.
(e) The Servicer shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate, other than any taxes asserted
with respect to, and as of the date of, the sale of the Receivables to the
Issuer or the issuance and original sale of the Notes, or Federal or other
income taxes imposed on the Issuer because of its classification or
reclassification for tax purposes, or Federal or other income taxes
arising out of distributions on the Notes.
For purposes of this Section, in the event of the termination of the
rights and obligations of MCC (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture Trustee)
pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include reasonable fees and expenses of counsel and expenses
of litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall promptly
repay such amounts to the Servicer, without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. Any Person (a) (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger or consolidation to which
the Servicer shall be a party, (iii) which
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may succeed to the properties and assets of the Servicer substantially as a
whole, or (iv) which is a corporation 50% or more of the voting stock of which
is owned, directly or indirectly, by Metropolitan Life Insurance Company
Corporation, and (b) in the case of any of (i), (ii), (iii) or (iv), which has
executed an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided,
however, that (w) immediately after giving effect to such transaction, no
Servicer Default, and no event which, after notice or lapse of time, or both,
would become a Servicer Default shall have occurred and be continuing, (x) the
Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an
Officers' 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 provided for in this Agreement
relating to such transaction have been complied with, (y) the Rating Agency
Condition shall have been satisfied with respect to such transaction and (z) the
Servicer shall have delivered to the Owner Trustee and the Indenture Trustee an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee, respectively, in the
Receivables and reciting the details of such filings or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interests. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(w), (x), (y) and (z) above shall be conditions to the consummation of the
transactions referred to in clause (a), (b), (c), or (d) above.
SECTION 7.04. 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 or the Noteholders, except
as provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement or for errors in judgment;
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
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director or officer or employee or agent of the Servicer as the
case may be, may rely in good faith on any document of any kind prima facie
properly executed and submitted by any person respecting any matters arising
under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the other Basic
Documents and the rights and duties of the parties to this Agreement and the
other Basic Documents and the interests of the Noteholders under the Indenture.
SECTION 7.05. MCC Not To Resign as Servicer. Subject to the provisions of
Section 7.03, MCC shall not resign from the obligations and duties hereby
imposed on it as
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Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement shall no longer be permissible under applicable
law (if it is also determined that such determination may not be reversed).
Notice of any such determination permitting the resignation of MCC shall be
communicated to the Owner Trustee and the Indenture Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee and the Indenture Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until the
Indenture Trustee or a successor Servicer shall have assumed the
responsibilities and obligations of MCC in accordance with Section 8.02.
ARTICLE VIII
DEFAULT
SECTION 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer (i) to deliver to the Indenture Trustee
for deposit in any of the Trust Accounts any required payment or (ii) to direct
the Indenture Trustee to make any required distribution therefrom in either case
that shall continue unremedied for a period of three Business Days after written
notice of such failure is received by the Servicer from the Owner Trustee or the
Indenture Trustee or after discovery of such failure by an officer of the
Servicer; or
(b) failure on the part of the Servicer or the Transferor, as the case may
be, duly to observe or to perform in any material respect any other covenants or
agreements of the Servicer or the Transferor (as the case may be) set forth in
this Agreement or any other Basic Document, which failure shall (i) materially
and adversely affect the rights of Noteholders and (ii) continues unremedied for
a period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (A) to the Servicer or
the Transferor (as the case may be) by the Owner Trustee or the Indenture
Trustee or (B) to the Servicer or the Transferor (as the case may be), and to
the Owner Trustee and the Indenture Trustee by the Holders of Class A Notes
evidencing not less than 25% of the outstanding Amount of the Class A Notes; or
(c) an Insolvency Event occurs with respect to the Transferor or the
Servicer; then, and in each and every case, so long as the Servicer Default
shall not have been remedied, either the Indenture Trustee, or the Holders of
Class A Notes evidencing not less than 25% of the Outstanding Amount of the
Class A Notes, by notice then given in writing to the Servicer (and to the
Indenture Trustee and the Owner Trustee if given by the Class A Noteholders) may
terminate all the rights and obligations (other than the obligations set forth
in Section 7.02 hereof) of the Servicer under this Agreement (a "Servicer
Termination Event"). On or after the receipt by the Servicer of such written
notice, all authority and power of the Servicer under this
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Agreement, whether with respect to the Notes or the Receivables or otherwise,
shall, without further action, pass to and be vested in the Indenture Trustee or
such successor Servicer as may be appointed under Section 8.02; and, without
limitation, the Indenture Trustee and the Owner Trustee are hereby authorized
and empowered to execute and deliver, on behalf of the predecessor 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, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the Indenture
Trustee and the Owner Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or shall thereafter be received by it with respect to a Receivable. All
reasonable costs and expenses (including reasonable attorneys' fees) incurred in
connection (x) with transferring the computer or other records to the successor
Servicer in the form requested and (y) amending this Agreement to reflect such
succession as Servicer pursuant to this Section shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of a Servicer Default, the
Owner Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.02. Appointment of Successor.
(a) Upon the Servicer's receipt of notice of termination, pursuant to
Section 8.01 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the earlier of (x) the date 45 days from the delivery to the
Owner Trustee and the Indenture Trustee of written notice of such resignation
(or written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Indenture Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Owner Trustee and the Indenture Trustee. In the event that a
successor Servicer has not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with this Section, pending
the appointment of and acceptance by a successor Servicer, the Indenture Trustee
without further action shall automatically be appointed and serve as the
successor Servicer and the Indenture Trustee shall be entitled to the Servicing
Fee and the Servicer's Yield. Notwithstanding the above, the Indenture Trustee
shall, if it shall be legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution who has
demonstrated its capability to service the Receivables to the satisfaction of
the Indenture Trustee, as the successor to the Servicer under this Agreement,
having a net worth of not less than $50,000,000 and whose regular business shall
include the servicing of receivables comparable with the Receivables, as the
successor to the Servicer under this Agreement.
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The Indenture Trustee, acting in its capacity as successor Servicer, and
any successor Servicer appointed by it, shall have no responsibility or
obligation (i) for any breach by any predecessor Servicer of any of its
representations and warranties, or (ii) any acts or omissions of MCC or any
other Servicer prior to its termination.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and the
Servicer's Yield and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement.
(c) Subject to the Indenture Trustee's right to appoint a successor
Servicer pursuant to Section 8.02(a) after the Indenture Trustee has become the
Servicer pending the appointment of and acceptance by a successor Servicer, the
Servicer may not resign unless it is prohibited from serving as such by law.
(d) Notwithstanding any other provision of this Agreement, neither the
Indenture Trustee nor any successor Servicer shall be deemed in default, breach
or violation of this Agreement as a result of the failure of MCC or any Servicer
(i) to cooperate with the Indenture Trustee or any successor Servicer pursuant
to Section 8.01, (ii) to deliver funds required to be deposited to any Trust
Account, or (iii) to deliver files or records relative to the Receivables as may
be requested by the Indenture Trustee or successor Servicer.
SECTION 8.03. Notification to 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 the Indenture Trustee
shall give prompt written notice thereof to Noteholders and the Rating Agencies.
SECTION 8.04. Waiver of Past Defaults. The Holders of Class A Notes
evidencing not less than a majority of the Outstanding Amount of the Class A
Notes may, on behalf of all Noteholders, waive in writing any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from any of the
Trust Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Default 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 thereto.
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ARTICLE IX
EARLY AMORTIZATION EVENTS; OPTIONAL PURCHASE
SECTION 9.01. Early Amortization Events. If any of the following events
shall occur during the Revolving Period:
(a) failure on the part of the Transferor or the Servicer to make any
payment or deposit under this Agreement or the Contribution and Sale Agreement
on or before the date occurring three Business Days after such payment or
deposit is required to be made;
(b) failure on the part of the Transferor or the Servicer to duly observe
or perform in any material respect any other covenants or agreements of the
Transferor or the Servicer set forth in this Agreement or the Contribution and
Sale Agreement, which failure materially and adversely affects the rights of the
Class A Noteholders and which continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Transferor or the Servicer (as the
case may be) by the Owner Trustee or the Indenture Trustee or (B) to the
Servicer or the Transferor (as the case may be) and the Owner Trustee and the
Indenture Trustee by the Holders of Class A Notes evidencing not less than 25%
of the Outstanding Amount of the Class A Notes;
(c) any representation or warranty made by MCC in the Contribution and Sale
Agreement or by the Transferor or the Servicer in this Agreement or any
information in the Receivables Schedule (x) shall prove to be incorrect in any
material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to (A) MCC, the Transferor or the Servicer (as the case may be) by the Owner
Trustee or the Indenture Trustee or (B) MCC, the Transferor or the Servicer (as
the case may be) and the Owner Trustee and the Indenture Trustee by Holders of
Class A Notes evidencing not less than 25% of the Outstanding Amount of the
Class A Notes and (y) as a result of which the interest of the Class A
Noteholders are materially and adversely affected; provided, however, that an
Early Amortization Event shall not be deemed to occur pursuant to this
subparagraph (c) if MCC, the Transferor or the Servicer (as the case may be)
shall have purchased the relevant Receivable pursuant to Section 6.02(a)(i) of
the Contribution and Sale Agreement or Section 3.02 or 4.07 (as applicable) by
depositing the related Purchase Amount in the Collection Account pursuant to
Section 5.03;
(d) an Insolvency Event shall occur with respect to MCC, the Transferor or
the Servicer;
(e) the Transferor or the Trust shall become subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended;
(f) on the tenth day following any Distribution Date, the Principal
Funding Account Balance shall be greater than [$_________];
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(g) a Servicer Termination Event shall occur;
(h) the amount on deposit in the Reserve Account shall be less than the
Specified Reserve Account Balance for any [three] consecutive Distribution
Dates; or
(i) an Event of Default shall have occurred and be continuing and
the Notes shall be declared immediately due and payable;
then (but in the case of any event described in subparagraph (a), (b) or (c)
after any applicable grace period) an early amortization event (an "Early
Amortization Event") shall have occurred.
SECTION 9.02. Optional Purchase of All Receivables. If on the last day of
any Collection Period the Pool Balance is less than 10% of the Initial Pool
Balance, the Servicer shall have the option to purchase the Owner Trust Estate,
other than the Trust Accounts, which purchase shall be effective as of such last
day; provided, however, that the Servicer may not effect any such purchase so
long as the rating on MCC's long-term debt obligations is less than Baa3 by
Moody's, unless the Owner Trustee and the Indenture Trustee shall have received
an Opinion of Counsel to the effect that such purchase would not constitute a
fraudulent conveyance. To exercise such option, the Servicer shall deposit in
the Collection Account on or prior to the second Business Day prior to the next
succeeding Distribution Date an amount equal to the aggregate Purchase Amount
for the Receivables (including Defaulted Receivables but not including
Liquidated Receivables) pursuant to Section 5.03, and shall succeed to all
interests in and to the Trust.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment. The Agreement may be amended by the Transferor,
the Servicer and the Trust, with the consent of the Indenture Trustee, but
without the consent of any of the Noteholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders;
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 Noteholder.
This Agreement may also be amended from time to time by the Transferor,
the Servicer and the Trust, with the consent of the Indenture Trustee, the
consent of the Holders of Class A Notes evidencing not less than a majority of
the Outstanding Amount of the Class A Notes, 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 Noteholders;
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 Receivables or
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distributions that shall be required to be made for the benefit of the
Noteholders or (b) reduce the aforesaid portion of the Outstanding Amount of the
Class A Notes, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all the outstanding Class A
Notes.
Prior to 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 of the Rating Agencies. 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 the Indenture Trustee.
It shall not be necessary for the consent of 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.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture 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 the Opinion of Counsel referred to in Section
10.02(i)(1). The Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Indenture Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust.
(a) The Transferor shall take all actions necessary to perfect, and
maintain perfection of, the interests of the Owner Trustee and the Indenture
Trustee in the Receivables. In the event it is determined that the Indenture
Trustee's or the Issuer's interests are no longer perfected, such actions shall
include but shall not be limited to enforcement of the terms of Section 6.02 of
the Contribution and Sale Agreement. In addition, without limiting the rights of
the Indenture Trustee or the Issuer specified in the immediately preceding
sentence, the Transferor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to present, maintain, and
protect the interest of the Issuer and the interest of the Indenture Trustee in
the Receivables and in the proceeds thereof. The Transferor 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 Transferor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above or otherwise seriously misleading within the meaning of ss.
9-402(7) of the UCC (regardless of whether such a filing was ever made), unless
it shall have given the Owner Trustee and the Indenture Trustee at least five
days' prior written notice thereof and, if applicable, shall have timely filed
appropriate amendments to any
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and all previously filed financing statements or continuation statements (so
that the Lien of the Issuer or the Indenture Trustee is not adversely affected).
(c) Each of the Transferor and the Servicer shall have an obligation to
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 (regardless of whether such a filing was ever
made) and shall promptly, if applicable, file any such amendment. The Servicer
shall at all times maintain each office from which it shall service Receivables,
and its principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and Recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or Recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) The Servicer shall maintain its Receivable Management System so that,
from and after the time of sale under this Agreement of the Receivables, the
Servicer's Receivable Management System (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer (which
interest has been acquired from the Transferor) and the Indenture Trustee in
such Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Indenture Trustee. Indication of the Issuer's interest (which
interest has been acquired from the Transferor) and the Indenture Trustee's
interest in a Receivable shall be deleted from or modified on the Servicer's
Receivable Management System when, and only when, the related Receivable shall
have been paid in full or repurchased.
(f) If at any time the Transferor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in receivables
comparable with the Receivables, to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at any
time during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to the Schedule
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of Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this Agreement and
of each amendment thereto, an Opinion of Counsel either (A) stating that,
in the opinion of such counsel, all actions have been taken that are
necessary fully to perfect the interests of the Owner Trustee and the
Indenture Trustee in the Receivables, and reciting the details of such
action 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
shall be necessary to perfect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Initial Cut-off Date, an Opinion of Counsel, dated as of a date
during such 90-day period, either (A) stating that, in the opinion of such
counsel, all actions have been taken, and, if applicable, all financing
statements and continuation statements have been executed and filed, that
are necessary fully to perfect the interests of the Owner Trustee and the
Indenture Trustee in the Receivables 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 shall be necessary to perfect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to perfect such interest.
(j) The Transferor shall, to the extent required by applicable law, cause
the Class A Notes to be registered with the Commission pursuant to Section 12(b)
or Section 12(g) of the Exchange Act within the time periods specified in such
sections.
SECTION 10.03. Notices. All demands, notices and communications upon or to
the Transferor, the Servicer, the Issuer, the Owner Trustee, the Indenture
Trustee or the Rating Agencies 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
Transferor, to MetLife Capital Corp. III, 15915 Katy Freeway, Suite 150,
Houston, Texas 77094 (713) 398-8881, (b) in the case of the Servicer, to MetLife
Capital Corporation, 10900 N.E. 4th Street, Suite 500, Bellevue, WA 98004, (c)
the case of the Issuer or the Owner Trustee, at the "Corporate Trust Office" (as
defined in the Trust Agreement), (d) in the case of the Indenture Trustee, at
the Corporate Trust Office, (e) in the case of Moody's, to Moody's Investors
Service, Inc., ABS Monitoring Department, 99 Church Street, New York, New York
10007 and (f) in the case of Standard & Poor's, to Standard & Poor's Ratings
Services, 26 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department, or, as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
49
<PAGE>
SECTION 10.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.04 and 7.03 and as provided
in the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Transferor or the Servicer.
SECTION 10.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Transferor, the Servicer, the
Issuer, the Owner, the Owner Trustee, the Indenture Trustee and the Noteholders,
and nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 10.09. Governing Law. THIS AGREEMENT 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, REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.10. Assignment to Indenture Trustee. The Transferor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest of
the Issuer in, to and under the Receivables and the other property constituting
the Owner Trust Estate and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the Servicer,
the Transferor, the Owner Trustee and the Indenture Trustee shall not, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court
50
<PAGE>
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.
(b) Notwithstanding any prior termination of this Agreement, the Servicer,
the Issuer, the Owner Trustee and the Indenture Trustee shall not, prior to the
date which is one year and one day after the termination of this Agreement with
respect to the Transferor, acquiesce, petition or otherwise invoke or cause the
Transferor to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Transferor under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Transferor or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Transferor.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [owner trustee] not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer, and in no
event shall [owner trustee] in its individual capacity or, except as expressly
provided in the Trust Agreement, as beneficial owner of the Issuer have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or 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 V, VI and VII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by [indenture trustee] not in its
individual capacity but solely as Indenture Trustee, and in no event shall
[indenture trustee] have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
[Signature page to follow]
51
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transfer and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
METLIFE CAPITAL EQUIPMENT LOAN TRUST
[SERIES DESIGNATION]
By:[OWNER TRUSTEE],
not in its individual capacity but solely as Owner
Trustee on behalf of the Trust,
By:_________________________________________________
Name:
Title:
METLIFE CAPITAL FUNDING CORP. III,
Transferor,
By:_________________________________________________
Name:
Title:
METLIFE CAPITAL CORPORATION,
Servicer,
By:_________________________________________________
Name:
Title:
Acknowledged and Accepted:
[INDENTURE TRUSTEE],
not in its individual capacity
but solely as Indenture Trustee
By:__________________________________________
Name:
Title:
[Signature Page to Transfer and Servicing Agreement]
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
March 14, 1997
MetLife Capital Funding Corp. III
15915 Katy Freeway
Suite 150
Houston, Texas 77094
Ladies and Gentlemen:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement"), as prepared for filing by MetLife Capital
Funding Corp. III, a Delaware corporation (the "Registrant") in connection with
the registration under the Securities Act of 1933, as amended (the "Act") of
Class A Asset Backed Notes (the "Securities"). The Securities are issuable in
Series under a separate Indenture among the Trust and an Indenture Trustee named
therein. The Securities of each Series are to be sold as set forth in the
Registration Statement, any amendments thereto, and the prospectus and
prospectus supplement relating to the Securities of such Series.
We have examined such instruments, documents and records as we
deemed relevant and necessary as a basis of our opinion hereinafter expressed.
In such examination, we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that when the
issuance of each Series of the Securities has been duly authorized by
appropriate corporate action and the Securities of such Series have been duly
executed, authenticated and delivered in accordance with the Indenture and sold
in the manner described in the Registration Statement, any amendment thereto and
the prospectus and prospectus supplement relating thereto, the Securities will
be legally issued, fully paid, non-assessable and binding obligations of the
Trust created by the applicable Trust
<PAGE>
MetLife Capital Funding Corp. III
March 14, 1997
Page 2
Agreement, and the holders of the Securities of such Series will be entitled to
the benefits of the Trust Agreement and Indenture, as applicable, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium, or other laws
relating to or affecting the rights of creditors generally and general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing, and the possible unavailability of
specific performance or injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name wherever appearing in the
Registration Statement and the prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder, with respect to any part of the
Registration Statement, including this opinion as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
[Letterhead of Orrick, Herrington & Sutcliffe LLP]
March 14, 1997
MetLife Capital Funding Corp. III
15915 Katy Freeway
Suite 150
Houston, Texas 77094
Ladies and Gentlemen:
We have advised MetLife Capital Funding Corp. III (the "Registrant")
with respect to certain federal income tax aspects of the issuance of Class A
Asset Backed Notes issuable in Series (the "Securities"). Such advice conforms
to the description of selected federal income tax consequences to holders of the
Securities that appears under the heading "Federal Income Tax Considerations" in
the prospectus (the "Prospectus") forming a part of the Registration Statement
on Form S-3 (the "Registration Statement") as filed by the Registrant with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act") on the date hereof, for registration of the
Securities under the Act. Such description does not purport to discuss all
possible income tax ramifications of the proposed issuance, but with respect to
those tax consequences which are discussed, in our opinion the description is
accurate in all material respects. All capitalized terms used herein that are
not otherwise defined have the meanings as set forth in the Prospectus.
This opinion letter is based on the facts and circumstances set
forth in the Prospectus and in the other documents reviewed by us. Our opinion
as to the matters set forth herein could change with respect to a particular
Series of Securities as a result of changes in facts and circumstances, changes
in the terms of the documents reviewed by us, or changes in the law subsequent
to the date hereof. As the Registration Statement contemplates Series of
Securities with numerous different characteristics, the particular
characteristics of each Series of Securities must be considered in determining
the applicability of this opinion to a particular Series of Securities.
<PAGE>
MetLife Capital Funding Corp. III
March 14, 1997
Page 2
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the use of our name wherever appearing in
the Registration Statement and the Prospectus contained therein. In giving such
consent, we do not consider that we are "experts," within the meaning of the
term as used in the Act or the rules and regulations of the Commission issued
thereunder, with respect to any part of the Registration Statement, including
this opinion letter as an exhibit or otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
________________________________________________________________________________
METLIFE CAPITAL CORPORATION
and
METLIFE CAPITAL FUNDING CORP. III
_____________________
FORM OF CONTRIBUTION AND SALE AGREEMENT
Dated as of [___________, __, 19__]
_________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions............................................ 1
SECTION 1.02. Other Definitional Provisions.......................... 3
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Initial Receivables...................... 3
SECTION 2.02. Conveyance of Subsequent Receivables................... 4
SECTION 2.03. Ownership of Receivables Files......................... 5
SECTION 2.04. Books and Records...................................... 5
SECTION 2.05. The Closing............................................ 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of Purchaser............ 6
SECTION 3.02. Representations and Warranties of Seller............... 7
ARTICLE IV
CONDITIONS
SECTION 4.01. Conditions to the Obligation of the Purchaser.......... 12
SECTION 4.02. Conditions to Obligation of Seller..................... 13
SECTION 4.03. Junior Liens on Financed Equipment..................... 13
ARTICLE V
COVENANTS OF THE SELLER AND THE PURCHASER
SECTION 5.01. Protection of Right, Title and Interest................ 13
SECTION 5.02. Other Liens or Interests............................... 13
SECTION 5.03. Chief Executive Office................................. 14
SECTION 5.04. Corporate Existence.................................... 14
SECTION 5.05. Indemnification........................................ 16
i
<PAGE>
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Obligations of Seller.................................. 16
SECTION 6.02. Repurchase Events...................................... 16
SECTION 6.03. Purchaser Assignment of Repurchased Receivables........ 17
SECTION 6.04. Trust.................................................. 17
SECTION 6.05. Amendment.............................................. 17
SECTION 6.06. Waivers................................................ 17
SECTION 6.07. Notices................................................ 17
SECTION 6.08. Costs and Expenses..................................... 18
SECTION 6.09. Representations of Seller and Purchaser................ 18
SECTION 6.10. Confidential Information............................... 18
SECTION 6.11. Headings and Cross-References.......................... 18
SECTION 6.12. Governing Law.......................................... 18
SECTION 6.13. Counterparts........................................... 18
EXHIBIT A Assignment
EXHIBIT B Supplemental Assignment
SCHEDULE A Schedule of Receivables
ii
<PAGE>
CONTRIBUTION AND SALE AGREEMENT dated as of [___________ __, 19__], between
METLIFE CAPITAL CORPORATION, a Delaware corporation (the "Seller"), and METLIFE
CAPITAL FUNDING CORP. III, a Delaware corporation (the "Purchaser").
WHEREAS in the regular course of its business, the Seller has originated or
purchased certain fixed-rate commercial equipment loan contracts and equipment
finance lease contracts secured by new and used machinery and equipment; and
WHEREAS the Seller and the Purchaser wish to set forth the terms pursuant
to which the Receivables (as hereinafter defined) are to be contributed or sold
by the Seller to the Purchaser, which Receivables will be transferred by the
Purchaser, pursuant to the Transfer and Servicing Agreement (as hereinafter
defined), to MetLife Capital Equipment Loan Trust [Series] (the "Trust"), which
Trust will issue Asset Backed Notes (the "Notes") secured by, such Receivables
and the other property of the Trust.
NOW, THEREFORE, in consideration of the foregoing, other good and valuable
consideration and the mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Definitions. 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 Agreement.
"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, by contract or otherwise; and the terms
"controlled by," "controlling" and "under common control with" have meanings
correlative to the foregoing.
"Agreement" shall mean this Contribution and Sale Agreement, as the same
may be amended, modified or supplemented from time to time.
"Assignment" shall mean the document of assignment attached to this
Agreement as Exhibit A.
"Basic Documents" shall have the meaning given such term in the Indenture.
"Closing Date" shall mean [___________].
<PAGE>
"Indenture" shall mean the Indenture dated as of [_______ __, 19__] between
the Trust and [________________], as indenture trustee, as the same may be
amended, modified or supplemented from time to time.
"Initial Receivable" shall mean each loan or lease Contract, including any
Included Component Receivable, that is identified in the initial Schedule of
Receivables assigned to the Purchaser on the Closing Date pursuant to Section
2.01.
"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.
"Prospectus" shall mean the Prospectus (which consists of a base prospectus
and a prospectus supplement, each dated [__________ __, 19__] pursuant to which
the Notes and Certificates were offered.
"Purchaser" shall mean MetLife Capital Funding Corp. III, [a Delaware]
corporation, its successors and assigns.
"Receivable" shall mean each Initial Receivable and each Subsequent
Receivable; provided, that from and after the date on which a Receivable becomes
a Purchased Receivable, such Purchased Receivable will no longer be a
Receivable.
"Repurchase Event" shall have the meaning specified in Section 6.02(a).
"Schedule of Receivables" shall mean each list of Receivables (as
supplemented from time to time to reflect Subsequent Receivables and Purchased
Receivables) annexed hereto as Schedule A (which may be in the form of
microfiche) and incorporated into and made a part of this Agreement.
"Seller" shall mean MetLife Capital Corporation, a Delaware corporation,
its successors and assigns.
"Subsequent Receivable" shall mean each loan or lease contract, including
any Included Component Receivable, originated or acquired by MCC and transferred
to the Purchaser pursuant to Section 2.02, and which is identified in a Schedule
of Receivables attached to a Supplemental Assignment.
"Supplemental Assignment" shall have the meaning assigned thereto in
Section 2.02.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement dated as of [__________ __, 19__], among the Trust, the Purchaser (in
its capacity as seller thereunder) and the Seller (in its capacity as Servicer
thereunder), as the same may be amended, modified or supplemented from time to
time.
2
<PAGE>
"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. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the
Transfer and Servicing Agreement or, if not defined therein, in the Indenture,
or if not defined therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the meanings contained
herein when used in any document made or delivered pursuant hereto unless
otherwise defined therein.
(c) As used in this Agreement and in any document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement or in
any such other document, and accounting terms partly defined in this Agreement
or in any such other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this
Agreement or in any such other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such other document shall control.
(d) The words "hereof," "herein," "hereunder," and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" shall mean
"including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.01. Conveyance of Initial Receivables. In consideration of the
sale on the Closing Date of $[_____________] in Principal Balance of Initial
Receivables, the Purchaser shall (i) deliver to or upon the order of the Seller
an amount equal to $[___________] cash, or (ii) with the consent of the Seller,
accept a capital contribution from the Seller equal to $[______________]. The
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (subject to the obligations herein), all right,
title and interest in and to the following, whether now owned or hereafter
acquired:
(a) all right, title and interest of the Seller, in and to the Initial
Receivables, and all moneys (including accrued interest) due thereunder on
and after the Initial Cut-off Date;
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<PAGE>
(b) the interest of the Seller in the security interests in the
Financed Equipment granted by Obligors pursuant to the Initial Receivables
and any other interest of the Seller in such Financed Equipment;
(c) the interest and rights of the Seller in any proceeds with respect
to the Initial Receivables from claims on any physical damage, credit life
or disability insurance policies covering Financed Equipment or Obligors,
as the case may be; and
(d) the proceeds of any and all of the foregoing.
SECTION 2.02. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b) below, on each
Transfer Date, upon receipt of the purchase price by the Seller from the in the
form of (i) cash, (ii) with the consent of the Seller, capital contributed to
the Purchaser by the Seller in the form of the Subsequent Receivables being
transferred on such Transfer Date, or (iii) with the consent of the Seller, any
combination of the foregoing, in an amount equal to the Principal Balance of the
Subsequent Receivables being transferred on such date as of the related
Subsequent Cut-off Date, the Seller hereby sell, transfers, assigns, sets over
and otherwise conveys to the Purchaser, without recourse (subject to the
obligations herein) all right, title and interest of the Seller in and to the
following, whether then owned or thereafter acquired:
(i) the Subsequent Receivables listed on the related Schedule of
Receivables and all moneys (including accrued interest) due thereunder on
or after the related Subsequent Cut-off Date;
(ii) the interest of the Seller in the security interests in the
Financed Equipment granted by Obligors pursuant to such Subsequent
Receivables and any other interest of the Seller in such Financed
Equipment;
(iii) the interest and rights of the Seller in any proceeds with
respect to such Subsequent Receivables from claims on any physical damage,
credit life or disability insurance policies covering Financed Equipment or
Obligors; and
(iv) the proceeds of any of the foregoing.
(b) The Seller shall convey to the Seller the Subsequent Receivables and
the other property and rights related thereto described in paragraph (a) above
only upon satisfaction of the following conditions precedent on or prior to the
related Transfer Date:
(i) the Seller shall have delivered to the Purchaser a duly executed
written assignment in substantially the form of Exhibit B (the
"Supplemental Assignment"), which shall include supplements to the Schedule
of Receivables listing the Subsequent Receivables;
4
<PAGE>
(ii) as of such Transfer Date, (A) the Seller shall not have been
insolvent and shall not become insolvent as a result of the conveyance of
Subsequent Receivables on such Transfer Date, (B) the Seller shall not have
intended to incur or believed that it would incur debts that would be
beyond the Seller's ability to pay as such debts matured, (C) such transfer
shall not have been made with actual intent to hinder, delay or defraud any
Person and (D) the assets of the Seller shall not have constituted
unreasonably small capital to carry out its business as conducted;
(iii) the Receivables then in the Trust, including the Subsequent
Receivables to be conveyed to the Trust on such Transfer Date, shall meet
the following criteria (based on the characteristics of the Initial
Receivables on the Initial Cut-off Date and the Subsequent Receivables on
the respective Subsequent Cut-off Dates): [insert applicable criteria];
(iv) each of the representations and warranties made by the Seller
pursuant to Section 3.02(b) with respect to the Subsequent Receivables
shall be true and correct as of such Transfer Date, and the Seller shall
have performed all obligations to be performed by it hereunder on or prior
to such Transfer Date;
(v) the Seller shall, at its own expense, on or prior to such Transfer
Date, indicate in its Receivables Management System that the Subsequent
Receivables identified in the Supplemental Assignment have been conveyed to
the Purchaser pursuant to this Agreement and the Supplemental Assignment;
(vi) the Seller shall have taken any action required to maintain the
first perfected ownership interest of the Purchaser in the Subsequent
Receivables conveyed on such date;
(vii) no selection procedures believed by the Seller to be adverse to
the interests of the Purchaser or the Class A Noteholders shall have been
utilized in selecting the Subsequent Receivables; and
(ix) the Seller shall have delivered to the Purchaser and Officer's
Certificate confirming the satisfaction of each condition specified in this
paragraph (b).
SECTION 2.03. Ownership of Receivables Files. Upon the acceptance by the
Seller of the purchase price set forth in Section 2.01, the ownership of each
Initial Receivable and the contents of the related Receivables File shall be
vested in the Purchaser. Upon the acceptance of the purchase price set forth in
Section 2.02, the ownership of the related Subsequent Receivables and the
contents of the related Receivables File shall be vested in the Purchaser.
SECTION 2.04. Books and Records.
The transfer of each Receivable shall be reflected on the Seller's balance
sheets and other financial statements prepared in accordance with generally
accepted accounting principles as a
5
<PAGE>
sale of assets by the Seller to the Purchaser. The Seller shall be responsible
for maintaining, and shall maintain, a complete and accurate set of accounts,
records and computer files for each Receivable which shall be clearly marked to
reflect the ownership of each Receivable by the Purchaser.
SECTION 2.05. The Closing.
The conveyance of the Initial Receivables shall take place at the offices
of Orrick, Herrington & Sutcliffe, 666 5th Avenue, New York, New York 10103, on
the Closing Date, simultaneously with the closing of the transactions
contemplated by the Transfer and Servicing Agreement, the underwriting agreement
related to the Notes and the other Basic Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of Purchaser. The Purchaser
hereby represents and warrants to the Seller as of the date hereof, as of the
Closing Date and as of each Transfer Date:
(a) Organization and Good Standing. The Purchaser is duly organized,
validly existing in good standing under the laws of the State of Delaware,
and has the power and authority to own its properties and to conduct the
business in which it is currently engaged, and had at all relevant times,
and has, the power, authority and legal right to acquire and own the
Receivables.
(b) Due Qualification. The Purchaser 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 shall require such
qualifications.
(c) Power and Authority. The Purchaser has the power and authority to
execute and deliver this Agreement and to carry out its terms and the
execution, delivery and performance of this Agreement has been duly
authorized by the Purchaser by all necessary corporate action.
(d) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Purchaser, or any indenture,
agreement or other instrument to which the Purchaser is a party or by which
it is bound; nor result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than the Transfer and Servicing Agreement and the
Indenture); nor
6
<PAGE>
violate any law or, to the best of the Purchaser's knowledge, any order,
rule or regulation applicable to the Purchaser of any court, federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Purchaser or its properties.
(e) No Proceedings. There are no proceedings or investigations pending
or, to the Purchaser's best knowledge, threatened, before any court,
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser or its
properties which (i) assert the invalidity of this Agreement, (ii) seek to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seek any determination or ruling that might materially
and adversely affect the performance by the Purchaser of its obligations
under, or the validity or enforceability of, this Agreement.
SECTION 3.02. Representations and Warranties of Seller. (a) The Seller
hereby represents and warrants to the Purchaser of the date hereof, as of the
Closing Date and as of each Transfer Date:
(i) Organization and Good Standing. The Seller is duly organized,
validly existing in good standing under the laws of the State of Delaware,
and has the power and authority to own its properties and to conduct the
business in which it is currently engaged, and had at all relevant times,
and has, the power, authority and legal right to acquire and own the
Receivables.
(ii) Due Qualification. The Seller 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 shall require such
qualifications.
(iii) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and to carry out its terms; the Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser hereby and has duly authorized such sale and
assignment to the Purchaser by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Seller by all necessary corporate action.
(iv) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof neither conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Seller, or any indenture,
agreement or other instrument to which the Seller is a party or by which it
is bound; nor result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than this Agreement); nor violate any law or, to
the best of the Seller's knowledge, any order, rule or regulation
applicable to the Seller of any court, federal or
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state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no proceedings or investigations
pending, or, to the best of Seller's knowledge, threatened, before any
court, federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties which (A) assert the invalidity of this Agreement, (B) seek to
prevent the consummation of any of the transactions contemplated by this
Agreement, or (C) seek any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement.
(vi) No Consents Required. All approvals, authorizations, consents,
orders or other actions of any Person or of any Governmental Authority
required in connection with the execution and delivery by the Seller of
this Agreement or any other Basic Document, the performance by the Seller
of the transactions contemplated by this Agreement or any other Basic
Document and the fulfillment by the Seller of the terms hereof or thereof,
have been obtained or have been completed and are in full force and effect
(other than approvals, authorizations, consents, orders or other actions
which if not obtained or completed or in full force and effect would not
have a material adverse effect on the Seller or upon the collectibility of
any Receivable or upon the ability of the Seller to perform its obligations
under this Agreement).
(b) The Seller makes the following representations and warranties as to the
Receivables on which the Purchaser relied in accepting the Receivables. The
parties hereto acknowledge that the representations and warranties below require
the Seller to monitor conditions that it may not have the ability to monitor.
Accordingly, wherever the Seller makes, or is deemed to make, a representation
that it cannot monitor, such representation shall be made as if prefaced with
the phrase "to the best of the Seller's knowledge"; provided, however, that the
determination as to whether a Repurchase Event has occurred pursuant to Section
6.02 of this Agreement shall be made without reliance on the phrase described
above. Such representations and warranties speak as of the execution and
delivery of this Agreement and, with respect to Subsequent Receivables, as of
each Transfer Date but shall survive the sale, transfer and assignment of the
Receivables to the Purchaser and the subsequent assignments and transfers of the
Receivables pursuant to the Transfer and Servicing Agreement and pursuant to the
Indenture:
(i) Characteristics of Receivables. Each Receivable (A) was originated
in the United States of America by the Seller in the ordinary course of
business and was fully and properly executed by the parties thereto, (B)
has created a valid, subsisting and enforceable first priority security
interest in favor of the Seller in the Financed Equipment, which security
interest is assignable by the Seller to the Purchaser, by the Purchaser to
the Issuer and by the Issuer to the Indenture Trustee, (C) contains
customary and enforceable provisions such that the rights and remedies of
the holder thereof are adequate for realization against the collateral of
the benefits of the security, and (D) provides for fixed payments (except
as described below) on a periodic basis,
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yields interest at a fixed-rate and is prepayable without premium or
penalty at any time. The fixed payments provided for are sufficient to
amortize the Amount Financed of such Receivable by maturity and yield
interest at the annual percentage rate specified in the related Contract
for the relevant Receivable (which is the APR specified in the Schedule of
Receivables for such Receivable).
(ii) Schedule of Receivables. The information set forth in the
Schedule of Receivables to this Agreement is true and correct in all
material respects as of the opening of business on each Cut-off Date and no
selection procedures believed to be adverse to the Noteholders were
utilized in selecting the Receivables. The computer tape regarding the
Receivables made available to the Purchaser and its assigns is true and
correct in all respects.
(iii) Compliance with Law. Each Receivable and the sale of the
Financed Equipment complied at the time it was originated or made, and at
the execution of this Agreement (with respect to the Initial Receivables)
or as of the applicable Transfer Date (with respect to Subsequent
Receivables) complies in all material respects, with all requirements of
applicable federal, state and local laws and regulations thereunder,
including usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty
Act, the Federal Reserve Board's Regulations B and S, and other equal
credit opportunity and disclosure laws, in each case to the extent
applicable to non-consumer transactions.
(iv) Binding Obligations. Each Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof (which as of the Closing Date for the
Initial Receivables or the relevant Transfer Date with respect to
Subsequent Receivables is the Seller) in accordance with its terms, subject
to bankruptcy, insolvency and other laws relating to the enforcement of
creditors' rights generally and to general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at
law). Such enforceability has not been and is not adversely affected by
whether or not the Seller was or is qualified to do business in the state
in which the Obligor was or is located.
(v) Security Interest in Financed Equipment. Immediately prior to the
sale, assignment and transfer thereof, each Receivable shall be secured by
a validly perfected first priority security interest in the Financed
Equipment in favor of the Seller as secured party.
(vi) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Equipment been released
from the lien granted by the related Receivable in whole or in part. No
Receivable is rescindable on the basis of whether or not the Seller was or
is qualified to do business in the state in which the Obligor was or is
located.
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(vii) Prospectus Information. As of the Initial Cut-off Date, each
Initial Receivable conforms and all Receivables in the aggregate conform,
in all material respects, to the description set forth in the Prospectus,
including all statistical data or otherwise.
(viii) No Amendments. No Receivable has been amended such that the
amount of the Obligor's Scheduled Payments has been increased or decreased.
(ix) No Defenses. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened with respect to any Receivable.
(x) No Liens. No liens or claims have been filed for work, labor or
materials relating to any Financed Equipment that are liens prior to, or
equal or coordinate with, the security interest in the Financed Equipment
granted by the Receivable.
(xi) No Default. No Receivable has a payment that is more than 61 days
overdue as of the applicable Cut-off Date and, except as permitted in this
paragraph, no default, breach, violation or event permitting acceleration
under the terms of any Receivable has occurred and is continuing; and
(except for payment defaults continuing for a period of not more than 61
days) no continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting acceleration
under the terms of any Receivable has arisen; and the Seller has not waived
and shall not waive any of the foregoing.
(xii) Insurance. The Seller, in accordance with its customary
procedures, has determined that the Obligor has obtained physical damage
insurance covering the Financed Equipment, and under the terms of the
Receivable the Obligor is required to maintain such insurance.
(xiii) Title. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Receivables from
the Seller to the Purchaser, and that the beneficial interest in and title
to the Receivables not be part of the debtor's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the Purchaser. Immediately
prior to the transfer and assignment herein contemplated, the Seller has
good and marketable title to each Receivable, free and clear of all Liens,
encumbrances, security interests and rights of others and, immediately upon
the transfer thereof, the Purchaser shall have good and marketable title to
each Receivable, free and clear of all Liens, tax (including [expand as
needed to address Washington taxes], governmental or similar liens,
encumbrances, security interests and rights of others; and the transfer of
the Receivables to the Purchaser has been perfected under the UCC.
(xiv) Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such
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Receivable or any Receivable under this Agreement, the Transfer and
Servicing Agreement or the Indenture is unlawful, void or voidable.
(xv) All Actions Taken. All actions necessary to give the Purchaser a
first priority perfected ownership interest in the Receivables pursuant to
the applicable UCC have been taken.
(xvi) One Original. There is only one original Contract related to
each Receivable.
(xvii) Maturity of Receivables. Each Receivable has a final scheduled
payment date due not later than the [__________] Distribution Date as of
the relevant Cut-off Date and the weighted average remaining term of the
Receivables is no more than [__] months as of each Cut-off Date.
(xviii) Location of Receivable Files. The Receivable Files are kept at
the location listed in Schedule B to the Transfer and Servicing Agreement.
(xix) Outstanding Principal Balance. Each Receivable has an
outstanding principal balance of at least $[__________] as of the Cut-off
Date applicable to such Receivable.
(xx) No Bankruptcies. No Obligor on any Receivable as of the
applicable Cut-off Date was noted in the related Receivable File as having
filed for bankruptcy or as being subject to a bankruptcy proceeding and to
the Seller's knowledge no such proceeding is pending or threatened against
any Obligor as of the Closing Date (with respect to the Initial
Receivables) or as of the relevant Transfer Date (with respect to
Subsequent Receivables).
(xxi) No Repossessions. No Financed Equipment securing any Receivable
is in repossession status as of the Closing Date (with respect to the
Initial Receivables) or as of the related Transfer Date (with respect to
subsequent Receivables).
(xxii) Chattel Paper. Each Receivable constitutes "chattel paper"
within the meaning of the UCC of the State of Washington.
(xxiii) U.S. Obligors. None of the Receivables is due from any Person
which does not have a mailing address in the United States of America.
(xxiv) Payment Frequency. [As of the Initial Cut-off Date and as shown
on the books of the Seller, Receivables having an aggregate principal
balance equal to approximately ______% of the aggregate principal balance
of all Receivables had monthly scheduled payments; and as of the Initial
Cut-off Date and as shown on the books of the Seller, Receivables having an
aggregate principal balance equal to approximately ______% of the aggregate
principal balance of all Receivables had
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scheduled payments which have monthly scheduled payments other than
certain months specified therein for which payment is skipped.]
(xxv) Interest Accrual. Each Receivable is, as of the Closing Date
(with respect to the Initial Receivables) or as of the relevant Transfer
Date (with respect to the Subsequent Receivables), accruing interest.
ARTICLE IV
CONDITIONS
SECTION 4.01. Conditions to the Obligation of the Purchaser. The obligation
of the Purchaser to purchase the Receivables is subject to the satisfaction of
the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller hereunder shall be true and correct on the Closing
Date with the same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder on or prior to
the Closing Date or the Transfer Date, as applicable.
(b) Computer Files Marked. The Seller shall, at its own expense on or
prior to the Closing Date (with respect to the Initial Receivables) or the
relevant Transfer Date (with respect to the Subsequent Receivables), (i)
indicate in its computer files that receivables created in connection with
the Receivables have been sold to the Purchaser pursuant to this Agreement
and sold by the Purchaser to the Trust pursuant to the Transfer and
Servicing Agreement and (ii) deliver to the Purchaser the Schedule of
Receivables certified by the Chairman, the President, a Vice President,
Secretary, the Treasurer or an Assistant Treasurer of the Seller to be
true, correct and complete.
(c) Documents to be Delivered by Seller at Closing.
(i) Assignment. On the Closing Date, the Seller will execute and
deliver the Assignment. The Assignment shall be substantially in the
form of Exhibit A hereto.
(ii) Evidence of UCC Filings for Sale to Purchaser. On or prior
to the Closing Date, the Seller shall deliver to the Purchaser, for
its inspection and review, completed UCC requests for information,
dated on or before the Closing Date, listing all effective financing
statements filed with the [__________] Secretary of State listing the
Seller as debtor.
(iii) Other Documents. Such other documents as the Purchaser may
reasonably request.
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(d) Other Transactions. The transactions contemplated by the Transfer
and Servicing Agreement and the Indenture to be consummated on the Closing
Date shall be consummated on such date.
SECTION 4.02. Conditions to Obligation of Seller. The obligation of the
Seller to sell the Initial Receivables to the Purchaser is subject to the
satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Purchaser hereunder shall be true and correct on the
Closing Date with the same effect as if then made, and the Purchaser shall
have performed all obligations to be performed by it hereunder on or prior
to the Closing Date.
(b) Receivables Purchase Price. On the Closing Date, the Purchaser
shall have delivered to the Seller the purchase price specified in Section
2.01.
SECTION 4.03. Junior Liens on Financed Equipment. The Seller agrees not to
exercise its right to foreclose upon, and will not transfer to third parties its
rights with respect to, any junior liens on any item of Financed Equipment if
such junior liens have not been assigned to the Purchaser pursuant to Section
2.01, until (i) the related Receivable has been paid in full or (ii) the related
first priority lien on the Financed Equipment assigned to the Purchaser pursuant
to Section 2.01 has been foreclosed upon or released.
ARTICLE V
COVENANTS OF THE SELLER AND THE PURCHASER
The Seller and the Purchaser agree with each other as follows; provided,
however, that to the extent that any provision of this Article conflicts with
any provision of the Transfer and Servicing Agreement, the Transfer and
Servicing Agreement shall govern:
SECTION 5.01. Protection of Right, Title and Interest. (a) Further
Assurances. The Seller shall take all actions to preserve and protect the right,
title and interest of the Purchaser in and to the Receivables and the other
property included in the Owner Trust Estate. The Purchaser shall cooperate fully
with the Seller in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the purpose of this
paragraph.
(b) Name Change. Within 15 days after the Seller makes any change in its
name, identity or corporate structure, the Seller shall give the Purchaser
notice of any such change.
SECTION 5.02. Other Liens or Interests. Except for the conveyances
hereunder and pursuant to the Transfer and Servicing Agreement, the Indenture
and the other Basic Documents, the Seller will not sell, pledge, assign or
transfer to any Person, or grant, create, incur, assume or suffer to exist any
Lien on, any interest in, to and under the Receivables, and the Seller shall
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defend the right, title and interest of the Purchaser in, to and under the
Receivables against all claims of third parties claiming through or under the
Seller; provided, however, that the Seller's obligations under this Section
shall terminate one year and one day after the termination of the Trust pursuant
to the Trust Agreement.
SECTION 5.03. Chief Executive Office. During the term of the Receivables,
the Seller will maintain its chief executive office in one of the United States,
except Louisiana or Vermont.
SECTION 5.04. Corporate Existence. (a) During the term of this Agreement,
the Purchaser will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of Delaware 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 Agreement, the Basic Documents and each other instrument
or agreement necessary or appropriate to the proper administration of this
Agreement and the Transfer and Servicing Agreement and the transactions
contemplated hereby.
(b) The Seller will not take any action or fail to take any action if such
act or omission would cause the Purchaser not to observe the covenants set forth
in Section 5.04(c) of this Agreement or to violate the provisions of the
Purchaser's certificate of incorporation.
(c) The Purchaser and the Seller agree that Purchaser's and the Seller's
businesses shall be conducted as follows, and neither Purchaser nor the Seller
shall take any action or fail to take any action if such act or omission would
cause such businesses not to be conducted as follows:
(i) The Purchaser will maintain both an office at which its business
is and will be conducted and a telephone number separate from the Seller or
any of the Seller's Affiliates.
(ii) At least one of the Purchaser's directors are not and will not be
directors, officers or employees of the Seller or any of the Seller's
Affiliates.
(iii) The Purchaser will maintain corporate records and books and
accounts separate from those of the Seller or any of the Seller's
Affiliates.
(iv) Except as expressly permitted by the Transfer and Servicing
Agreement with respect to collections on the Receivables prior to the
transfer of such collections to the Collection Account, the Purchaser's
funds will not be commingled with those of the Seller or any of the
Seller's Affiliates, and the Purchaser shall maintain bank accounts
separate from those of the Seller or any of the Seller's Affiliates.
(v) The Seller shall maintain records permitting a determination on a
daily basis of the amount and location of any of its funds which are
commingled as permitted under clause (iv) above.
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(vi) The Board of Directors of the Purchaser will take appropriate
corporate action (including without limitation holding meetings or acting
by unanimous consent) to authorize all of the Purchaser's corporate
actions, and minutes shall be maintained by the Purchaser separate and
apart from those of the Seller or any of the Seller's Affiliates.
(vii) The Purchaser shall at all times be adequately capitalized to
engage in the transactions contemplated at its formation.
(viii) The Purchaser shall not incur or guarantee any debt other than
under the Transfer and Servicing Agreement, nor shall the Purchaser make
any loans, other than as permitted by the Purchaser's Certificate of
Incorporation.
(ix) The Purchaser shall not engage in any transaction with the Seller
or any of the Seller's Affiliates on terms more favorable than in a similar
transaction involving a third party.
(x) The Purchaser shall at all times use its own stationery.
(xi) The Purchaser shall always be described as a separate
corporation, and never as a department, division or otherwise of the Seller
or any of the Seller's Affiliates.
(xii) The Purchaser shall act solely in its own corporate name and
through its own authorized officers and agents. Neither the Purchaser nor
any of Purchaser's Affiliates shall be appointed agent of the Seller,
except as expressly provided for by the Transfer and Servicing Agreement
and the Administration Agreement.
(xiii) The data and records (including computer records) used by the
Purchaser or the Seller in the collection and administration of the
Receivables shall reflect the Purchaser's ownership interest therein.
(xiv) Other than organizational expenses, the Purchaser shall be
responsible for the payment of all expenses, indebtedness and other
obligations incurred by it.
(xv) The Purchaser shall at all times hold itself out to the public
under the Purchaser's own name as a legal entity separate and distinct from
the Seller and any of the Seller's Affiliates.
(xvi) None of the Purchaser's funds nor any of the funds held by the
Seller on behalf of the Purchaser or the holders of the Certificates or the
Notes shall be invested in securities issued by the Seller or any of the
Seller's Affiliates.
(d) The Purchaser and the Seller will each furnish to the other on or
before April 30 of each year for so long as any Note remains outstanding an
Officer's Certificate to the effect that all of its obligations under this
Section 5.04 have been fulfilled throughout the preceding
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calendar year, or, if there has been any default in the fulfillment of any such
obligations, specifying each such default known to the signer thereof and the
nature and status thereof.
(e) The Seller will not transfer or assign any interest in the Purchaser
except pursuant to an instrument under which the transferee or assignee of such
interest expressly assumes the performance of all covenants of the Seller to be
performed or observed under this Section 5.04.
(f) The annual audited financial statements of the Purchaser and the Seller
will reflect the results of the issuance of the Notes in accordance with
generally accepted accounting principles and also disclose that the assets of
the Seller are not available to pay creditors of the Purchaser or any other
Affiliate of the Seller.
SECTION 5.05. Indemnification. (a) The Seller shall indemnify the Purchaser
for any liability as a result of the failure of a Receivable to be originated in
compliance with all requirements of law and for any breach of any of its
representations and warranties contained herein, other than the representations
and warranties made pursuant to Section 3.02(b) for which the sole remedy shall
be provided by Section 6.02 hereof; provided, however, that the Seller shall
indemnify the Purchaser for any liability arising from a breach of Section
3.02(b)(ii) and, (iii). These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.01. Obligations of Seller. The obligations of the Seller under
this Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.
SECTION 6.02. Repurchase Events. (a) The Seller hereby covenants and agrees
with the Purchaser for the benefit of the Purchaser, the Indenture Trustee, the
Noteholders, the Owner Trustee and the Owner that the occurrence of a material
breach of any of the Seller's representations and warranties contained in
Section 3.02(b) in respect of a Receivable shall constitute an event obligating
the Seller to repurchase such Receivable ("Repurchase Events"), at the Purchase
Amount from the Purchaser.
(b) These repurchase obligations of the Seller shall constitute the sole
remedies to the Purchaser, the Indenture Trustee, the Noteholders, the Owner
Trustee or the Owner against the Seller with respect to any Repurchase Event.
(c) The terms and conditions of the Purchaser's obligation to enforce its
right of repurchase pursuant to this Section 6.02 shall be governed by Section
3.02 of the Transfer and Servicing Agreement.
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SECTION 6.03. Purchaser Assignment of Repurchased Receivables. With respect
to all Receivables repurchased by the Seller pursuant to this Agreement, the
Purchaser shall assign, without recourse, representation or warranty, to the
Seller all the Purchaser's right, title and interest in and to such Receivables,
and all security and documents relating thereto.
SECTION 6.04. Trust. The Seller acknowledges and agrees that (a) the
Purchaser will, pursuant to the Transfer and Servicing Agreement, sell the
Receivables to the Trust and assign its rights under this Agreement to the
Trust, (b) the Trust will, pursuant to the Indenture, assign such Receivables
and such rights to the Indenture Trustee and (c) the representations and
warranties contained in this Agreement and the rights of the Purchaser under
this Agreement, including under Section 6.02, are intended to benefit the Trust,
the Owner and the Noteholders (and may be enforced directly by the Indenture
Trustee on behalf of the Noteholders and by the Owner Trustee on behalf of the
Trust or the Owner). The Seller hereby consents to all such sales and
assignments.
SECTION 6.05. Amendment. This Agreement may be amended from time to time,
with prior written notice to the Rating Agencies, by a written amendment duly
executed and delivered by the Seller and the Purchaser, without the consent of
the Noteholders or the Owner, 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 Noteholders or the Owner; provided
that such amendment will not, in the Opinion of Counsel, materially and
adversely affect the interest of any Noteholder or the Owner. This Agreement may
also be amended by the Seller and the Purchaser, with prior written notice to
the Rating Agencies, with the consent of the holders of Class A Notes evidencing
a majority in the Outstanding Amount of the Class A Notes 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
Noteholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required to be
made for the benefit of holders of Class A Notes or (ii) reduce the aforesaid
percentage of the Class A Notes which are required to consent to any such
amendment, without the consent of the holders of all the outstanding Class A
Notes.
SECTION 6.06. Waivers. No failure or delay on the part of the Purchaser in
exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude and any other or further exercise
thereof or the exercise of any other power, right or remedy.
SECTION 6.07. 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 Seller, to MetLife Capital Corporation,
[Address]; (b) in the case of the Purchaser, to MetLife Capital Funding Corp.
III, 10900 N.E. 4th Street, Suite 500, Bellevue, Washington 98004; (c) in the
case of Moody's, to Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007; and (d) in the case of Standard &
Poor's, to Standard & Poor's Ratings Services, 26 Broadway (10th Floor), New
York, New York 10004,
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Attention of Asset Backed Surveillance Department; or as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
SECTION 6.08. Costs and Expenses. The Seller will pay all expenses incident
to the performance of its obligations under this Agreement, and the Seller
agrees to pay all reasonable out-of-pocket costs and expenses of the Purchaser,
excluding fees and expenses of counsel, in connection with the perfection as
against third parties of the Purchaser's right, title and interest in and to the
Receivables and the enforcement of any obligation of the Seller hereunder.
SECTION 6.09. Representations of Seller and Purchaser. The respective
agreements, representations, warranties and other statements by the Seller and
the Purchaser set forth in or made pursuant to this Agreement shall remain in
full force and effect and will survive the closing under Section 2.02.
SECTION 6.10. Confidential Information. The Purchaser agrees that it will
neither use nor disclose to any Person the names and addresses of the Obligors,
except in connection with the enforcement of the Purchaser's rights hereunder,
under the Receivables, under the Transfer and Servicing Agreement or the
Indenture or any other Basic Document or as required by any of the foregoing or
by law.
SECTION 6.11. Headings and Cross-References. The various headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to Section names or numbers are to such Sections of this Agreement.
SECTION 6.12. Governing Law. THIS AGREEMENT AND THE ASSIGNMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.13. Counterparts. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers duly authorized as of the date and year
first above written.
METLIFE CAPITAL FUNDING CORP. III
By: _____________________________
Name:
Title:
METLIFE CAPITAL CORPORATION
By: _____________________________
Name:
Title:
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received, in accordance with the Contribution and Sale Agreement
(the "Contribution and Sale Agreement") dated as of [_________ __, 19__] between
the undersigned and MetLife Capital Funding Corp. III (the "Purchaser"), the
undersigned does hereby sell, assign, transfer, set over and otherwise convey
unto the Purchaser, without recourse, (i) all right, title and interest of the
Seller, in and to the Initial Receivables, and all moneys (including accrued
interest) due thereunder on and after Initial Cut-off Date; (ii) the interests
of the Seller in the security interests in the Financed Equipment granted by the
Obligors pursuant to the Receivables and any other interest of the Seller in
such Financed Equipment; (iii) the interest and rights of the Seller in any
proceeds with respect to the Receivables from claims on any physical damage,
credit life or disability insurance policies relating to the Financed Equipment
or Obligors, as the case may be; and (iv) the proceeds of any and all of the
foregoing.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Contribution and Sale Agreement and is to be governed by the Contribution and
Sale Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Contribution and Sale Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of [__________ __, 19__].
METLIFE CAPITAL CORPORATION
By:__________________________
Name:
Title:
<PAGE>
SCHEDULE A
SCHEDULE OF RECEIVABLES
- --------------------------------------------------------------------------------
METLIFE CAPITAL EQUIPMENT LOAN TRUST [SERIES]
------------------------
FORM OF ADMINISTRATION AGREEMENT
Dated as of [______ __, 19__]
------------------------
METLIFE CAPITAL CORPORATION
Administrator
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
1. Duties of Administrator................................................ 2
2. Records................................................................ 7
3. Compensation........................................................... 7
4. Additional Information To Be Furnished to Issuer....................... 7
5. Independence of Administrator.......................................... 7
6. No Joint Venture....................................................... 7
7. Other Activities of Administrator...................................... 7
8. Term of Agreement; Resignation and Removal of Administrator............ 8
9. Action upon Termination, Resignation or Removal........................ 9
10. Notices................................................................ 9
11. Amendments............................................................. 10
12. Successors and Assigns................................................. 10
13. GOVERNING LAW.......................................................... 10
14. Headings............................................................... 11
15. Counterparts........................................................... 11
16. Severability........................................................... 11
17. Not Applicable to MetLife Capital Corporation in Other
Capacities........................................................... 11
18. Limitation of Liability of Owner Trustee and Trustee................... 11
19. Third-Party Beneficiary................................................ 11
20. Successor Servicer and Administrator................................... 11
21. Nonpetition Covenants.................................................. 12
EXHIBIT A - Form of Power of Attorney
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ADMINISTRATION AGREEMENT dated as of [_________, __, 19__], among METLIFE
CAPITAL EQUIPMENT LOAN TRUST [SERIES], a Delaware business trust (the "Issuer"),
METLIFE CAPITAL CORPORATION, a Delaware corporation, as administrator (the
"Administrator"), METLIFE CAPITAL FUNDING CORP. III, a Delaware corporation (the
"Transferor"), and [Indenture Trustee], a [national banking association], not in
its individual capacity but solely as Indenture Trustee (the "Indenture
Trustee").
W I T N E S S E T H :
WHEREAS the Issuer is issuing the Notes (the "Notes"), pursuant to the
Indenture dated as of [________ __, 19__] (as amended, modified or supplemented
from time to time in accordance with the provisions thereof, the "Indenture"),
between the Issuer and the Indenture Trustee.
WHEREAS the Issuer has entered into certain agreements in connection with
the issuance of the Notes and of the beneficial ownership interest of the
Issuer, including (i) a Transfer and Servicing Agreement dated as of [________
__, 19__] (the "Transfer and Servicing Agreement") (capitalized terms used
herein and not defined herein shall have the meanings assigned such terms in the
Sales and Servicing Agreement, or if not defined therein, in the Indenture)
among the Issuer, MetLife Capital Corporation ("MCC"), as servicer, and the
Transferor, (ii) a Depository Agreement dated [_______ __, 19__] (the
"Depository Agreement") among the Issuer, the Indenture Trustee and The
Depository Trust Company and (iii) the Indenture, (the Transfer and Servicing
Agreement, the Depository Agreement and the Indenture being hereinafter referred
to collectively as the "Related Agreements");
WHEREAS pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (b) the beneficial ownership interest in the Issuer (the holder of such
interest being referred to herein as the "Owner");
WHEREAS the Issuer and the Owner Trustee desire to have the Administrator
perform certain of the duties of the Issuer and the Owner Trustee referred to in
the preceding clause, and to provide such additional services consistent with
the terms of this Agreement and the Related Agreements as the Issuer and the
Owner Trustee may from time to time request;
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
<PAGE>
1. Duties of Administrator. (a) Duties with Respect to the Related
Agreements. (i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under the
Depository Agreement. In addition, the Administrator shall consult with the
Owner Trustee regarding the duties of the Issuer and the Owner Trustee under the
Related Agreements. The Administrator shall monitor the performance of the
Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's or the Owner Trustee's duties under the Related Agreements.
The Administrator shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer or the Owner Trustee to prepare, file or deliver
pursuant to any Related Agreement. In furtherance of the foregoing, the
Administrator shall take all appropriate action that it is the duty of the
Issuer or the Owner Trustee to take pursuant to the Indenture including, without
limitation, such of the foregoing as are required with respect to the following
matters under the Indenture (references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give the
Indenture Trustee notice of any appointment of a new Note Registrar and
the location, or change in location, of the Note Register (Section 2.04);
(B) the notification of Noteholders of the final principal payment
on their Notes (Section 2.07(b));
(C) the fixing or causing to be fixed of any specified record date
and the notification of the Indenture Trustee and Noteholders with respect
to special payment dates, if any (Section 2.07(c));
(D) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes, if any, and delivery of the same
to the Indenture Trustee (Section 2.02);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release of
collateral (Section 2.09);
(F) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.03);
(G) the direction to Paying Agents to pay to the Indenture Trustee
all sums held in trust by such Paying Agents (Section 3.03);
(H) 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, the Collateral and each other instrument and agreement included
in the Trust Estate;
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<PAGE>
(I) the preparation of all supplements, amendments, financing
statements, continuation statements, if any, 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);
(J) the obtaining of the Opinion of Counsel on the Closing Date and
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);
(K) the identification to the Indenture Trustee in an Officers'
Certificate of a Person with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.07(b));
(L) the notification of the Indenture Trustee and the Rating
Agencies of a Servicer Default pursuant to the Transfer and Servicing
Agreement and, if such Servicer Default arises from the failure of the
Servicer to perform any of its duties under the Transfer and Servicing
Agreement, the taking of all reasonable steps available to remedy such
failure (Section 3.07(d));
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligation under the
Indenture (Section 3.11(b));
(N) the delivery of notice to the Indenture Trustee of each Event of
Default and each default by the Servicer or Transferor under the Transfer
and Servicing Agreement (Section 3.19);
(O) 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);
(P) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
(Q) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(R) 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 6.10);
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<PAGE>
(S) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.01);
(T) the preparation and, after execution by the Issuer, the filing
with the Commission, any applicable state agencies and the Indenture
Trustee of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations prescribed
by, the Commission and any applicable state agencies and the transmission
of such summaries, as necessary, to the Noteholders (Section 7.03);
(U) 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 and 8.03);
(V) the preparation of an Issuer Request and Officers' Certificate
and the obtaining of an Opinion of Counsel and Independent Certificates,
if necessary, for the release of the Trust Estate as defined in the
Indenture (Sections 8.04 and 8.05);
(W) the preparation of Issuer Orders and the obtaining of Opinions
of Counsel with respect to the execution of supplemental indentures and
the mailing to the Noteholders of notices with respect to such
supplemental indentures (Sections 9.01, 9.02 and 9.03);
(X) the execution of new Notes conforming to any supplemental
indenture (Section 9.06);
(Y) the notification of Noteholders of redemption of the Notes
(Section 10.02);
(Z) 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(a));
(AA) the preparation and delivery of Officers' Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.01(b));
(BB) the notification of the Rating Agencies, upon the failure of
the Indenture Trustee to give such notification, of the information
required pursuant to Section 11.04 of the Indenture (Section 11.04);
(CC) the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Section 11.06);
(DD) the recording of the Indenture, if applicable (Section 11.15);
and
4
<PAGE>
(EE) causing the Servicer to comply with Sections [4.09, 4.10, 4.11
and 5.06] of the Transfer and Servicing Agreement.
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to time reasonable
compensation for all services rendered by the Indenture Trustee under the
Indenture (which compensation shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(B) except as otherwise expressly provided in the Indenture,
reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture
Trustee in accordance with any provision of the Indenture (including the
reasonable compensation, expenses and disbursements of its agents and
either in-house counsel or outside counsel, but not both), except any such
expense, disbursement or advance as may be attributable to its negligence
or bad faith;
(C) indemnify the Indenture Trustee and its agents for, and to hold
them harmless against, any losses, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated by
the Indenture, including the reasonable costs and expenses of defending
themselves against any claim or liability in connection with the exercise
or performance of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and to hold them
harmless against, any losses, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection
with the acceptance or administration of the transactions contemplated by
the Trust Agreement, including the reasonable costs and expenses of
defending themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties under the Trust
Agreement.
(b) Additional Duties. (i) In addition to the duties of the Administrator
set forth above, the Administrator shall perform such calculations and shall
prepare for execution by the Issuer or the Owner Trustee or shall cause the
preparation by other appropriate persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to the Related
Agreements, and at the request of the Owner Trustee shall take all appropriate
action that it is the duty of the Issuer or the Owner Trustee to take pursuant
to the Related Agreements. Subject to Section 5 of this Agreement, and in
accordance with the directions of the Owner Trustee, the Administrator shall
administer, perform or supervise the performance of such other activities in
connection with the Collateral (including the Related Agreements) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Owner Trustee and are reasonably within the capability of the Administrator.
5
<PAGE>
(ii) The Administrator shall perform the duties of the Administrator
specified in Section 9.02 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Administrator under the Trust
Agreement.
(iii) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its Affiliates; provided, however, that the terms of
any such transactions or dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Administrator's opinion, no less
favorable to the Issuer than would be available from unaffiliated parties.
(iv) It is the intention of the parties hereto that the Administrator
shall, and the Administrator hereby agrees to, execute on behalf of the Issuer
or the Owner Trustee all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to the Basic Documents. In
furtherance thereof, the Owner Trustee shall, on behalf of itself and of the
Issuer, execute and deliver to the Administrator, and to each successor
Administrator appointed pursuant to the terms hereof, one or more powers of
attorney substantially in the form of Exhibit A hereto, appointing the
Administrator the attorney-in-fact of the Owner Trustee and the Issuer for the
purpose of executing on behalf of the Owner Trustee and the Issuer all such
documents, reports, filings, instruments, certificates and opinions.
(c) Non-Ministerial Matters. (i) With respect to matters that in the
reasonable judgment of the Administrator are non-ministerial, the Administrator
shall not take any action unless within a reasonable time before the taking of
such action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the Receivables);
(C) the amendment, change or modification of the Related Agreements;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Trustees pursuant to the Indenture or the appointment
of successor Administrators or successor Servicers, or the consent to the
assignment by the Note Registrar, Paying Agent or Trustee of its
obligations under the Indenture; and
6
<PAGE>
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) make any payments to
the Noteholders or the Certificateholder under the Related Agreements, (y) sell
the Trust Estate pursuant to Section 5.04 of the Indenture or (z) take any other
action that the Issuer directs the Administrator not to take on its behalf.
2. Records. The Administrator shall maintain appropriate books of account
and records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer, the Owner Trustee, the
Indenture Trustee and the Transferor at any time during normal business hours.
3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement, the Administrator shall be
entitled to $[500] per month which shall be payable in accordance with Section
5.04 of the Transfer and Servicing Agreement. The Transferor shall reimburse the
Administrator for any of its liabilities and expenses related to its performance
hereunder or under any Related Document (including without limitation those
expenses set forth in Section 1(a)(ii) of this Agreement).
4. Additional Information To Be Furnished to Issuer. The Administrator
shall furnish to the Issuer from time to time such additional information
regarding the Collateral as the Issuer shall reasonably request.
5. Independence of Administrator. For all purposes of this Agreement, the
Administrator shall be an independent contractor and shall not be subject to the
supervision of the Issuer or the Owner Trustee with respect to the manner in
which it accomplishes the performance of its obligations hereunder. Unless
expressly authorized by the Issuer, the Administrator shall have no authority to
act for or represent the Issuer or the Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement shall (i)
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) be construed to impose
any liability as such on any of them or (iii) be deemed to confer on any of them
any express, implied or apparent authority to incur any obligation or liability
on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
7
<PAGE>
8. Term of Agreement; Resignation and Removal of Administrator. (a) This
Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(b) Subject to Section 8(e) and (f), the Administrator may resign its
duties hereunder by providing the Issuer with at least 60 days prior written
notice.
(c) Subject to Section 8(e) and (f), the Issuer may remove the
Administrator without cause by providing the Administrator with at least 60 days
prior written notice.
(d) Subject to Section 8(e) and (f), at the sole option of the Issuer, the
Administrator may be removed immediately upon written notice of termination from
the Issuer to the Administrator if any of the following events shall occur:
(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not
cure such default within ten days (or, if such default cannot be cured in
such time, shall not give within ten days such assurance of cure as shall
be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a
decree or order for relief, and such decree or order shall not have been
vacated within 60 days, in respect of the Administrator in any involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for the Administrator
or any substantial part of its property or order the winding-up or
liquidation of its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official for the Administrator or any substantial part of its
property, shall consent to the taking of possession by any such official
of any substantial part of its property, shall make any general assignment
for the benefit of creditors or shall fail generally to pay its debts as
they become due.
The Administrator agrees that if any of the events specified in clause
(ii) or (iii) of this Section shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven days after the happening of
such event.
(e) No resignation or removal of the Administrator pursuant to this
Section shall be effective until (i) a successor Administrator shall have been
appointed by the Issuer and (ii) such successor Administrator shall have agreed
in writing to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
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<PAGE>
(f) The appointment of any successor Administrator shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
9. Action upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Administrator pursuant to Section 8(b) or (c),
respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 8(a) deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the Administrator. In the
event of the resignation or removal of the Administrator pursuant to Section
8(b) or (c), respectively, the Administrator shall cooperate with the Issuer and
take all reasonable steps requested to assist the Issuer in making an orderly
transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) if to the Issuer or the Owner Trustee, to
MetLife Capital Equipment Loan Trust [Series]
[Address]
Attention:
(b) if to the Administrator, to
MetLife Capital Corporation
1900 N.E. 4th Street
Suite 500
Bellevue, Washington 98004
(c) if to the Indenture Trustee, to
[Name]
[Address]
(d) if to the Transferor, to
MetLife Capital Funding Corp. III
[Address]
9
<PAGE>
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above, except that notices to the
Indenture Trustee are effective only upon receipt.
11. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee,
without the consent of the Noteholders and the Certificateholder, 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 Noteholders or Certificateholder; provided that such amendment will not, in
the Opinion of Counsel, materially and adversely affect the interest of any
Noteholder or the Certificateholder. This Agreement may also be amended by the
Issuer, the Administrator and the Indenture Trustee with the written consent of
the Owner Trustee and the holders of Notes evidencing a majority in the
Outstanding Amount of the Notes 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 Noteholders; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that are required to be made for the benefit of the holders of the
Class A Notes or (ii) reduce the aforesaid percentage of the holders of Class A
Notes which are required to consent to any such amendment, without the consent
of the holders of all the outstanding Class A Notes. Notwithstanding the
foregoing, the Administrator may not amend this Agreement without the permission
of the Transferor, which permission shall not be unreasonably withheld.
12. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the Rating
Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator, provided that such successor organization executes
and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an
agreement in which such corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement shall
bind any successors or assigns of the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT 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
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
10
<PAGE>
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall together constitute but one and the same agreement.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
17. Not Applicable to MetLife Capital Corporation in Other Capacities.
Nothing in this Agreement shall affect any obligation MetLife Capital
Corporation may have in any other capacity.
18. Limitation of Liability of Owner Trustee and Trustee. (a)
Notwithstanding anything contained herein to the contrary, this instrument has
been signed by [Owner Trustee] not in its individual capacity but solely in its
capacity as Owner Trustee of the Issuer and in no event shall [Owner Trustee] in
its individual capacity or any beneficial owner of the Issuer have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, 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 V, VI and VII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by [Indenture Trustee] not in its individual capacity
but solely as Indenture Trustee and in no event shall [Indenture Trustee] have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
20. Successor Servicer and Administrator. The Administrator shall
undertake, as promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section [8.02] of
the Transfer and Servicing Agreement, to enforce the provisions of Section
[8.02] with respect to the appointment of a successor Servicer. Such successor
Servicer shall, upon compliance with the last sentence of the first paragraph of
Section [8.02] of the Transfer and Servicing Agreement, become the successor
Administrator hereunder; provided, however, that if the Indenture Trustee shall
become such successor
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Administrator, the Indenture Trustee shall not be required to perform any
obligations or duties or conduct any activities as successor Administrator that
would be prohibited by law and not within the banking and trust powers of the
Indenture Trustee. In such event, the Indenture Trustee shall appoint a
sub-administrator to perform such obligations and duties.
21. Nonpetition Covenants. (a) Notwithstanding any prior termination of
this Agreement, the Transferor, the Administrator, the Owner Trustee and the
Indenture Trustee shall not, prior to the date which is one year and one day
after the termination of this Agreement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to 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.
(b) Notwithstanding any prior termination of this Agreement, the
Issuer, the Administrator, the Owner Trustee and the Indenture Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Transferor, acquiesce, petition or otherwise
invoke or cause the Transferor to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Transferor under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Transferor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Transferor.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
METLIFE CAPITAL EQUIPMENT LOAN
TRUST [SERIES]
By: [OWNER TRUSTEE],
not in its individual capacity
but solely as Owner Trustee,
By: ________________________________________
Name:
Title:
INDENTURE TRUSTEE, not in its individual
capacity but solely as Indenture
Trustee,
By: ________________________________________
Name:
Title:
METLIFE CAPITAL CORPORATION,
as Administrator,
By: ________________________________________
Name:
Title:
METLIFE CAPITAL FUNDING CORP. III,
as Transferor
By: ________________________________________
Name:
Title:
<PAGE>
EXHIBIT A
[Form of Power of Attorney]
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that ______________________, a
____________________________, not in its individual capacity but solely as owner
trustee ("Owner Trustee") for the MetLife Capital Equipment Loan Trust [Series]
("Trust"), does hereby make, constitute and appoint
____________________________, as Administrator under the Administration
Agreement (as defined below), and its agents and attorneys, as Attorneys-in-
Fact to execute on behalf of the Owner Trustee or the Trust all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Owner Trustee or the Trust to prepare, file or deliver pursuant to the
Related Documents (as defined in the Administration Agreement), including,
without limitation, to appear for and represent the Owner Trustee and the Trust
in connection with the preparation, filing and audit of federal, state and local
tax returns pertaining to the Trust, and with full power to perform any and all
acts associated with such returns and audits that the Owner Trustee could
perform, including without limitation, the right to distribute and receive
confidential information, defend and assert positions in response to audits,
initiate and defend litigation, and to execute waivers of restriction on
assessments of deficiencies, consents to the extension of any statutory or
regulatory time limit, and settlements. For the purpose of this Power of
Attorney, the term "Administration Agreement" means the Administration Agreement
dated as of [________ __, 19__], among the Trust, MetLife Capital Corporation,
as Administrator and Servicer, and [Indenture Trustee], as Indenture Trustee, as
such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed by
the Owner Trustee are hereby revoked.
EXECUTED this [__] day of [_______, 19__].
[OWNER TRUSTEE], not in its
individual capacity but solely as
Owner Trustee
By: _______________________________
Name:
Title:
