<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 1999
REGISTRATION NO. 333-83111
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
(Issuer with respect to the Securities)
HELLER FUNDING CORPORATION
(Depositor of the Trust described herein)
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6189 36-4165546
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification Number)
incorporation or organization) Classification Code Number)
</TABLE>
HELLER FUNDING CORPORATION
500 WEST MONROE STREET
CHICAGO, ILLINOIS 60661
(312) 441-7246
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
DEBRA H. SNIDER, ESQ.
HELLER FUNDING CORPORATION
C/O HELLER FINANCIAL, INC.
500 WEST MONROE STREET
CHICAGO, ILLINOIS 60661
(312) 441-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
M. DAVID GALAINENA, ESQ. JAMES J. CROKE, JR., ESQ.
Winston & Strawn Cadwalader, Wickersham & Taft
35 West Wacker Drive 100 Maiden Lane
Chicago, Illinois 60601 New York, New York 10038
(312) 558-5600 (212) 504-6000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the 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. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Class A-1 Receivable-Backed Notes.......... $ 93,311,414 100% $ 93,311,414 $24,634.21
Class A-2 Receivable-Backed Notes.......... $ 77,424,735 100% $ 77,424,735 $20,440.13
Class A-3 Receivable-Backed Notes.......... $105,363,377 100% $105,363,377 $27,815.93
Class A-4 Receivable-Backed Notes.......... $ 67,198,827 100% $ 67,198,827 $17,740.49
Class B Receivable-Backed Notes............ $ 4,565,138 100% $ 4,565,138 $ 1,205.20
Class C Receivable-Backed Notes............ $ 4,565,138 100% $ 4,565,138 $ 1,205.20
</TABLE>
(1) The amount of Securities being registered represents the maximum aggregate
principal amount of Securities currently expected to be offered for sale.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(a).
------------------------------
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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 3, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PRELIMINARY PROSPECTUS
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
RECEIVABLE-BACKED NOTES, SERIES 1999-2
<TABLE>
<S> <C>
HELLER FUNDING HELLER FINANCIAL,
CORPORATION, INC.,
as trust depositor as servicer
</TABLE>
------------------------
We are offering the following six classes of Receivable-Backed Notes,
Series 1999-2:
<TABLE>
<CAPTION>
APPROXIMATE
INITIAL
CLASS AGGREGATE FIRST STATED PRICE TO UNDERWRITING
OF PRINCIPAL COUPON PAYMENT MATURITY PUBLIC PER DISCOUNT PER
NOTES AMOUNT RATE DATE DATE NOTE NOTE
- ----- ------------ -------- -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
A-1 $ 93,311,414 % 1/14/00 1/14/01 % %
A-2 $ 77,424,735 % 1/14/00 4/14/02 % %
A-3 $105,363,377 % 1/14/00 3/14/04 % %
A-4 $ 67,198,827 % 1/14/00 3/14/07 % %
B $ 4,565,138 % 1/14/00 11/14/07 % %
C $ 4,565,138 % 1/14/00 1/14/08 % %
</TABLE>
The total price to the public is $ . The total underwriting discount
is $ . The total proceeds to the trust is $ .
YOU SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE 11 OF THIS PROSPECTUS.
THE NOTES ARE NOT OBLIGATIONS OF AND WILL NOT REPRESENT INTERESTS IN, AND
ARE NOT GUARANTEED OR INSURED BY, THE TRUST DEPOSITOR, THE OWNER TRUSTEE, HELLER
FINANCIAL, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES, OR ANY GOVERNMENTAL
AGENCY.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
FIRST UNION SECURITIES, INC.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Important Notice about Information
Presented in this Prospectus........ iii
Summary............................... 2
Risk Factors.......................... 11
The Absence of an Existing Market for
the Notes May Limit Your Ability to
Resell the Notes.................... 11
Prepayments on the Contracts May Cause
an Earlier Repayment of the Notes
than You Expect and You May Not Be
Able to Find Investments with the
Same Yield as the Notes at the Time
of the Repayment.................... 11
The Price at which You Can Resell Your
Notes May Decrease if the Ratings of
Your Notes Change................... 11
The Subordination of the Class A-2
Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes, the Class C
Notes, the Class D Notes and the
Class E Notes is a Limited Form of
Credit Enhancement.................. 11
Limited Assets Secure the Notes;
Noteholders Will Have No Recourse to
the Originators, Servicer or their
Affiliates in the Event
Delinquencies and Losses Deplete the
Trust's Assets...................... 12
Because Disproportionate Amounts of
Contracts Relate to Four States,
Adverse Events in Those States and
Surrounding Regions May Cause
Increased Defaults and
Delinquencies....................... 12
Because Disproportionate Amounts of
Contracts Relate to Particular
Industries, Adverse Economic
Conditions in Those Industries May
Cause Increased Defaults and
Delinquencies....................... 12
Because Disproportionate Amounts of
Contracts Relate to Groups of
Obligors, Including Obligors under
Contracts Originated by the Same
Vendor, Adverse Economic Events for
those Groups or Vendors May Cause
Increased Defaults and
Delinquencies....................... 13
</TABLE>
<TABLE>
The Rate at which Equipment or
Software Becomes Obsolete Affects
the Prepayment Rate of the Contracts
and the Notes....................... 13
<CAPTION>
PAGE
--------
<S> <C>
Even if We Repossess and Sell the
Equipment Relating to a Contract
After an Obligor Defaults,
Shortfalls in Amounts Available to
Pay the Notes May Occur if the
Market Value of the Equipment Has
Declined............................ 13
The Servicer's or a Vendor's Retention
of Contract Files May Hinder Our
Ability to Realize the Value of
Equipment Securing the Contracts.... 14
Failure to Record Assignment of
Perfected Security Interest May
Hinder Our Ability to Realize the
Value of Equipment Securing the
Contracts........................... 14
Repurchase Obligation of Trust
Depositor and Originators Provides
You Only Limited Protection Against
Prior Liens on the Contracts........ 14
If a Bankruptcy Court Rules that the
Transfer of Contracts from a Vendor
to an Originator was not a True Sale
then Payments on the Contracts May
be Reduced or Delayed............... 15
If a Bankruptcy Court Rules that the
Transfer of Contracts from an
Originator to the Trust Depositor
was not a True Sale then Payments on
the Contracts Could be Reduced or
Delayed............................. 15
Insolvency of the Trust Depositor or
the Trust Could Delay or Reduce
Payments to You..................... 16
Insolvency of the Vendors Could Delay
or Reduce Payments to You........... 16
The Retention of a Residual Interest
by a Vendor May Increase the Risk of
Rejection of the Related Contract if
that Vendor Becomes Bankrupt........ 16
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Proceeds From Required Sale of the
Contracts Following Trust Depositor
Bankruptcy May Not Be Sufficient to
Repay the Notes in Full............. 16
End-User Bankruptcy May Reduce or
Delay Collections on the
Contracts........................... 17
Contracts Relating to Software or
Related Support and Consulting
Services are not Secured by the
Software or Related Services........ 17
Transfer of Servicing May Delay
Payments to You Due to Contract
Processing Delays................... 18
Year 2000 Issues May Impact Heller
Financial's Ability to Service the
Contracts........................... 18
Use of Proceeds....................... 18
Calculation of Discounted Contract
Balance............................. 19
Composition of the Contracts.......... 20
Distribution of Contracts by Contract
Type................................ 21
Distribution of Contracts by State in
Which Obligors Are Located.......... 22
Distribution of Contracts by Equipment
Type................................ 23
Distribution of Contracts by Obligor
Industry............................ 24
Distribution of Contracts by Original
Gross Contract Balance.............. 25
Distribution of Contracts by Remaining
Discounted Contract Balance......... 26
Distribution of Contracts by Original
Contract Term....................... 27
Distribution of Contracts by Remaining
Months to Stated Maturity........... 27
Delinquency and Loss Information...... 27
Definition of Delinquency for the
Contracts Transferred to the
Trust............................... 29
The Contracts......................... 30
Prepayment and Yield Considerations... 37
Weighted Average Life................. 63
Heller Financial, Inc. and Heller
Financial Leasing, Inc.............. 66
</TABLE>
<TABLE>
The Trust............................. 72
<CAPTION>
PAGE
--------
<S> <C>
The Trust Depositor................... 73
Description of the Notes and
Indenture........................... 74
General............................. 74
Interest and Principal.............. 74
Amounts Available for Payments on
the Notes......................... 75
Allocations......................... 76
Reserve Fund........................ 83
Collection Account and Collection
Period............................ 84
Events of Default................... 85
Events of Default; Remedies......... 87
The Indenture Trustee............... 87
Governing Law....................... 88
Amendments.......................... 88
Servicing Compensation and Payment
of Expenses....................... 88
Optional Termination................ 89
Reports............................. 89
List of Noteholders................. 90
Administration Agreement............ 91
Book-Entry Registration............. 91
Issuance of Certificated Notes at a
Later Date........................ 94
The Class D Notes, Class E Notes and
the Certificate..................... 95
The Sale and Servicing Agreement...... 95
Termination of Trust................ 95
Conveyance of the Contracts......... 96
Representations and Warranties;
Definition of Eligible Contract... 97
Remedies for Breaches of
Representations and Warranties;
Definition of Ineligible
Contract.......................... 99
Concentration Amounts; Definition of
Excess Contract................... 100
Material Modifications to
Contracts......................... 101
Substitute Contracts................ 101
Definition of Defaulted Contracts... 102
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Indemnification..................... 102
Servicing Standard and Servicer
Advances.......................... 103
Servicer Resignation................ 103
Servicer Default.................... 103
Evidence as to Compliance........... 105
Amendments.......................... 105
The Owner Trustee................... 106
</TABLE>
<TABLE>
Federal Income Tax Consequences....... 107
<CAPTION>
PAGE
--------
<S> <C>
ERISA Considerations.................. 112
Plan of Distribution.................. 114
Rating of the Notes................... 116
Legal Matters......................... 116
Experts............................... 116
Index of Terms........................ 119
</TABLE>
------------------------
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
Within the period during which there is an obligation to deliver a
prospectus, the underwriters will, at your request, promptly deliver to you, or
cause to be delivered to you, without charge, a paper copy of this prospectus.
No dealer, salesman or other person is authorized to give any information or
to make any representation not contained in this prospectus. If anyone makes
such a representation to you, you should not rely on it.
This prospectus does not constitute an offer to sell or a solicitation of
any offer to buy any security other than the notes offered by this prospectus,
nor does it constitute an offer to sell or a solicitation of any offer to buy
any of the notes to any person in any jurisdiction 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 an offer or solicitation to such person.
iii
<PAGE>
SUMMARY
The following is only a summary of the terms of the notes. It does not
contain all the information that may be important to you. You should read this
entire prospectus. In addition, you may wish to read the documents governing the
sale of the contracts, the formation of the trust and the issuance of notes.
Those documents have been filed as exhibits to the registration statement of
which this prospectus is a part.
There are material risks associated with an investment in the notes. See
"RISK FACTORS" on page 11 for a discussion of factors you should consider before
making an investment in the notes.
<TABLE>
<S> <C>
The Trust................................. Heller Equipment Asset Receivables Trust 1999-2. The
trust's principal offices will be in care of Wilmington
Trust Company, as owner trustee, at Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890,
telephone number (302) 651-1000.
The Originators........................... Heller Financial, Inc. and Heller Financial Leasing,
Inc.
The Trust Depositor....................... Heller Funding Corporation. The trust depositor is a
wholly owned, limited purpose subsidiary of Heller
Financial, Inc. The trust depositor's principal
executive offices are located at 500 West Monroe Street,
Chicago, Illinois 60661, telephone (312) 441-7246.
The Servicer.............................. Heller Financial, Inc., with Heller Financial Leasing,
Inc. acting as a sub-servicer.
The Indenture Trustee..................... Norwest Bank Minnesota, National Association
The Trust's Assets
A. The Contracts....................... The trust's assets will primarily consist of the
contracts.
The contracts consist of:
- conditional sale agreements
- leases
- secured promissory notes
- installment payment agreements
- financing agreements
Most of the contracts are end-user contracts. End-user
contracts relate to the financing by end-users of
equipment or software and related support and consulting
services. The obligors on the end-user contracts are the
actual end-users. The other contracts are limited
recourse loans to equipment manufacturers, dealers or
distributors or to computer software distributors, all
of which are secured by one or more end-user contracts.
We refer to these other contracts as vendor loans.
The contracts have been originated or purchased by
Heller Financial, Inc., Heller Financial Leasing, Inc.
or vendors of equipment or software. If a vendor
originated a contract, the vendor assigned the contract
to Heller Financial, Inc. or Heller Financial Leasing,
Inc. Heller Financial, Inc. and Heller Financial
Leasing, Inc. have sold the contracts to the trust
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
depositor. On or about December 14, 1999, the trust
depositor will transfer the contracts and security
interests in the related equipment to the trust. The
contracts have been selected based on criteria specified
in the sale and servicing agreement.
Frequently, information about the contracts is expressed
in terms of the discounted contract balance. The
discounted contract balance of a contract is the present
value of scheduled payments to be paid on the contract
calculated at a discount rate of [ ]%. For a more
specific description of how the discounted contract
balance is calculated see "DISCOUNTED CONTRACT BALANCE".
Where noted in this prospectus, we used a statistical
discount rate of 7.162% to calculate the discounted
contract balances of the contracts. The statistical
discount rate is based on an average of the estimated
interest rates of the notes weighted by the estimated
initial average life and initial principal amounts of
the notes.
None of the obligors on the contracts are located
outside of the United States and its territories. No
more than 22.36% (calculated using the statistical
discount rate) of the aggregate discounted contract
balance of the contracts relates to obligors located in
the same state. All of the contracts are commercial
contracts and, as of the date of this prospectus, no
contract has any delinquent scheduled payments. We
consider a scheduled payment to be delinquent if:
- it is more than 60 days delinquent; and
- the delinquent amount is more than the greater of the
following:
(A) $10 or
(B) 10% of the scheduled payment.
See "THE SALE AND SERVICING AGREEMENT--REPRESENTATIONS
AND WARRANTIES; DEFINITION OF ELIGIBLE CONTRACT" and
"THE CONTRACTS POOL".
As of December 1, 1999, the contracts had the following
characteristics calculated using the statistical
discount rate:
</TABLE>
<TABLE>
<S> <C>
Number of contracts...................... 1,140
Aggregate discounted contract balance.... $365,211,014
Average discounted contract balance of a
contract............................... $320,361
Weighted average original term to
maturity............................... 61.23 months
Range.................................... 12-107 months
Weighted average remaining term to
maturity............................... 50.61 months
Range.................................... 1-93 months
</TABLE>
<TABLE>
<S> <C>
Changes in characteristics of the contracts between
December 1, 1999 and the closing date will not affect
more than 5.00% of the aggregate discounted contract
balance of the contracts.
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
For further information regarding the contracts, see
"THE CONTRACTS POOL" and "THE CONTRACTS," as well as
"THE SALE AND SECURITY AGREEMENT--REPRESENTATIONS AND
WARRANTIES; DEFINITION OF ELIGIBLE CONTRACT" and
"--CONCENTRATION AMOUNTS; DEFINITION OF EXCESS
CONTRACT".
We may replace a contract that is part of the trust's
assets with a substitute contract:
- if we subsequently determine that a contract was not
eligible to be sold to the trust at the time of its
sale to the trust;
- if we did not remove and replace that contract, the
obligor or equipment concentrations of contracts would
exceed the limits described in "THE SALE AND
SERVICING AGREEMENT--CONCENTRATION AMOUNTS;
DEFINITION OF EXCESS CONTRACTS;" or
- if such contract is prepaid.
See "THE SALE AND SERVICING AGREEMENT--SUBSTITUTE
CONTRACTS". The substitute contracts will have been
originated under the same credit criteria and policies
as the contracts they replace.
B. Reserve Fund........................ On the closing date of the transfer of the contracts to
the trust, the trust depositor will establish a reserve
fund in the name of the indenture trustee. The reserve
fund provides you with limited protection in the event
collections from obligors on the contracts are
insufficient to make payments on the notes. We cannot
assure you, however, that this protection will be
adequate to prevent shortfalls in amounts available to
make payment on the notes. The initial balance of the
reserve fund will be equal to 0.10% of the initial
aggregate discounted contract balance of the contracts,
approximately $365,211. If, on any payment date, the
amounts available for distribution exceed the amounts
needed to pay amounts owed to the servicer and to pay
interest and principal on the notes, the excess will be
deposited into the reserve fund. However, the amount
deposited in the reserve fund shall not exceed the
amount needed to increase the reserve fund balance to an
amount equal to 0.70% of the aggregate outstanding
principal amount of the notes as of the last day of the
immediately preceding completed collection period.
Investment earnings on amounts held in the reserve fund
will be available for distribution to you.
If on any payment date, collections on the contracts are
less than the amount needed to pay interest on the
notes, the indenture trustee will withdraw funds from
the reserve fund to pay the interest. Additionally, if
collections on the contracts are sufficient to pay
interest but not principal on the notes, we will
withdraw any amounts in excess of 0.70% of the aggregate
outstanding principal amount of the notes. The
conditions under which we will withdraw amounts from the
reserve fund are more specifically described in the
"DESCRIPTION OF THE NOTES AND INDENTURE--ALLOCATIONS"
and "--RESERVE FUND".
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Securities Not Offered by this
Prospectus.............................. We will also issue approximately $7,304,220 aggregate
principal amount of Class D [ ]% Receivable-Backed
Notes, Series 1999-2, approximately $3,652,110 aggregate
principal amount of Class E [ ]% Receivable-Backed
Notes, Series 1999-2 and a certificate with a
approximately $1,826,054 certificate balance, none of
which are offered by this prospectus.
Terms of the Notes........................ The basic terms of the notes will be as described below.
See "DESCRIPTION OF THE NOTES AND INDENTURE". We will
pay principal and interest due on the notes using:
- collections of payments due under the contracts held
by the trust;
- earnings on amounts held in the collection account;
- late charges relating to a contract if the late
charges were included in the contract's terms as of the
date the contract was purchased by the trust;
- amounts earned on funds held in the reserve fund;
- amounts received upon the prepayment or purchase of
contracts or liquidation of the contracts and
disposition of the related equipment upon defaults
under the contracts;
- amounts received from vendor recourse, if any; and
- amounts in the reserve fund more specifically
described in "DESCRIPTION OF NOTES AND
INDENTURE--RESERVE FUND".
See "AMOUNTS AVAILABLE FOR PAYMENTS ON THE NOTES".
You may purchase the offered notes in minimum
denominations of $1,000, and in integral multiples of
$1,000 in excess of the minimum denominations. We will
offer the offered notes only in book-entry form.
A. Events of Default................... Events of default with respect to the notes include:
- failure to pay accrued interest on any payment date,
- failure to pay outstanding principal on a maturity
date,
- breach of representations and warranties with respect
to the contracts which are materially incorrect and
which have a material adverse effect on the
noteholders and
- the occurrence of insolvency events with respect to
the originators, the trust depositor, the trust or the
servicer.
See "DESCRIPTION OF THE NOTES AND INDENTURE--EVENTS OF
DEFAULT".
B. Interest............................ On a payment date, we will first repay any outstanding
servicer advances. Second, we will pay the servicer's
monthly servicing fee, but only if the servicer is not
Heller Financial, Inc. or one of its affiliates. Third,
we will pay interest on the
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
notes at the rates specified on the cover of this
prospectus in the following order:
</TABLE>
<TABLE>
<CAPTION>
<C> <S>
SECURITIES RECEIVING INTEREST PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
--------------------- ----------------------------------------
A-1, A-2,
A-3, A-4 None
B Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes
C Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes
D Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes
E Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes,
Class B Notes, Class C Notes, Class D
Notes
</TABLE>
<TABLE>
<S> <C>
See "DESCRIPTION OF THE NOTES AND
INDENTURE--ALLOCATIONS".
We will calculate interest on the Class A-1 Notes on the
basis of actual days elapsed over a year of 360 days. We
will calculate interest on all other notes on the basis
of a year of 360 days consisting of twelve 30 day
months.
C. Principal............................. On a payment date, after we pay interest on the notes,
we will pay principal on the notes in the following
order:
</TABLE>
<TABLE>
<CAPTION>
<C> <S>
SECURITIES RECEIVING PRINCIPAL PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
--------------------- ----------------------------------------
A-1 None
A-2 Class A-1 Notes
Class B Notes, Class C Notes, Class D
Notes and Class E Notes will receive
principal payments prior to Class A-2
Notes on any payment date on which the
outstanding principal amount of the
Class A-1 Notes is greater than $0
A-3 Class A-1 Notes, Class A-2 Notes
Class B Notes, Class C Notes, Class D
Notes and Class E Notes will receive
principal payments prior to Class A-3
Notes on any payment date on which the
outstanding principal amount of the
Class A-2 Notes is greater than $0
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
SECURITIES RECEIVING PRINCIPAL PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
--------------------- ----------------------------------------
A-4 Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes
Class B Notes, Class C Notes, Class D
Notes and Class E Notes will receive
principal payments prior to Class A-4
Notes on any payment date on which the
outstanding principal amount of the
Class A-3 Notes is greater than $0
B Class A-1 Notes
Class A-2 Notes will receive principal
payments prior to the Class B Notes
after the outstanding principal amount
of the Class A-1 Notes is reduced to $0
Class A-3 Notes will receive principal
payments prior to the Class B Notes
after the outstanding principal amount
of the Class A-1 Notes and Class A-2
Notes is reduced to $0
Class A-4 Notes will receive principal
payments prior to the Class B Notes
after the outstanding principal amount
of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes is reduced to $0
C Class A-1 Notes, Class B Notes
Class A-2 Notes will receive principal
payments prior to the Class C Notes
after the outstanding principal amount
of the Class A-1 Notes is reduced to $0
Class A-3 Notes will receive principal
payments prior to the Class C Notes
after the outstanding principal amount
of the Class A-1 Notes and Class A-2
Notes is reduced to $0
Class A-4 Notes will receive principal
payments prior to the Class C Notes
after the outstanding principal amount
of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes is reduced to $0
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
SECURITIES RECEIVING PRINCIPAL PAYMENT
CLASS OF NOTES PRIOR TO SPECIFIED CLASS
--------------------- ----------------------------------------
D Class A-1 Notes, Class B Notes, Class C
Notes
Class A-2 Notes will receive principal
payments prior to the Class D Notes
after the outstanding principal amount
of the Class A-1 Notes is reduced to $0
Class A-3 Notes will receive principal
payments prior to the Class D Notes
after the outstanding principal amount
of the Class A-1 Notes and Class A-2
Notes is reduced to $0
Class A-4 Notes will receive principal
payments prior to the Class D Notes
after the outstanding principal amount
of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes is reduced to $0
E Class A-1 Notes, Class B Notes, Class C
Notes, Class D Notes
Class A-2 Notes will receive principal
payments prior to the Class E Notes
after the outstanding principal amount
of the Class A-1 Notes is reduced to $0
Class A-3 Notes will receive principal
payments prior to the Class E Notes
after the outstanding principal amount
of the Class A-1 Notes and Class A-2
Notes is reduced to $0
Class A-4 Notes will receive principal
payments prior to the Class E Notes
after the outstanding principal amount
of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes is reduced to $0
</TABLE>
<TABLE>
<S> <C>
See "DESCRIPTION OF THE NOTES AND
INDENTURE--ALLOCATIONS".
For the purposes of principal allocation described
below, the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes are considered as one class of
notes and are referred to as Class A Notes. The amount
of principal paid on any class of notes will be the
amount necessary to reduce the outstanding principal of
that class of notes to the greater of:
(1) a specified percentage of the aggregate discounted
contract balance of the contracts as of the last
day of the most recent full collection period or
(2) an amount which is intended to maintain a credit
enhancement equal to a specified dollar amount of
credit enhancement provided by the classes of notes
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
subordinate to such class and the certificate after
taking into account cumulative losses on the
contracts.
The percentage used in clause (1) is the ratio of the
initial principal amount of such class of notes to the
initial aggregate discounted contract balance of the
contracts.
Following an event of default, we will not make
principal payments in the order described above.
Instead, we will pay principal on the notes in the
following order:
- outstanding principal of Class A-1 Notes
- Class A-2 Notes, Class A-3 Notes and Class A-4 Notes
(pro rata)
- outstanding principal of Class B Notes
- outstanding principal of Class C Notes
- outstanding principal of Class D Notes
- outstanding principal of Class E Notes
See "DESCRIPTION OF THE NOTES AND
INDENTURE--ALLOCATIONS" and "--EVENTS OF DEFAULT".
D. Payment Dates....................... You will receive distributions of interest and principal
on the fourteenth day of each month, or if that day is
not a business day, the next business day.
E. Stated Maturity Date................ The notes will mature on the date shown on the cover of
this prospectus, except that if the day is not a
business day, then the stated maturity date will be the
next business day.
F. Optional Redemption................. If the aggregate discounted contract balance of the
contracts at the time is less than 10% of the initial
aggregate discounted contract balance of the contracts
as of December 1, 1999, the trust depositor may redeem
any outstanding notes. If the trust depositor does
redeem any outstanding notes, the redemption price will
be equal to the unpaid principal amount of the notes
plus accrued and unpaid interest through the date of
redemption.
Servicing; Servicing Fee.................. The servicer will be responsible for servicing, managing
and administering the contracts and related interests,
and enforcing and making collections on the contracts.
Additionally, the servicer and the sub-servicer have in
some cases delegated servicing and collection functions
on some contracts to the vendor who originated those
contracts. In such instances, the servicer retains the
right to determine or veto some servicing decisions
and/or to replace or take over servicing and collection
functions from the vendor. Although Heller Financial,
Inc. may delegate its servicing duties, it remains
liable for the performance or non-performance of those
duties. See "THE SALE AND SERVICING AGREEMENT--SERVICING
STANDARD AND SERVICER ADVANCES".
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
The servicer will be entitled to receive a monthly fee
equal to the product of:
(1) one-twelfth of 0.40% and
(2) the aggregate discounted contract balance of the
contracts in the trust as of the second day of the
immediately preceding calendar month.
The fee is payable out of amounts we receive on the
contracts. The servicer will pay any servicing fees to
be paid to any sub-servicers (including vendor
sub-servicers) from the servicer's monthly servicing
fee.
The servicing fee is paid after making payments of
interest and principal on the notes as long as Heller
Financial, Inc. or any affiliate is the servicer.
See "DESCRIPTION OF THE NOTES AND INDENTURE--SERVICING
COMPENSATION AND EXPENSES" and "THE SALE AND SERVICING
AGREEMENT".
Federal Income Tax Considerations......... In the opinion of Winston & Strawn, federal tax counsel
to the trust depositor, for federal income tax purposes,
the notes offered by this prospectus will be
characterized as debt, and the trust will not be
characterized as an association or a publicly traded
partnership taxable as a corporation. You, by accepting
a note, agree to treat the note as indebtedness. See
"FEDERAL INCOME TAX CONSIDERATIONS".
ERISA Considerations...................... Subject to the considerations discussed under "ERISA
CONSIDERATIONS", the notes will be eligible for purchase
by some employee benefit plans. Any benefit plan
fiduciary considering purchase of the notes should,
however, consult with its counsel regarding the
consequences of its purchase under ERISA and the
Internal Revenue Code. See "ERISA CONSIDERATIONS".
Rating.................................... We will not issue the notes unless they receive ratings
from the following rating agencies as set forth below:
</TABLE>
<TABLE>
<CAPTION>
MOODY'S FITCH DUFF & PHELPS
INVESTORS IBCA, CREDIT
CLASS OF NOTE SERVICE INC. RATING CO.
------------- --------- --------- --------------
<S> <C> <C> <C>
A-1.................... P-1 F1+/AAA D-1+
A-2.................... Aaa AAA AAA
A-3.................... Aaa AAA AAA
A-4.................... Aaa AAA AAA
B...................... Aa3 AA AA
C...................... A1 A A
</TABLE>
<TABLE>
<S> <C>
A rating is not a recommendation to purchase, hold or
sell notes since a rating does not comment on market
price or suitability for a particular investor. See
"RATING OF THE NOTES".
Legal Investment.......................... The Class A-1 Notes will be eligible securities for
purchase by money market funds under Rule 2a-7 under the
Investment Company Act of 1940.
</TABLE>
10
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors before you invest
in the notes.
THE ABSENCE OF AN EXISTING MARKET FOR THE NOTES MAY LIMIT YOUR ABILITY TO RESELL
THE NOTES
There is currently no public market for the notes and we cannot assure you
that one will develop. Thus, you may not be able to resell your notes at all, or
may be able to do so only at a substantial discount. The underwriters may assist
in resales of the notes but they are not obligated to do so. We do not intend to
apply for listing of the notes on any securities exchange or for the inclusion
of the notes on any automated quotation system. Even if a secondary market does
develop, it may not continue.
PREPAYMENTS ON THE CONTRACTS MAY CAUSE AN EARLIER REPAYMENT OF THE NOTES THAN
YOU EXPECT AND YOU MAY NOT BE ABLE TO FIND INVESTMENTS WITH THE SAME YIELD AS
THE NOTES AT THE TIME OF THE REPAYMENT.
A higher than anticipated level of prepayments may cause us to pay principal
on the notes sooner than you expected. Similarly, upon the occurrence of an
event of default, you may also receive principal of the notes sooner than you
expected. See "DESCRIPTION OF THE NOTES AND INDENTURE--EVENTS OF DEFAULT" and
"PREPAYMENT AND YIELD CONSIDERATION". You may not be able to reinvest those
distributions of principal at yields equivalent to the yield on the notes;
therefore, the ultimate return you receive on your investment in the notes may
by less than the return you expected on the notes. The rate of early
terminations of contracts due to prepayments, including defaults, is influenced
by various factors including:
- technological change;
- changes in customer requirements;
- the level of interest rates;
- the level of casualty losses; and
- the overall economic environment.
We cannot assure you that prepayments on the contracts held by the trust
will conform to any historical experience. We cannot predict the actual rate of
prepayments which will be experienced on the contracts.
THE PRICE AT WHICH YOU CAN RESELL YOUR NOTES MAY DECREASE IF THE RATINGS OF YOUR
NOTES CHANGE
Moody's Investors Service, Fitch IBCA, Inc. and Duff & Phelps Credit Rating
Co. are the rating agencies rating the notes. At any time, a rating may be
lowered or withdrawn entirely by a rating agency rating the notes. In the event
that the rating initially assigned to any note is subsequently lowered or
withdrawn for any reason, you may not be able to resell your notes without a
substantial discount. For more detailed information regarding the ratings
assigned to any class of the notes, see "RATING OF THE NOTES."
THE SUBORDINATION OF THE CLASS A-2 NOTES, CLASS A-3 NOTES, CLASS A-4 NOTES,
CLASS B NOTES, THE CLASS C NOTES, THE CLASS D NOTES AND THE CLASS E NOTES IS A
LIMITED FORM OF CREDIT ENHANCEMENT
We will pay interest and principal on some classes of notes prior to paying
interest and principal on other classes of notes. See "DESCRIPTION OF THE NOTES
AND INDENTURE--ALLOCATIONS". The subordination of some classes of notes to
others means that the subordinated classes of notes are more likely to suffer
the consequences of delinquent payments and defaults on the contracts than the
notes which receive payments prior to those subordinated classes.
11
<PAGE>
The more senior classes of notes could lose the credit enhancement provided
by the more subordinate classes and the reserve fund if delinquencies and
defaults on the contracts increase and if the collections on the contracts and
amounts in the reserve fund are insufficient to pay even the more senior classes
of notes.
LIMITED ASSETS SECURE THE NOTES; NOTEHOLDERS WILL HAVE NO RECOURSE TO THE
ORIGINATORS, SERVICER OR THEIR AFFILIATES IN THE EVENT DELINQUENCIES AND
LOSSES DEPLETE THE TRUST'S ASSETS
The trust is a limited purpose trust with limited assets. Moreover, you have
no recourse to the general credit of the servicer, originator or their
affiliates. Therefore, you must rely solely upon the contracts for payment of
principal and interest on the notes. If a contract is a vendor loan, you must
rely solely upon the end-user contracts securing the vendor loan. Most vendor
loans are non-recourse to the vendors. You are limited to recovering amounts due
under vendor loans solely from the end-user contracts and related security. If
payments on the contracts are delinquent or are insufficient to make payments on
the notes, no assets other than the reserve fund will be available to make
payments on the notes. Similarly, in the event that contracts become defaulted
contracts, the proceeds from the sale of the equipment securing the contracts
may be insufficient to make payments on the notes and no other assets will be
available for the payment of the deficiency. There can be no assurance that the
delinquency and loss experience of the contracts will be comparable to the
information set forth in "DELINQUENCY AND LOSS INFORMATION".
BECAUSE DISPROPORTIONATE AMOUNTS OF CONTRACTS RELATE TO THREE STATES, ADVERSE
EVENTS IN THOSE STATES AND SURROUNDING REGIONS MAY CAUSE INCREASED DEFAULTS
AND DELINQUENCIES
If adverse events or economic conditions were particularly severe in the
geographic regions in which there is a substantial concentration of obligors,
the amount of delinquent payments and defaults on the contracts may increase. As
a result, the overall timing and amount of collections on the contracts held by
the trust may differ from what you may have expected, and you may experience
delays or reductions in payments you expected to receive. As of December 1,
1999, approximately 22.36% of the aggregate discounted contract balance
(calculated using the statistical discount rate) of the contracts held by the
trust related to obligors located in California, 11.02% in Illinois, 5.09% in
New York. No other state accounts for more than 5.00% of the contracts. The
contracts in those states represent 38.47% of the aggregate discounted contract
balance of the contracts held by the trust, calculated using the statistical
discount rate. An example of an adverse event specific to a geographic region is
the occurrence of a catastrophic earthquake in California. An earthquake in
California could have negative regional economic repercussions and potentially
cause obligors in that region to delay or reduce their payments on contracts.
Additionally, a substantial downturn in the financial services industry, which
is highly concentrated in the states of New York and New Jersey could reduce
revenues for obligors in those states and ultimately reduce the associated
obligors' ability to make timely payments on their related contracts.
BECAUSE DISPROPORTIONATE AMOUNTS OF CONTRACTS RELATE TO PARTICULAR INDUSTRIES,
ADVERSE ECONOMIC CONDITIONS IN THOSE INDUSTRIES MAY CAUSE INCREASED DEFAULTS
AND DELINQUENCIES
If the industries in which there is a substantial concentration of obligors
experience adverse events or economic conditions, the overall timing and amount
of collections on the contracts held by the trust may differ from what you may
have expected. This could result in delays or reduced payments to you. As of
December 1, 1999, contracts constituting approximately 21.51% of the aggregate
discounted contract balance, calculated using the statistical discount rate, of
the contracts held by the trust relate to equipment used in the printing
industry, 13.74% relate to the business services, 10.34% relate to industrial
machinery, 7.44% relate to electronics. A reduction in the demand for materials
produced by the industries that utilize print materials, such as advertising and
print media, may consequently cause
12
<PAGE>
an increase in delinquencies and defaults on contracts with obligors associated
with the printing industry. No other industry accounts for more than 5.00% of
the aggregate discounted contract balance calculated using the statistical
discount rate, of the contracts held by the trust.
BECAUSE DISPROPORTIONATE AMOUNTS OF CONTRACTS RELATE TO GROUPS OF OBLIGORS,
INCLUDING OBLIGORS UNDER CONTRACTS ORIGINATED BY THE SAME VENDOR, ADVERSE
ECONOMIC EVENTS FOR THOSE GROUPS OR VENDORS MAY CAUSE INCREASED DEFAULTS AND
DELINQUENCIES
Approximately 18.76% of the aggregate discounted contract balance,
calculated using the statistical discount rate of the contracts, was originated
by a single vendor. That vendor leases printing equipment. If the vendor
representing 18.76% of the aggregate discounted contract balance were to
experience financial difficulties, the obligors' payment performance with
respect to the related contracts may decline as the obligors may be less
inclined to make payments on contracts originated by a vendor who is suffering
financial difficulties. In effect, if any group of obligors, including obligors
under contracts originated by a single vendor, i.e., the printing equipment
vendors, were to experience financial difficulties, the amount of delinquent
payments and defaults on the contracts may increase. As a result, the overall
timing and amount of collections on the contracts held by the trust may differ
from what you may have expected, and you may experience delays or reductions in
payments you expected to receive. No other single vendor originated more than
6.00% of the aggregate discounted contract balance, calculated using the
statistical discount rate, of the contracts. We are not able to determine and
have no basis to predict whether any events have occurred or may occur, that
would cause a material increase in delinquencies and defaults on contracts
originated by an individual vendor or group of vendors. Similarly, we have no
basis to determine whether any economic conditions, laws or regulations exist or
will exist that would cause a material increase in delinquencies and defaults on
contracts originated by an individual vendor or group of vendors. There can be
no assurance that any adverse events or conditions which materially affect
contracts originated by an individual vendor or a group of vendors will not
occur. See also "--INEFFECTIVE SALE IN VENDOR BANKRUPTCY COULD DELAY OR REDUCE
PAYMENTS UNDER THE CONTRACTS".
THE RATE AT WHICH EQUIPMENT OR SOFTWARE BECOMES OBSOLETE AFFECTS THE PREPAYMENT
RATE OF THE CONTRACTS AND THE NOTES
Technological change could affect your investment in the notes. For example,
technological change may cause obligors to prepay their respective contracts in
order to acquire more current technology. Consequently, an increase in
prepayments on the contracts held by the trust would result in an increase in
the rate at which principal on the notes is paid. As a result, you may need to
reinvest your note principal in a market that offers only investments with lower
returns. See "PREPAYMENT AND YIELD CONSIDERATIONS" and "THE CONTRACTS--END-USER
CONTRACTS".
EVEN IF WE REPOSSESS AND SELL THE EQUIPMENT RELATING TO A CONTRACT AFTER AN
OBLIGOR DEFAULTS, SHORTFALLS IN AMOUNTS AVAILABLE TO PAY THE NOTES MAY OCCUR
IF THE MARKET VALUE OF THE EQUIPMENT HAS DECLINED
If a contract held by the trust becomes a defaulted contract, the only
sources of payment for amounts expected to be paid on that contract will be the
income and proceeds from the sale of any related equipment and a deficiency
judgment, if any, against the obligor under the defaulted contract as well as,
to the extent available, vendor recourse. See "THE SALE AND SERVICING
AGREEMENT--DEFINITION OF DEFAULTED CONTRACTS". Since the market value of the
equipment may decline faster than the discounted contract balance, the servicer
may not recover the entire amount due on the contract and might not receive any
recoveries on the equipment. The reserve fund and the subordination of interest
and principal payments on the Class D Notes and the Class E Notes are intended
to make up for
13
<PAGE>
deficiencies in the proceeds and recoveries on the contracts. However, this
protection is limited and could be depleted if those deficiencies are larger
than we currently anticipate.
THE SERVICER'S OR A VENDOR'S RETENTION OF CONTRACT FILES MAY HINDER OUR ABILITY
TO REALIZE THE VALUE OF EQUIPMENT SECURING THE CONTRACTS
To facilitate servicing and reduce administrative costs, the servicer will
retain possession of the documents evidencing the contracts held by the trust.
Because the documents evidencing the contracts will remain in the servicer's
possession, if a subsequent purchaser were able to take physical possession of
the documents without knowledge of their assignment, that purchaser could have a
security interest in the contracts senior to our security interest. In the event
that we must rely upon repossession and sale of the related equipment securing
defaulted contracts to recover principal and interest due on the defaulted
contracts, our ability to realize upon the equipment may be limited due to the
existence of a third party's senior security interest in those contracts. In
such event, distributions to you could be delayed or reduced. Similarly, with
respect to contracts securing vendor loans, in some instances the vendor will
retain the original documents associated with those contracts. Uniform
Commercial Code financing statements are filed reflecting the pledge of those
contracts to the applicable originator as security for the vendor loans.
However, the related documents will remain in the vendor's possession. If a
subsequent purchaser were able to take physical possession of the related
documents without knowledge of the pledge to the originator, our priority
security interest in those contracts could be defeated. In such event,
distributions to you could be delayed or reduced.
FAILURE TO RECORD ASSIGNMENT OF PERFECTED SECURITY INTEREST MAY HINDER OUR
ABILITY TO REALIZE THE VALUE OF EQUIPMENT SECURING THE CONTRACTS
In connection with the conveyance of the contracts to the trust, security
interests in the equipment securing the contracts have been assigned by the
originators to the trust depositor and will be assigned by the trust depositor
to the trust. Due to the administrative burden and expense associated with
amending and paying the filing fee for the assignment of approximately 1,140
Uniform Commercial Code financing statements in 50 states where equipment is
located, we will not file any assignments of the Uniform Commercial Code
financing statements evidencing the assignment of the security interests in the
equipment to the trust depositor, the trust or the indenture trustee. Because
neither the trust depositor's, trust's, owner trustee or indenture trustee's
name appears on the UCC financing statements, an originator or the servicer
could inadvertently release the security interest in the equipment securing a
contract. In such event, we would not have a perfected security interest in the
equipment. Without a perfected security interest, we may not be able to fully
realize the value of the equipment if the related contract becomes a defaulted
contract. Failure to file the assignments does not affect either the trust's
perfected security interest in the contracts or the indenture trustee's
perfected security interest in the contracts assigned to it by the trust. It has
been the general policy of the originators to file or cause to be filed Uniform
Commercial Code financing statements with respect to the equipment relating to
the contracts.
REPURCHASE OBLIGATION OF TRUST DEPOSITOR AND ORIGINATORS PROVIDES YOU ONLY
LIMITED PROTECTION AGAINST PRIOR LIENS ON THE CONTRACTS
Federal or state law may grant liens on a contract that have priority over
the trust's interest. To the extent a lien having priority over the trust's lien
exists with respect to a contract and/or the related equipment, the trust's
interest in the asset will be subordinate to such prior lien. In the event the
creditor associated with such prior lien exercises its remedies on its security
interest it is unlikely that, after the senior creditor is repaid, sufficient
cash proceeds from the contract and related equipment will be available to pay
the discounted contract balance to the trust. An example of a lien arising under
federal or state law is a tax or other government lien on property of the
originator or the trust
14
<PAGE>
depositor arising prior to the time a contract is conveyed to the trust. The tax
lien has priority over the interest of the trust in the contract.
The vendors have warranted to the originators that the contracts transferred
to the originators are free and clear of the lien of any third party.
Additionally, the vendors have agreed not to sell, pledge, assign, transfer or
grant any lien on any contract transferred to the originators. Under the sale
and servicing agreement, the originators will jointly and severally warrant to
the trust that the contracts transferred thereunder will be transferred free and
clear of the lien of any third party. The originators and the trust depositor
also will jointly and severally warrant to the trust that they will not sell,
pledge, assign, transfer or grant any lien on the contracts. In the event that
such warranties are not true with respect to any contract, the trust depositor
and the originators are required under the sale and servicing agreement to
repurchase the contract. There can be no assurance that the trust depositor or
originators will be able to repurchase a contract at the time we request it.
IF A BANKRUPTCY COURT RULES THAT THE TRANSFER OF CONTRACTS FROM A VENDOR TO AN
ORIGINATOR WAS NOT A TRUE SALE THEN PAYMENTS ON THE CONTRACTS MAY BE REDUCED
OR DELAYED
The originators have originated contracts or acquired contracts from a
vendor, which contracts have in either case been transferred to the trust
depositor. If a bankruptcy court decides that the acquisition of a contract by
an originator is not a sale of the contract from the vendor to the originator,
the contract would be part of the vendor's bankruptcy estate. Accordingly, the
contract would be available to the vendor's creditors. In that case, the trust
would likely receive less than the scheduled payments on the contracts and
distributions to you could be delayed or reduced. In order to treat the transfer
of contracts to the trust as not being a true sale, the bankruptcy court would
recharacterize the transfer as a pledge of the contracts to secure borrowings by
the vendor. Additionally, if the transfer of contracts to an originator from a
vendor is recharacterized as a pledge, a tax or government lien on the property
of the pledging vendor arising before the contracts came into existence, then
the holders of such other interests may have priority over such originator's,
and hence the trust depositor's, the trust's and the indenture trustee's,
interest in the contracts.
IF A BANKRUPTCY COURT RULES THAT THE TRANSFER OF CONTRACTS FROM AN ORIGINATOR TO
THE TRUST DEPOSITOR WAS NOT A TRUE SALE THEN PAYMENTS ON THE CONTRACTS COULD
BE REDUCED OR DELAYED
If an originator became a debtor in a bankruptcy case and creditors of the
originator, or the originator acting as a debtor-in-possession, were to assert
that the transfer of the contracts from an originator to the trust depositor was
ineffective to remove such contracts from the originator's estate, the
distribution of proceeds of the contracts to the trust might be subject to the
automatic stay provisions of the United States Bankruptcy Code. This would delay
the distribution of those proceeds for an uncertain period of time. Furthermore,
if the bankruptcy court rules in favor of the creditor or originator, reductions
in payments under the contracts to the trust could occur. In either case,
distributions to you then could be delayed or reduced. In addition, a bankruptcy
trustee would have the power to sell the contracts if the proceeds of the sale
could satisfy the amount of the debt deemed owed by the originator. The
bankruptcy trustee could also substitute other collateral in lieu of the
contracts to secure the debt. Additionally, the bankruptcy court could adjust
the debt if the originator were to file for reorganization under Chapter 11 of
the Bankruptcy Code. In the sale and servicing agreement, the originators will
jointly and severally warrant to the trust depositor that the conveyance of the
contracts to the trust depositor is a valid sale and transfer of the contracts
to the trust depositor. In addition, the originators and the trust depositor
have agreed that they will each treat the transactions described in this
prospectus as a sale of the contracts to the trust depositor. The originators
will take all actions that are required under applicable law to perfect the
trust depositor's ownership interest in the contracts sold by the originators
and the trust depositor's security interest in the contracts and the equipment,
if any, securing vendor loans sold by the originators.
15
<PAGE>
INSOLVENCY OF THE TRUST DEPOSITOR OR THE TRUST COULD DELAY OR REDUCE PAYMENTS TO
YOU
If the trust depositor were to become a debtor in a bankruptcy case and
creditors of the trust depositor, or the trust depositor acting as a
debtor-in-possession, were to assert that the sale of the contracts to the trust
was ineffective to remove such contracts from the trust depositor's estate, then
delays in payments under the contracts to the trust could occur or, reductions
in the amount of payments under the contracts to the trust could result.
Distributions to you then could be delayed or reduced. The trust depositor will
warrant in the sale and servicing agreement that the conveyance of the contracts
to the trust is a valid sale of the contracts to the trust. The trust depositor
will also warrant that the security interest in the contracts granted by the
trust to the indenture trustee is a valid and duly perfected security interest.
The trust depositor will also agree to take all actions that are required under
applicable law to perfect the trust's and the indenture trustee's respective
interests in the contracts. In the event the trust depositor becomes subject to
insolvency proceedings, the trust, the trust's interest in the trust's assets
and the trust's obligation to make payments on the notes might also become
subject to the insolvency proceedings. We believe that the trust will be
considered bankruptcy remote from the originators. However, no law firm will
render an opinion to that effect.
INSOLVENCY OF THE VENDORS COULD DELAY OR REDUCE PAYMENTS TO YOU
In the event a vendor under a vendor loan becomes subject to insolvency
proceedings, the end-user contracts and equipment securing the vendor loan as
well as the vendor's obligation to make payments would also become subject to
the insolvency proceedings. Moreover, under bankruptcy and insolvency laws the
servicer may have to write off vendor loans as uncollectible. In that event, we
may be forced to delay of distributions on the notes. We may pay less than the
full amount of payment of principal and interest due on the notes if collections
from the remaining unaffected contracts are insufficient to cover losses to the
trust. Additionally, your remedies under the indenture and the sale and
servicing agreement could be limited.
Some assignments of end-user contracts by vendors provide that the
originator has recourse to the vendor for all or a portion of the losses the
originator may incur as a result of a default under those end-user contracts. In
the event of a vendor's bankruptcy, a bankruptcy trustee, a creditor or the
vendor as debtor-in-possession might attempt to characterize sales to an
originator through vendor assignments as loans to the vendor from the originator
secured by the end-user contracts. If such an attempt is successful, such
assignments from vendors would be subject to the risks described in this
prospectus for vendor loans. In such case, the contracts sold under such vendor
assignments would constitute security for loans to the related vendor.
THE RETENTION OF A RESIDUAL INTEREST BY A VENDOR MAY INCREASE THE RISK OF
REJECTION OF THE RELATED CONTRACT IF THAT VENDOR BECOMES BANKRUPT
Any end-user contract which is originated by a vendor for which the vendor
retains a residual interest in the equipment will be subject to rejection by
that vendor, as debtor-in-possession, or by that vendor's bankruptcy trustee.
Upon the vendor's rejection, scheduled payments under the rejected end-user
contract may terminate. You may suffer losses if the remaining unaffected
contracts, and security interests in the related equipment, are insufficient to
cover the losses.
PROCEEDS FROM REQUIRED SALE OF THE CONTRACTS FOLLOWING TRUST DEPOSITOR
BANKRUPTCY MAY NOT BE SUFFICIENT TO REPAY THE NOTES IN FULL
If the trust depositor is bankrupt or insolvent, then an event of default
would occur with respect to the notes. Under the indenture and the sale and
servicing agreement, and assuming the trust was not then a debtor in a
bankruptcy case, the indenture trustee would be required to sell the interests
in the contracts. If the sum of the proceeds of the sale of the contracts and
the proceeds of any collections on
16
<PAGE>
the contracts is insufficient to pay you in full, then you may suffer losses on
your investment in the notes.
END-USER BANKRUPTCY MAY REDUCE OR DELAY COLLECTIONS ON THE CONTRACTS
Bankruptcy and insolvency laws could affect your interests in contracts with
bankrupt end-user obligors if those laws result in any of the contracts being
written off as uncollectible or result in delay in payments due on any
contracts. As a result, you may be subject to delays in receiving payments, and
you may also suffer losses if collections from the remaining unaffected
contracts are insufficient to cover losses to the trust. State laws impose
requirements and restrictions relating to foreclosure sales and obtaining
deficiency judgments following foreclosure sales. In the event that you must
rely on repossession and disposition of equipment to recover amounts due on
defaulted contracts, the amounts due may not be realized due to these
requirements and restrictions. Factors that may affect whether you receive the
full amount due on a contract include the failure to file financing statements
to perfect the originator's, or trust's security interest in the equipment
securing the contract. The depreciation, obsolescence, damage or loss of any
item of equipment will also affect whether you receive the full amount due on a
contract.
CONTRACTS RELATING TO SOFTWARE OR RELATED SUPPORT AND CONSULTING SERVICES ARE
NOT SECURED BY THE SOFTWARE OR RELATED SERVICES
Some of the contracts held by the trust will relate to software or related
support and consulting services that are not owned by an originator. In these
cases, the vendor or a licensor traditionally owns the software, and the
software and related support and consulting services do not serve as collateral
for the contracts. Thus, we will not have an interest in such software or
related support and consulting services. In other words, we own solely the
associated contracts' cash flow. See "THE CONTRACTS". Accordingly, if any such
contract becomes a defaulted contract, we will not be able to foreclose on the
software or related support and consulting services. Because there will be no
proceeds from the software or related support and consulting services which
could be used to make payments to you, we must look solely to the obligor to
collect amounts due on the contract. There can be no assurance that the obligor
will be able to pay in full amounts due under the contract. The discounted
contract balance of the contracts to be transferred to the trust that relate to
software or relating support and consulting services, does not exceed 7.62% of
the aggregate discounted contract balance (calculated using the statistical
discount rate) of the contracts.
17
<PAGE>
TRANSFER OF SERVICING MAY DELAY PAYMENTS TO YOU DUE TO CONTRACT PROCESSING
DELAYS
If Heller Financial, Inc. were to cease acting as servicer, delays in
processing payments on the contracts and information in respect thereof could
occur and result in delays in payments to you.
YEAR 2000 ISSUES MAY IMPACT HELLER FINANCIAL'S ABILITY TO SERVICE THE CONTRACTS
If Heller Financial, Inc., as servicer, and Heller Financial Leasing, Inc.
as sub-servicer do not have computerized systems that are Year 2000 compliant by
the Year 2000, their ability to service the contracts may be materially and
adversely affected. Similarly, if the indenture trustee does not have
computerized systems that are Year 2000 compliant by the Year 2000, its ability
to make distributions to you may be materially and adversely affected. The "YEAR
2000" issue concerns the potential exposures related to the automated generation
of business and financial misinformation resulting from the application of
computer programs which have been written using two digits to identify a year in
the date field rather than four. These programs could fail or produce erroneous
results during the transition from the Year 1999 to the Year 2000.
Although Heller Financial, Inc. has taken significant steps to address the
Year 2000 issue, Heller Financial, Inc. continues to bear some risk related to
the Year 2000 issue and could be materially adversely affected if its own
remediation and contingency planning efforts fall behind schedule or if other
entities not affiliated with it do not appropriately address their own Year 2000
compliance issues. These other entities include vendors and those providing
contingency plans or outsourced technology services such as mainframe and
application support, as well as borrowers and power companies. Due to this
uncertainty, Heller Financial, Inc. is unable to represent that there will be no
material adverse consequences related to the Year 2000 issue, however, it
believes that it is doing what is reasonably necessary to provide the expertise,
resources, assessments and corrective procedures for the Year 2000 issues which
could have a material adverse impact on its operations or financial condition.
See "HELLER FINANCIAL, INC. AND HELLER FINANCIAL LEASING, INC.--ASSESSMENT OF
YEAR 2000 ISSUES."
USE OF PROCEEDS
In consideration of the trust depositor's transfer of the contracts to the
trust, the trust will transfer the net proceeds from the sale of the notes to
the trust depositor. The trust depositor purchased the contracts from time to
time from the originators. The trust depositor previously sold undivided
variable percentage ownership interests in the contracts to various purchasers.
The trust depositor will apply the net proceeds from the sale of the notes to
the repurchase of those undivided variable percentage ownership interests.
18
<PAGE>
CALCULATION OF DISCOUNTED CONTRACT BALANCE
As used in this prospectus, the "DISCOUNTED CONTRACT BALANCE" of a contract
is,
(1) as of the related cutoff date, the present value of all of the remaining
scheduled payments becoming due under such contract after the applicable
cutoff date discounted monthly at the discount rate, unless another rate
is specifically mentioned, and
(2) as of any other date of determination, the sum of:
(A) the present value of all of the remaining scheduled payments becoming
due under such contract after such date of determination discounted
monthly at the discount rate, unless another rate is specifically
mentioned, and
(B) the aggregate amount of all scheduled payments due and payable under
such contract after the applicable cutoff date and prior to such date
of determination that have not then been received by the servicer.
Excluded from the calculation are scheduled payments related to defaulted
contracts and contracts which have terminated prior to their scheduled maturity
date.
The discounted contract balance for each contract shall be calculated
assuming:
(1) all payments due in any collection period are due on the last day of
such collection period;
(2) payments are discounted on a monthly basis using a 30 day month and a
360 day year; and
(3) all security deposits and drawings under letters of credit, if any,
issued in support of a contract are applied to reduce scheduled payments
in inverse order of the due date of those payments.
The discount rate is [ ]% and was calculated as the sum of:
(1) the average of the interest rate of the notes weighted by the initial
principal amount of the notes and the initial average life, assuming a
15% conditional prepayment rate and no loss scenario, and assuming that
the trust depositor will exercise its option to redeem the notes when the
aggregate discounted contract balance of the contracts is less than 10%
of the aggregate discounted contract balance as of December 1, 1999; and
(2) 0.40%.
19
<PAGE>
COMPOSITION OF THE CONTRACTS
On or about December 14, 1999, the trust depositor will transfer to the
trust the contracts as of December 1, 1999 and from time to time substitute
contracts as of the applicable cutoff dates under the sale and servicing
agreement. The originators selected the contracts from their portfolio of
contracts based on the criteria described in the sale and servicing agreement.
See "THE SALE AND SERVICING AGREEMENT--REPRESENTATIONS AND WARRANTIES;
DEFINITION OF ELIGIBLE CONTRACT" and "--CONCENTRATION AMOUNTS; DEFINITION OF
EXCESS CONTRACT". The originators will jointly and severally represent that all
of the contracts transferred to the trust are commercial, rather than consumer
leases or loans/financings, and that no adverse selection process was employed
in the originators' selection of contracts for sale to the trust depositor and
to the trust under the sale and servicing agreement.
The composition and distribution of the contracts by remaining term,
original term, discounted contract balance, original gross contract balance,
end-user industry, geographic distribution, type of equipment and type of
end-user contract are set forth in the following tables and are reported as of
December 1, 1999 using the statistical discount rate. For further information
regarding the contracts, see "THE CONTRACTS".
As the obligors pay amounts owed by them under the contracts, the aggregate
discounted contract balance of all of the contracts held by the trust will
decrease. This decrease in the discounted contract balance of the contracts is
referred to as amortization. The rate at which the discounted contract balance
of each contract is reduced may vary from contract to contract. The variance
will depend in large part on the contract terms and the manner in which the
obligor makes its payments. As a result, the statistical distribution of the
contracts held by the trust, including the concentration of obligors in any one
state or of the contracts with respect to any one equipment type will vary as
the contract balances amortize.
While reading the tables you should note that:
- In the event that the documents evidencing a contract require amounts to
be billed to multiple billing locations, the contract is not treated as a
single contract, but rather multiple contracts corresponding in number to
the number of billing locations.
- Classification by industry is based on Heller Financial, Inc.'s customary
procedures for determining obligor industry.
- Percentages and amounts set forth in the following tables may not total
due to rounding.
- The largest end-user industry concentration including end-user obligors on
contracts and end-user contracts securing vendor loans, which represents
an aggregate discounted contract balance of approximately 21.51% as of
December 1, 1999 (calculated at the statistical discount rate), relates to
printing and publishing.
- The final scheduled payment on the contract with the latest maturity or
expiration is on or prior to October 1, 2007.
- Approximately 9.50% of the aggregate discounted contract balance
(calculated at the statistical discount rate) of the contracts provide for
payments by the obligor thereunder on a basis other than monthly payments.
Some of the contracts intended, as of December 1, 1999, to be transferred to
the trust may be determined not to meet the eligibility requirements and those
contracts may not be transferred to the trust on the closing date for the sale
of the contracts to the trust. While the statistical distribution of the
characteristics as of the closing date for the final pool of contracts and
calculated at the discount rate will vary somewhat from the statistical
distribution of the characteristics as of December 1, 1999 and calculated at the
statistical discount rate as presented in this prospectus, the variance will not
be
20
<PAGE>
material. Changes in the characteristics of the contracts between December 1,
1999 and the closing date will not affect more than 5.00% of the aggregate
discounted contract balance of the contracts.
With respect to notes issued in a separate offering by the Heller Equipment
Asset Receivables Trust 1999-1, the variance between the aggregate discounted
contract balance calculated at the statistical discount rate and the discount
rate was 0.045%. There can be no assurance that the variance between the
statistical discount rate and the discount rate with respect to the notes issued
by the trust will be substantially similar.
The statistical information presented in the following tables is as of
December 1, 1999 and is calculated using the statistical discount rate of
7.162%. The statistical discount rate is based on an average of the estimated
interest rates of the notes, weighted by estimated initial average life and
initial principal amounts. The percentages and balances set forth in each of the
following tables may not total due to rounding.
<TABLE>
<S> <C>
Aggregate Discounted Contract Balance....................... $365,211,014
Number of Contracts......................................... 1,140
Weighted Average Original Term.............................. 61.23
(Range)(in months) 12-107
Weighted Average Remaining Term............................. 50.61
(Range)(in months) 1-93
Average Discounted Contract Balance......................... $ 320,361
</TABLE>
DISTRIBUTION OF CONTRACTS BY CONTRACT TYPE
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
PERCENTAGE OF DISCOUNTED PERCENTAGE OF
NUMBER OF NUMBER OF CONTRACT AGGREGATE DISCOUNTED
TYPE CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- ---- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
Loans................ 557 48.86% $244,835,612 67.04%
Leases............... 583 51.14% 120,375,401 32.96%
----- ------ ------------ ------
Total:............... 1,140 100.00% $365,211,014 100.00%
</TABLE>
21
<PAGE>
DISTRIBUTION OF CONTRACTS BY STATE IN WHICH OBLIGORS ARE LOCATED
DATA AS OF DECEMBER 1, 1999
(ORDERED BY PERCENTAGE OF AGGREGATE DISCOUNTED CONTRACT BALANCE)
<TABLE>
<CAPTION>
APPROXIMATE
PERCENTAGE OF APPROXIMATE PERCENTAGE OF
NUMBER OF NUMBER OF NUMBER DISCOUNTED AGGREGATE DISCOUNTED
STATE CONTRACTS OF CONTRACTS CONTRACT BALANCE CONTRACT BALANCE
----- --------- ---------------- ---------------- --------------------
<S> <C> <C> <C> <C>
California...................... 177 15.53 % 81,678,633 22.36%
Illinois........................ 117 10.26 % 40,228,800 11.02%
New York........................ 58 5.09 % 18,594,659 5.09%
Texas........................... 55 4.82 % 18,166,550 4.97%
New Jersey...................... 88 7.72 % 16,336,780 4.47%
Colorado........................ 25 2.19 % 14,428,996 3.95%
Michigan........................ 50 4.39 % 12,984,387 3.56%
Massachusetts................... 50 4.39 % 12,550,990 3.44%
Nevada.......................... 21 1.84 % 11,881,298 3.25%
Utah............................ 19 1.67 % 10,342,005 2.83%
Minnesota....................... 39 3.42 % 9,104,059 2.49%
North Carolina.................. 17 1.49 % 8,670,461 2.37%
Connecticut..................... 25 2.19 % 7,826,663 2.14%
Virginia........................ 22 1.93 % 7,627,890 2.09%
Pennsylvania.................... 41 3.60 % 7,129,456 1.95%
Arizona......................... 18 1.58 % 7,111,724 1.95%
Missouri........................ 9 0.79 % 7,050,502 1.93%
Florida......................... 47 4.12 % 6,878,441 1.88%
Ohio............................ 50 4.39 % 6,643,966 1.82%
Wisconsin....................... 21 1.84 % 6,630,758 1.82%
Georgia......................... 27 2.37 % 5,429,822 1.49%
Idaho........................... 3 0.26 % 5,401,306 1.48%
Nebraska........................ 6 0.53 % 4,987,528 1.37%
Indiana......................... 24 2.11 % 4,244,101 1.16%
Maryland........................ 9 0.79 % 3,414,841 0.94%
Wyoming......................... 1 0.09 % 3,410,275 0.93%
Kentucky........................ 12 1.05 % 3,346,656 0.92%
Oklahoma........................ 10 0.88 % 3,110,421 0.85%
Tennessee....................... 11 0.96 % 3,043,071 0.83%
West Virginia................... 2 0.18 % 2,735,354 0.75%
South Carolina.................. 12 1.05 % 2,586,682 0.71%
New Hampshire................... 14 1.23 % 1,666,237 0.46%
Maine........................... 5 0.44 % 1,627,781 0.45%
Oregon.......................... 6 0.53 % 1,390,240 0.38%
Washington...................... 11 0.96 % 1,304,701 0.36%
Arkansas........................ 6 0.53 % 1,137,231 0.31%
Louisiana....................... 7 0.61 % 852,391 0.23%
Alabama......................... 4 0.35 % 777,907 0.21%
Kansas.......................... 6 0.53 % 743,480 0.20%
Rhode Island.................... 3 0.26 % 727,231 0.20%
Delaware........................ 3 0.26 % 444,638 0.12%
Iowa............................ 2 0.18 % 337,112 0.09%
North Dakota.................... 2 0.18 % 258,282 0.07%
Mississippi..................... 2 0.18 % 187,235 0.05%
South Dakota.................... 1 0.09 % 64,317 0.02%
District of Columbia............ 1 0.09 % 60,828 0.02%
Vermont......................... 1 0.09 % 54,327 0.01%
----- ------ ------------ ------
Total:.......................... 1,140 100.00 % 365,211,014 100.00%
===== ====== ============ ======
</TABLE>
22
<PAGE>
DISTRIBUTION OF CONTRACTS BY EQUIPMENT TYPE
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
PERCENTAGE OF DISCOUNTED PERCENTAGE OF
NUMBER OF NUMBER OF CONTRACT AGGREGATE DISCOUNTED
EQUIPMENT TYPE CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- -------------- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
Printing............................... 158 13.86% $ 84,111,459 23.03%
Computer Hardware...................... 204 17.89% 75,039,498 20.55%
Machine Tool........................... 315 27.63% 37,377,687 10.23%
Computer Software...................... 82 7.19% 27,846,837 7.62%
Furniture & Fixture.................... 42 3.68% 24,376,086 6.67%
High Tech Manufacturing................ 15 1.32% 20,962,856 5.74%
Franchising............................ 81 7.11% 20,492,212 5.61%
Plastics............................... 122 10.70% 19,444,011 5.32%
General Equipment...................... 20 1.75% 9,530,268 2.61%
Entertainment.......................... 5 0.44% 6,829,597 1.87%
Material Handling...................... 3 0.26% 5,712,560 1.56%
Construction........................... 8 0.70% 4,908,506 1.34%
Industrial Equipment................... 9 0.79% 4,629,094 1.27%
Vehicles............................... 5 0.44% 4,158,441 1.14%
Miscellaneous.......................... 4 0.35% 3,768,563 1.03%
Dry Cleaning........................... 27 2.37% 3,610,793 0.99%
Agriculture............................ 3 0.26% 3,187,542 0.87%
Dental................................. 1 0.09% 2,460,408 0.67%
Transportation......................... 2 0.18% 1,974,037 0.54%
Retail................................. 19 1.67% 1,640,074 0.45%
Medical................................ 5 0.44% 1,047,258 0.29%
Telecommunication...................... 2 0.18% 937,140 0.26%
Pre-Press.............................. 3 0.26% 750,108 0.21%
Embroidery Equipment................... 1 0.09% 218,520 0.06%
Communication.......................... 2 0.18% 134,070 0.04%
Textile................................ 2 0.18% 63,390 0.02%
----- ------ ------------ ------
Total.................................. 1,140 100.00% $365,211,014 100.00%
===== ====== ============ ======
</TABLE>
23
<PAGE>
DISTRIBUTION OF CONTRACTS BY OBLIGOR INDUSTRY
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
PERCENTAGE OF DISCOUNTED PERCENTAGE OF
NUMBER OF NUMBER OF CONTRACT AGGREGATE DISCOUNTED
INDUSTRY CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- -------- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
Printing and Publishing................ 135 11.84% $ 78,540,804 21.51%
Business Services...................... 108 9.47% 50,184,861 13.74%
Industrial Machinery................... 275 24.12% 37,751,260 10.34%
Electronic............................. 48 4.21% 27,175,925 7.44%
Rubber and Misc. Plastics.............. 93 8.16% 17,296,709 4.74%
Nonclassifiable Establishments......... 81 7.11% 17,082,349 4.68%
Nondepository Institution.............. 33 2.89% 16,362,593 4.48%
Securities and Commodities............. 13 1.14% 12,577,180 3.44%
Wholesale Trade-Durable Goods.......... 39 3.42% 8,791,775 2.41%
Miscellaneous Manufacturing............ 14 1.23% 7,924,396 2.17%
----- ------ ------------ ------
Subtotal............................... 839 73.60% $273,687,852 74.94%
All others............................. 301 26.40% 91,523,161 25.06%
----- ------ ------------ ------
Total.................................. 1,140 100.00% $365,211,014 100.00%
===== ====== ============ ======
</TABLE>
24
<PAGE>
DISTRIBUTION OF CONTRACTS BY ORIGINAL GROSS CONTRACT BALANCE
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
PERCENTAGE OF DISCOUNTED PERCENTAGE OF
NUMBER OF NUMBER OF CONTRACT AGGREGATE DISCOUNTED
ORIGINAL GROSS CONTRACT BALANCE CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- ------------------------------- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
25,001 - 50,000........................ 19 1.67% $ 622,601 0.17%
50,001 - 100,000....................... 223 19.56% 12,208,777 3.34%
100,001 - 150,000...................... 198 17.37% 17,700,192 4.85%
150,001 - 200,000...................... 144 12.63% 17,353,815 4.75%
200,001 - 250,000...................... 96 8.42% 14,549,199 3.98%
250,001 - 300,000...................... 56 4.91% 10,293,392 2.82%
300,001 - 400,000...................... 98 8.60% 22,815,538 6.25%
400,001 - 500,000...................... 57 5.00% 17,418,722 4.77%
500,001 - 600,000...................... 36 3.16% 13,102,467 3.59%
600,001 - 700,000...................... 27 2.37% 12,057,732 3.30%
700,001 - 800,000...................... 27 2.37% 13,998,061 3.83%
800,001 - 900,000...................... 15 1.32% 7,950,794 2.18%
900,001 - 1,000,000.................... 13 1.14% 8,525,055 2.33%
1,000,001 - 1,250,000.................. 26 2.28% 17,475,335 4.78%
1,250,001 - 1,500,000.................. 16 1.40% 14,582,179 3.99%
1,500,001 - 1,750,000.................. 16 1.40% 13,255,533 3.63%
1,750,001 - 2,000,000.................. 12 1.05% 13,987,412 3.83%
2,000,001 - 2,250,000.................. 7 0.61% 8,610,628 2.36%
2,250,001 - 2,500,000.................. 8 0.70% 13,730,273 3.76%
2,500,001 - 2,750,000.................. 7 0.61% 13,073,103 3.58%
2,750,001 - 3,000,000.................. 5 0.44% 10,755,117 2.94%
3,000,001 - 3,500,000.................. 5 0.44% 9,533,908 2.61%
3,500,001 - 4,000,000.................. 11 0.96% 22,604,259 6.19%
4,000,001 - 4,500,000.................. 6 0.53% 16,625,067 4.55%
4,500,001 - 5,000,000.................. 3 0.26% 8,104,754 2.22%
5,000,001 - 6,000,000.................. 5 0.44% 20,265,445 5.55%
6,000,001 - 7,000,000.................. 2 0.18% 4,573,604 1.25%
7,000,001 - 8,000,000.................. 1 0.09% 5,241,863 1.44%
8,000,001 - 9,000,000.................. 1 0.09% 4,196,190 1.15%
----- ------ ------------ ------
Total.................................. 1,140 100.00% $365,211,014 100.00%
===== ====== ============ ======
</TABLE>
25
<PAGE>
DISTRIBUTION OF CONTRACTS BY REMAINING DISCOUNTED CONTRACT BALANCE
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
PERCENTAGE OF DISCOUNTED PERCENTAGE OF
NUMBER OF NUMBER OF CONTRACT AGGREGATE DISCOUNTED
REMAINING DISCOUNTED CONTRACT BALANCE CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- ------------------------------------- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
1 - 25,000............................. 2 0.18% $ 22,829 0.01%
25,001 - 50,000........................ 115 10.09% 4,530,918 1.24%
50,001 - 100,000....................... 304 26.67% 22,512,364 6.16%
100,001 - 150,000...................... 213 18.68% 26,117,914 7.15%
150,001 - 200,000...................... 106 9.30% 18,494,957 5.06%
200,001 - 250,000...................... 66 5.79% 14,953,181 4.09%
250,001 - 300,000...................... 57 5.00% 15,498,848 4.24%
300,001 - 400,000...................... 72 6.32% 24,851,684 6.80%
400,001 - 500,000...................... 37 3.25% 16,581,400 4.54%
500,001 - 600,000...................... 38 3.33% 20,801,334 5.70%
600,001 - 700,000...................... 20 1.75% 12,720,930 3.48%
700,001 - 800,000...................... 8 0.70% 5,794,313 1.59%
800,001 - 900,000...................... 10 0.88% 8,421,005 2.31%
900,001 - 1,000,000.................... 11 0.96% 10,603,857 2.90%
1,000,001 - 1,250,000.................. 19 1.67% 20,749,385 5.68%
1,250,001 - 1,500,000.................. 11 0.96% 15,511,241 4.25%
1,500,001 - 1,750,000.................. 8 0.70% 12,866,722 3.52%
1,750,001 - 2,000,000.................. 13 1.14% 24,697,869 6.76%
2,000,001 - 2,250,000.................. 7 0.61% 14,812,210 4.06%
2,250,001 - 2,500,000.................. 5 0.44% 12,125,696 3.32%
2,500,001 - 2,750,000.................. 5 0.44% 13,287,869 3.64%
2,750,001 - 3,000,000.................. 2 0.18% 5,812,625 1.59%
3,000,001 - 3,500,000.................. 4 0.35% 13,146,627 3.60%
3,500,001 - 4,000,000.................. 2 0.18% 7,185,096 1.97%
4,000,001 - 4,500,000.................. 2 0.18% 8,485,985 2.32%
4,500,001 - 5,000,000.................. 2 0.18% 9,382,292 2.57%
5,000,001 - 6,000,000.................. 1 0.09% 5,241,863 1.44%
----- ------ ------------ ------
Total.................................. 1,140 100.00% $365,211,014 100.00%
===== ====== ============ ======
</TABLE>
26
<PAGE>
DISTRIBUTION OF CONTRACTS BY ORIGINAL CONTRACT TERM
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
ORIGINAL PERCENTAGE OF DISCOUNTED PERCENTAGE OF
TERM NUMBER OF NUMBERS OF CONTRACT AGGREGATE DISCOUNTED
(MONTHS) CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- -------- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
1--12................ 1 0.09% $ 133,305 0.04%
13--24............... 46 4.04% 11,825,795 3.24%
25--36............... 192 16.84% 64,098,548 17.55%
37--48............... 102 8.95% 51,753,847 14.17%
49--60............... 396 34.74% 91,218,867 24.98%
61--72............... 200 17.54% 42,488,428 11.63%
73--84............... 49 4.30% 24,983,567 6.84%
85--107.............. 154 13.51% 78,708,657 21.55%
----- ------- ------------ -------
Total................ 1,140 100.00% $365,211,014 100.00%
===== ======= ============ =======
</TABLE>
DISTRIBUTION OF CONTRACTS BY REMAINING MONTHS TO STATED MATURITY
DATA AS OF DECEMBER 1, 1999
<TABLE>
<CAPTION>
AGGREGATE
REMAINING PERCENTAGE OF DISCOUNTED PERCENTAGE OF
TERM NUMBER OF NUMBERS OF CONTRACT AGGREGATE DISCOUNTED
(MONTHS) CONTRACTS CONTRACTS BALANCE CONTRACT BALANCE
- --------- --------- ------------- ------------ --------------------
<S> <C> <C> <C> <C>
1--12................ 27 2.37% $ 6,785,378 1.86%
13--24............... 148 12.98% 45,049,583 12.34%
25--36............... 192 16.84% 64,502,947 17.66%
37--48............... 167 14.65% 61,303,288 16.79%
49--60............... 389 34.12% 80,794,866 22.12%
61--72............... 48 4.21% 17,404,089 4.77%
73--84............... 116 10.18% 52,285,446 14.32%
85--93............... 53 4.65% 37,085,418 10.15%
----- ------- ------------ -------
Total................ 1,140 100.00% $365,211,014 100.00%
===== ======= ============ =======
</TABLE>
DELINQUENCY AND LOSS INFORMATION
The originators treat a contract as delinquent if the obligor does not make
a scheduled payment at the time or in the amount required by the contract terms.
Contract terms require payment by the obligor within 30 days from the "DUE DATE"
provided in the associated invoice.
The following tables set forth the originators' delinquency and loss
experience on their domestic portfolio of equipment leases and loans. Not all of
the contracts in the originators' aggregate portfolio will be transferred to the
trust. Therefore, the data in the following tables includes delinquency and loss
experience for the contracts and other financial assets owned by Heller
Financial, which originated from the on-going business in the Commercial
Equipment Finance Division and the Chicago-based group of the Global Vendor
Finance Division. The delinquency and loss experience set forth in the following
tables is described in terms of receivables and repossessed assets on Heller
Financial's financial statements as they relate to the on-going business in the
Commercial Equipment Finance Division and the Chicago-based group of the Global
Vendor Finance Division. The receivables are calculated net of unearned income.
27
<PAGE>
The data presented in the following tables and the period to period
discussion below reflect historical results and there is no assurance that the
delinquency or loss experience of the contracts will be similar to that set
forth below.
CONTRACT PORTFOLIO
DELINQUENCY EXPERIENCE
(DOLLARS IN MILLIONS)
AT
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ending Receivables and Repossesed
Assets.......................... $1,690.00 100.00% $2,027.00 100.00% $1,647.00 100.00% $1,758.00 100.00%
Number of Delinquent Days ($ of
Ending Receivables and
Repossessed Assets)
31-60 days........................ $ 16.58 0.98% $ 13.38 0.66% $ 9.44 0.57% $ 17.33 0.99%
61-90 days........................ $ 26.23 1.55% $ 6.70 0.33% $ 6.04 0.37% $ 6.86 0.39%
Over 90 days...................... $ 23.87 1.41% $ 12.18 0.60% $ 14.55 0.88% $ 18.91 1.08%
Total............................. $ 66.68 3.94% $ 32.26 1.59% $ 30.03 1.82% $ 43.10 2.45%
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31,
1996
--------------------
<S> <C> <C>
Ending Receivables and Repossesed
Assets.......................... $1,525.00 100.00%
Number of Delinquent Days ($ of
Ending Receivables and
Repossessed Assets)
31-60 days........................ $ 16.55 1.09%
61-90 days........................ $ 4.68 0.31%
Over 90 days...................... $ 17.15 1.12%
Total............................. $ 38.38 2.52%
</TABLE>
Delinquent receivables in the above table include accrued interest.
CONTRACT PORTFOLIO
CONTRACT LOSS EXPERIENCE
(DOLLARS IN MILLIONS)
AT
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average Receivables and
Repossessed Assets.............. $1,776.00 100.00% $1,912.00 100.00% $1,845.00 100.00% $1,609.00 100.00%
Gross Losses (as % of Receivables
and Repossessed Assets)......... $ 2.72 0.15% $ 0.83 0.04% $ 1.35 0.07% $ 1.92 0.12%
Gross Recoveries (as % of
Receivables and Repossessed
Assets)......................... $ 0.27 0.02% $ 0.58 0.03% $ 0.60 0.03% $ 0.42 0.03%
Net Losses (as % of Receivables
and Repossessed Assets)......... $ 2.45 0.14% $ 0.25 0.01% $ 0.75 0.04% $ 1.50 0.09%
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31,
1996
--------------------
<S> <C> <C>
Average Receivables and
Repossessed Assets.............. $1,293.00 100.00%
Gross Losses (as % of Receivables
and Repossessed Assets)......... $ 0.65 0.05%
Gross Recoveries (as % of
Receivables and Repossessed
Assets)......................... $ 0.36 0.03%
Net Losses (as % of Receivables
and Repossessed Assets)......... $ 0.29 0.02%
</TABLE>
Gross losses, as a percentage of receivables and repossessed assets, are
shown in the above table net of vendor recourse.
With respect to contracts secured by printing equipment related to the
vendor representing 18.76% of the aggregate discounted contract balance end-user
defaults would have been approximately $3.0 million for the nine months ended
September 30, 1999, $2.6 million for the nine months ended September 30, 1998,
$4.1 million in the twelve months ended December 31, 1998 and $8.4 million for
the twelve months ended December 31, 1997; after vendor recourse, net losses
aggregated $149,000 over the period.
28
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1999 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1998
The amounts classified as delinquent as a percentage of receivables and
repossessed assets increased between the nine months ended September 30, 1998
and the nine months ended September 30, 1999. The increase in delinquencies in
the nine month period ending September 30, 1999 compared to the nine month
period ending September 30, 1998 is due primarily from certain personnel
changes. An appropriate solution to such personnel changes has been implemented.
We do not expect the personnel issue to affect receivable net losses. Net losses
as a percentage of average receivables and repossessed assets increased in the
nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998. The increase is not attributable to any one factor and we
have no basis to predict, and offer no assurances as to, whether net losses as a
percentage of receivables and repossessed assets will continue to increase in
subsequent periods. Average receivables and repossessed assets decreased
approximately 7.1% from the nine months ended September 30, 1998 to the nine
months ended September 30, 1999 due to asset securitizations during the period.
TWELVE MONTHS ENDED DECEMBER 31, 1998 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1997
The amounts classified as delinquent as a percentage of receivables and
repossessed assets declined between December 31, 1997 and December 31, 1998. Net
losses as a percentage of average receivables and repossessed assets decreased
slightly in 1998 as compared to 1997. The slight decrease is not attributable to
any one factor and we have no basis to predict, and offer no assurances as to,
whether net losses as a percentage of receivables and repossessed assets will
continue to decrease in subsequent periods. Average receivables and repossessed
assets increased approximately 14.7% from December 31, 1997 to December 31, 1998
due to normal fluctuations in the amount of contracts originated. We believe
that stability in delinquency and loss experience is a result of continued
favorable economic conditions and consistent application of credit standards on
the part of the originators of such assets.
TWELVE MONTHS ENDED DECEMBER 31, 1997 VERSUS TWELVE MONTHS ENDED DECEMBER 31,
1996
The amounts classified as delinquent as a percentage of receivables and
repossessed assets decreased slightly between December 31, 1996 and
December 31, 1997. Net losses as a percentage of average receivables and
repossessed assets increased slightly in 1997 as compared to 1996. The increase
is not attributable to any one factor and we believe that it is partially
attributable to the increase in average receivables and repossessed assets.
Average receivables and repossessed assets increased approximately 24% from
December 31, 1996 to December 31, 1997 due to an increase in financing activity.
As noted above, we believe that stability in delinquency and loss experience is
a result of continued favorable economic conditions and consistent application
of credit standards on the part of the originators of such assets.
DEFINITION OF DELINQUENCY FOR THE CONTRACTS TRANSFERRED TO THE TRUST
As of December 1, 1999 no contract sold to the trust has any delinquent
scheduled payments. We consider a scheduled payment to be delinquent if:
- it is more than 60 days delinquent; and
- the delinquent amount is more than the greater of the following:
(A) $10 or
(B) 10% of the scheduled payment.
29
<PAGE>
There are no non-performing or non-prime contracts included in the contracts
sold to the trust. For a definition of defaulted contracts, see "THE SALE AND
SERVICING AGREEMENT--DEFINITION OF DEFAULTED CONTRACTS".
THE CONTRACTS
The trust will be entitled to all collections on account of the contracts
and related equipment, including collections on end-user contracts securing
vendor loans. However, the trust will not be entitled to the Excluded Amounts.
See "DESCRIPTION OF THE NOTES AND INDENTURE--AMOUNTS AVAILABLE FOR PAYMENT ON
THE NOTES". All of the contracts are commercial contracts.
END-USER CONTRACTS
The following discussion describes the end-user contracts, including
end-user contracts securing vendor loans. All of the end-user contracts in
respect of equipment, software and related support and consulting services to be
included from time to time in the trust are of one of the following types:
- conditional sale agreements;
- leases;
- secured promissory notes;
- installment payment agreements; and
- financing agreements.
There is no limit on the number of contracts which may consist of any of the
foregoing types. Each contract must be an eligible contract as of the applicable
cutoff date. In order for a contract to be eligible to be transferred to the
trust and to be a trust asset it must have the characteristics which are more
fully described in "THE SALE AND SERVICING AGREEMENT--REPRESENTATIONS AND
WARRANTIES; DEFINITION OF ELIGIBLE CONTRACT".
CONDITIONAL SALE AGREEMENTS.
The originators offer financing for equipment under conditional sale
agreements assigned to the originators by vendors. Most of the conditional sale
agreements transferred to the trust will consist of either the originators'
standard, pre-printed form, or of the vendors' standard, pre-printed forms.
These forms have been reviewed and approved for use by the applicable
originator. The conditional sale agreement sets forth the description of each
item financed thereunder and the schedule of installment payments. Most of the
loans under conditional sale agreements are fixed rate and are for a one to
eight year term. Most of the payments under conditional sale agreements are due
monthly. Conditional sale agreement terms include the following:
- a grant by the end-user of a security interest in any related equipment
which is then assigned by the vendor to the originator;
- may allow prepayment of the obligation upon payment, where allowed by
applicable state law, of an additional prepayment fee;
- the end-user is required to maintain the equipment, keep it free and clear
of liens and encumbrances and pay all taxes related to the equipment;
- no modification or disposal of the equipment without the originator's or
its assignee's consent;
- a disclaimer of warranties;
30
<PAGE>
- the end-user's indemnity against liabilities arising from the use,
possession or ownership of the equipment; and
- the end-user's absolute and unconditional obligation to pay the
installment payments required under the terms of the agreement.
The conditional sale agreement also requires each end-user to maintain
insurance, the terms of which may vary. The terms of a conditional sale
agreement may be modified at its inception at the end-user's request. These
modifications must either be approved by the originator's legal department and
several levels of management before the originator will agree to accept an
assignment of the conditional sale agreement from a vendor, or the vendor must
indemnify the originator against any losses or damages it may suffer as a result
of the modifications.
LEASES.
The originators, either directly or by assignment from vendors, offer
financing of equipment under leases. Leases may consist of individual lease
agreements each relating to a single, separate transaction or may consist of
individual transactions written under and governed by a master lease agreement
which contains the general terms and conditions of the transaction. Specific
terms and conditions, such as descriptions of the specific equipment being
leased or financed and the schedule of related rental payments, are contained in
a supplement or schedule to the master lease agreement, which is signed by the
end-user, as lessee, and either the vendor or the originator, as lessor. The
supplement or schedule incorporates the master lease agreement by reference and
is treated by the originator as a separate lease. Each lease is originated in
the ordinary course of business by either the originator or a vendor. The
vendors assign leases to the originator through a vendor finance agreement or
vendor assignment.
The initial terms of most of the leases transferred to the trust range from
one to eight years. Each lease provides for the periodic payment by the end-user
of rent in advance or arrears, usually monthly or quarterly. The periodic
payments represent the amortization, usually on a level basis, of the total
amount that an end-user is required to pay throughout the term of a lease.
The leases to be transferred to the trust are "NET LEASES" under which the
end-user assumes responsibility for the items financed thereunder, including
operation, maintenance, repair, insurance, return of any equipment at the
expiration or termination of the lease and the payment of all sales and use and
property taxes relating to such financed item during the lease term. The
originator or vendor is named as loss payee on insurance policies covering the
equipment. The end-user further agrees to indemnify the lessor for any
liabilities arising out of the use or operation of the item financed by the
end-user. In most cases, the lessor is also authorized to perform the end-user's
obligations under the lease at the end-user's expense, if it so elects, in cases
where the end-user has failed to perform. In addition, the leases often contain
"HELL OR HIGH WATER" clauses unconditionally obligating the end-user to make
periodic payments, without setoff, at the times and in the amounts specified in
the lease. If the originator is the lessor, the lease contains no express or
implied warranties with respect to the items financed thereunder other than a
warranty of quiet enjoyment. If a vendor is the lessor, the lease or a related
agreement may contain representations and warranties relating to the items
financed thereunder in addition to a warranty of quiet enjoyment; however, the
end-user agrees not to assert any warranty claims against any assignee of the
vendor, including the originator, by way of setoff, counterclaim or otherwise,
and further agrees that it may only bring such claims against the vendor. All
leases of equipment require the end-user to maintain, at its expense, casualty
insurance covering damage to or loss of the equipment during the lease term or
to self-insure against those risks, if approved in advance by the originator.
The leases include both "true leases" and leases intended for security as
defined in Section 1-201(37) of the Uniform Commercial Code. Under a "true
lease," the lessor bears the risk of ownership, although the risk of loss of the
related equipment is passed to the end-user under the
31
<PAGE>
leases, and no title is conferred upon the lessee. Under a "true lease" the
lessor also takes any tax benefits associated with the ownership of depreciable
property under applicable law. The lessee under a "true lease" has the right to
the temporary use of property for a term shorter than the economic life of such
property in exchange for payments at scheduled intervals during the lease term
and the lessor retains a significant "residual" economic interest in the leased
property. End of lease options for "true leases" include purchase or renewal at
fair market value. Under leases intended for security, the lessor in effect
finances the "PURCHASE" of the leased property by the lessee and retains a
security interest in the leased property. The lessee retains the leased property
for substantially all its economic life and the lessor retains no significant
residual interest. Such leases are considered conditional sales type leases for
federal income tax purposes and, accordingly, the lessor does not take any
federal tax benefits associated with the ownership of depreciable property. End
of lease options for such leases depend on the terms of the related individual
lease agreement or master lease agreement supplement or schedule. Those terms
usually provide for the purchase of the equipment at a specified price, which
may be nominal.
End-users under a lease are either prohibited from altering or modifying the
equipment or may alter or modify the equipment only to the extent the
alterations or modifications are readily removable without damage to the
equipment. Under some master lease agreements, the end-user may assign its
rights and obligations under the lease, but only upon receiving the prior
written consent of the lessor. Under some master lease agreements, the end-user
may relocate the equipment upon giving the lessor prompt written notice of the
relocation. The right to grant or deny the consent or to receive the written
notice will be exercised by the servicer. Some leases permit the end-user to
substitute substantially identical leased equipment for leased equipment
scheduled to be returned to the lessor under the lease.
While the terms and conditions of the leases do not usually permit
cancellation by the end-user, some leases may be modified or terminated before
the end of the lease term. Modifications to a lease term or early lease
terminations may be permitted by the originator, or by a vendor with the consent
of the originator. Modifications are often permitted in conjunction with
additional financing opportunities from the same end-user. Early termination of
a lease may be permitted in connection with the acquisition of new technology
requiring replacement of the equipment. In such cases, the related equipment is
returned to the vendor or originator and an amount approximately equal to the
present value of the remaining rental payments under the lease plus an early
termination fee is paid by the end-user to the originator. Modifications usually
involve repricing a lease or modification of the lease term. Occasionally a
lease may be modified in connection with an increase in the capacity or
performance of equipment by adding additional equipment that includes new
technology. Coincident with the financing of an upgrade to the equipment, the
originator may reprice and extend the related base lease term. Leases whose
terms have been extended under those circumstances may remain in the pool of
contracts held by the trust. Heller Financial, Inc., as servicer, expects to
continue to permit these modifications and terminations with respect to leases
included in the contracts. However the servicer's ability to make material
modifications is limited as described under "THE SALE AND SERVICING
AGREEMENT--MATERIAL MODIFICATIONS TO CONTRACTS".
The standard terms and conditions of a master lease agreement may be
modified at the inception of a lease at the request of the end-user. The
modifications must either be approved by the originator's legal department and
several levels of management before the originator will agree to enter into the
lease or accept an assignment of the lease from a vendor. Alternatively, the
vendor must indemnify the originator against any losses or damages it may suffer
as a result of the modifications. Common permitted modifications include, but
are not limited to, the following:
- a one dollar purchase option at the end of the lease term;
- prearranged mid-lease purchase options, early termination options and
lease extension options as described above;
32
<PAGE>
- modifications to the lessor's equipment inspection rights;
- modifications to the end-user's insurance requirements permitting the
end-user to self-insure against casualty to the equipment;
- the end-user's right to assign the lease or sub-lease the financed items
to an affiliated entity, so long as the end-user remains liable under the
lease and promptly notifies the lessor or its assignee of such assignment
or sublease; and
- extended grace periods for late payments of rent.
SECURED PROMISSORY NOTES.
The originators also provide direct initial financing or refinancing of
equipment under secured promissory notes, which consist of an installment note
and a separate security agreement. In an initial financing transaction, the
applicable originator pays to the vendor the purchase price for the equipment
and in a refinancing transaction, the originator pays off an end-user's existing
financing source. In the case of a refinancing transaction, upon payment to the
existing financing source, the originator obtains a release of the other party's
lien on the financed equipment. In either case, the originator records its own
lien against the financed equipment and takes possession of the secured
promissory note, which constitutes chattel paper under the Uniform Commercial
Code. In either case, the transaction is documented as a direct loan by the
originator to the end-user of the equipment using a secured promissory note.
Except for the lack of references to "SALE" or "PURCHASE" of equipment, the
terms and conditions contained in a secured promissory note are substantially
similar to those contained in a conditional sale agreement.
INSTALLMENT PAYMENT AGREEMENTS AND FINANCING AGREEMENTS.
The originators provide financing for software license fees and related
support and consulting services under installment payment supplements to
software license agreements, separate installment payment agreements or other
forms of financing agreements assigned to the applicable originator by vendors
of software. Each financing agreement is an unsecured obligation of the
end-user. Most of the financing agreements provide:
- a fixed schedule of payments with no end-user right of prepayment;
- that the agreement is noncancellable for its term;
- a "HELL OR HIGH WATER" clause unconditionally obligating the end-user to
make periodic payments, without setoff, at the times and in the amounts
specified in such agreement;
- for the vendor to assign the payment agreement to a third party, including
the originator
- an agreement by the end-user, upon such assignment, not to assert against
such assignee any claims or defenses the end-user may have against the
vendor; and
- default and remedy provisions that often include acceleration of amounts
due.
In some cases, the financing agreements also give the vendor the right to
terminate the underlying software license and all related support and consulting
activities. The originator may obtain this right by assignment from the vendor.
EQUIPMENT
The end-user contracts cover a wide variety of new and used equipment. Some
examples of the types of equipment are: printing, pre-press, machine tool,
plastics, computer hardware, computer software, restaurant, transportation,
energy related, medical, industrial equipment and aircraft engines.
33
<PAGE>
All of the interests of the originator in the equipment subject to an end-user
contract will be transferred to the trust. Those interests consist or will
consist of either title to the equipment or a security interest in the
equipment.
SOFTWARE AND RELATED SERVICES
Some of the end-user contracts, which are usually in the form of financing
agreements, cover license fees and other fees owed by the end-users under either
perpetual or term software license agreements and other related agreements in
connection with the use by such end-users of computer software programs. Those
end-user contracts may also cover related support and consulting services which
are provided by the vendor, an affiliate of the vendor or a third party contract
party and which facilitate the obligors use of the software. No interest in the
software, the software license agreement or the related services, other than the
right to collect the payment of software license fees and, in some cases, to
exercise rights and remedies under the software license agreement, has been or
will be conveyed to the originators or the trust depositor. Consequently, the
trust will not have title to or a security interest in the software, nor will it
own the related services, and would not be able to realize any value from the
software upon a default by the end-user.
VENDOR LOANS
The contracts may include limited recourse or non-recourse loan or repayment
obligations. These loan or repayment obligations are referred to in this
prospectus as vendor loans. A vendor loan is payable by a vendor and secured by
all of the vendor's interest in an individual end-user contract originated by
the vendor and by the equipment related to that end-user contract. A vendor can
be a equipment manufacturer, dealer or distributor or a computer software
distributor or any other person located in the United States.
Vendor loans may be originated under a vendor finance program. Under some
vendor financial programs end-user contracts may be originated by the originator
directly, or purchased by the originator from the vendor, in separate
transactions not giving rise to vendor loans. See "--VENDOR FINANCE PROGRAMS".
Vendor loans often are non-recourse to the vendor, meaning the applicable
originator may obtain repayment solely from the proceeds of the end-user
contracts and related equipment securing the vendor loan. In a few instances,
however, recourse to a vendor for nonpayment of a vendor loan may be available
through a limited recourse arrangement included in the related vendor finance
program. The repayment terms under a vendor loan, including periodic amounts
payable and schedule of payments, correspond to the payment terms of the
end-user under the end-user contract collaterally assigned under the vendor
loan.
VENDOR FINANCE PROGRAMS
We expect that a substantial portion of the end-user contracts included in
the trust will have been originated by vendors and assigned or pledged to the
originator under the vendor finance programs. Also, as described above, vendor
loans may be originated through vendor finance programs with the related vendor.
All rights, but not obligations, of the originators with respect to the
contracts under the agreements governing vendor finance programs are usually
assignable and will be so assigned by the originators to the trust depositor and
in turn conveyed by the trust depositor to the trust. The vendor finance
programs with vendors provide the originators with the opportunity to finance
transactions relating to the acquisition or use by an end-user of a vendor's
equipment, software and related services or other products. Vendor finance
programs provide the originators with a steady, sustainable flow of new
business. Often these vendors have costs of origination that are lower than the
originators' asset-based financings which are marketed directly to end-users.
Many of the vendor finance programs provide various forms of support to the
applicable originator, including representations and warranties by the vendor in
respect of the end-user contracts assigned by the vendor to the originator and
related
34
<PAGE>
equipment or software and related services, credit support with respect to
defaults by end-users and equipment repurchase and remarketing arrangements upon
early termination of end-user contracts upon a default by the related end-users.
Some of the vendor finance programs take the form of a referral relationship
which is less formal, and may or may not include credit or remarketing support
to the originator from the vendor.
Other than agreements that only establish a referral relationship, each
agreement governing a vendor finance program includes the following provisions:
- Vendor representations, warranties and covenants regarding each end-user
contract assigned to the originator, including the following:
(1) the obligations of the end-user under the assigned end-user contract
are absolute, unconditional, noncancellable and enforceable;
(2) the obligations of the end-user under assigned end-user contract are
free from any rights of offset, counterclaim or defense;
(3) the originator holds the sole original of the end-user contract and
has either title to or a first priority perfected security interest
in the equipment;
(4) the equipment and the end-user contract are free and clear of all
liens, claims or encumbrances;
(5) the equipment or the software has been irrevocably accepted by the
end-user and will perform as warranted to the end-user; and
(6) the assigned end-user contract was duly authorized and signed by the
end-user;
- Remedies in the event of a misrepresentation or breach of a warranty or
covenant by the vendor regarding an assigned end-user contract. These
remedies usually require the vendor to repurchase the affected end-user
contract for the originator's investment balance in the end-user contract
plus costs incurred by the originator in breaking any underlying funding
arrangement;
- In the case of end-user contracts covering equipment, remarketing support
from the vendor in the event of an end-user default and subsequent
repossession or return of the equipment under the end-user contract. The
remarketing support is intended to assist the originator in realizing
proceeds from the equipment assigned as collateral security to support the
obligations of the end-user under the end-user contract; and
- The right of the originator to further assign its interests in assigned
end-user contracts, all payments thereunder and any related interest in
equipment.
The originator may delegate to the vendor ongoing administrative duties
relating to servicing, processing of collections and actual substantive
collection remedies. The vendor may be able to delegate those administrative
duties to a sub-servicer acceptable to the originator.
In addition to the foregoing, a vendor finance program agreement may include
recourse against the vendor with respect to end-user defaults under specific
end-user contracts. The recourse may be structured in the following ways:
- by specifying that the assignment of the end-user contract from the vendor
to the originator is with full recourse against the vendor;
- by specifying that the vendor will absorb a limited fixed dollar or
percentage amount of "FIRST LOSSES" on the contract; or
- by inclusion of the end-user contract in an "ULTIMATE NET LOSS POOL"
created under the vendor finance program. In the event of an end-user
default under an end-user contract which was
35
<PAGE>
assigned by the vendor to the originator subject to the ultimate net loss
pool, the originator may draw against the ultimate net loss pool up to the
amount of the originator's remaining unpaid investment balance in the
defaulted end-user contract, but not in excess of the ultimate net loss
pool balance then available. Drawings may also be made against the
ultimate net loss pool with respect to end-user contracts that are not
included in the pool of contracts and, accordingly, there can be no
assurance that any amounts contributed by a vendor to the ultimate net
loss pool will be available in the event of an end-user default under a
end-user contract included in the pool of contracts.
The manner in which end-user contracts are assigned to the originator by the
vendors differs under each vendor finance program, depending upon the nature of
the financed equipment by the contracts, the form of the end-user contract, the
accounting treatment sought by the vendor and the end-user and tax
considerations.
For example, the originator might either accept a vendor loan and collateral
assignment of the end-user contract and the security interest in the related
equipment from the vendor. Alternatively, the originator may accept a full
assignment of the end-user contract and collateral assignment of related
equipment from the vendor, which collateral assignment secures the end-user's
obligations under the end-user contract. The originator also may receive, from a
vendor with respect to software, a full assignment of leases, installment
payment programs, installment payment supplements to license programs, and other
types of financing programs used in financing software license payments and
related support and consulting services.
We expect that some portion of the end-user contracts included in the pool
of contracts, especially in the case of conditional sale programs, will consist
of end-user contracts originated by vendors and assigned to the originator under
individual assignments to vendors. Each vendor assignment of a contract or
contracts will either be made with or without recourse against the vendor for
end-user defaults. Additionally, each vendor assignment of a contract will
contain many, if not all, of the representations, warranties and covenants
typically contained in vendor finance program agreements, as well as a vendor
repurchase requirement in the event of a breach by the vendor of such
representations, warranties or covenants. The vendor assignments may or may not
provide for any vendor remarketing support in the event of an end-user default.
CONTRACT FILES
The applicable originator will indicate in its books and records, including
the appropriate computer files relating to the contracts, that the contracts
have been transferred to the trust for the benefit of the holders of the notes
and certificate. Furthermore, the servicer will stamp the documents relating to
the contracts or otherwise mark the contracts with a legend to the effect that
the contracts have been transferred to the trust for the benefit of the holders
of the notes and certificate. The originators will also deliver to the indenture
trustee a computer file or microfiche or written list containing a true and
complete list of all contracts which have been transferred to the trust,
identified by account number and by the discounted contract balance as of the
applicable cutoff date.
HOW COLLECTIONS ON THE CONTRACTS ARE TREATED
All collections received with respect to the contracts will be allocated as
described in "DESCRIPTION OF THE NOTES AND INDENTURE--ALLOCATIONS". Prepayments
will be treated as though they were received on the last day of the collection
period in which they are actually received for purposes of calculating amounts
available for distribution to you. Payments of principal on the contracts made
in advance of their due date will be treated as though they were received on the
last day of the collection period in which such principal payments were actually
received. Each collection period begins on the second day of a calendar month
and ends on and includes the first day of the immediately following calendar
month.
36
<PAGE>
PREPAYMENT AND YIELD CONSIDERATIONS
The rate of principal payments on the notes, the aggregate amount of each
interest payment on the notes and the yield to maturity of the notes are
directly related to the rate of payments on the underlying contracts. The
payments on the contracts may be in the form of payments scheduled to be made
under the terms of the contracts, prepayments or liquidations due to default,
casualty and other events which cannot be specified at present. Any payments
other than scheduled payments may result in distributions to you of amounts
which would otherwise have been distributed over the remaining term of the
contracts. Each prepayment on a contract, if the contract is not replaced by the
trust with a comparable substitute contract as described under "THE SALE AND
SERVICING AGREEMENT--SUBSTITUTE CONTRACTS", will shorten the weighted average
remaining term of the contracts and the weighted average life of the notes.
In general, the rate of payments on the contracts may be influenced by a
number of other factors, including general economic conditions. The rate of
principal payments with respect to any class of notes may also be affected by
any repurchase by the trust depositor of contracts under the sale and servicing
agreement. Under the sale and servicing agreement, the trust depositor and the
originators must repurchase contracts if there is:
- a breach of representation or warranty as to the contracts which causes
such contract to be ineligible to be at trust asset; or
- the exercise by the trust depositor of its repurchase option when the
aggregate discounted contract balance of the contracts is less than 10% of
the aggregate discounted contract balance of the contracts as of
December 1, 1999, the initial cutoff date.
Further, the servicer may permit the obligor under a contract to make an
optional prepayment in an amount which is less than the amount sufficient to
repay the portion of such contract, together with accrued interest, so long as
the trust is indemnified for any such insufficiency by the vendor or the
originator. In the case of contracts which must be removed from the trust assets
due to their failure to have the characteristics set forth in the sale and
servicing agreement or which are Excess Contracts, the rate of prepayment would
also be influenced by the trust depositor's decision not to repurchase those
contracts and instead, to accept substitute contracts. See "THE SALE AND
SERVICING AGREEMENT--SUBSTITUTE CONTRACTS". In the event of a repurchase, the
repurchase price will decrease the aggregate discounted contract balance of the
contracts, leading to a principal repayment and causing the corresponding
weighted average life of the notes to decrease. See "RISK FACTORS--MATURITY AND
PREPAYMENT CONSIDERATIONS."
A higher than anticipated rate of prepayment will reduce the aggregate
discounted contract balance of the contracts more quickly than expected and
thereby result in an increase in the rate at which principal is paid to you and
reduce the aggregate interest payments you may have expected to receive on the
notes.
The effective yield will depend upon, among other things, the amount of and
rate at which principal is paid to you. You will bear any reinvestment risks
resulting from a faster or slower incidence of prepayment of contracts. The
reinvestment risks include the risk that interest rates may be lower at the time
you receive payments from the trust than interest rates would otherwise have
been had the prepayments not been made or had the prepayments been made at a
different time. Your after-tax yield may be affected by lags between the time
interest income accrues to you and the time the related interest income is
received by you.
The following chart sets forth the percentage of the initial principal
amount of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4
Notes, Class B Notes, Class C Notes, Class D Notes and Class E Notes which would
be outstanding on the distribution dates set forth below assuming a conditional
prepayment rate of 0.00%, 5.00%, 10.00%, 15.00%, 20.00% and 25.00%,
37
<PAGE>
respectively. Such information is hypothetical and is set forth for illustrative
purposes only. The conditional prepayment rate assumes that a fraction of the
outstanding contracts is prepaid on each distribution date, which implies that
each contract in the pool of contracts is equally likely to prepay. This
fraction, expressed as a percentage, is annualized to arrive at the conditional
prepayment rate for the contracts. The conditional prepayment rate measures
prepayments based on the outstanding discounted contract balances of the
contracts, after the payment of all payments scheduled to be made under the
terms of the contracts during each collection period. The conditional prepayment
rate further assumes that all contracts are the same size and amortize at the
same rate and that each contract will be either paid as scheduled or prepaid in
full. The amounts set forth below are based upon the timely receipt of scheduled
monthly contract payments as of December 1, 1999, assumes that the trust
depositor exercises its option to cause a redemption of the notes when the
aggregate discounted contract balance of the contracts is less than 10% of the
aggregate discounted contract balance of the contracts as of December 1, 1999,
and assumes the closing date for the sale of the contracts to the trust is
December 14, 1999. These tables are based upon the statistical discount rate of
7.162%. In addition, it is assumed for the purposes of these tables only, that
the trust issues the Class A-1, Class A-2, Class A-3, Class A-4, Class B,
Class C, Class D and Class E notes in an initial principal amount equal to
$93,311,414, $77,424,735, $105,363,377, $67,198,827, $4,565,138, $4,565,138,
$7,304,220, and $3,652,110, respectively, and with an interest rate of 6.10154%,
6.51000%, 6.72000%, 6.84000%, 6.89000%, 7.09000%, 7.43000% and 9.56000%,
respectively.
38
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-1 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 90.61% 89.08% 87.47% 85.78% 84.00% 82.11%
2/14/00 80.49% 77.53% 74.43% 71.18% 67.78% 64.18%
3/14/00 72.54% 68.20% 63.69% 58.98% 54.07% 48.91%
4/14/00 62.91% 57.30% 51.49% 45.46% 39.20% 32.66%
5/14/00 54.26% 47.44% 40.42% 33.16% 25.65% 17.86%
6/14/00 46.38% 38.42% 30.25% 21.85% 13.20% 4.27%
7/14/00 37.33% 28.33% 19.14% 9.72% 0.08% 0.00%
8/14/00 27.34% 17.42% 7.32% 0.00% 0.00% 0.00%
9/14/00 18.55% 7.74% 0.00% 0.00% 0.00% 0.00%
10/14/00 9.80% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/00 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/00 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-1 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
9/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-1 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 0.50 yrs 0.44 yrs 0.40 yrs 0.36 yrs 0.32 yrs 0.29 yrs
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-2 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
7/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 88.16%
8/14/00 100.00% 100.00% 100.00% 96.42% 83.77% 70.85%
9/14/00 100.00% 100.00% 96.13% 82.74% 69.16% 55.36%
10/14/00 100.00% 97.80% 83.67% 69.42% 55.02% 40.46%
11/14/00 99.92% 85.10% 70.20% 55.24% 40.21% 25.10%
12/14/00 90.58% 74.90% 59.23% 43.56% 27.89% 12.21%
1/14/01 80.03% 63.66% 47.36% 31.13% 14.98% 0.00%
2/14/01 69.35% 52.38% 35.55% 18.88% 2.37% 0.00%
3/14/01 60.71% 43.10% 25.72% 8.58% 0.00% 0.00%
4/14/01 50.14% 32.09% 14.36% 0.00% 0.00% 0.00%
5/14/01 40.57% 22.11% 4.04% 0.00% 0.00% 0.00%
6/14/01 32.46% 13.55% 0.00% 0.00% 0.00% 0.00%
7/14/01 23.36% 4.15% 0.00% 0.00% 0.00% 0.00%
8/14/01 14.23% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/01 5.54% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/01 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-2 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
12/14/02 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-2 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 1.39 yrs 1.24 yrs 1.11 yrs 1.00 yrs 0.91 yrs 0.83 yrs
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-3 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
7/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
8/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
9/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
10/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
11/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 99.21%
2/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 89.74%
3/14/01 100.00% 100.00% 100.00% 100.00% 93.89% 81.67%
4/14/01 100.00% 100.00% 100.00% 97.76% 85.22% 72.93%
5/14/01 100.00% 100.00% 100.00% 90.00% 77.35% 65.01%
6/14/01 100.00% 100.00% 96.42% 83.26% 70.48% 58.09%
7/14/01 100.00% 100.00% 89.36% 76.11% 63.31% 50.96%
8/14/01 100.00% 96.18% 82.40% 69.12% 56.34% 44.09%
9/14/01 100.00% 89.66% 75.81% 62.52% 49.81% 37.68%
10/14/01 98.18% 83.65% 69.73% 56.45% 43.80% 31.45%
11/14/01 91.61% 77.06% 63.20% 50.02% 37.54% 25.02%
12/14/01 86.30% 71.67% 57.79% 44.65% 31.96% 19.58%
1/14/02 80.85% 66.19% 52.35% 39.31% 26.43% 14.27%
2/14/02 74.56% 60.01% 46.33% 33.36% 20.53% 8.68%
3/14/02 69.90% 55.33% 41.69% 28.53% 15.85% 4.22%
4/14/02 64.90% 50.38% 36.85% 23.56% 11.10% 0.00%
5/14/02 59.60% 45.21% 31.54% 18.49% 6.32% 0.00%
6/14/02 55.33% 40.99% 27.16% 14.28% 2.31% 0.00%
7/14/02 51.03% 36.78% 22.83% 10.13% 0.00% 0.00%
8/14/02 46.36% 31.99% 18.27% 5.84% 0.00% 0.00%
9/14/02 42.54% 28.03% 14.45% 2.21% 0.00% 0.00%
10/14/02 38.65% 24.03% 10.65% 0.00% 0.00% 0.00%
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-3 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
11/14/02 34.37% 19.80% 6.67% 0.00% 0.00% 0.00%
12/14/02 30.46% 16.07% 3.15% 0.00% 0.00% 0.00%
1/14/03 26.47% 12.30% 0.00% 0.00% 0.00% 0.00%
2/14/03 22.26% 8.36% 0.00% 0.00% 0.00% 0.00%
3/14/03 18.62% 4.95% 0.00% 0.00% 0.00% 0.00%
4/14/03 14.72% 1.33% 0.00% 0.00% 0.00% 0.00%
5/14/03 11.10% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/03 7.65% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/03 4.39% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/03 0.70% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/03 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-3 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 2.69 yrs 2.43 yrs 2.21 yrs 2.00 yrs 1.83 yrs 1.67 yrs
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-4 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
7/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
8/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
9/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
10/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
11/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/14/00 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
5/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
6/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
7/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
8/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
9/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
10/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
11/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
12/14/01 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/02 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
2/14/02 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
3/14/02 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
4/14/02 100.00% 100.00% 100.00% 100.00% 100.00% 99.58%
5/14/02 100.00% 100.00% 100.00% 100.00% 100.00% 92.57%
6/14/02 100.00% 100.00% 100.00% 100.00% 100.00% 86.67%
7/14/02 100.00% 100.00% 100.00% 100.00% 97.49% 80.97%
8/14/02 100.00% 100.00% 100.00% 100.00% 91.22% 75.20%
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-4 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
9/14/02 100.00% 100.00% 100.00% 100.00% 85.90% 70.28%
10/14/02 100.00% 100.00% 100.00% 97.86% 80.69% 65.51%
11/14/02 100.00% 100.00% 100.00% 92.06% 75.37% 60.71%
12/14/02 100.00% 100.00% 100.00% 86.93% 70.66% 56.45%
1/14/03 100.00% 100.00% 99.41% 81.84% 66.03% 52.29%
2/14/03 100.00% 100.00% 93.72% 76.65% 61.37% 48.16%
3/14/03 100.00% 100.00% 88.76% 72.13% 57.29% 44.54%
4/14/03 100.00% 100.00% 83.59% 67.46% 53.14% 0.00%
5/14/03 100.00% 96.86% 78.82% 63.17% 49.33% 0.00%
6/14/03 100.00% 91.87% 74.29% 59.11% 45.75% 0.00%
7/14/03 100.00% 87.19% 70.05% 55.33% 0.00% 0.00%
8/14/03 100.00% 81.98% 65.42% 51.26% 0.00% 0.00%
9/14/03 96.11% 77.47% 61.40% 47.73% 0.00% 0.00%
10/14/03 91.33% 73.17% 57.58% 0.00% 0.00% 0.00%
11/14/03 86.59% 68.95% 53.86% 0.00% 0.00% 0.00%
12/14/03 81.85% 64.74% 50.19% 0.00% 0.00% 0.00%
1/14/04 77.57% 60.95% 46.88% 0.00% 0.00% 0.00%
2/14/04 73.25% 57.16% 0.00% 0.00% 0.00% 0.00%
3/14/04 69.16% 53.59% 0.00% 0.00% 0.00% 0.00%
4/14/04 65.56% 50.43% 0.00% 0.00% 0.00% 0.00%
5/14/04 61.94% 47.29% 0.00% 0.00% 0.00% 0.00%
6/14/04 58.83% 44.57% 0.00% 0.00% 0.00% 0.00%
7/14/04 55.87% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 50.54% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 47.96% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 45.41% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS A-4 NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 4.55 yrs 4.21 yrs 3.85 yrs 3.54 yrs 3.28 yrs 3.03 yrs
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS B NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 97.45% 97.03% 96.59% 96.14% 95.65% 95.14%
2/14/00 94.70% 93.89% 93.05% 92.17% 91.24% 90.26%
3/14/00 92.54% 91.36% 90.13% 88.85% 87.51% 86.11%
4/14/00 89.92% 88.39% 86.82% 85.18% 83.47% 81.70%
5/14/00 87.57% 85.71% 83.81% 81.83% 79.79% 77.67%
6/14/00 85.42% 83.26% 81.04% 78.76% 76.41% 73.98%
7/14/00 82.97% 80.52% 78.02% 75.46% 72.84% 70.15%
8/14/00 80.25% 77.55% 74.81% 72.01% 69.16% 66.25%
9/14/00 77.86% 74.92% 71.95% 68.93% 65.86% 62.75%
10/14/00 75.48% 72.32% 69.14% 65.92% 62.67% 59.39%
11/14/00 72.80% 69.46% 66.10% 62.73% 59.33% 55.93%
12/14/00 70.69% 67.16% 63.62% 60.09% 56.56% 53.02%
1/14/01 68.32% 64.62% 60.95% 57.29% 53.65% 50.02%
2/14/01 65.91% 62.08% 58.28% 54.52% 50.80% 47.12%
3/14/01 63.96% 59.99% 56.07% 52.20% 48.39% 44.64%
4/14/01 61.57% 57.50% 53.50% 49.58% 45.73% 41.96%
5/14/01 59.42% 55.25% 51.18% 47.20% 43.31% 39.53%
6/14/01 57.59% 53.32% 49.17% 45.13% 41.20% 37.40%
7/14/01 55.53% 51.20% 47.00% 42.93% 39.00% 35.22%
8/14/01 53.48% 49.09% 44.86% 40.79% 36.87% 33.11%
9/14/01 51.51% 47.09% 42.84% 38.76% 34.86% 31.14%
10/14/01 49.71% 45.25% 40.98% 36.90% 33.02% 30.48%
11/14/01 47.69% 43.23% 38.97% 34.93% 31.10% 30.48%
12/14/01 46.06% 41.57% 37.31% 33.28% 30.64% 30.48%
1/14/02 44.39% 39.89% 35.64% 31.64% 30.64% 30.48%
2/14/02 42.46% 37.99% 33.79% 29.86% 30.64% 30.48%
3/14/02 41.03% 36.56% 32.37% 29.86% 30.64% 30.48%
4/14/02 39.49% 35.04% 30.89% 29.86% 30.64% 30.48%
5/14/02 37.87% 33.45% 30.89% 29.86% 30.64% 30.48%
6/14/02 36.56% 32.16% 30.89% 29.86% 30.64% 30.48%
7/14/02 35.24% 30.86% 30.89% 29.86% 30.64% 30.48%
8/14/02 33.80% 30.86% 30.89% 29.86% 30.64% 30.48%
9/14/02 32.63% 30.86% 30.89% 29.86% 30.64% 30.48%
10/14/02 31.44% 30.86% 30.89% 29.86% 30.64% 30.48%
11/14/02 30.15% 30.86% 30.89% 29.86% 30.64% 30.48%
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS B NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
12/14/02 30.15% 30.86% 30.89% 29.86% 30.64% 30.48%
1/14/03 30.15% 30.86% 30.89% 29.86% 30.64% 30.48%
2/14/03 30.15% 30.86% 30.89% 29.86% 30.64% 30.48%
3/14/03 30.15% 30.86% 30.89% 29.86% 30.64% 30.48%
4/14/03 30.15% 30.86% 30.89% 29.86% 30.64% 0.00%
5/14/03 30.15% 30.86% 30.89% 29.86% 30.64% 0.00%
6/14/03 30.15% 30.86% 30.89% 29.86% 30.64% 0.00%
7/14/03 30.15% 30.86% 30.89% 29.86% 0.00% 0.00%
8/14/03 30.15% 30.86% 30.89% 29.86% 0.00% 0.00%
9/14/03 30.15% 30.86% 30.89% 29.86% 0.00% 0.00%
10/14/03 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
11/14/03 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
12/14/03 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
1/14/04 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
2/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
3/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
4/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
5/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
6/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
7/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS B NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 2.41 yrs 2.22 yrs 2.01 yrs 1.83 yrs 1.70 yrs 1.57 yrs
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS C NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 97.45% 97.03% 96.59% 96.14% 95.65% 95.14%
2/14/00 94.70% 93.89% 93.05% 92.17% 91.24% 90.26%
3/14/00 92.54% 91.36% 90.13% 88.85% 87.51% 86.11%
4/14/00 89.92% 88.39% 86.82% 85.18% 83.47% 81.70%
5/14/00 87.57% 85.71% 83.81% 81.83% 79.79% 77.67%
6/14/00 85.42% 83.26% 81.04% 78.76% 76.41% 73.98%
7/14/00 82.97% 80.52% 78.02% 75.46% 72.84% 70.15%
8/14/00 80.25% 77.55% 74.81% 72.01% 69.16% 66.25%
9/14/00 77.86% 74.92% 71.95% 68.93% 65.86% 62.75%
10/14/00 75.48% 72.32% 69.14% 65.92% 62.67% 59.39%
11/14/00 72.80% 69.46% 66.10% 62.73% 59.33% 55.93%
12/14/00 70.69% 67.16% 63.62% 60.09% 56.56% 53.02%
1/14/01 68.32% 64.62% 60.95% 57.29% 53.65% 50.02%
2/14/01 65.91% 62.08% 58.28% 54.52% 50.80% 47.12%
3/14/01 63.96% 59.99% 56.07% 52.20% 48.39% 44.64%
4/14/01 61.57% 57.50% 53.50% 49.58% 45.73% 41.96%
5/14/01 59.42% 55.25% 51.18% 47.20% 43.31% 39.53%
6/14/01 57.59% 53.32% 49.17% 45.13% 41.20% 37.40%
7/14/01 55.53% 51.20% 47.00% 42.93% 39.00% 35.22%
8/14/01 53.48% 49.09% 44.86% 40.79% 36.87% 33.11%
9/14/01 51.51% 47.09% 42.84% 38.76% 34.86% 31.14%
10/14/01 49.71% 45.25% 40.98% 36.90% 33.02% 31.14%
11/14/01 47.69% 43.23% 38.97% 34.93% 31.10% 31.14%
12/14/01 46.06% 41.57% 37.31% 33.28% 31.10% 31.14%
1/14/02 44.39% 39.89% 35.64% 31.64% 31.10% 31.14%
2/14/02 42.46% 37.99% 33.79% 29.86% 31.10% 31.14%
3/14/02 41.03% 36.56% 32.37% 29.86% 31.10% 31.14%
4/14/02 39.49% 35.04% 30.89% 29.86% 31.10% 31.14%
5/14/02 37.87% 33.45% 30.89% 29.86% 31.10% 31.14%
6/14/02 36.56% 32.16% 30.89% 29.86% 31.10% 31.14%
7/14/02 35.24% 30.86% 30.89% 29.86% 31.10% 31.14%
8/14/02 33.80% 30.86% 30.89% 29.86% 31.10% 31.14%
9/14/02 32.63% 30.86% 30.89% 29.86% 31.10% 31.14%
10/14/02 31.44% 30.86% 30.89% 29.86% 31.10% 31.14%
</TABLE>
54
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS C NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
11/14/02 30.15% 30.86% 30.89% 29.86% 31.10% 31.14%
12/14/02 30.15% 30.86% 30.89% 29.86% 31.10% 31.14%
1/14/03 30.15% 30.86% 30.89% 29.86% 31.10% 31.14%
2/14/03 30.15% 30.86% 30.89% 29.86% 31.10% 31.14%
3/14/03 30.15% 30.86% 30.89% 29.86% 31.10% 31.14%
4/14/03 30.15% 30.86% 30.89% 29.86% 31.10% 0.00%
5/14/03 30.15% 30.86% 30.89% 29.86% 31.10% 0.00%
6/14/03 30.15% 30.86% 30.89% 29.86% 31.10% 0.00%
7/14/03 30.15% 30.86% 30.89% 29.86% 0.00% 0.00%
8/14/03 30.15% 30.86% 30.89% 29.86% 0.00% 0.00%
9/14/03 30.15% 30.86% 30.89% 29.86% 0.00% 0.00%
10/14/03 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
11/14/03 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
12/14/03 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
1/14/04 30.15% 30.86% 30.89% 0.00% 0.00% 0.00%
2/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
3/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
4/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
5/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
6/14/04 30.15% 30.86% 0.00% 0.00% 0.00% 0.00%
7/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 30.15% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS C NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 2.41 yrs 2.22 yrs 2.01 yrs 1.83 yrs 1.71 yrs 1.58 yrs
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS D NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 97.45% 97.03% 96.59% 96.14% 95.65% 95.14%
2/14/00 94.70% 93.89% 93.05% 92.17% 91.24% 90.26%
3/14/00 92.54% 91.36% 90.13% 88.85% 87.51% 86.11%
4/14/00 89.92% 88.39% 86.82% 85.18% 83.47% 81.70%
5/14/00 87.57% 85.71% 83.81% 81.83% 79.79% 77.67%
6/14/00 85.42% 83.26% 81.04% 78.76% 76.41% 73.98%
7/14/00 82.97% 80.52% 78.02% 75.46% 72.84% 70.15%
8/14/00 80.25% 77.55% 74.81% 72.01% 69.16% 66.25%
9/14/00 77.86% 74.92% 71.95% 68.93% 65.86% 62.75%
10/14/00 75.48% 72.32% 69.14% 65.92% 62.67% 59.39%
11/14/00 72.80% 69.46% 66.10% 62.73% 59.33% 55.93%
12/14/00 70.69% 67.16% 63.62% 60.09% 56.56% 53.02%
1/14/01 68.32% 64.62% 60.95% 57.29% 53.65% 50.02%
2/14/01 65.91% 62.08% 58.28% 54.52% 50.80% 47.12%
3/14/01 63.96% 59.99% 56.07% 52.20% 48.39% 44.64%
4/14/01 61.57% 57.50% 53.50% 49.58% 45.73% 41.96%
5/14/01 59.42% 55.25% 51.18% 47.20% 43.31% 39.53%
6/14/01 57.59% 53.32% 49.17% 45.13% 41.20% 37.40%
7/14/01 55.53% 51.20% 47.00% 42.93% 39.00% 35.22%
8/14/01 53.48% 49.09% 44.86% 40.79% 36.87% 33.11%
9/14/01 51.51% 47.09% 42.84% 38.76% 34.86% 31.14%
10/14/01 49.71% 45.25% 40.98% 36.90% 33.02% 31.14%
11/14/01 47.69% 43.23% 38.97% 34.93% 31.10% 31.14%
12/14/01 46.06% 41.57% 37.31% 33.28% 31.10% 31.14%
1/14/02 44.39% 39.89% 35.64% 31.64% 31.10% 31.14%
2/14/02 42.46% 37.99% 33.79% 30.52% 31.10% 31.14%
3/14/02 41.03% 36.56% 32.37% 30.52% 31.10% 31.14%
4/14/02 39.49% 35.04% 30.89% 30.52% 31.10% 31.14%
5/14/02 37.87% 33.45% 30.89% 30.52% 31.10% 31.14%
6/14/02 36.56% 32.16% 30.89% 30.52% 31.10% 31.14%
7/14/02 35.24% 30.86% 30.89% 30.52% 31.10% 31.14%
8/14/02 33.80% 30.86% 30.89% 30.52% 31.10% 31.14%
9/14/02 32.63% 30.86% 30.89% 30.52% 31.10% 31.14%
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS D NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
10/14/02 31.44% 30.86% 30.89% 30.52% 31.10% 31.14%
11/14/02 30.67% 30.86% 30.89% 30.52% 31.10% 31.14%
12/14/02 30.67% 30.86% 30.89% 30.52% 31.10% 31.14%
1/14/03 30.67% 30.86% 30.89% 30.52% 31.10% 31.14%
2/14/03 30.67% 30.86% 30.89% 30.52% 31.10% 31.14%
3/14/03 30.67% 30.86% 30.89% 30.52% 31.10% 31.14%
4/14/03 30.67% 30.86% 30.89% 30.52% 31.10% 0.00%
5/14/03 30.67% 30.86% 30.89% 30.52% 31.10% 0.00%
6/14/03 30.67% 30.86% 30.89% 30.52% 31.10% 0.00%
7/14/03 30.67% 30.86% 30.89% 30.52% 0.00% 0.00%
8/14/03 30.67% 30.86% 30.89% 30.52% 0.00% 0.00%
9/14/03 30.67% 30.86% 30.89% 30.52% 0.00% 0.00%
10/14/03 30.67% 30.86% 30.89% 0.00% 0.00% 0.00%
11/14/03 30.67% 30.86% 30.89% 0.00% 0.00% 0.00%
12/14/03 30.67% 30.86% 30.89% 0.00% 0.00% 0.00%
1/14/04 30.67% 30.86% 30.89% 0.00% 0.00% 0.00%
2/14/04 30.67% 30.86% 0.00% 0.00% 0.00% 0.00%
3/14/04 30.67% 30.86% 0.00% 0.00% 0.00% 0.00%
4/14/04 30.67% 30.86% 0.00% 0.00% 0.00% 0.00%
5/14/04 30.67% 30.86% 0.00% 0.00% 0.00% 0.00%
6/14/04 30.67% 30.86% 0.00% 0.00% 0.00% 0.00%
7/14/04 30.67% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 30.67% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 30.67% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 30.67% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
58
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS D NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 2.42 yrs 2.22 yrs 2.01 yrs 1.84 yrs 1.71 yrs 1.58 yrs
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS E NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
Closing 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
1/14/00 97.45% 97.03% 96.59% 96.14% 95.65% 95.14%
2/14/00 94.70% 93.89% 93.05% 92.17% 91.24% 90.26%
3/14/00 92.54% 91.36% 90.13% 88.85% 87.51% 86.11%
4/14/00 89.92% 88.39% 86.82% 85.18% 83.47% 81.70%
5/14/00 87.57% 85.71% 83.81% 81.83% 79.79% 77.67%
6/14/00 85.42% 83.26% 81.04% 78.76% 76.41% 73.98%
7/14/00 82.97% 80.52% 78.02% 75.46% 72.84% 70.15%
8/14/00 80.25% 77.55% 74.81% 72.01% 69.16% 66.25%
9/14/00 77.86% 74.92% 71.95% 68.93% 65.86% 62.75%
10/14/00 75.48% 72.32% 69.14% 65.92% 62.67% 59.39%
11/14/00 72.80% 69.46% 66.10% 62.73% 59.33% 55.93%
12/14/00 70.69% 67.16% 63.62% 60.09% 56.56% 53.02%
1/14/01 68.32% 64.62% 60.95% 57.29% 53.65% 50.02%
2/14/01 65.91% 62.08% 58.28% 54.52% 50.80% 47.12%
3/14/01 63.96% 59.99% 56.07% 52.20% 48.39% 44.64%
4/14/01 61.57% 57.50% 53.50% 49.58% 45.73% 41.96%
5/14/01 59.42% 55.25% 51.18% 47.20% 43.31% 39.53%
6/14/01 57.59% 53.32% 49.17% 45.13% 41.20% 37.40%
7/14/01 55.53% 51.20% 47.00% 42.93% 39.00% 35.22%
8/14/01 53.48% 49.09% 44.86% 40.79% 36.87% 33.11%
9/14/01 51.51% 47.09% 42.84% 38.76% 34.86% 31.14%
10/14/01 49.71% 45.25% 40.98% 36.90% 33.02% 31.14%
11/14/01 47.69% 43.23% 38.97% 34.93% 31.10% 31.14%
12/14/01 46.06% 41.57% 37.31% 33.28% 31.10% 31.14%
1/14/02 44.39% 39.89% 35.64% 31.64% 31.10% 31.14%
2/14/02 42.46% 37.99% 33.79% 31.64% 31.10% 31.14%
3/14/02 41.03% 36.56% 32.37% 31.64% 31.10% 31.14%
4/14/02 39.49% 35.04% 30.89% 31.64% 31.10% 31.14%
5/14/02 37.87% 33.45% 30.89% 31.64% 31.10% 31.14%
6/14/02 36.56% 32.16% 30.89% 31.64% 31.10% 31.14%
7/14/02 35.24% 30.86% 30.89% 31.64% 31.10% 31.14%
8/14/02 33.80% 30.86% 30.89% 31.64% 31.10% 31.14%
9/14/02 32.63% 30.86% 30.89% 31.64% 31.10% 31.14%
10/14/02 31.44% 30.86% 30.89% 31.64% 31.10% 31.14%
11/14/02 31.44% 30.86% 30.89% 31.64% 31.10% 31.14%
12/14/02 31.44% 30.86% 30.89% 31.64% 31.10% 31.14%
1/14/03 31.44% 30.86% 30.89% 31.64% 31.10% 31.14%
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS E NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
2/14/03 31.44% 30.86% 30.89% 31.64% 31.10% 31.14%
3/14/03 31.44% 30.86% 30.89% 31.64% 31.10% 31.14%
4/14/03 31.44% 30.86% 30.89% 31.64% 31.10% 0.00%
5/14/03 31.44% 30.86% 30.89% 31.64% 31.10% 0.00%
6/14/03 31.44% 30.86% 30.89% 31.64% 31.10% 0.00%
7/14/03 31.44% 30.86% 30.89% 31.64% 0.00% 0.00%
8/14/03 31.44% 30.86% 30.89% 31.64% 0.00% 0.00%
9/14/03 31.44% 30.86% 30.89% 31.64% 0.00% 0.00%
10/14/03 31.44% 30.86% 30.89% 0.00% 0.00% 0.00%
11/14/03 31.44% 30.86% 30.89% 0.00% 0.00% 0.00%
12/14/03 31.44% 30.86% 30.89% 0.00% 0.00% 0.00%
1/14/04 31.44% 30.86% 30.89% 0.00% 0.00% 0.00%
2/14/04 31.44% 30.86% 0.00% 0.00% 0.00% 0.00%
3/14/04 31.44% 30.86% 0.00% 0.00% 0.00% 0.00%
4/14/04 31.44% 30.86% 0.00% 0.00% 0.00% 0.00%
5/14/04 31.44% 30.86% 0.00% 0.00% 0.00% 0.00%
6/14/04 31.44% 30.86% 0.00% 0.00% 0.00% 0.00%
7/14/04 31.44% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/04 31.44% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/04 31.44% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/04 31.44% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/04 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/05 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
PERCENTAGE OF THE INITIAL CLASS E NOTES PRINCIPAL AMOUNT
AT THE CONDITIONAL PREPAYMENT RATES SET FORTH BELOW
<CAPTION>
0% CPR 5% CPR 10% CPR 15% CPR 20% CPR 25% CPR
<S> <C> <C> <C> <C> <C> <C>
4/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/06 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
5/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
6/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
7/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
8/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
9/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
10/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
11/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
12/14/07 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
1/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
2/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
3/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
4/14/08 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Weighted Average Life
(Years)
To Call: 2.43 yrs 2.22 yrs 2.01 yrs 1.85 yrs 1.71 yrs 1.58 yrs
</TABLE>
62
<PAGE>
WEIGHTED AVERAGE LIFE
If the trust depositor does not exercise its option to cause a redemption of
the notes when the aggregate discounted contract balance of the contracts is
less than 10% of the aggregate discounted contract balance of the contracts as
of December 1, 1999, the average life of the each class of notes would be as
follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE AVERAGE LIFE
ASSUMING ASSUMING ASSUMING ASSUMING ASSUMING ASSUMING
0.00% 5.00% 10.00% 15.00% 20.00% 25.00%
CONDITIONAL CONDITIONAL CONDITIONAL CONDITIONAL CONDITIONAL CONDITIONAL
PREPAYMENT PREPAYMENT PREPAYMENT PREPAYMENT PREPAYMENT PREPAYMENT
CLASS RATE RATE RATE RATE RATE RATE
- ----- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
A-1...................... 0.50 yrs 0.44 yrs 0.40 yrs 0.36 yrs 0.32 yrs 0.29 yrs
A-2...................... 1.39 yrs 1.24 yrs 1.11 yrs 1.00 yrs 0.91 yrs 0.83 yrs
A-3...................... 2.69 yrs 2.43 yrs 2.21 yrs 2.00 yrs 1.83 yrs 1.67 yrs
A-4...................... 4.94 yrs 4.59 yrs 4.25 yrs 3.92 yrs 3.62 yrs 3.33 yrs
B........................ 2.98 yrs 2.84 yrs 2.71 yrs 2.51 yrs 2.37 yrs 2.19 yrs
C........................ 3.04 yrs 2.89 yrs 2.75 yrs 2.58 yrs 2.47 yrs 2.30 yrs
D........................ 3.15 yrs 3.00 yrs 2.85 yrs 2.69 yrs 2.59 yrs 2.45 yrs
E........................ 3.28 yrs 3.13 yrs 3.00 yrs 2.91 yrs 2.74 yrs 2.62 yrs
</TABLE>
The weighted average life of a note is determined by:
- multiplying the amount of cash distributions in reduction of the
outstanding principal amount of such class of notes, by the number of
years from the closing date of the sale of the contracts to the trust to
the respective note payment date on which such class of notes is repaid in
full;
- adding the results; and
- dividing the sum by the initial principal amount of such class of notes.
The following shows the scheduled cashflows from the contracts:
<TABLE>
<CAPTION>
COLLECTION PERIOD SCHEDULED CASHFLOW
- ----------------- ------------------
<S> <C>
December-1999.............................................. $11,505,236.23
January-2000............................................... 12,161,274.07
February-2000.............................................. 9,961,663.38
March-2000................................................. 11,576,274.68
April-2000................................................. 10,549,610.31
May-2000................................................... 9,730,383.58
June-2000.................................................. 10,839,556.35
July-2000.................................................. 11,724,827.29
August-2000................................................ 10,475,586.46
September-2000............................................. 10,388,338.78
October-2000............................................... 11,433,731.51
November-2000.............................................. 9,285,163.09
December-2000.............................................. 10,227,595.73
January-2001............................................... 10,282,319.23
February-2001.............................................. 8,556,039.18
March-2001................................................. 10,099,620.93
April-2001................................................. 9,223,966.94
May-2001................................................... 7,981,023.98
June-2001.................................................. 8,747,117.52
July-2001.................................................. 8,728,474.13
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
COLLECTION PERIOD SCHEDULED CASHFLOW
- ----------------- ------------------
<S> <C>
August-2001................................................ $ 8,327,758.99
September-2001............................................. 7,719,118.19
October-2001............................................... 8,450,516.67
November-2001.............................................. 6,991,149.99
December-2001.............................................. 7,114,638.07
January-2002............................................... 8,014,134.17
February-2002.............................................. 6,153,200.33
March-2002................................................. 6,498,666.71
April-2002................................................. 6,805,884.37
May-2002................................................... 5,609,902.54
June-2002.................................................. 5,617,751.47
July-2002.................................................. 5,996,507.75
August-2002................................................ 5,021,268.56
September-2002............................................. 5,065,299.58
October-2002............................................... 5,372,717.34
November-2002.............................................. 4,773,463.44
December-2002.............................................. 4,835,532.49
January-2003............................................... 5,051,821.53
February-2003.............................................. 4,409,070.61
March-2003................................................. 4,675,820.86
April-2003................................................. 4,337,683.99
May-2003................................................... 4,153,598.02
June-2003.................................................. 3,925,121.40
July-2003.................................................. 4,355,048.08
August-2003................................................ 3,795,135.92
September-2003............................................. 3,640,741.06
October-2003............................................... 3,585,328.32
November-2003.............................................. 3,577,735.39
December-2003.............................................. 3,243,645.38
January-2004............................................... 3,256,046.80
February-2004.............................................. 3,080,223.14
March-2004................................................. 2,734,523.60
April-2004................................................. 2,735,793.97
May-2004................................................... 2,381,832.07
June-2004.................................................. 2,260,980.15
July-2004.................................................. 3,844,730.98
August-2004................................................ 1,977,377.91
September-2004............................................. 1,945,185.22
October-2004............................................... 1,777,622.39
November-2004.............................................. 1,712,750.72
December-2004.............................................. 1,751,173.78
January-2005............................................... 1,613,792.00
February-2005.............................................. 1,605,262.51
March-2005................................................. 1,596,774.85
April-2005................................................. 1,584,121.65
May-2005................................................... 1,534,808.96
June-2005.................................................. 1,519,752.53
July-2005.................................................. 1,736,010.07
August-2005................................................ 1,401,171.74
September-2005............................................. 1,382,320.31
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
COLLECTION PERIOD SCHEDULED CASHFLOW
- ----------------- ------------------
<S> <C>
October-2005............................................... 1,365,781.41
November-2005.............................................. 1,348,378.70
December-2005.............................................. 1,443,557.56
January-2006............................................... 1,298,522.07
February-2006.............................................. 1,310,745.05
March-2006................................................. 1,240,921.90
April-2006................................................. 1,780,467.15
May-2006................................................... 1,848,276.98
June-2006.................................................. 1,353,252.54
July-2006.................................................. 938,786.57
August-2006................................................ 821,380.76
September-2006............................................. 627,895.92
October-2006............................................... 609,614.04
November-2006.............................................. 560,689.04
December-2006.............................................. 621,319.89
January-2007............................................... 665,937.83
February-2007.............................................. 454,773.73
March-2007................................................. 400,963.57
April-2007................................................. 381,483.88
May-2007................................................... 575,641.96
June-2007.................................................. 596,461.31
July-2007.................................................. 477,750.54
August-2007................................................ 503,492.00
September-2007............................................. 8,625.00
October-2007............................................... --
</TABLE>
65
<PAGE>
HELLER FINANCIAL, INC. AND HELLER FINANCIAL LEASING, INC.
GENERAL
Heller Financial, Inc. is a Delaware corporation formed in 1919 and is
engaged in various aspects of the commercial finance business. Heller
Financial, Inc. and its consolidated subsidiaries employ approximately 2,500
people; its executive offices are located at 500 West Monroe Street, Chicago,
Illinois 60661 (telephone: (312) 441-7000). In May 1998, Heller Financial, Inc.
issued 38,525,000 shares of Class A Common Stock in an initial public offering.
Fuji America Holdings, Inc., a wholly owned subsidiary of The Fuji Bank,
Limited, owns 79% of the voting interest and 52% of the economic interest in
Heller Financial, Inc.'s issued and outstanding common stock. All of the
outstanding common stock of the Heller Financial Leasing, Inc. is owned by
Heller Financial, Inc. Heller Financial Leasing, Inc. is a non-operating
subsidiary which through the Commercial Equipment Finance and the Global Vendor
Finance business units originate contracts.
Heller Financial, Inc. is a leading diversified commercial financial
services company which provides a broad array of financial products and services
to mid-sized and small businesses in the United States and selected
international markets. Heller Financial, Inc. provides its products and services
principally through two business segments namely, Domestic Commercial Finance
and International Corporate Finance. The Domestic Commercial Finance segment is
made up of five business units:
- Heller Corporate Finance, which provides collateralized cash flow and
asset based lending;
- Heller Real Estate Financial Services, which provides secured real estate
financing;
- Heller Leasing Services, which provides debt and lease financing of small
and large ticket equipment and commercial aircraft;
- Heller Small Business Finance, which provides financing to small
businesses, primarily under U.S. Small Business Administration loan
programs; and
- Heller Healthcare Finance, which provides secured financing to small and
mid-sized healthcare companies.
Heller Financial, Inc.'s International Factoring and Asset Based Finance segment
provides factoring services and loans secured primarily by receivables,
inventory and equipment through its wholly-owned subsidiaries and joint
ventures. Heller Financial Leasing, Inc. is made up of three distinct units:
Global Vendor Finance, Commercial Equipment Finance and Capital Finance.
Heller Financial, Inc. primarily serves middle-market businesses. The
middle-market segment served includes entities primarily in the manufacturing
and service sectors with annual sales in the range of $15 million to
$200 million and in the real estate sector with property values typically in the
range of $5 million to $40 million.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, AS OF DECEMBER 31,
----------------------- ------------------------------
1999 1998 1998 1997 1996
---------- ---------- -------- -------- --------
(UNAUDITED) (IN BILLIONS)
<S> <C> <C> <C> <C> <C>
Total Assets.......................... $17.7 $14.8 $14.4 $12.9 $9.9
Total Liabilities..................... $15.4 $13.0 $12.4 $11.1 $8.4
Total Stockholders' Equity............ $ 2.3 $ 1.8 $ 2.0 $ 1.7 $1.5
</TABLE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, ENDED DECEMBER 31,
--------------------- ------------------------------
1999 1998 1998 1997 1996
--------- --------- -------- -------- --------
(UNAUDITED) (IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Total Revenues........................ $ 688 $ 576 $ 783 $754 $533
Net Income............................ $ 175 $ 146 $ 193 $158 $133
</TABLE>
66
<PAGE>
Heller Financial, Inc. and Heller Financial Leasing, Inc. originated or
purchased the contracts under two separate operating units: Commercial Equipment
Finance and Global Vendor Finance. Originations from either Commercial Equipment
Finance or Global Vendor Finance must meet Heller Financial, Inc.'s Credit Risk
Management System as described below.
CREDIT RISK MANAGEMENT SYSTEM
Heller Financial, Inc.'s Credit Risk Management System provides credit
functions within the originators' origination groups, including Commercial
Equipment Finance and Global Vendor Finance, as well as credit oversight at
Heller Financial, Inc.'s corporate level. The system provides established,
consistent and documented credit policies at both the corporate and group level.
The first line of credit risk management is the origination groups where
substantially all originations, due diligence and primary credit analysis are
performed. Credit determinations are separate from origination and are staffed
with experienced credit and portfolio officers in the origination groups.
Oversight over the credit process at Heller Financial, Inc.'s corporate
level is headed by Heller Financial, Inc.'s Chief Credit Officer. The Chief
Credit Officer is responsible for ensuring that the credit risk management
system is appropriately implemented. Heller Financial, Inc.'s Chief Credit
Officer approves all new transactions and modifications that exceed origination
group authority. Additionally, Heller Financial's Credit Committee approves new
lending programs and performs ongoing reviews of existing lending programs and
strategies as well as identifies strategic credit issues, including review of
the portfolio mix, and the credit policies and procedures throughout Heller
Financial, Inc.
The Credit Risk Management System emphasizes active portfolio management in
an effort to ensure:
- individual accounts are appropriately managed;
- portfolio reporting to management is accurate and timely; and
- problem accounts are identified and reported on a timely basis to ensure
prompt corrective action.
Each origination group has portfolio practices which enhance early
identification of account issues through account performance analysis, risk
rating systems and regular group portfolio reviews. Management of risk accounts
is transferred to corporate workout specialists where appropriate. Quarterly or
semi-annual portfolio reviews are held with the Chief Executive Officer and
Chief Credit Officer. Heller Financial, Inc.'s Internal Audit Department
performs extensive loan reviews on an independent basis to ensure:
- compliance with group and corporate credit policies and procedures;
- the integrity of the risk ratings;
- the effectiveness of problem loan identification; and
- the adequacy of loan loss reserves.
As servicer, Heller Financial, Inc. will continue to apply its Credit Risk
Management System to the management of the contracts that have been sold to the
trust.
GLOBAL VENDOR FINANCE
GENERAL DESCRIPTION.
Global Vendor Finance was formed in 1998 by the combination of the existing
Vendor Finance unit and U.S. assets of the Dealer Products Group of Dana
Commercial Credit Corporation and the
67
<PAGE>
stock of Dealer Products Group's international subsidiaries which were acquired
by Heller Financial, Inc. on November 30, 1998. Global Vendor Finance provides
customized sales financing programs that enable vendors and manufacturers in
commercial, industrial, medical, information and technology markets to offer
financing and leasing options to their customers. These programs are often made
with partial, or in some cases, full recourse from the vendor. This unit also
provides a wide range of financing options to independent leasing companies,
including term financing, residual financing and private securitization
structures. The Global Vendor Finance portfolio is well diversified with an
average transaction size of $350,000 excluding newly acquired Dealer Products
Group which has an average transaction size of $10,000. In 1998, Global Vendor
Finance generated approximately $792 million in new business volume. As of
September 30, 1999 year to date new business volume was $440 million.
GLOBAL VENDOR FINANCE'S CREDIT ANALYSIS.
The primary factors used by Global Vendor Finance in its credit analysis are
the following, listed in order of importance:
(1) vendor support and the originator's reliance on such support;
(2) the credit strength of the underlying end-user of the equipment or
software; and
(3) the value of the equipment.
The credit analysis involves finding an appropriate balance between these
factors.
The following discipline is applied to all Global Vendor Finance
originations:
- a complete underwriting is required for each new vendor finance program
evaluating financial information, equipment value, quality of obligor
customer base, review of relevant industry data and the value of recourse,
- tiered credit approval authorities have been implemented for each vendor
program and the transactions originated under such programs,
- a comprehensive credit policies and procedures manual is maintained to
ensure consistent compliance with the originator's credit standards,
- an independent internal audit function exists within Global Vendor Finance
to conduct due diligence on new client relationships and which conducts
ongoing audits of the client relationship,
- financial performance of each vendor is periodically reviewed,
- Global Vendor Finance's portfolio is reviewed semiannually with the
originator's Chief Executive Officer and Chief Credit Officer, and
- there is an independent internal audit function.
COLLECTION PROCESS/VENDOR RECOURSE.
The vendor finance programs usually provide for some form of credit support
or recourse to the vendor. Vendor recourse ranges from limited remarketing
assistance to full recourse programs. Vendor credit support includes direct
recourse, holdbacks, funded reserves, remarketing agreements as well as
representations and warranties provided in the contract documentation. Direct
vendor recourse may be provided with respect to a "POOL" of numerous underlying
transactions or on an individual, transaction-by-transaction basis. In some
circumstances the vendor and/or another leasing company originates, documents
and performs servicing while in other circumstances the originators originate,
document and perform servicing with respect to the contracts. The vendor may
generate documents
68
<PAGE>
and the bills as well as collect payments from the end-user and remit payment to
the servicer. In such instances the servicer's involvement is transparent to the
end-user and is motivated by a variety of vendor marketing considerations. In
other situations, the vendor simply originates the contract and the servicer
performs the servicing with respect to such contract. In general, the servicing
function of the vendor is an important factor in the pricing characteristics for
the respective vendor finance program. A write-down or write-off of a loan or
lease receivable is governed by Heller Financial, Inc. policy, with the amount
of the write-off or write-down based on the principal amount outstanding; plus
unpaid service charges which have not been suspended; less the fair market value
of collateral or the amount of dealer/vendor recourse. Accounts are reviewed and
appropriate write-offs made when an obligor is past due or when an obligor is in
bankruptcy.
In those situations in which the vendor is providing a substantial portion
of the servicing functions, the servicer undertakes extensive due diligence with
respect to the vendor's internal operating procedures with additional emphasis
on billing, collection, reporting and remittance. The due diligence analysis
will take on various levels of scrutiny depending on the degree of servicing
handled by the vendor, the vendor's credit strength, the volume generated by the
vendor, and the history and relationship with the vendor.
COMMERCIAL EQUIPMENT FINANCE
GENERAL DESCRIPTION.
Commercial Equipment Finance offers expansion, replacement and modernization
equipment financing directly to a broad range of industries where the financing
is primarily collateralized by the financed equipment. In addition to direct
origination, Commercial Equipment Finance generates business through traditional
broker and intermediary channels. The portfolio is well diversified with
financings that typically range from $500,000 to $15 million. As of
December 31, 1997 the average transaction size was approximately $4 million. New
business volume in 1998 was approximately $600 million representing a 11%
increase over 1997 and, as of September 30, 1999, year to date new business
volume was $433 million.
COMMERCIAL EQUIPMENT FINANCE CREDIT ANALYSIS.
Commercial Equipment Finance's approach to lending concentrates on three
critical factors:
- cash flow of the obligor--meaning Commercial Equipment Finance evaluates
the quality of the underlying obligor's cash flow by analyzing the related
industry dynamics, such obligor's competitive strengths and weaknesses,
the role of external factors in such obligor's business as well as the
financial profile of the obligor,
- the importance/value of the equipment to the obligor's overall
operations--in a downside/ workout scenario, the more important/valuable
the equipment, the more likely it is that the originator will be paid, and
- the originator's position in the overall capital structure of the
obligor--the smaller the role that Commercial Equipment Finance plays in a
company's overall capital structure, the more likely it is that the
originator will be paid in a negative economic environment.
Notwithstanding the type of program or related credit analysis, the
following discipline is applied to all Commercial Equipment Finance
originations:
- the Commercial Equipment Finance credit approval process requires complete
financial due diligence, collateral review, management/strategy
evaluation, review of all industry relevant data as well as review of all
legal aspects of the credit,
- reliance on the Commercial Equipment Finance Policy Manual,
69
<PAGE>
- approval authority tiered to provide prompt responses to the customer at
lower exposure levels and ensure divisional involvement at higher exposure
levels; all regional office origination is approved by both the region
manager and the area region credit manager,
- quarterly/annual financial reviews of each account are prepared by
Commercial Equipment Finance credit staff,
- quarterly reviews of the portfolio are conducted with the Chief Executive
Officer and Chief Credit Officer of the originator,
- monthly distribution of key reports relating to delinquency and risk
ratings changes to the originator's senior management to ensure prompt
communication of material credit issues, and
- industry and geographic diversity is maintained with respect to Commercial
Equipment Finance's originations.
COLLECTION/SERVICING.
A delinquency report for each region must be prepared by a region credit
manager on a monthly basis. Heller Financial's key to successful resolution of a
problem contract is early recognition. Each region is responsible for detecting
signs of potential problem contracts through proactive portfolio management,
including review of delinquency reports, the financial statement and covenant
compliance checklist for each account, account risk rating memos, flash reports,
annual reviews, and the quarterly portfolio reviews held in Chicago. Within ten
business days of the point in time at which an account is both 60 days past due
or delinquent and is put on a "WATCH LIST", an in-person collateral inspection
must be performed. If an in-person inspection is impractical, an updated Uniform
Commercial Code search must be performed within the same ten day period.
Commercial Equipment Finance transactions are required to contain a
provision for assessing late charges in the event that an obligor fails to make
a payment on the contract on the related due date. The charge is usually between
1% and 5% of the amount due and is incurred within one to fifteen days after the
due date depending upon the documentation. An account is delinquent when a
payment is not made according to contract terms. A write-down or write-off of a
loan or lease receivable is governed by Heller Financial, Inc. policy, with the
amount of the write-off or write-down based on the principal amount outstanding;
plus unpaid service charges which have not been suspended; less the fair market
value of collateral or the amount of dealer/vendor recourse. Accounts are
reviewed and appropriate write-offs made when an obligor is past due or when an
obligor is in bankruptcy.
All obligors are required by the terms of the contracts to maintain the
equipment and install the equipment at a place of business approved by
Commercial Equipment Finance personnel. Delivery, transportation, repairs and
maintenance are obligations of obligors, and obligors are required to carry, at
their own expense, liability and replacement cost insurance under terms
acceptable to Commercial Equipment Finance. Any lease payment defaults permit
Commercial Equipment Finance to declare immediately due and payable all
remaining lease payments. At the end of a lease term, lessees must return the
leased equipment to the originator in good working order unless the lease is
renewed or the leased equipment is purchased by the obligor.
LEGAL PROCEEDINGS
Heller Financial, Inc. is not subject to any legal proceedings that could
have a material adverse impact on its operations or its consolidated financial
condition.
70
<PAGE>
YEAR 2000 COMPLIANCE
Heller Financial, Inc. has adopted a phased approach to assessing and, where
necessary, remediating or otherwise addressing, year 2000 issues. Phases
include:
- awareness, which, while ongoing, is substantially complete;
- assessment, which was substantially completed in 1998 with respect to
information technology systems and potential issues relating to borrowers,
vendors, international affiliates and environmental factors, and
substantially completed in the first nine months of 1999 for similar
matters relating to acquired assets;
- remediation or implementation of contingency solutions, which is
substantially complete for all information technology systems deemed
mission-critical, and is scheduled for completion in 1999 for all other
matters; and
- validation, which is substantially complete for the mission-critical
information technology systems and information technology infrastructure,
and will continue throughout 1999 for all other matters. As part of the
validation process, we continue to assess the need for any re-verification
of client server hardware and software represented as compliant by the
vendor.
In addition to information technology systems, Heller Financial, Inc.
continues to assess and monitor potential year 2000 impacts on its material
vendors and borrowers, as well as year 2000 issues relating to environmental
factors such as facilities and general utilities.
With respect to vendors, Heller Financial, Inc. has categorized vendors with
reference to materiality and availability of other sources for the provided
services and supplies. It has made inquiry of those vendors deemed material.
Responses are reviewed to assess the need for any follow-up action. This
assessment is substantially complete, and all resulting remediation or
contingency solutions are scheduled for completion during 1999.
With respect to borrowers, a year 2000 risk assessment has been incorporated
in Heller Financial, Inc.'s underwriting and portfolio management activities in
order to evaluate exposure due to any lack of compliance on the part of
borrowers. The company categorizes prospective and existing borrowers by level
of year 2000 risk, and is underwriting new transactions and managing portfolio
accounts accordingly.
Finally, the company has incorporated year 2000 contingency planning into
its overall business resumption program in consideration of facilities and other
environmental factors as well as with respect to mission-critical processes. The
planning component of this effort has been completed. Implementation is underway
and remains scheduled for completion by the beginning of December 1999.
The company has incurred approximately $15 million to date of expenses
related to year 2000 issue and estimates that it will incur an additional amount
of approximately $4 million through the end of the project. The company will
expense remediation, compliance, maintenance and modification costs as incurred.
The company continues to bear some risk related to the year 2000 issue and
could be materially adversely affected if its own remediation and contingency
planning efforts fall behind schedule or if third parties with whom the company
has material relationships (e.g., vendors, including those providing contingency
plans or outsourced technology services such as mainframe and application
support, borrowers and power companies) do not appropriately address their own
year 2000 compliance issues.
71
<PAGE>
THE TRUST
The trust has been organized as a business trust under the laws of the State
of Delaware under the Trust Agreement. The Trust was formed solely for the
purpose of effectuating the transactions described in this prospectus. Prior to
formation, we had no assets or obligations and no operating history. Upon
formation, we will not engage in any business activity other than:
(1) acquiring, managing and holding the contracts and related interests
described in this prospectus,
(2) issuing the notes and certificate,
(3) making distributions and payments on the notes and certificate, and
(4) engaging in those activities, including entering into agreements, that
are necessary, suitable or convenient to accomplish the above listed
activities or are incidental to those activities.
As a consequence, we do not expect to have any source of capital resources other
than the assets transferred to the trust as described in this prospectus. As of
the date of this prospectus, neither the trust depositor nor the trust is
subject to any legal proceedings.
If the issuance and sale of the notes had taken place on December 1, 1999
the capitalization of the trust would consist solely of the notes with an
aggregate principal amount of $363,384,959 and a certificate with a $1,826,054
balance.
The trust depositor has filed with the Securities and Exchange Commission a
registration statement under the Securities Act of 1933, as amended, with
respect to the notes offered by this prospectus. For further information, you
should read the registration statement. The registration statement may be
inspected and copied at the public reference facilities maintained by the
Securities and Exchange Commission at the following locations:
<TABLE>
<S> <C> <C>
450 Fifth Street, N.W. Citicorp Center Seven World Trade Center
Room 1024 500 West Madison, Suite 1400 Suite 1300
Washington, D.C. 20549 Chicago, Illinois 60661 New York, New York 10048
</TABLE>
You may obtain copies of the registration statement for a fee from the
Public Reference Branch of the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Securities and Exchange Commission
also maintains a public access site on the Internet through the World Wide Web
at which you may view reports, information statements and other information,
including all electronic filings, regarding the trust depositor and the trust.
The Internet address of the World Wide Web site is http://www.sec.gov. The
servicer, on behalf of the trust, will also file or cause to be filed with the
Securities and Exchange Commission the periodic reports required under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Securities and Exchange Commission thereunder. Copies of those reports can
be obtained as described above.
72
<PAGE>
THE TRUST DEPOSITOR
The trust depositor is a wholly-owned bankruptcy-remote subsidiary of Heller
Financial, Inc. The trust depositor was formed solely for the purpose of
acquiring from the originators contracts as well as other financial assets and
either issuing debt securities secured by identifiable fixed or revolving pools
of financial assets, or conveying or depositing the same into trusts or other
securitization vehicles. As a bankruptcy-remote entity, the trust depositor's
operations will be restricted so that it does not engage in business with, or
incur liabilities to, any other entity other than the indenture trustee and
other trustees and agents on behalf of other investors in nonrecourse,
asset-backed financings. The restrictions are intended to prevent the trust
depositor from engaging in business with other entities which may bring
bankruptcy proceedings against the trust depositor. The restrictions are also
intended to reduce the risk that the trust depositor will be consolidated into
the bankruptcy proceedings of any other entity.
The trust depositor will have no other assets available to pay amounts owing
under the indenture except the trust's assets, including the contracts and the
security interests in the equipment, the proceeds of the contracts and earnings
on the amounts on deposit in the collection account. The trust depositor's
address is 500 West Monroe Street, Chicago, Illinois 60661, and its phone number
is (312) 441-7246.
73
<PAGE>
DESCRIPTION OF THE NOTES AND INDENTURE
The statements under this caption describe all of the material terms of the
notes and an indenture, dated as of December 1, 1999, between the trust and the
indenture trustee. However, these statements are summaries. For a more detailed
description of the terms of the notes, you should read the sale and servicing
agreement and the indenture, the forms of which have been filed as exhibits to
the registration statement of which this prospectus is a part.
GENERAL
The offered notes will consist of six classes, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, Class B Notes and the
Class C Notes. The Class D Notes and Class E Notes are not being offered and
sold pursuant to this prospectus. The notes will be issued under the indenture.
The offered notes will be available for purchase in minimum denominations of
$1,000 and in integral multiples of $1,000 in book-entry form. The Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and
Class C Notes will initially be represented by one or more certificates
registered in the name of the nominee of The Depository Trust Company, except as
set forth below. Payments on the notes will be made as described below to the
noteholders in whose names the notes were registered at the close of business on
the day immediately preceding the day in which such payments will be made.
However, the final payment on the notes offered hereby will be made only upon
presentation and surrender of the notes. All payments with respect to the
principal of and interest on the notes will be made in immediately available
funds. See "DESCRIPTION OF THE NOTES AND INDENTURE--BOOK-ENTRY REGISTRATION".
The indenture trustee will be granted a first priority lien on the trust's
assets to secure the notes; PROVIDED, that distributions on the notes will be
allocated as provided in "--ALLOCATIONS". The notes are nonrecourse obligations
of the trust only and do not represent interests in or obligations of the
originators, the servicer or the trust depositor, or any affiliate of such
persons.
INTEREST AND PRINCIPAL
Interest on the notes will be payable on the fourteenth day of each calendar
month, or if that day is not a business day, the next business day, beginning on
January 14, 2000 until the notes have been paid in full or have matured.
Interest on the offered notes will be paid at the respective rates specified on
the cover of this prospectus. Interest on each class of notes will accrue at the
interest rate specified for the class, for the period from and including the
most recent date on which interest has been paid. However, in the case of the
initial interest payment date, interest will accrue from the closing date for
the initial transfer of the contracts to the trust to but excluding the
following payment date. The interest will accrue on the outstanding principal
amount of the notes as of the first day of the interest accrual period.
The stated maturity dates of the offered notes are specified on the cover of
this prospectus. However, if all payments on the contracts are made as
scheduled, final payment with respect to the notes would occur prior to stated
maturity. Prior to the respective stated maturity dates, amounts to be applied
in reduction of the outstanding principal amount of any note, including the
payment of the Class A Principal Payment Amount, Class B Principal Payment
Amount, Class C Principal Payment Amount, Class D Principal Payment Amount or
Class E Principal Payment Amount payable on any payment date, will not be due
and payable, although the failure of the trust depositor or servicer to remit
any amounts available for payment on the notes will, after the applicable grace
period, constitute an event of default under the indenture. See "--EVENTS OF
DEFAULT".
We will pay interest and principal on the notes using amounts representing
primarily collections of payments due under the contracts and amounts received
upon prepayment or purchase of the contracts
74
<PAGE>
or liquidation of the contracts and disposition of the related equipment upon
defaults thereunder, but only after we use those amounts to repay servicer
advances. See "--AMOUNTS AVAILABLE FOR PAYMENTS ON THE NOTES" and "THE SALE AND
SERVICING AGREEMENT--SERVICING STANDARD AND SERVICER ADVANCES".
AMOUNTS AVAILABLE FOR PAYMENTS ON THE NOTES
As of any payment date which shall be the fourteenth day of each calendar
month, the amounts available for payment of interest and principal consist of:
- except for Excluded Amounts, all amounts on deposit in the collection
account as of the third business day immediately preceding the payment
date on account of scheduled payments due on or before, and prepayments
received on or before, the last day of the immediately preceding
collection period;
- recoveries on account of previously defaulted contracts received during
the preceding collection period, including proceeds of repossessed
equipment or other security or other property, insurance proceeds, amounts
representing late fees and penalties and amounts subsequently received
from the related vendor, net of collection and liquidation expenses;
- amounts held from time to time in the collection account, together with
investment earnings credited to the collection account and the reserve
fund;
- late charges relating to a contract received during the preceding
collection period, provided that the late charges were included in the
contract's terms as of the applicable cutoff date;
- funds on deposit in the reserve fund in the amount specified in "RESERVE
FUND"; and
- proceeds of any of the above items.
Each collection period for purposes of determining the amounts available for
distribution on the notes is a monthly period that begins on the second day of
each calendar month and ends on and includes the first day of the next following
calendar month.
Amounts available for distribution to you will not include any amounts
payable on an account of the equipment which exceeds the sum of the scheduled
payments and late charges described above payable under the related contract.
Furthermore, the available amounts will not include amounts relating to the
residual value of equipment leased under true leases.
Prepayments on the contracts which are treated as available amounts are:
- optional prepayments which are partial and full prepayments, including any
payment which the servicer has received, and expressly permitted the
related obligor to make, in advance of its scheduled due date;
- payments upon repurchases by the applicable originator through the trust
depositor as a result of the breach of representations and warranties or
covenants in the sale and servicing agreement; and
- payments upon an optional termination of the trust.
If the servicer permits an obligor to prepay a contract in an amount less
than its discounted contract balance plus accrued, unpaid interest at the
discount rate, the originator of the contract will make up the difference.
"EXCLUDED AMOUNTS" means:
- collections on deposit in the collection account or otherwise received by
the servicer on or with respect to the contracts or related equipment,
which collections are attributable to any taxes, fees or other charges
imposed by any governmental authority;
- collections representing reimbursements of insurance premiums or payments
for services that were not financed by the originator; and
75
<PAGE>
- any proceeds from prepayments in excess of the sum of
(1) the discounted contract balance of the prepaid contracts on the date of
the prepayments plus any accrued and unpaid interest and
(2) any outstanding servicer advances on those prepaid contracts.
ALLOCATIONS
PRIOR TO AN EVENT OF DEFAULT.
On the third business day prior to each payment date prior to the occurrence
of an event of default under the indenture, the servicer shall instruct the
indenture trustee to withdraw, and on the payment date the indenture trustee
shall withdraw, from the collection account the amounts needed to make the
following payments. See "--AMOUNTS AVAILABLE FOR PAYMENT ON THE NOTES" and
"--EVENTS OF DEFAULT". The payments listed below will be made only to the extent
there are sufficient amounts available on the payment date. We will make
payments on the fourteenth day of each calendar month, or if such day is not a
business day, the next business day, in the following order of priority:
FIRST, to the servicer, reimbursement for the amount of any scheduled
payments on the contracts which were not received when due and which the
servicer advanced for deposit in the collection account;
SECOND, if the servicer is no longer Heller Financial, Inc. or an affiliate
of Heller Financial, Inc., to the servicer, its monthly servicing fee for the
preceding monthly period together with any amounts in respect of the servicer's
fee that were due in respect of prior monthly periods that remain unpaid;
THIRD, to the holders of the notes, the amounts specified in the following
table and in the order set forth in the following table:
<TABLE>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------------- ------------------------------------------------------------
<S> <C>
A-1, A-2, A-3 and
A-4.................... Interest accrued on the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes at their respective
interest rates for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
B...................... Interest accrued on the Class B Notes at the Class B Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
C...................... Interest accrued on the Class C Notes at the Class C Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
D...................... Interest accrued on the Class D Notes at the Class D Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
E...................... Interest accrued on the Class E Notes at the Class E Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
A-1.................... The Class A Principal Payment Amount, until the outstanding
principal of the Class A-1 Notes is reduced to $0.
</TABLE>
76
<PAGE>
<TABLE>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------------- ------------------------------------------------------------
<S> <C>
A-2.................... - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes is reduced to $0.
- Class A Principal Payment Amount less the amount needed
to reduce the outstanding principal of the Class A-1 Notes
to $0, on subsequent payment dates until the outstanding
principal of the Class A-2 Notes is reduced to $0.
A-3.................... - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes and Class A-2 Notes is
reduced to $0.
- Class A Principal Payment Amount less the amount needed
to reduce the outstanding principal of the Class A-1 Notes
and Class A-2 Notes to $0, on subsequent payment dates
until the outstanding principal of the Class A-3 Notes is
reduced to $0.
A-4.................... - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes is reduced to $0.
- Class A Principal Payment Amount less the amount needed
to reduce the outstanding principal amount of the Class A-1
Notes, Class A-2 Notes and Class A-3 Notes to $0, on
subsequent payment dates until the outstanding principal
of the Class A-4 Notes is reduced to $0.
B...................... Class B Principal Payment Amount until the outstanding
principal of the Class B Notes is reduced to $0.
C...................... Class C Principal Payment Amount until the outstanding
principal of the Class C Notes is reduced to $0.
D...................... Class D Principal Payment Amount until the outstanding
principal of the Class D Notes is reduced to $0.
E...................... Class E Principal Payment Amount until the outstanding
principal of the Class E Notes is reduced to $0.
A-1.................... Additional Principal until the outstanding principal of the
Class A-1 Notes is reduced to $0.
A-2.................... - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes is reduced to $0.
- The excess of Additional Principal over the amount needed
to reduce the outstanding principal of the Class A-1 Notes
to $0, on subsequent payment dates until the outstanding
principal of the Class A-2 Notes is reduced to $0.
A-3.................... - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes and Class A-2 Notes is
reduced to $0.
- The excess of Additional Principal over the amount needed
to reduce the outstanding principal of the Class A-1 Notes
and Class A-2 Notes to $0, on subsequent payment dates
until the outstanding principal of the Class A-3 Notes is
reduced to $0.
</TABLE>
77
<PAGE>
<TABLE>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------------- ------------------------------------------------------------
<S> <C>
A-4.................... - $0, prior to the payment date on which the outstanding
principal of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes is reduced to $0.
- The excess of Additional Principal over the amount needed
to reduce the outstanding principal of the Class A-1 Notes,
Class A-2 Notes and Class A-3 Notes to $0, on subsequent
payment dates until the outstanding principal of the
Class A-4 Notes is reduced to $0.
B...................... The excess of Additional Principal over the amount needed to
reduce the outstanding principal of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to $0,
on subsequent payment dates until the outstanding principal
of the Class B Notes is reduced to $0.
C...................... The excess of Additional Principal over the amount needed to
reduce the outstanding principal of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and
Class B Notes to $0, on subsequent payment dates until the
outstanding principal of the Class C Notes is reduced to $0.
D...................... The excess of Additional Principal over the amount needed to
reduce the outstanding principal of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes and Class C Notes to $0, on subsequent payment dates
until the outstanding principal of the Class D Notes is
reduced to $0.
E...................... The excess of Additional Principal over the amount needed to
reduce the outstanding principal of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes, Class C Notes and Class D Notes to $0, on subsequent
payment dates until the outstanding principal of the
Class E Notes is reduced to $0.
</TABLE>
FOURTH, if the servicer is Heller Financial, Inc. or an affiliate of Heller
Financial, Inc., to the servicer, its monthly servicing fee for the preceding
monthly period together with any amounts in respect of the servicer's fee that
were due in respect of prior monthly periods that remain unpaid;
FIFTH, to the extent that any amounts remain after allocating the amounts
available for distribution on the notes, the indenture trustee will deposit into
the reserve fund an amount, if any, which, when so deposited, causes the balance
in the reserve fund to equal the Required Reserve Amount; and
SIXTH, any excess shall be paid to the holder of the certificate.
The indenture trustee will distribute available amounts on each note within
each class of notes based on the outstanding principal amount of the note
relative to the aggregate outstanding principal amount of that class of notes.
FOLLOWING AN EVENT OF DEFAULT.
On the third business day prior to each payment after the occurrence of an
event of default under the indenture, the servicer shall instruct the indenture
trustee to withdraw, and on the payment date the indenture trustee will follow
the instructions to withdraw, from the collection account the amounts needed to
make the following payments. See "--AMOUNTS AVAILABLE FOR PAYMENT ON THE NOTES"
and see "--EVENTS OF DEFAULT". The payments listed below will be made only to
the extent there are sufficient amounts available on such payment date. We will
make payments on the fourteenth day of each
78
<PAGE>
calendar month, or if such day is not a business day, the next business day, in
the following order of priority:
FIRST, pay to the indenture trustee or the owner trustee, the amount of any
unpaid fees, expenses, late charges or other losses;
SECOND, pay to the noteholders, reimbursement for any indemnity payments
made by them to the indenture trustee;
THIRD, if the servicer is no longer Heller Financial or an affiliate of
Heller Financial, to the servicer, its monthly servicing fee for the preceding
monthly period together with any amounts in respect of the servicer's fee that
were due in respect of prior monthly periods that remain unpaid;
FOURTH, to the holders of the notes the amounts specified in the following
table and in the order set forth in the following table:
<TABLE>
<CAPTION>
CLASS OF NOTE
RECEIVING PAYMENT AMOUNT TO BE PAID
- ----------------- ------------------------------------------------------------
<S> <C>
A-1, A-2, A-3 and
A-4.................... Interest accrued on the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes at their respective
interest rates for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
B...................... Interest accrued on the Class B Notes at the Class B Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
C...................... Interest accrued on the Class C Notes at the Class C Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
D...................... Interest accrued on the Class D Notes at the Class D Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
E...................... Interest accrued on the Class E Notes at the Class E Note
interest rate for the period from and including the most
recent date on which interest has been paid to, but
excluding, the current interest payment date.
A-1.................... Outstanding principal of the Class A-1 Notes.
A-2, A-3 and A-4....... Outstanding principal of the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes, pro rata according to the
outstanding principal for each class of notes.
B...................... Outstanding principal of the Class B Notes.
C...................... Outstanding principal of the Class C Notes.
D...................... Outstanding principal of the Class D Notes.
E...................... Outstanding principal of the Class E Notes.
</TABLE>
FIFTH, any excess shall be paid to the holder of the certificate.
The terms used in describing the calculation of interest and principal
payments and allocations on the notes are defined as follows:
"ADDITIONAL PRINCIPAL" means, with respect to a date on which principal is
to be paid,
(1) if the Class B Target Investor Principal Amount, Class C Target Investor
Principal Amount, Class D Target Investor Principal Amount and Class E
Target Investor Principal Amount
79
<PAGE>
exceed the Class B Floor, Class C Floor, Class D Floor and Class E Floor,
respectively, an amount of $0; or
(2) if any of the conditions in clause (1) are not satisfied, an amount
equal to the excess, if any, of
(A) the difference between
(i) the sum of the outstanding principal amount of all of the notes
and the Overcollateralization Balance as of the immediately
preceding principal payment date (after making any principal
payments on such date) and
(ii) the aggregate discounted contract balance of the contracts as
of the last day of the most recently completed collection
period, over
(B) the sum of the Class A Principal Payment Amount, Class B Principal
Payment Amount, Class C Principal Payment Amount, Class D Principal
Payment Amount and Class E Principal Payment Amount for such payment
date.
"CLASS A PERCENTAGE" means approximately 94.0000%, which is the ratio of:
(1) the sum of the initial principal amount of the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to
(2) the aggregate discounted contract balance of the contracts as of
December 1, 1999.
"CLASS A PRINCIPAL PAYMENT AMOUNT" means, with respect to a date on which
principal is to be paid,
the amount necessary to reduce the sum of outstanding principal amount of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes to the
Class A Target Investor Principal Amount.
"CLASS A TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class A Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"CLASS B FLOOR" means, with respect to a date on which principal is to be
paid,
(1) 1.8600% of the initial aggregate discounted contract balance of the
contracts plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the sum of
(A) the outstanding principal amount of the Class C Notes, Class D Notes
and Class E Notes as of the immediately preceding payment date after
giving effect to all principal payments made on such prior payment
date and
(B) the Overcollateralization Balance as of the immediately preceding
payment date.
"CLASS B PERCENTAGE" means approximately 1.2500%, which is the ratio of:
(1) the initial principal amount of the Class B Notes to
(2) the aggregate discounted contract balance of the contracts as of
December 1, 1999.
"CLASS B PRINCIPAL PAYMENT AMOUNT" means, with respect to a date on which
principal is to be paid, the amount necessary to reduce the outstanding
principal amount of the Class B Notes to the greater of:
(A) the Class B Target Investor Principal Amount; or
(B) the Class B Floor.
"CLASS B TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class B Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
80
<PAGE>
"CLASS C FLOOR" means, with respect to a date on which principal is to be
paid,
(1) 1.4725% of the initial aggregate discounted contract balance of the
contracts plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the sum of
(A) the outstanding principal amount of the Class D Notes and the
Class E Notes as of the immediately preceding payment date after
giving effect to all principal payments made on such prior payment
date and
(B) the Overcollaterization Balance as of the immediately preceding
payment date; PROVIDED, HOWEVER, that if the outstanding principal
amount of the Class B Notes is less than or equal to the Class B
Floor on such payment date, the Class C Floor will equal the
outstanding principal amount of the Class C Notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such prior payment date.
"CLASS C PERCENTAGE" means approximately 1.2500%, which is the ratio of:
(1) the initial principal amount of the Class C Notes to
(2) the aggregate discounted contract balance of the contracts as of
December 1, 1999.
"CLASS C PRINCIPAL PAYMENT AMOUNT" means, with respect to a date on which
principal is to be paid, the amount necessary to reduce the outstanding
principal amount of the Class C Notes to the greater of:
(A) the Class C Target Investor Principal Amount; or
(B) the Class C Floor.
"CLASS C TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class C Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"CLASS D FLOOR" means, with respect to a date on which principal is to be
paid,
(1) 1.0850% of the initial aggregate discounted contract balance plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the sum of
(A) the outstanding principal amount of the Class E Notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such prior payment date and
(B) the Overcollateralization Balance as of the immediately preceding
payment date; PROVIDED, HOWEVER, that if the outstanding principal
amount of the Class C Notes is less than or equal to the Class C
Floor on such payment date, the Class D Floor will equal the
outstanding principal amount of the Class D Notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such prior payment date.
"CLASS D PERCENTAGE" means approximately 2.0000%, which is the ratio of:
(1) the initial principal amount of the Class D Notes to
(2) the aggregate discounted contract balance of the contracts as of
December 1, 1999.
"CLASS D PRINCIPAL PAYMENT AMOUNT" means, with respect to a date on which
principal is to be paid, the amount necessary to reduce the outstanding
principal amount of the Class D Notes to the greater of:
(A) the Class D Target Investor Principal Amount; or
(B) the Class D Floor.
81
<PAGE>
"CLASS D TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class D Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"CLASS E FLOOR" means, with respect to a date on which principal is to be
paid,
(1) 0.4650% of the initial aggregate discounted contract balance plus
(2) the Cumulative Loss Amount as of such payment date minus
(3) the Overcollateralization Balance as of the immediately preceding
payment date; PROVIDED, HOWEVER, that if the outstanding principal
payment amount of the Class D Notes is less than or equal to the Class D
Floor on such payment date, the Class E Floor will equal the outstanding
principal amount of the Class E Notes as of the immediately preceding
payment date after giving effect to all principal payments made on such
prior payment date.
"CLASS E PERCENTAGE" means approximately 1.0000%, which is the ratio of:
(1) the initial principal amount of the Class E Notes to
(2) the aggregate discounted contract balance of the contracts as of
December 1, 1999.
"CLASS E PRINCIPAL PAYMENT AMOUNT" means, with respect to a date on which
principal is to be paid, the amount necessary to reduce the outstanding
principal amount of the Class E Notes to the greater of:
(A) the Class E Target Investor Principal Amount; or
(B) the Class E Floor.
"CLASS E TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a date on
which principal is to be paid, an amount equal to the product of:
(1) the Class E Percentage and
(2) the aggregate discounted contract balance of the contracts as of the
last day of immediately preceding completed collection period.
"CUMULATIVE LOSS AMOUNT" means, with respect to a date on which principal is
to be paid, an amount equal to the excess, if any, of
(1) the total of:
(A) the outstanding principal amounts of all of the notes as of the
immediately preceding payment date after giving effect to all
principal payments made on such date plus
(B) the Overcollateralization Balance as of the immediately preceding
payment date minus
(C) the lesser of
(1) the difference between
(x) the sum of the outstanding principal amount of all of the
notes and the Overcollateralization Balance as of the immediately
preceding principal payment date (after making any principal
payments on such date) and
(y) the aggregate discounted contract balance of the
contracts as of the last day of the most recently completed
collection period; and
(2) the amounts available for distribution on the notes after paying
all amounts owing to the servicer, excluding servicing fees owed
to Heller Financial, Inc. or an affiliate of Heller
Financial, Inc., and all interest due on the notes on such
payment date over
(2) the aggregate discounted contract balance as of the last day of the
immediately preceding completed collection period.
"OVERCOLLATERALIZATION BALANCE" means with respect to a principal payment
date, an amount equal to the excess, if any, of:
(1) the aggregated discounted contract balance as of the last day of the
collection period completed immediately prior to such date over
82
<PAGE>
(2) the sum of the outstanding principal amount of all of the notes as of
such date after giving effect to all principal payments made on such
date.
RESERVE FUND
The reserve fund will be an account held in the name of the indenture
trustee on behalf of you. On the closing date for the transfer of the contracts
to the trust, the reserve fund balance will be equal to 0.10% of the initial
aggregate discounted contract balance of the contracts, approximately $365,211.
On any payment date, after distributing the available amounts to the servicer
and noteholders as described in "--ALLOCATIONS", we will deposit the remaining
available amounts into the reserve fund until the amounts in the reserve fund
equal the Required Reserve Amount. If on any Payment Date, the aggregate amounts
on deposit in the Collection Account and the Reserve Fund are greater than or
equal to the sum of (i) the aggregate outstanding principal balance of the Class
A Notes, Class B Notes, Class C Notes, Class D Notes, and Class E Notes, (ii)
the accrued and unpaid interest on the Class A Notes, Class B Notes, Class C
Notes, Class D Notes, and Class E Notes, (iii) the accrued and unpaid servicer's
fee, and (iv) the unreimbursed servicer advances, then the amount on deposit in
the Reserve Fund will be deposited in the Collection Account and applied to pay
in full the Class A Notes, Class B Notes, Class C Notes, Class D Notes, and
Class E Notes.
"REQUIRED RESERVE AMOUNT" means, with respect to any payment date before the
payment date on which the outstanding aggregate discounted contract balance of
the contracts is less than 10% of the initial aggregate discounted contract
balance of the contracts, an amount equal to 0.70% of the aggregate outstanding
principal amount of the notes as of the last day of the immediately preceding
completed collection period, and thereafter an amount equal to the required
reserve amount on the previous payment date.
Amounts in the reserve fund will be invested in investments deemed to be
eligible investments for funds held in the collection account. See "--COLLECTION
ACCOUNT". Earnings on the eligible investments will be treated as amounts
available for distribution to the noteholders and the holder of the certificate.
If on any payment date, the available amounts remaining after we pay the
servicer and noteholders as described in "--ALLOCATIONS" exceed the amount
needed to increase the reserve fund balance to the Required Reserve Amount, we
will distribute such excess to the holder of the certificate. Upon any such
distributions to the holder of the certificate, you will have no further rights
in, or claims to, such amounts.
On any payment date, if the amounts available for making the following two
payments are insufficient, the indenture trustee will withdraw the deficiency
from the reserve fund to make the following two payments:
- servicing fee, if the servicer is no longer Heller Financial, Inc. or an
affiliate of Heller Financial, Inc.; or
- interest on the notes.
Furthermore, if the amounts available for making the following four payments are
insufficient, the indenture trustee will withdraw the lesser of the deficiency
and the excess in the reserve fund over the Required Reserve Amount to make the
following four payments:
- unreimbursed servicer advances;
- principal on the notes;
- additional principal, if any, to most senior outstanding class of notes;
or
- servicing fee, if the servicer is Heller Financial, Inc. or an affiliate
of Heller Financial, Inc.
83
<PAGE>
On any payment date, if the aggregate discounted contract balance is less
than 10% of the initial aggregate discounted contract balance, the trustee will
withdraw amounts from the reserve fund to pay (1) interest, principal and
additional principal on the notes; (2) the servicing fee, if the servicer is no
longer Heller Financial, Inc. or an affiliate of Heller Financial, Inc. and (3)
any unreimbursed servicer advances.
We will allocate amounts withdrawn from the reserve fund as described in
"--ALLOCATIONS". Upon making these payments in full, the funds on deposit in the
reserve fund in excess of the Required Reserve Amount shall be paid to the
holder of the certificate.
If amounts on deposit in the reserve fund have been depleted as a result of
losses in respect of the contracts, the credit enhancement afforded by the
reserve fund will be exhausted and will not be restored.
The servicer may, from time to time after the date of this prospectus
request each rating agency that rated the notes to, at the request of the trust
depositor, approve a formula for determining the Required Reserve Amount that is
different from the formula described above and would result in a decrease in the
amount of the Required Reserve Amount or the manner by which the reserve fund is
funded. If each rating agency delivers a letter to the indenture trustee and the
owner trustee to the effect that the use of the new formulation will not result
in a qualification, reduction or withdrawal of its then-current rating of any
class of notes then the Required Reserve Amount will be determined using the new
formula. The sale and servicing agreement will accordingly be amended to reflect
the new calculation without your consent.
COLLECTION ACCOUNT AND COLLECTION PERIOD
The servicer, for your benefit, shall cause to be established an account
referred to as the "COLLECTION ACCOUNT" maintained in the name of the indenture
trustee, with an office or branch of a depository institution or trust company,
which may be the indenture trustee, organized under any state laws or laws of
the United States of America and located in the state designated by the
servicer. This account will be a non-interest bearing segregated corporate trust
account bearing a designation clearly indicating that the funds deposited in the
account are held in trust for the benefit of the noteholders.
At all times such depository institution or trust company shall have the
following characteristics and the amounts in the collection account will be
invested in the following eligible investments:
ELIGIBLE DEPOSITORY INSTITUTION OR TRUST COMPANY
- - the corporate trust department of the indenture trustee or
- - a depository institution organized under any state laws, the laws of the
United States of America or the District of Columbia or any domestic branch of
a foreign bank,
(1) (A) which has either
(i) a long-term unsecured debt rating acceptable to the rating agencies
rating the notes or
(ii) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the rating agencies,
(B) the parent corporation of which has either
(i) a long-term unsecured debt rating acceptable to the rating agencies
rating the notes or
(ii) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the rating agencies or
(C) which is otherwise acceptable to the rating agencies rating the
notes and
(2) whose deposits are insured by the Federal Deposit time deposits with an
entity, the commercial paper of which Insurance Corporation.
84
<PAGE>
ELIGIBLE INVESTMENTS
- obligations fully guaranteed by the United States of America;
- demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies having commercial paper and short-term
unsecured debt obligations, other than such obligation whose rating is
based on the credit of another person, with the highest rating from each
rating agency rating the notes;
- commercial paper or other short-term obligations having the highest rating
from each rating agency rating the notes at the time the trust purchased
it;
- demand deposits, time deposits and certificates of deposit which are fully
insured by the FDIC with the highest rating from each rating agency rating
the notes;
- notes or banker's' acceptance issued by any depository institution or
trust company having commercial paper and short-term unsecured debt
obligations, other than such obligation whose rating is based on the
credit of another person, with the highest money market funds which have
the highest rating from, or have otherwise been approved in writing by,
each rating agency rating the notes;
- other investments approved in writing by the rating agencies rating the
notes.
Funds in the collection account may be invested in debt obligations of
Heller Financial, Inc. or its affiliates so long as the obligations qualify as
the above described eligible investments.
Any earnings, net of losses and investment expenses, on funds in the
collection account will be held in that account and be treated as amounts
available for distribution to you. The servicer will have the revocable power to
instruct the indenture trustee to make withdrawals and payments from the
collection account for the purpose of carrying out its duties under the sale and
servicing agreement.
If any institution at which any of the collection account is established
ceases to be an eligible institution as described above, the servicer shall,
within ten business days after receiving notice of that fact, establish a
replacement account at another institution meeting the above eligibility
requirements.
Each collection period begins on the second day of a calendar month and ends
on and includes the first day of the immediately following calendar month.
EVENTS OF DEFAULT
Allocations of amounts to payments to you will be made as described above
under "--ALLOCATIONS; PRIOR TO AN EVENT OF DEFAULT" unless and until an event of
default has occurred, in which case allocations of amounts will be made as
described above under "--ALLOCATIONS; FOLLOWING AN EVENT OF DEFAULT".
An "EVENT OF DEFAULT" refers to any of the following events:
- failure to pay the full amount of accrued interest on any note on a
payment date;
- failure to pay the then outstanding principal amount of any note, if any,
on its related maturity date of the note;
- (1) failure on the part of any originator to make any payment or deposit
required under the sale and servicing agreement within three
business days after the date the payment or deposit is required to
be made, or
(2) failure on the part of any originator, the trust depositor, the trust
or the owner trustee to observe or perform any other covenants or
agreements in the sale and servicing agreement or the indenture,
which failure has a material adverse effect on the
85
<PAGE>
noteholders and which continues unremedied for a period of 60 days
after written notice; PROVIDED, there is no 60-day cure period if the
originators do not accept reassignment of ineligible contracts as
required by the sale and servicing agreement, and FURTHER PROVIDED,
that only a five day cure period shall apply in the case of a failure
by any originator, the indenture trustee or the owner trustee to
comply with their respective covenants not to grant a security
interest in or otherwise intentionally create a lien on the
contracts;
- any representation or warranty made by any originator, the trust
depositor, the indenture trustee or the owner trustee in the sale and
servicing agreement or any information required to be given by any
originator or the trust depositor to the indenture trustee to identify the
contracts was incorrect in any material respect when made and continues to
be incorrect in any material respect for a period of 60 days after written
notice and as a result of which the noteholders' interests are materially
and adversely affected; PROVIDED, HOWEVER, that an event of default shall
not be deemed to occur under the sale and servicing agreement if the
originator has repurchased the related contracts through the trust
depositor during such period under the terms of the sale and servicing
agreement;
- the occurrence of any of the following events with respect to the
originator, the trust depositor, the trust or the servicer:
(1) a court files a decree or order for relief against the party in an
involuntary case under the Bankruptcy Code of the United States or
any other liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws affecting the rights of
creditors,
(2) the party commences a voluntary case under any insolvency law,
(3) the party consents to a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official taking possession of any
substantial part of its property,
(4) the party makes a general assignment for the benefit of creditors, or
(5) the party fails to pay its debts as those debts become due;
- the trust becomes an "INVESTMENT COMPANY" within the meaning of the
Investment Company Act of 1940, as amended.
In the case of any event described above, an event of default with respect
to the notes will be deemed to have occurred; PROVIDED the event of default may
be waived if the Required Holders provide written notice to the trust depositor
and the servicer of the waiver. In the event the indenture trustee has actual
knowledge of an event of default, it will be required to notify, among others,
the trust depositor, each originator, the servicer and the owner trustee.
"REQUIRED HOLDERS" means:
(1) prior to the payment in full of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes outstanding, holders Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, respectively,
evidencing more than 66 2/3% of the aggregate of principal amount of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes voting
as a single class, and
(2) from and after the payment in full of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes and Class A-4 Notes outstanding, holders of Class B Notes
evidencing more than 66 2/3% of the aggregate principal amount of the
Class B Notes outstanding, and
(3) from and after the payment in full of the Class B Notes outstanding, holders
of Class C Notes evidencing more than 66 2/3% of the aggregate principal
amount of the Class C Notes outstanding.
86
<PAGE>
If events relating to the bankruptcy or insolvency of the trust depositor
occur on the day of such event, the trust depositor will promptly give notice to
the indenture trustee of the event, and the indenture trustee will, unless
notified to the contrary by the Required Holders, promptly act to sell, dispose
of or otherwise liquidate the contracts in a commercially reasonable manner and
on commercially reasonable terms. The proceeds from any sale, disposition or
liquidation of contracts will be deposited in the collection account and
allocated as described in the sale and servicing agreement and in
"--ALLOCATIONS". If the proceeds of any collections on contracts in the
collection account allocated to noteholders of any class is not sufficient to
pay the principal amount of the notes of the class in full, those noteholders
will incur a loss.
EVENTS OF DEFAULT; REMEDIES
If an event of default relating to bankruptcy or insolvency as described
under the heading "--EVENTS OF DEFAULT" has occurred, then the unpaid principal
of the notes, together with interest accrued but unpaid and all other amounts
due to you under the indenture, shall immediately become due and payable.
If an event of default other than the event of default relating to
bankruptcy or insolvency as described under the heading "--EVENTS OF DEFAULT"
occurs, the Required Holders may waive the event of default by sending a written
notice of the waiver to the indenture trustee, the servicer and the trust
depositor. If the Required Holders do not waive the event of default then the
unpaid principal of the notes, together with interest accrued but unpaid and all
other amounts due to you under the indenture, shall immediately and without
further act become due and payable.
THE INDENTURE TRUSTEE
The indenture trustee with respect to the notes is Norwest Bank Minnesota,
National Association. Heller Financial, Inc. and its affiliates may from time to
time enter into banking and trustee relationships with the indenture trustee and
its affiliates. Heller Financial, Inc. and its affiliates may hold notes in
their own names; however, any notes so held shall not be entitled to participate
in any decisions made or instructions given to the indenture trustee by the
noteholders as a group.
The indenture trustee's responsibilities will be ministerial in nature,
consisting principally of:
- the distribution of monies as required by the sale and servicing
agreement;
- the authentication and registration of transfer of notes under the
indenture, and
- the delivery of information received from the trust depositor.
The indenture trustee also, as pledgee of the trust under the indenture, will
take and maintain possession of any contracts constituting "INSTRUMENTS" for
purposes of the Uniform Commercial Code that are not otherwise part of chattel
paper.
For purposes of meeting the legal requirements of any jurisdictions in which
any part of the trust's assets may at the time be located, the indenture trustee
will have the power to appoint a co-trustee or separate trustee of all or any
part of the trust's assets. To the extent permitted by law, all rights, powers,
duties and obligations conferred or imposed upon the indenture trustee will be
conferred or imposed upon and exercised or performed by the indenture trustee
and the separate trustee or co-trustee jointly. In any jurisdiction in which the
indenture trustee will be incompetent or unqualified to perform as required by
the indenture, all rights, powers, duties and obligations conferred or imposed
upon the indenture trustee will be conferred or imposed upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the indenture trustee.
87
<PAGE>
The indenture trustee may resign at any time, in which event a successor
indenture trustee which meets the requirements of Section 310(a) of the Trust
Indenture Act of 1939, as amended, will be appointed by the servicer. The
servicer may also remove the indenture trustee if the indenture trustee ceases
to be eligible to continue as the trustee under the indenture. In such
circumstances, a successor indenture trustee which meets the requirements of
Section 310(a) of the Trust Indenture Act will be appointed by the servicer. Any
resignation or removal of the indenture trustee and appointment of a successor
indenture trustee does not become effective until acceptance of the appointment
by the successor indenture trustee.
GOVERNING LAW
The indenture will be governed by the laws of the State of New York.
AMENDMENTS
The owner trustee, the trust depositor, and the indenture trustee, with the
written consent of the Required Holders represented thereby, may execute a
supplement to the indenture for the purpose of adding provisions to, or changing
or eliminating provisions of, the indenture. Additionally, the indenture
trustee, with the written consent of the Required Holders represented thereby,
may consent to or execute a written amendment of or supplement to, or waiver or
consent under, the sale and servicing agreement. But, in each case the consent
of each noteholder is required to:
(1) reduce the amount or extend the time of payment of any amount owing or
payable under any note,
(2) increase or reduce the interest payable on any note,
(3) alter or modify the provisions of the sale and servicing agreement with
respect to the order of priorities in which collections on the contracts
shall be paid to noteholders or with respect to the amount or timing of
payments on the notes,
(4) reduce, modify or amend any indemnities in favor of any noteholder or in
favor of or to be paid by the trust depositor, or alter the definition of
"INDEMNITEES" to exclude any noteholder, except as consented to by each
person adversely affected by the change,
(5) make any interest or principal payable in a currency other than U.S.
dollars,
(6) modify, amend or supplement the provisions of the sale and servicing
agreement relating to amendments, waivers and supplements to the
indenture, the sale and servicing agreement or any other document, or
(7) modify the definition of Required Holders or the percentage of
noteholders required to make any modification of the indenture.
However, only the consent of the affected holder shall be required for any
decrease in an amount of or the rate of interest payable on the note or any
extension for the time of payment of any amount payable under the note.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The servicer's compensation with respect to its servicing activities and
reimbursement for its expenses will be a servicing fee calculated monthly in
conjunction with the collection periods for the notes. The servicer's monthly
fee will be an amount equal to the product of
(1) one-twelfth,
(2) 0.40% and
88
<PAGE>
(3) the aggregate discounted contract balance of all of the contracts as of
the second day of the immediately preceding calendar month.
The servicer's fee will be funded from payments due under the contracts and
amounts received upon the prepayment or purchase of contracts or liquidation of
the contracts and disposition of the related equipment upon defaults thereunder.
See "--AMOUNTS AVAILABLE FOR PAYMENTS ON THE NOTES". The servicer's monthly fee
will be paid on the fourteenth day of each calendar month from the collection
account. See "DESCRIPTION OF THE NOTES AND INDENTURE--ALLOCATIONS" above.
The servicer will pay from its servicing compensation some of the expenses
incurred in connection with servicing the contracts including, without
limitation:
- expenses related to the enforcement of the contracts;
- payment of the fees and disbursements of the indenture trustee and owner
trustee and independent accountants;
- expenses of maintaining casualty insurance on equipment to the extent the
contracts provide for the originator to pay such insurance; and
- any fees which are not expressly stated in the sale and servicing
agreement to be payable by the trust, you or the trust depositor.
However, the servicer will not pay federal, state, local and foreign income,
franchise or other taxes based on income, if any, or any interest or penalties
on such income, imposed upon the trust. The servicing fees of any sub-servicers,
including vendor sub-servicers, will be paid by the servicer out of its monthly
servicing fee.
In the event that Heller Financial, Inc. is acting as servicer and fails to
pay the fees and disbursements of the indenture trustee or owner trustee, the
trustee will be entitled to receive the portion of the servicer's monthly
servicing fee that is equal to those unpaid amounts. In no event will you be
liable to the indenture trustee or owner trustee for the servicer's failure to
pay those amounts.
OPTIONAL TERMINATION
If the aggregate discounted contract balance of the contracts is less than
10% of the initial aggregate discounted contract balance of the contracts as of
December 1, 1999, the trust depositor will have the option to cause the trust to
purchase without penalty all, but not less than all, of the remaining
outstanding notes and certificate. The trust depositor will exercise this option
only on a payment date for the notes. The redemption price will be equal to the
sum of the outstanding principal amount of the notes and certificate, together
with accrued interest through the date of redemption. The source of funds for
the redemption price will be the proceeds of the trust's sale to the trust
depositor of the contracts and the trust depositor's concurrent resale of the
contracts to the applicable originators. Following any redemption, you will have
no further rights with respect to the trust's assets.
REPORTS
No later than the third business day prior to each payment date, the
servicer will forward to the indenture trustee and each rating agency rating the
notes a monthly report prepared by the servicer setting forth information with
respect to the trust and the notes and certificate, including:
(1) the aggregate discounted contract balance
(A) as of the end of the related collection period and
(B) as of the end of the second collection period preceding such interest
and principal payment date;
89
<PAGE>
(2) the Class A Principal Payment Amount, Class B Principal Payment Amount,
Class C Principal Payment Amount, Class D Principal Payment Amount,
Class E Principal Payment Amount and Additional Principal including the
calculations utilized in the determination of those principal payment
amounts;
(3) the aggregate discounted contract balance of contracts held by the trust
which were 31, 61 and 91 days or more delinquent as of the end of such
collection period;
(4) the discounted contract balance of contracts that became defaulted
contracts during such collection period and cumulatively for each
preceding collection period;
(5) the monthly servicing fee for the related collection period;
(6) the amounts available for distribution to the holders of the notes with
respect to the related collection period, including the calculation of
those amounts;
(7) the total amount distributed on the notes;
(8) the amount allocable to principal on each class of the notes;
(9) the amount allocable to interest on each class of the notes;
(10) any servicer advances;
(11) the balance in the reserve fund; and
(12) the discounted contract balance of contracts that become prepaid
contracts during such collection period.
On each payment date, the indenture trustee (or an agent on its behalf),
will forward to each noteholder of record a copy of the monthly report.
On or before January 31 of each calendar year, commencing January 31, 2001,
the indenture trustee will furnish or cause to be furnished to each person who
at any time during the preceding calendar year was a noteholder of record, a
statement containing the information required to be provided by an issuer of
indebtedness under the Internal Revenue Code of 1986, as amended for such
preceding calendar year or the applicable portion of the year during which you
were a noteholder, together with such other customary information as is
necessary to enable you to prepare your tax returns. See "FEDERAL INCOME TAX
CONSEQUENCES".
As long as the offered notes remain in book-entry form, periodic and annual
unaudited reports, containing information concerning the trust, the contracts,
the offered notes and the certificate, will be prepared by the servicer and sent
on behalf of the trust to Cede & Co., as nominee of The Depository Trust
Company, and the Euroclear System or Cedel Bank, S.A. as registered holders of
the offered notes. These reports will be made available by DTC, Euroclear or
CEDEL and its participants to holders of interests in the offered notes as
required by the rules, regulations and procedures creating and affecting DTC,
Euroclear and CEDEL, respectively. See "DESCRIPTION OF THE NOTES AND INDENTURE--
BOOK ENTRY REGISTRATION" and "--REPORTS". These reports will not constitute
financial statements prepared in accordance with generally accepted accounting
principles or that have been examined and reported upon by, with an opinion
expressed by, an independent or certified public accountant. Upon the issuance
of fully registered, certificated notes, these reports will be sent to each
registered noteholder.
LIST OF NOTEHOLDERS
If the offered notes are subsequently issued in fully registered,
certificated form, the indenture trustee will afford you access during normal
business hours to the current list of noteholders for purpose of communicating
with other noteholders with respect to their rights under the indenture, the
90
<PAGE>
sale and servicing agreement or the notes. The indenture trustee will provide
this list upon written request of any noteholder or group of noteholders of
record holding notes evidencing not less than 10% of the aggregate unpaid
principal amount of the notes. While the notes are held in book-entry form,
holders of beneficial interests in the notes will not have access to a list of
other holders of beneficial interests in the notes, which may impede the ability
of such holders of beneficial interests to communicate with each other. See
"--BOOK-ENTRY REGISTRATION" below.
ADMINISTRATION AGREEMENT
Heller Financial, Inc., in its capacity as administrator, will enter into an
Administration Agreement. Heller Financial, Inc. will agree, to the extent
provided in the Administration Agreement, to provide the notices and to perform
other administrative obligations required to be provided or performed by the
trust or the owner trustee under the indenture.
Heller Financial, Inc., as the administrator, agrees to perform the
accounting functions of the trust which the owner trustee is required to perform
under the Trust Agreement, including but not limited to:
- maintaining the books of the trust;
- filing tax returns for the trust; and
- delivering tax related reports to you.
However, the owner trustee shall retain responsibility for distributing the
Schedule K-1s. As compensation for the performance of the administrator's
obligations under the Administration Agreement and as reimbursement for its
expenses, Heller Financial, Inc., as the administrator will be entitled to a
monthly administration fee, which fee will be paid by the servicer.
BOOK-ENTRY REGISTRATION
You may hold your notes through The Depository Trust Company in the United
States or Cedel Bank, society anonyme or Euroclear System in Europe if you are a
participant of those systems, or indirectly through organizations that are
participants in those systems.
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 Uniform Commercial Code and a "clearing
agency" registered under to Section 17A of the Exchange Act. DTC was created to
hold securities for its direct participants and to facilitate the clearance and
settlement of securities transactions between its direct participants through
electronic book-entries, thereby eliminating the need for physical movement of
certificates. DTC's direct participants include the underwriters offering the
notes to you, securities brokers and dealers, banks, trust companies and
clearing corporations, and may include other organizations. Indirect access to
the DTC system is also available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
direct participant, either directly or indirectly.
To facilitate subsequent transfers, all notes deposited with DTC will be
registered in the name of DTC's nominee, Cede & Co. You will maintain beneficial
ownership of the notes despite the deposit of notes with DTC and their
registration in the name of Cede. DTC has no knowledge of the actual
noteholders; DTC's records reflect only the identity of its direct participants
to whose accounts such notes are credited, which may or may not be the
noteholders. DTC's direct and indirect participants will remain responsible for
keeping account of their holdings on behalf of their customers.
You will not be entitled to receive a certificate representing your interest
in a class of notes. As long as the notes are registered in the name of Cede &
Co., any action to be taken by you or any other noteholders will be taken by DTC
upon instructions from DTC's participants, and all distributions,
91
<PAGE>
notices, reports and statements to noteholders will be delivered to Cede, as the
registered holder of the notes, for distribution to noteholders in compliance
with DTC procedures.
You will receive all payments of principal and interest on the notes through
direct participants or indirect participants. DTC will forward such payments to
its direct participants which will forward them to indirect participants or
noteholders. Under a book-entry format, you may experience some delay in their
receipt of payments, since such payments will be forwarded to Cede as nominee of
DTC. You will not be recognized by the indenture trustee as a noteholder, as
such term is used in the indenture. You will be permitted to exercise the rights
of noteholders only indirectly through DTC and its direct participants and
indirect participants. Because DTC can act only on behalf of direct
participants, who in turn act on behalf of indirect participants, and on behalf
of banks, trust companies and other persons approved by it, your ability to
pledge the 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 absence of physical notes for such notes.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants and by direct
participants and indirect participants to noteholders will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payments by DTC participants to noteholders
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such DTC
participant and not of DTC, the indenture trustee, the owner trustee, the
originators or the originator, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the indenture trustee, disbursement of
such payments to direct participants shall be the responsibility of DTC and
disbursement of such payments to noteholders shall be the responsibility of
direct participants and indirect participants.
Purchases of notes under the DTC system must be made by or through direct
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual noteholder is in turn to be recorded on the
direct participants' and indirect participants' records. Noteholders will not
receive written confirmation from DTC of their purchase, but noteholders are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holders, from the direct participant or
indirect participant through which the noteholder entered into the transaction.
Transfers of ownership interests in the notes are to be accomplished by entries
made on the books of DTC's participants acting on behalf of noteholders.
Noteholders will not receive physical notes representing their ownership
interest in notes, except in the event that use of the book-entry system for the
notes is discontinued.
DTC will not comment or vote with respect to the notes. DTC has advised us
that it will take any action permitted to be taken by a noteholder under the
indenture only at the direction of one or more direct participants to whose
accounts with DTC the notes are credited. Additionally, DTC has advised us that
to the extent that the indenture requires that any action may be taken only by
noteholders representing a specified percentage of the aggregate outstanding
principal amount of the notes, DTC will take such action only at the direction
of and on behalf of direct participants whose holdings include undivided
interests that satisfy such specified percentage.
DTC may discontinue providing its services as securities depositary with
respect to the notes at any time by giving reasonable notice to the indenture
trustee. Under such circumstances, in the event that a successor securities
depositary is not obtained, fully registered, certificated notes are required to
be printed and delivered. The originator may decide to discontinue use of the
system of book-entry transfers through DTC or a successor securities depositary.
In that event, fully registered, certificated notes will be delivered to
noteholders. See "--ISSUANCE OF DEFINITIVE NOTES AT A LATER DATE".
92
<PAGE>
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but neither we
nor the trust depositor take any responsibility for the accuracy of this
information.
Cedel and Euroclear will hold omnibus positions on behalf of the
participants in the Cedel and Euroclear systems, respectively, through
customers' securities accounts in Cedel's and Euroclear's names on the books of
their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Cedel is incorporated under the laws of Luxembourg as a professional
depositary. Cedel holds securities for its participants and facilitates the
clearance and settlement of securities transactions between its participants
through electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled in Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its 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 depositary, Cedel is subject to regulation
by the Luxembourg Monetary Institute. Cedel's participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and other
organizations and may include the underwriters. 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.
Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear's participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 29 currencies, including United States dollars. Euroclear
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described above. Euroclear is
operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New
York, under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation. All operations are conducted by Euroclear's operator
and all Euroclear securities clearance accounts and Euroclear cash accounts are
accounts with Euroclear's operator. Euroclear Clearance Systems S.C. establishes
policy for Euroclear on behalf of Euroclear's participants. Euroclear
participants include banks, securities brokers and dealers and other
professional financial intermediaries and may include the underwriters. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
Morgan Guaranty Trust Company of New York 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 Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with Euroclear operator are
governed by the Terms and Conditions Governing Use of Euroclear and the related
Operating Procedures of the Euroclear System and applicable Belgian law. Those
Euroclear Terms and Conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear, and receipts of
payments with respect to securities in Euroclear. All securities in Euroclear
are held on a fungible basis without attribution of specific certificates to
specific securities clearance accounts. The Euroclear operator acts under the
Euroclear Terms and Conditions only on behalf of Euroclear's participants, and
has no record of or relationship with persons holding through Euroclear's
participants.
93
<PAGE>
Transfers between direct participants will comply with DTC rules. Transfers
between Cedel's participants and Euroclear's participants will comply with their
rules and operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel or Euroclear, on the other, will be effected in DTC under DTC
rules through the relevant European international clearing system through 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 as required by 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 using its normal procedures for same-day funds 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 day, dated the business
day following the DTC settlement date, and such credits or any transactions in
such securities settled during such processing day will be reported to the
relevant Cedel participant or Euroclear participant on such business day. Cash
received in 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.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of notes among participants of DTC, Cedel and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time.
Except as required by law, none of the originators, the owner trustee, the
trust depositor or the indenture trustee will have any liability for any aspect
of the records relating to, actions taken or implemented by, or payments made on
account of, beneficial ownership interests in the notes held through DTC, or for
maintaining, supervising or reviewing any records or actions relating to such
beneficial ownership interests.
ISSUANCE OF CERTIFICATED NOTES AT A LATER DATE
The offered notes will be issued in fully registered, certificated form to
beneficial owners or their nominees rather than to The Depository Trust Company
or its nominee, only if:
(1) we advise the indenture trustee in writing that The Depository Trust
Company is no longer willing or able to discharge properly its
responsibilities as Depository with respect to such notes, and we or the
indenture trustee are unable to locate a qualified successor or
(2) we elect to terminate the book-entry system.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the indenture trustee is required to notify all beneficial
owners for each class of notes held through The Depository Trust Company of the
availability of notes in fully registered, certificated form. Upon surrender by
The Depository Trust Company of the global note representing the notes and
instructions for reregistration, the indenture trustee will issue such fully
registered, certificated notes, and the indenture trustee will recognize the
holders of such fully registered, certificated notes as noteholders under the
indenture.
Additionally, upon the occurrence of any such event described above,
distribution of principal of and interest on the notes will be made by the
indenture trustee directly to you as required by the
94
<PAGE>
indenture. Distributions will be made by check, mailed to your address as it
appears on the note register. Upon at least 10 days' notice to noteholders for
such class, however, the final payment on any note will be made only upon
presentation and surrender of such note at the office or agency specified in the
notice of final distribution to noteholders. The final payment will be made in
this manner whether the notes are fully registered, certificated notes or the
note for such class registered in the name of Cede & Co. representing the notes
of such class.
Fully registered, certificated notes of each class will be transferable and
exchangeable at the offices of the indenture trustee or its agent in New York,
New York, which the indenture trustee shall designate on or prior to the
issuance of any fully registered, certificated notes with respect to such class.
No service charge will be imposed for any registration of transfer or exchange,
but the indenture trustee may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection with the transfer or
exchange.
THE CLASS D NOTES, CLASS E NOTES AND THE CERTIFICATE
On the closing date for the sale of the offered notes; we will also issue
$7,304,220 aggregate principal amount of Class D [ ]% Receivable-Backed Notes,
Series 1999-2 and $3,652,110 aggregate principal amount of Class E [ ]%
Receivable-Backed Notes, Series 1999-2. The initial principal balance of the
Class D Notes is equal to 2.0000% of the initial aggregate discounted contract
balance of the contracts. The initial principal balance of the Class E Notes is
equal to 1.0000% of the initial aggregate discounted contract balance of the
contracts. The Class D Notes will mature on June 14, 2008. The Class E Notes
will mature on September 14, 2008. We will also issue the certificate with an
initial certificate balance of $1,826,054; the certificate will not bear
interest and shall have the right to monies in the reserve fund and to funds
remaining after the payment of all principal and interest on the notes. The
certificate will represent a fractional undivided beneficial equity interest in
the trust and will be issued under the Trust Agreement.
None of the Class D Notes, the Class E Notes, or the certificate are being
offered and sold by this prospectus. We expect to sell the Class D Notes and
Class E Notes concurrently in a private placement. The trust depositor is
expected initially to retain the certificate, although we may transfer the
certificate at some later date in a transaction separate from this offering
provided the owner trustee and indenture trustee receive an opinion of
independent counsel that such transfer will not cause the trust to become a
taxable entity or otherwise adversely affect the noteholders. Distributions with
respect to the certificate will be subordinated to the rights of the noteholders
to the extent described in "DESCRIPTION OF THE NOTES AND
INDENTURE--ALLOCATIONS".
THE SALE AND SERVICING AGREEMENT
The following is a summary of all of the material terms of the sale and
servicing agreement dated as of December 1, 1999 among the trust depositor, the
originators, the trust and the indenture trustee. You should read the sale and
servicing agreement, the form of which was filed as an exhibit to the
Registration Statement of which this prospectus is a part.
TERMINATION OF TRUST
Unless the trust depositor instructs the owner trustee otherwise, the trust
will terminate only on the earliest to occur of
(1) the day following the day on which the aggregate principal amount of all
notes is zero; provided, that the trust depositor shall have delivered a
written notice to the owner trustee electing to terminate the trust, or
(2) if the contracts are sold, disposed of or liquidated following the
occurrence of events relating to bankruptcy or insolvency, immediately
following such sale, disposition or liquidation. Upon termination of the
trust, all right, title and interest in the trust's assets (other than
amounts in
95
<PAGE>
accounts maintained by the trust for the final payment of principal and
interest to the holders of the notes and certificate) will be conveyed
and transferred to the holder of the certificate and any permitted
assignee.
CONVEYANCE OF THE CONTRACTS
The contracts, and security interests in the equipment and in end-user
contracts and equipment securing vendor loans for the contracts, will be sold or
contributed to the trust by the trust depositor as required by the sale and
servicing agreement. The originators have sold, transferred, assigned, set over
and otherwise conveyed to the trust depositor, without recourse all of the
originators' right, title and interest in and to:
- the contracts, including any substitute contracts, and all monies due or
to become due in payment of the contracts on or after the related cutoff
date, including all scheduled payments thereunder due on or after the
cutoff date;
- any prepayment amounts, any payments in respect of a casualty or early
termination, and any recoveries on the contracts but excluding any
scheduled payments due prior to the related cutoff date, any scheduled
payments due after the cutoff date but received on or prior to the cutoff
date and any Excluded Amounts;
- the related equipment (and, in the case of any vendor loan, any end-user
contracts or equipment securing the vendor loan), including all proceeds
from any sale or other disposition of the equipment;
- any documents delivered to the trust depositor or held by the servicer on
its behalf with respect to each contract;
- all payments made or to be made in the future with respect to each
contract and the obligor thereunder and under any other guarantee or
similar credit enhancement with respect to the contracts;
- all payments made with respect to each contract under any insurance policy
covering physical damage to the related equipment; and
- all income and proceeds of the foregoing.
As of the initial cutoff date or any subsequent cutoff date for substitute
contracts, the trust depositor will transfer and assign the assets described in
the previous seven bullet points to the trust for the benefit of the noteholders
and the trust will grant a lien on the same in favor of the indenture trustee.
To facilitate servicing and reduce administrative costs, Heller Financial
Leasing, Inc., as a sub-servicer, will retain custody of, but not title to, the
contracts, the documents relating to the contracts and any related evidence of
insurance payments, scheduled payments and any other similar payments under the
contracts. Prior to the conveyance of any contracts to the trust depositor, each
originator indicated in its books and records, including the computer files
relating to the contracts, that the contracts have been transferred to the trust
depositor. Prior to each transfer of any assets to the trust, the trust
depositor will file UCC financing statements reflecting the conveyance of the
assets described in the previous seven bullet points to the trust and the grant
of a lien on those assets to the indenture trustee. The trust depositor will
mark its books and records, including the appropriate computer files relating to
the contracts, to indicate that the contracts have been conveyed to the trust.
The trust will give the indenture trustee a list of the contracts transferred to
trust, identified by account number and by the discounted contract balance as of
the related cutoff date. With respect to end-user contracts securing vendor
loans, in some instances the vendor will retain the original contract files
associated with those end-user contracts. UCC financing statements have been
filed to reflect the pledge of contracts to the applicable originator as
security for the vendor loans.
96
<PAGE>
REPRESENTATIONS AND WARRANTIES; DEFINITION OF ELIGIBLE CONTRACT
The originators will, jointly and severally, make the following
representations and warranties in the sale and servicing agreement with respect
to each contract as of December 1, 1999. Similarly, the originators will make or
be deemed to have made those representations and warranties with respect to each
substitute contract which may be transferred by either of them as of its related
cutoff date, including that:
(1) the information with respect to the contract is true and correct in all
material respects;
(2) immediately prior to the transfer of a contract, the contract was owned
by the originator free and clear of any adverse claim;
(3) the contract is not a defaulted contract;
(4) no provision of the contract has been waived, altered or modified in any
way, except by instruments or documents contained in the files relating
to the contract;
(5) the contract is a valid and binding payment obligation of the obligor
and its terms are enforceable, except the enforcement may be limited by
insolvency, bankruptcy, moratorium, reorganization, or other similar
laws affecting enforceability of creditors' rights and the availability
of equitable remedies;
(6) the contract is not and will not be subject to rights of rescission,
setoff, counterclaim or defense;
(7) the contract, at the time it was made, did not violate the laws of the
United States or any state, except for any violations which do not
materially and adversely affect the collectibility of the contracts
taken as a whole;
(8)
(a) the contract and any related equipment have not been sold,
transferred, assigned or pledged by the originator to any person
other than the end-user;
(b) any equipment related to the contract is free and clear of any liens
and encumbrances of any third parties other than liens in favor of
the originator and permitted liens; and
(c) either
(i) the contract is secured by a fully perfected lien of the first
priority on the related equipment or, in the case of any vendor
loan, related end-user contract or equipment or
(ii) in the case of a contract secured by aircraft, within
30 calendar days of the origination or acquisition of the
contract by the originator all required federal registration or
recording procedures were initiated, and such interest will be
so noted or recorded within 180 days of such acquisition or
origination;
(9) if the contract constitutes either an "INSTRUMENT" or "CHATTEL PAPER"
for purposes of the Uniform Commercial Code, there is not more than one
"SECURED PARTY'S ORIGINAL" counterpart of the contract;
(10) all filings necessary to evidence the conveyance or transfer of the
contract to the trust depositor have been made in all appropriate
jurisdictions;
(11) the obligor is not, to the originators' knowledge, subject to bankruptcy
or other insolvency proceedings;
(12) the contract is a U.S. dollar-denominated obligation and the associated
equipment is located in the United States;
(13) the contract does not require the prior written consent of an obligor or
contain any other restriction on the transfer or assignment of the
contract other than a consent or waiver of such restriction that has
been obtained prior to the date of the contract was sold to the trust;
(14) the obligations of the related obligor under the contract are
irrevocable and unconditional and non-cancelable or, if prepayable by
its terms, such contract meets the criteria described in clause (24)
below;
(15) the contract has an original maturity of not greater than 107 months;
97
<PAGE>
(16) no adverse selection procedure was used in selecting the contract for
transfer;
(17) the obligor under the contract is required to maintain casualty
insurance with respect to the related equipment or to self-insure
against casualty with respect to the related equipment in an amount that
is consistent with the servicer's normal servicing requirements;
(18) the contract constitutes chattel paper, an account, an instrument or a
general intangible as defined under the Uniform Commercial Code;
(19) no lease is a "CONSUMER LEASE" as defined in Section 2A-103(1)(e) of the
Uniform Commercial Code and each lease is a lease intended for security
as defined in Section 1-201(39) of the Uniform Commercial Code;
(20) each lessee has represented to the originator or the vendor that it has
accepted the related equipment and that it has had a reasonable
opportunity to inspect and test the equipment and the originator has not
been notified of any defects in the equipment;
(21) the contract is not guaranteed by any originator nor has the originator
established any specific credit reserve with respect to the related
obligor;
(22) each lease is a "TRIPLE NET LEASE" under which the obligor is
responsible for the maintenance of the related equipment in a manner
that conforms with general industry standards;
(23) each vendor loan is secured by an end-user contract(s) having an
aggregate discounted contract balance equal to the outstanding principal
amount of the vendor loan;
(24) no provision of the contract provides for a prepayment amount less than
(a) the amount the discounted contract balance on the date of the
prepayment plus
(b) any accrued, unpaid interest at the discount rate plus
(c) any outstanding servicer's advances for the contract;
unless the vendor or the originators pay to the trust the difference
between the prepayment amount actually paid and the required prepayment
amount; and
(25) the obligor is not the United States of America or any state or local
government or any agency, department, subdivision or instrumentality of
those governments.
These representations and warranties will be reaffirmed by the originators
when they transfer a substitute contract to the trust depositor. A contract
which satisfies all of the above representations and warranties shall be deemed
an "ELIGIBLE CONTRACT". Contracts with respect to which the representations in
clauses (3), (15) and (24) are not true shall also be eligible contracts if the
trust depositor shall have received confirmation from each rating agency rating
the notes that the discrepancy will not result in a downgrading of the existing
ratings on the notes. In addition, the originators will jointly and severally
represent and warrant to the trust depositor that they have validly sold and
assigned to the trust depositor all right, title and interest of the applicable
originator in the related contracts and the proceeds of the contracts.
The originators will also jointly and severally represent and warrant in the
sale and servicing agreement with respect to each end-user contract securing a
vendor loan transferred by either originator that as of the related cutoff date,
among other things,
(1) that the end-user contract is an eligible contract,
(2) that the originator holds a duly perfected lien of the first priority on
the end-user contract, and
(3) that the transfer of the originator's security interest in the end-user
contract and the proceeds of those contracts to the trust depositor is
effective to create in favor of the trust depositor a lien on those
contracts and that such lien has been duly perfected.
Permitted liens on the contracts consist of:
(1) liens for state, municipal or other local taxes but only if
(a) such taxes shall not at the time be due and payable or
98
<PAGE>
(b) the trust depositor shall currently be contesting the validity of
those liens in good faith by appropriate proceedings and shall have
reserved for those liens on its books;
(2) liens in favor of the trust depositor created under the sale and
servicing agreement and transferred to the trust under the sale and
servicing agreement;
(3) liens in favor of the trust created under the sale and servicing
agreement; and
(4) liens in favor of the indenture trustee created under the sale and
servicing agreement and the indenture; and
Permitted liens on the equipment securing the contracts consist of:
(1) materialmen's, warehousemen's, mechanics' and other liens arising by
operation of law in the ordinary course of business for sums not due;
(2) liens for state, municipal or other local taxes if:
(A) such taxes shall not at the time be due and payable or
(B) the trust depositor shall currently be contesting the validity of
those liens in good faith by appropriate proceedings and shall have
set aside on its books adequate related reserves;
(3) liens in favor of the trust depositor and transferred to the trust under
the sale and servicing agreement;
(4) liens in favor of the trust created under the sale and servicing
agreement;
(5) liens in favor of the indenture trustee created under the sale and
servicing agreement and the indenture;
(6) other subordinated liens which are subordinated to the prior payment of
the notes on terms described in the sale and servicing agreement; and
(7) liens granted by the end-users or vendors which are subordinated to the
interest of the trust in the equipment.
The trust depositor will represent and warrant in the sale and servicing
agreement that:
(1) the transfer of the contracts is a valid sale, transfer and assignment
to the trust of all right, title and interest of the trust depositor in
the contracts;
(2) all filings necessary to evidence the conveyance or transfer of the
contracts to the trust have been made in all appropriate jurisdictions;
(3) that each contract is an eligible contract;
(4) that each end-user contract or interest in the contract securing a
vendor loan is an eligible contract;
(5) that the security interest granted on the related contracts by the trust
to the indenture trustee is effective to create in favor of the indenture
trustee a lien on the contracts and that the lien has been duly
perfected; and
(6) that the trust depositor holds a duly perfected lien of the first
priority on each end-user contract securing a vendor loan.
None of the indenture trustee, the trust, the owner trustee or any of them
in their individual capacities, shall make or be deemed to have made any
representations or warranties, express or implied, regarding the trust's assets
or the transfers of those assets by the originators, the trust depositor or the
trust.
REMEDIES FOR BREACHES OF REPRESENTATIONS AND WARRANTIES; DEFINITION OF
INELIGIBLE CONTRACT
Under the terms of the sale and servicing agreement, each contract must be
an eligible contract as of its date of transfer to the trust. The indenture
trustee shall reassign any contract to the trust depositor, and the originators
will be concurrently obligated, jointly and severally, to purchase from the
trust depositor, such contract transferred by an originator no later than
90 days after any originator becomes aware, or receives written notice from the
servicer or the trust depositor, of the breach of any representation or warranty
made by the originator in the sale and servicing agreement. That transfer
99
<PAGE>
and repurchase of the contract is required only if the breach of the
representation or warranty by the originator materially adversely affects the
interests of the trust depositor or the trust or their successors or assigns in
such contract or the documents relating to such contract, which breach has not
been cured or waived in all material respects. This purchase obligation will
constitute the sole remedy against the originators and the trust depositor
available to you for a breach of a representation or warranty under the sale and
servicing agreement made by the originators with respect to that contract.
An ineligible contract shall be reassigned to the trust depositor and the
trust depositor shall make a deposit in the collection account in immediately
available funds in an amount equal to the discounted contract balance of the
ineligible contract together with accrued interest and any outstanding servicer
advances on the contract. Any amount deposited into the collection account in
connection with the reassignment of an ineligible contract shall be considered
payment in full of the ineligible contract, and that amount shall be treated as
an amount available for distribution to you. In the alternative, the trust
depositor may instead obtain a substitute contract and convey the substitute
contract to the trust in replacement for the affected ineligible contract. We
will release the ineligible contract and the trust depositor will reconvey it to
the originator. See "SUBSTITUTE CONTRACTS".
CONCENTRATION AMOUNTS; DEFINITION OF EXCESS CONTRACT
In addition to the representations and warranties made by the originators
and the trust depositor with respect to the contracts as described above under
"--REPRESENTATIONS AND WARRANTIES; DEFINITION OF ELIGIBLE CONTRACT", the trust
depositor will represent and warrant (using the statistical discount rate) as of
December 1, 1999 as follows:
(1) the aggregate discounted contract balance of all end-user contracts
which finance, lease or are related to software will not exceed 7.62% of
the aggregate discounted contract balance of the contracts;
(2) the aggregate discounted contract balance of all end-user contracts with
obligors who comprise the five largest obligors (measured by aggregate
discounted contract balance) does not exceed 6.67% of the aggregate
discounted contract balance of the contracts; and
(3) the aggregate discounted contract balance of all end-user contracts with
obligors located in a single State of the United States does not exceed
22.36% of the aggregate discounted contract balance of the contracts.
On the date a substitute contract is added to the trust's assets the trust
depositor will make the foregoing representations and warranties as of the
initial closing date of the transfer of the contracts to the trust. We will
treat the Substitute Contract as though it, and not the replaced contract, was
included in the contracts on the initial closing date; however, the discounted
contract balance of such substitute contract shall be equal to its discounted
contract balance as of the actual cutoff date.
If there is a breach of any of the foregoing representations or warranties
(an "EXCESS CONTRACT"), which breach has not been cured or waived in all
material respects, the removal of which shall remedy such breach, the servicer
will select a contract, and the indenture trustee shall reassign such contract
to the trust depositor, and the originators will be jointly and severally
obligated to purchase such contract from the trust depositor. Such purchase
shall occur no later than 90 days after the trust depositor or any originator
becomes aware, or receives written notice from the servicer or the trust
depositor, of such breach. This purchase obligation will constitute the sole
remedy against the originators and trust depositor available to you for a breach
of one of the foregoing representations or warranties.
An Excess Contract shall be reassigned to the trust depositor and the trust
depositor shall make a deposit in the collection account in immediately
available funds in an amount equal to the discounted contract balance of the
Excess Contract together with accrued interest and any outstanding servicer
advances on the contract. Any amount deposited into the collection account in
connection with the
100
<PAGE>
reassignment of an Excess Contract shall be considered payment in full of the
Excess Contract and shall be treated as an amount available for distribution to
you. In the alternative, the trust depositor may instead cause the originators,
or either of them, to convey to the trust depositor, a substitute contract in
replacement for the Excess Contract, which shall thereupon be deemed released by
the trust and reconveyed through the trust depositor to the applicable
originator. See "--SUBSTITUTE CONTRACTS".
MATERIAL MODIFICATIONS TO CONTRACTS
Under the terms of the sale and servicing agreement, the servicer may vary
the provisions of a contract, some of which constitute material modifications.
Under the sale and servicing agreement, only the following modifications are
permitted:
- waivers and other modifications that:
(1) conform with the servicer's customary and usual practices and
(2) do not have the effect of accelerating, delaying, reducing or
extending the dates for scheduled payments for the contract; however,
the rating agencies may waive this requirement;
- to the extent consistent with the servicer's past practices, the servicer
may reduce one to three scheduled payments for a contract if additional
payments are added to the scheduled payments subsequently due and the
discounted contract balance of the contract as modified equals or exceeds
the discounted contract balance prior to the modification; provided, that
the discounted contract balances of all contracts which have similarly
reduced scheduled payments does not exceed 5% of the aggregate discounted
contract balance of the contracts as of the initial cutoff date and no
payments are deferred beyond October 1, 2007;
- waiver of any late payment charge and other service fees that may be
collected in the ordinary course of servicing the contract; or
- permit prepayment of a contract that is not otherwise prepayable by its
terms. The prepayment may include, without limitation, a full or partial
buy out of the equipment which is the subject of the contract, or an
equipment upgrade. In the event of an early termination of a contract
which has been prepaid in full, the trust depositor will have the option
to cause the trust to reinvest the proceeds of the contract in one or more
contracts having similar characteristics to the terminated contract. See
"--SUBSTITUTE CONTRACTS". The servicer is not authorized to permit an
early termination of a contract, without the addition to the trust of a
substitute contract, unless the amount to be prepaid, whether by the
related obligor, or through a combination of payments from the related
obligor and from the originator or servicer, on such terminated contract
is equal at least to the then discounted contract balance of the contract,
plus accrued and unpaid interest.
Non-material adjustments or modifications in contract terms may be effected by
the servicer on behalf of the trust without your consent and without affecting
the status of the contract as part of the trust.
SUBSTITUTE CONTRACTS
In the event we subsequently determine that a contract is not an eligible
contract or a contract becomes a prepaid contract, a materially modified
contract or an Excess Contract, the originator will have the option to
substitute for that contract another contract having similar characteristics.
See "--REMEDIES FOR BREACHES OF REPRESENTATIONS AND WARRANTIES; DEFINITION OF
INELIGIBLE CONTRACT," "--CONCENTRATION AMOUNTS; DEFINITION OF EXCESS CONTRACT"
and "--MATERIAL MODIFICATIONS TO CONTRACTS". The ability to substitute contracts
is subject to an overall limit, in respect of the materially modified
101
<PAGE>
contracts, of an aggregate amount not to exceed 10% of the aggregate discounted
contract balance of the contracts as of December 1, 1999, the initial cutoff
date.
The substitute contracts will have a discounted contract balance equal to or
greater than that of the contracts being substituted and shall have a similar
weighted average life. In addition, either the final payment on the substitute
contract will be on or prior to October 1, 2007, or, to the extent the final
payment on such contract is due after October 1, 2007, only scheduled payments
due on or prior to such date may be included in the discounted contract balance
of the contract for the purpose of making any calculation under the indenture or
the sale and servicing agreement.
DEFINITION OF DEFAULTED CONTRACTS
A contract will automatically be deemed to be a defaulted contract on the
earlier occurrence of either (1) or (2) below:
(1) a full contractual payment has not been received from the obligor or the
vendor, if there is vendor recourse, for 120 days or a shorter period as
the originators may determine consistent with their respective collection
policy; or
(2) if at any time the servicer determines, under its customary and usual
practices, that the contract is not collectible after taking into account
any available vendor recourse.
The current policy of the servicer with respect to writing off contracts is
described in "HELLER FINANCIAL, INC. AND HELLER FINANCIAL LEASING, INC.--GLOBAL
VENDOR FINANCE--COLLECTION PROCESS/VENDOR RECOURSE" and "HELLER FINANCIAL, INC.
AND HELLER FINANCIAL LEASING, INC.--COMMERCIAL EQUIPMENT
FINANCE--COLLECTION/SERVICING" above.
Upon classification as a defaulted contract, the servicer shall accelerate
all payments due thereunder or take any other action as the servicer reasonably
believes will maximize the amount of recoveries and shall otherwise follow its
customary and usual collection procedures, which may include the repossession
and sale of any related equipment or other security on behalf of the trust.
INDEMNIFICATION
The sale and servicing agreement provides that the servicer will indemnify
the trust depositor, the trust, the owner trustee, and the indenture trustee
from and against any loss, liability, expense, damage or injury suffered or
sustained arising out of the servicer's actions or omissions with respect to the
trust.
Under the sale and servicing agreement, the trust depositor has agreed to be
liable directly to an injured party for the entire amount of any losses, claims,
damages or liabilities arising out of or based on the arrangement created by the
sale and servicing agreement as though such agreement created a partnership
under the Illinois Uniform Limited Partnership Act in which the trust depositor
was a general partner. However, the trust depositor is not liable to you for any
losses, claims, damages or liabilities incurred by you in your capacity as an
investor in the notes. In the event a successor servicer is appointed, the
successor servicer will indemnify and hold harmless the trust depositor for any
losses, claims, damages and liabilities of the trust depositor as described in
this paragraph arising from the actions or omissions of the successor servicer.
Except as provided in the preceding paragraph, the sale and servicing agreement
provides that none of the trust depositor, the servicer or any of their
directors, officers, employees or agents will be under any other liability to
the trust, the owner trustee, the indenture trustee, the noteholders or any
other person for any action taken, or for refraining from taking any action, in
good faith under the sale and servicing agreement. However, none of the trust
depositor, the servicer or any of their directors, officers, employees or agents
will be protected against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross
102
<PAGE>
negligence of any such person in the performance of their duties or by reason of
reckless disregard of their obligations and duties thereunder.
In addition, the sale and servicing agreement provides that the servicer is
not under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its servicing responsibilities under the sale and
servicing agreement. The servicer may, in its sole discretion, undertake any
legal action which it may deem necessary or desirable for the benefit of the
noteholders with respect to the sale and servicing agreement and the rights and
duties of the parties thereunder.
SERVICING STANDARD AND SERVICER ADVANCES
The servicer is responsible for servicing, collecting, enforcing and
administering the contracts in a manner consistent with its customary and usual
procedures for servicing contracts comparable to the contracts. Although Heller
Financial, Inc. may delegate its servicing duties to a sub-servicer, it remains
liable for the performance or non-performance of those duties.
If the servicer determines that any scheduled payment with respect to any
contract which was due during the collection period was not received in full
prior to the end of that collection period, the servicer is required to advance
the unpaid scheduled payment if the servicer, in its sole discretion, determines
that it can recover its advance from subsequent payments on or with respect to
the contract. The servicer shall be entitled to reimbursement of the servicer
advances from subsequent payments on or with respect to the contract, including
collections of any prepayment amount, amounts deposited in the collection
account for the repurchase of ineligible contracts or recoveries with respect to
the contract, and, if the servicer determines that its advances will not be
recovered from the contracts to which its advances were related, from other
contracts included in the trust. If any entity, other than an affiliate of
Heller Financial, Inc., becomes a successor servicer, that entity shall have no
obligation to make the advances described in this paragraph.
SERVICER RESIGNATION
The servicer may not resign from its obligations and duties under the sale
and servicing agreement, except upon determination that its duties are no longer
permissible under applicable law. No such resignation will become effective
until a successor to the servicer has assumed the servicer's responsibilities
and obligations under the sale and servicing agreement.
Assuming that the action complies with the sale and servicing agreement
(1) any person into which Heller Financial, Inc. or the servicer may be
merged or consolidated;
(2) any person resulting from any merger or consolidation to which Heller
Financial, Inc. or the servicer is a party; or
(3) any person succeeding to the business of Heller Financial, Inc. or the
servicer
will be the successor to Heller Financial, Inc., as the servicer, under the sale
and servicing agreement.
SERVICER DEFAULT
In the event of any servicer default, either the indenture trustee or the
Required Holders, by written notice to the servicer and the owner trustee, and
to the indenture trustee, if given by the noteholders, may terminate all of the
rights and obligations of the servicer, as servicer, under the sale and
servicing agreement. If the indenture trustee within 60 days of receipt of the
termination notice is unable to obtain any bids from eligible servicers and the
servicer delivers an officer's certificate to the effect that the servicer
cannot in good faith cure the servicer default which gave rise to the
termination notice, then the indenture trustee shall offer the trust depositor
the right at its option to accept retransfer of the trust's assets on the
following note interest and principal payment date. The purchase price for the
retransfer of the trust's assets shall be equal to the sum of the aggregate
principal amount
103
<PAGE>
of all notes and certificate on such payment date plus accrued and unpaid
interest at the applicable interest rate through the date of the retransfer. The
purchase price may also include interest on interest payments that were due but
not paid when due.
The indenture trustee shall, as promptly as possible after giving a
termination notice, appoint a successor servicer and if no successor servicer
has been appointed by the indenture trustee and has accepted the appointment by
the time the servicer ceases to act as servicer, all rights, authority, power
and obligations of the servicer under the sale and servicing agreement shall
pass to and be vested in the indenture trustee. Prior to any appointment of the
successor, the indenture trustee will seek to obtain bids from potential
servicers meeting the eligibility requirements set forth in the sale and
servicing agreement to serve as a successor servicer for servicing compensation
not in excess of the servicing fee "DESCRIPTION OF THE NOTES AND
INDENTURE--SERVICING COMPENSATION AND PAYMENT OF EXPENSES". The rights and
interest of the trust depositor under the sale and servicing agreement as holder
of the certificate will not be affected by the termination or appointment of a
successor to the servicer.
A "SERVICER DEFAULT" refers to any of the following events:
(a) any failure by the servicer to make any payment, transfer or deposit or
to give instructions or notice to the owner trustee or the indenture
trustee as required by the sale and servicing agreement on or before the
date occurring three business days after the date the payment, transfer,
deposit, or the instruction or notice or report is required to be made or
given, as the case may be, under the terms of the sale and servicing
agreement; or
(b) failure on the part of the servicer duly to observe or perform in any
material respect any other covenants or agreements of the servicer set
forth in the sale and servicing agreement which has a material adverse
effect on the noteholders, which continues unremedied for a period of
30 days after the first to occur of:
(1) the date on which written notice of such failure requiring the same
to be remedied shall have been given to the servicer by the indenture
trustee or to the servicer and the indenture trustee by the
noteholders or the indenture trustee on behalf of the holders of
notes aggregating not less than 25% of the principal amount of any
class of notes adversely affected thereby and
(2) the date on which the servicer becomes aware of the failure and such
failure continues to materially adversely affect the noteholders for
such period; or
(c) any representation, warranty or certification made by the servicer in
the sale and servicing agreement or in any certificate delivered under
the sale and servicing agreement shall prove to have been incorrect when
made, which has a material adverse effect on the noteholders and which
continues to be incorrect in any material respect for a period of
30 days after the first to occur of:
(1) the date on which written notice of such incorrectness requiring the
same to be remedied shall have been given to the servicer and the
owner trustee by the indenture trustee, or to the servicer, the owner
trustee and the indenture trustee by noteholders or by the indenture
trustee on behalf of holders of notes aggregating not less than 25%
of the principal amount of any class adversely affected thereby and
(2) the date on which the servicer becomes aware of the incorrectness,
and such incorrectness continues to materially adversely affect such
holders for such period; or
(d) any event relating to bankruptcy, insolvency or receivership shall occur
with respect to the servicer.
104
<PAGE>
Notwithstanding the foregoing, a delay in or failure of performance referred
to under clause (a) above for a period of five business days or referred to
under clause (b) or (c) for a period of 60 days, in addition to any period
provided in (a), (b) or (c), shall not constitute a servicer default until the
expiration of such additional five business days or 60 days, respectively, if
such delay or failure could not be prevented by the exercise of reasonable
diligence by the servicer and such delay or failure was caused by an act of God
or other similar occurrences. Regardless of whether the events described in
(a)-(d) have occurred, the servicer is required to use its best efforts to
perform its obligations in a timely manner in as required by the sale and
servicing agreement. The servicer shall provide the owner trustee, the indenture
trustee and the trust depositor prompt notice of such failure or delay by it,
together with a description of its efforts to perform its obligations. The
servicer shall immediately notify the indenture trustee in writing of any
servicer default.
If an event relating to bankruptcy, insolvency or receivership occurs with
respect to the servicer and no other event which would result in a servicer
default has occurred, an unpaid creditor of the servicer or a representative of
creditors of the servicer, such as a trustee in bankruptcy, or the servicer
acting as a debtor-in-possession, would have the power to prevent either the
indenture trustee or the noteholders from appointing a successor servicer.
EVIDENCE AS TO COMPLIANCE
The sale and servicing agreement provides that on or before March 31 of each
calendar year the servicer will cause a firm of nationally recognized
independent public accountants to furnish a report to the effect that such firm
has applied the procedures agreed upon with the servicer and examined documents
and records relating to the servicing of the related contracts and that, on the
basis of such procedures, nothing came to the attention of such firm that caused
them to believe that the servicing was not conducted in compliance with the sale
and servicing agreement except for those exceptions or errors as such firm shall
believe to be immaterial and other exceptions set forth in its statement. Those
accountants may also render other services to the servicer or the trust
depositor.
The sale and servicing agreement provides for delivery to the indenture
trustee and each rating agency rating the notes on or before March 31 of each
calendar year of a statement signed by an officer of the servicer to the effect
that, to the best of the officer's knowledge, the servicer has performed its
obligations in all material respects under the sale and servicing agreement
throughout the preceding year or, if there has been a default in the performance
of any obligation, specifying the nature and status of the default.
Copies of all statements, certificates and reports furnished to the
indenture trustee may be obtained by a request in writing delivered to the
indenture trustee.
AMENDMENTS
The sale and servicing agreement may be amended from time to time by
agreement of the owner trustee, the indenture trustee and the trust depositor
without your consent or the indenture trustee's consent, to cure any ambiguity
or to add any consistent provisions; PROVIDED, we obtain an opinion of counsel
stating that the amendment does not adversely affect in any material respect the
interests of any noteholder or holder of the certificate.
The sale and servicing agreement may also be amended from time to time by
the trust depositor, the servicer, the indenture trustee and the owner trustee
with the consent of the noteholders holding notes evidencing not less than
66 2/3% of the principal amount of the notes for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the sale and servicing agreement or of modifying in any manner your rights. No
amendment, however, may
105
<PAGE>
(1) reduce in any manner the amount of, or delay the timing of,
distributions which are required to be made on any note without the
consent of each noteholder affected thereby;
(2) change the definition of or the manner of calculating the "CLASS A-1
PRINCIPAL PAYMENT AMOUNT", the "CLASS A-2 PRINCIPAL PAYMENT AMOUNT", the
"CLASS A-3 PRINCIPAL PAYMENT AMOUNT", the "CLASS A-4 PRINCIPAL PAYMENT
AMOUNT", the "CLASS B PRINCIPAL PAYMENT AMOUNT", the "CLASS C PRINCIPAL
PAYMENT AMOUNT", the "CLASS D PRINCIPAL PAYMENT AMOUNT", the "CLASS E
PRINCIPAL PAYMENT AMOUNT", the "ADDITIONAL PRINCIPAL", the "DISCOUNTED
CONTRACT BALANCE", the "REQUIRED HOLDERS", the amounts available for
distribution to noteholders or the principal amount of the notes without
the consent of each noteholder and holder of the certificate; or
(3) reduce the aforesaid percentage required to consent to any amendment
without the consent of each holder of the security affected thereby; or
(4) modify, amend or supplement the provisions of the sale and servicing
agreement relating to the allocation of collections on the contracts
without the consent of each noteholder; or
(5) make any security issued by the trust payable in money other than U.S.
dollars without the consent of each holder of the security affected
thereby.
Promptly following the execution of an amendment that requires the consent
of any noteholder, the owner trustee will furnish written notice of the
substance of such amendment to each affected noteholder.
THE OWNER TRUSTEE
Wilmington Trust Company will be the owner trustee under the sale and
servicing agreement. Heller Financial, Inc. and its affiliates may from time to
time enter into banking and trustee relationships with the owner trustee and its
affiliates. Heller Financial, Inc. and its affiliates may hold notes in their
own names; however, any notes so held shall not be entitled to participate in
any decisions made or instructions given to the owner trustee by the noteholders
as a group.
For purposes of meeting the legal requirements of any jurisdictions in which
any part of the trust's assets may at the time be located, the owner trustee
will have the power to appoint a co-trustee or separate trustee of all or any
part of the trust's assets. To the extent permitted by law, all rights, powers,
duties and obligations conferred or imposed upon the owner trustee will be
conferred or imposed upon and exercised or performed by the owner trustee and
the separate trustee or co-trustee jointly. In any jurisdiction in which the
owner trustee will be incompetent or unqualified to perform specific acts, all
rights, powers, duties and obligations conferred or imposed upon owner trustee
will be conferred or imposed upon the separate trustee or co-trustee who shall
exercise and perform those rights, powers, duties and obligations solely at the
direction of the owner trustee.
The owner trustee may resign at any time, in which event a successor owner
trustee will be appointed as provided in the sale and servicing agreement. The
servicer may also remove the owner trustee if the owner trustee ceases to be
eligible to continue as the owner trustee under the sale and servicing
agreement. In such circumstances, a successor owner trustee will be appointed as
provided in the sale and servicing agreement. Any resignation or removal of the
owner trustee and appointment of a successor owner trustee does not become
effective until acceptance of the appointment by the successor owner trustee.
106
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general and brief discussion of the material United
States federal income tax consequences of the purchase, ownership and
disposition of the notes offered by this prospectus. The discussion that
follows, and the opinion described below of Winston & Strawn, special tax
counsel to the trust depositor, are based upon current provisions of the
Internal Revenue Code of 1986, as amended, existing and proposed Treasury
Regulations, current administrative rulings, judicial decisions and other
applicable authorities in effect as of the date hereof, all of which are subject
to change, possibly with retroactive effect. There are no cases, regulations, or
Internal Revenue Service rulings on comparable transactions or instruments to
those described in this prospectus. As a result, there can be no assurance that
the IRS will not challenge the conclusions reached in this description of
Federal Income Tax Consequences, and no ruling from the IRS has been or will be
sought on any of the issues discussed below. Furthermore, legislative, judicial
or administrative changes may occur, perhaps with retroactive effect, which
could affect the accuracy of the statements set forth below.
The following is a summary of material federal income tax consequences and
therefore it does not attempt to explain fully every relevant technical aspect
of the applicable tax provisions. Additionally, some of the complex technical
rules which would not be applicable to most investors but may apply to some
specific types of investors, such as dealers in securities, have not been
included. Also, the descriptions of the relevant tax rules are intended to
explain the general application of the rules. BECAUSE THIS SUMMARY OF MATERIAL
FEDERAL INCOME TAX CONSEQUENCES IS INTENDED TO BE GENERAL IN NATURE, IT IS
RECOMMENDED THAT PROSPECTIVE INVESTORS CONSULT WITH THEIR OWN TAX ADVISORS AS TO
THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
This summary of material federal income tax matters is divided into two
parts. The first part describes the classification of the notes as debt and the
treatment of the trust as an entity which is not subject to tax at the entity
level. The second part describes the taxation of an investor in the notes. Under
the caption "General Tax Treatment of Noteholders" is a description of the tax
consequences for what is expected to be the typical investment situation. The
description of General Tax Treatment of Noteholders provides a summary of
federal income tax consequences for investors who are citizens or residents of
the United States who purchase U.S. dollar denominated notes for investment at a
purchase price equal to the principal amount of the notes plus accrued interest,
if any. There are a variety of technical tax rules which can be expected to
apply only to some investors or in special circumstances. Those rules are
separately described under the caption "Special Tax Rules". Those special rules
apply, for example, to investors who are foreign persons or who purchase a note
at a price which is higher or lower than a note's principal amount. IT IS
RECOMMENDED THAT EACH PROSPECTIVE INVESTOR CONSULT A TAX ADVISOR TO DETERMINE
WHETHER ANY OF THE SPECIAL TAX RULES ARE APPLICABLE.
CLASSIFICATION OF THE NOTES AND THE TRUST
In connection with the issuance of the notes, Winston & Strawn has delivered
its opinion that, for federal income tax purposes, under existing law the trust
will not be treated as an association (or publicly traded partnership) taxable
as a corporation and the notes will be treated as indebtedness. In rendering
these opinions, Winston & Strawn has assumed that the terms of the various
documents relating to the issuance of the notes will be complied with by all of
the parties to the transaction. Those terms include a requirement, which each
investor agrees to by virtue of acquiring ownership of any beneficial interest
in a note, that the trust and the investors in the notes treat the notes as
indebtedness for federal income tax purposes. The opinion of Winston & Strawn
does not foreclose the possibility of a contrary determination by the IRS or by
a court of competent jurisdiction, or of a contrary position by the IRS or
Treasury Department in regulations or rulings issued in the future.
107
<PAGE>
It is intended that the Trust will be disregarded as a separate entity for
federal income tax purposes and therefore its net income will not be subject to
tax. If the IRS were to successfully contend that the Class E Notes, as to the
character of which Winston & Strawn provides no opinion, should be treated as
equity for federal income tax purposes, the trust would instead be treated as a
partnership and its status would not be disregarded. Restrictions have been
placed on the transferability and ownership of the Class E Notes to attempt to
ensure that, if the trust were treated as a partnership solely because of the
treatment of the Class E Notes as equity, the trust would not constitute a
publicly traded partnership taxable as a corporation. As a result, under those
circumstances the trust would be treated as a pass-thru entity for federal
income purposes which would not itself be subject to tax; however, certain types
of investors could be adversely affected as described in the next paragraph.
Although it is the opinion of Winston & Strawn that the trust will not be
treated as an association or publicly traded partnership taxable as a
corporation and the notes will be characterized as indebtedness for federal
income tax purposes, no assurance can be given that this characterization of the
trust or the notes will prevail. If the IRS successfully asserted that one or
more of the notes as to the character of which Winston & Strawn renders its
opinion did not represent debt for federal income tax purposes, such notes might
be treated as equity interests in the trust. As a result, the trust might be
classified as a publicly traded partnership taxable as a corporation. If the
trust were classified as a publicly traded partnership taxable as a corporation,
the trust would be subject to United States federal income tax on its net
income. An imposition of the corporate-level income tax could materially reduce
the amount of cash that would be available to make payments of principal and
interest on the notes. Alternatively, if the trust were classified as a
partnership other than a publicly traded partnership taxable as a corporation,
(whether because of a successful recharacterization by the IRS of either the
Class E Notes or any other notes as equity rather than debt) the trust itself
would not be subject to United States federal income tax. Instead, holders of
notes that were determined to be equity interests in the partnership would be
required to take into account their allocable share of the trust's income and
deductions. Such treatment may have adverse federal income tax consequences for
some noteholders. For example:
(1) income to some tax-exempt entities, including pension funds, may
constitute "UNRELATED BUSINESS TAXABLE INCOME,"
(2) income to foreign holders is often subject to U.S. tax and U.S. tax
return filing and withholding requirements,
(3) individual holders might be subject to limits on their ability to deduct
their share of trust expenses, and
(4) income from the trust's assets would be taxable to noteholders without
regard to whether cash distributions are actually made by the trust or
any particular noteholder's method of tax accounting.
The discussion that follows assumes that the notes will be treated as
indebtedness for federal income tax purposes.
GENERAL TAX TREATMENT OF NOTEHOLDERS
PAYMENTS OF INTEREST. An investor will be taxed on the amount of payments
of interest on a note as ordinary interest income at the time it accrues or is
received in a manner that is consistent with the investor's regular method of
accounting for United States federal income tax purposes.
SALE OR OTHER DISPOSITION OF A NOTE. An investor who disposes of a note,
whether by sale, exchange for other property, or payment by the trust, will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale or other disposition, not including any amount attributable
to accrued but unpaid interest, and the investor's adjusted tax basis in the
note. In general,
108
<PAGE>
an investor's adjusted tax basis in a note will be equal to the initial purchase
price. Any gain or loss recognized upon the sale or other disposition of a note
will be capital gain or loss. For non-corporate investors, capital gain
recognized on the sale or other disposition of a note held by the investor for
more than one year will be taxed at a maximum rate of 20%. Capital gain for a
note held for one year or less is taxed at the rates applicable to ordinary
income, I.E., up to 39.6%. Taxpayers must aggregate capital gains and losses for
each taxable year. In the event a taxpayer realizes a net capital loss for any
year there are limits on the amount of capital losses which can be deducted.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The trust will be required to
report annually to the IRS, and to each non-corporate noteholder, the amount of
interest paid on the notes for each calendar year. Each non-corporate
noteholder, other than noteholders who are not subject to the reporting
requirements, will be required to provide, under penalties of perjury, a
certificate (Form W-9) containing the noteholder's name, address, correct
federal taxpayer identification number and a statement that the noteholder is
not subject to backup withholding. Should a non-exempt noteholder fail to
provide the required certification, the trust will be required to withhold or
cause to be withheld 31% of the interest otherwise payable to the noteholder and
remit the withheld amounts to the IRS as a credit against the noteholder's
federal income tax liability.
SPECIAL TAX RULES
SPECIAL TYPES OF INVESTORS. The reference to United States citizens or
residents in the description of General Tax Treatment of Noteholders set forth
above applies not only to individuals but also to any investor who is:
- a corporation or partnership created or organized in or under the laws of
the United States or of any political subdivision thereof,
- an estate the income of which is subject to the United States federal
income taxation regardless of its sources, or
- a trust if a court within the United States is able to exercise primary
jurisdiction over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.
Any investor which is not a United States citizen or resident should review the
summary below for investment in notes by foreign persons. Also, neither the
description of General Tax Treatment of Noteholders above nor this discussion of
Special Tax Rules describes tax consequences to special classes of investors,
including investors who are dealers in securities or currencies, persons holding
notes as a part of a hedging transaction, some financial institutions or
insurance companies. Those particular types of investors are subject to specific
federal income tax treatment which is not generally applicable to other
investors. This summary of Federal Income Tax Consequences does not describe tax
consequences for those types of investors.
PURCHASE AT A DISCOUNT. An investor who purchases a note as part of the
initial offering by the trust for an issue price that is less than its "stated
redemption price at maturity" will be considered to have purchased the note at
an original issue discount for United States federal income tax purposes,
referred to as "OID". In general, the stated redemption price at maturity for a
note is equal to the principal amount. If a note is acquired with OID the
investor will be required to include in income each year, taxable as ordinary
income in the same manner as cash interest payments, a portion of the OID. For
cash basis investors, such as individuals, the requirement that OID be accrued
as income each year means the investor recognizes taxable income even though the
investor does not receive cash corresponding to that income. The amount of OID
accrued as income each year is based upon a formula which looks at the constant
yield on the notes and the term to maturity so as to annually allocate a
proportionate share of OID. Under these rules, investors will be required to
include in income increasingly greater amounts of OID in successive accrual
periods.
109
<PAGE>
In determining whether a note has OID, the issue price of the note may not
necessarily equal the investor's purchase price, although they should be
approximately the same. The issue price of a note will equal the initial
offering price to the public at which price a substantial amount of the notes is
sold not including bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters or wholesalers.
If an investor acquires a note in a secondary market transaction for a
purchase price which is less than the principal amount or other amount payable
at maturity of the note, the difference is referred to for tax purposes as
market discount. Similarly to OID, an investor must accrue a portion of the
market discount each year. The amount of market discount which accrues annually
will be calculated on a straight-line basis over the remaining term to maturity
of the note unless the investor elects to accrue market discount using the
constant yield method, I.E., the OID method. Unlike OID, however, an investor
does not include accrued market discount in ordinary income each year. Rather,
the aggregate amount of accrued market discount is included in income when an
investor sells or otherwise disposes of the note or principal amounts are
received. At that time, the portion of the amount realized by the investor on
the sale or other disposition of the note equal to accrued market discount is
taxed as ordinary income (maximum tax rate of 39.6%) rather than long term
capital gain (maximum tax rate of 20%).
If an investor would prefer to be taxed on the annual accrual of market
discount each year rather than being taxed on the aggregate amount of all
accrued market discount when the note is sold or otherwise disposed of, the
investor can file an election to do so. The adjusted basis of a note subject to
the election will be increased to reflect market discount included in gross
income, thereby reducing gain or increasing any loss on a sale or other taxable
disposition of the note. Such an election would apply to all of the investor's
debt investments acquired in or after the taxable year in which the notes are
acquired and not just to the notes.
Limitations imposed by the federal tax law which are intended to match
deductions with the taxation of income may defer deductions for interest paid by
an investor on indebtedness incurred or continued, or short-sale expenses
incurred, to purchase or carry a note with market discount. A noteholder who
elects to include market discount in gross income as it accrues is exempt from
this rule.
Whenever an investor accrues and includes in income an amount of OID or
market discount, the investor's adjusted basis in the corresponding note is
increased by that same amount. As a result, the investor would recognize a lower
capital gain or greater capital loss on the sale or other disposition of the
note.
In general, if the amount of OID or market discount would be less than 1/4th
of one percent of the note's principal or other stated redemption price at
maturity, the investor can disregard the OID or market discount rules.
PURCHASE AT A PREMIUM. If an investor purchases a note as part of the
initial offering for a price that exceeds the principal amount or other amount
payable at maturity, the investor will be considered to have an amortizable bond
premium. An investor can elect to accrue a portion of the premium each year as a
deduction to offset interest income on the corresponding note. The amount of
premium which can be amortized and deducted each year is calculated using a
constant yield method over the remaining term to maturity of the note. The
deduction is available only to offset interest income on the corresponding note;
it cannot be used as a deduction to the extent it exceeds taxable note interest.
The adjusted tax basis which an investor has in a note must be reduced by the
amount of premium for which a deduction is claimed. Because the basis is
reduced, the investor would recognize a larger taxable capital gain or a smaller
capital loss on the sale or other disposition of the note. If an investor elects
to amortize and deduct premium, the election will apply to all of the investor's
debt investments and not just to the notes.
110
<PAGE>
If an investor purchases in a secondary market transaction a note which was
originally issued with OID for an amount which is less than the sum of all
amounts payable on the note after the purchase date other than payments of
qualified stated interest but in excess of its adjusted issue price (I.E., the
original issue price plus any accrued OID as those terms are described above),
the excess is referred to for tax purposes as "acquisition premium." The
investor would be permitted to reduce the daily portions of OID the investor
would otherwise include in income by an amount corresponding to the ratio of
(1) the excess of the investor's purchase price for the note over the adjusted
issue price of the note as of the purchase date to (2) the excess of all amounts
payable on the note after the purchase date, other than payments of qualified
stated interest, over the note's adjusted issue price.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT. An investor may
elect to include in gross income all interest that accrues on a note using the
constant-yield method described above under the heading "PURCHASE AT A
DISCOUNT," with modifications described below. For purposes of this election,
interest includes qualified stated interest, OID, DE MINIMIS original issue
discount, market discount, DE MINIMUS market discount and unstated interest, as
adjusted by any amortizable bond premium or acquisition premium.
In applying the constant-yield method to a note with respect to which this
election has been made, the issue price of the note will equal the electing
investor's adjusted basis in the note immediately after its acquisition, the
issue date of the note will be the date of its acquisition by the electing
investor, and no payments on the note will be treated as payments of qualified
stated interest. This election, if made, may not be revoked without the consent
of the Internal Revenue Service. Investors should consult with their own tax
advisors as to the effect in their circumstances of making this election.
FOREIGN INVESTORS. Special tax rules apply to the purchase of notes by
foreign persons. For U.S. tax purposes, foreign investors include any person who
is not:
- a citizen or resident of the United States,
- a corporation, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof,
- an estate the income of which is includible in gross income for U.S.
federal income tax purposes, regardless of its sources, or
- a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of
the trust.
Interest paid or accrued to a foreign investor that is not effectively
connected with the conduct of a trade or business within the United States by
the investor will be considered "PORTFOLIO INTEREST" and usually will not be
subject to United States federal income tax or withholding tax as long as the
foreign investor is not actually or constructively a 10 percent shareholder of
the trust or a controlled foreign corporation related to the trust through stock
ownership and provides an appropriate statement (Form W-8 or Form W-8 BEN) to
the trust or paying agent that is signed under penalties of perjury, certifying
that the beneficial owner of the note is a foreign person and providing that
foreign person's name and address. If the information provided in this statement
changes, the foreign investor must provide a new form within 30 days. The form
is effective for three years. If the foreign investor fails to satisfy these
requirements so that interest on the investor's notes was not portfolio
interest, interest payments would be subject to United States federal income and
withholding tax treaty, the foreign investor must provide the paying agent with
Form 1001. This form is also effective for three years.
111
<PAGE>
Any capital gain realized on the sale or other taxable disposition of a note
by a foreign investor will be exempt from United States federal income and
withholding tax, provided that:
(1) the gain is not effectively connected with the conduct of a trade or
business in the Unites States by the investor and
(2) in the case of an individual foreign investor, the investor is not
present in the United States for 183 days or more during the taxable
year. If an individual foreign investor is present in the U.S. for
183 days or more during the taxable year, the gain on the sale or other
disposition of the notes could be subject to a 30% withholding tax unless
reduced by treaty.
If the interest, gain or income on a note held by a foreign investor is
effectively connected with the conduct of a trade or business in the United
States by the investor, the noteholder will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax rates.
At the same time, the noteholder may be exempt from withholding tax if a
Form 4224 is furnished to the paying agent. Form 4224 is effective for only one
calendar year. In addition, if the foreign investor is a foreign corporation, it
may be subject to a branch profits tax equal to 30% of its "effectively
connected earnings and profits" for the taxable year, as adjusted, unless it
qualifies for a lower rate under an applicable tax treaty.
Regardless of when a foreign investor acquired the note, Treasury
Regulations which will become effective for note payments made after
December 31, 2000 change reporting requirements for some withholding agents.
If a foreign investor fails to provide necessary documentation to the trust
or its paying agent regarding the investor's taxpayer identification number or
certification of exempt status, a 31% backup withholding tax may be applied to
note payments to that investor. Any amounts withheld under the backup
withholding rules will be allowed as a refund or a credit against the foreign
investor's U.S. federal income tax liability provided the required information
is furnished to the Internal Revenue Service.
STATE AND LOCAL TAX CONSEQUENCES
Because of the differences in state and local tax laws and their
applicability to different investors, it is not possible to summarize the
potential, state and local tax consequences of purchasing, holding or disposing
of the notes and no opinions of counsel have been obtained regarding state tax
matters. ACCORDINGLY, IT IS RECOMMENDED THAT EACH PROSPECTIVE INVESTOR CONSULT A
TAX ADVISOR REGARDING THE STATE AND LOCAL TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF NOTES.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended, imposes
specific requirements on employee benefit plans subject to ERISA and prohibits
some transactions between ERISA-regulated plans and persons who are "PARTIES IN
INTEREST" (as defined under ERISA) with respect to assets of such plans.
Section 4975 of the Internal Revenue Code prohibits a similar set of
transactions between specified plans or individual retirement accounts and
persons who are "DISQUALIFIED PERSONS" (as defined in the Internal Revenue Code)
with respect to Internal Revenue Code-regulated plans. Some employee benefit
plans, such as governmental plans and church plans, if no election has been made
under Section 410(d) of the Internal Revenue Code, are not subject to the
requirements of ERISA or Section 4975 of the Internal Revenue Code, and assets
of such plans may be invested in the notes, subject to the provisions of other
applicable federal and state law. Any such plan which is qualified under
Section 401(a) of the Internal Revenue Code and exempt from taxation under
Section 501(a) of the Internal Revenue Code is, however, subject to the
prohibited transaction rules set forth in Section 503 of the Internal Revenue
Code.
112
<PAGE>
Investments by ERISA-regulated plans are subject to ERISA's general
fiduciary requirements, including the requirement of investment prudence and
diversification and the requirement that investments comply with the terms of
the documents governing the ERISA-regulated plan. Before investing in the notes,
an ERISA-regulated plan fiduciary should consider, among other factors, whether
to do so is appropriate in view of the overall investment policy and liquidity
needs of the ERISA Plan.
PROHIBITED TRANSACTIONS
In addition, Section 406 of ERISA and Section 4975 of the Internal Revenue
Code prohibit parties in interest and disqualified persons with respect to ERISA
Plans and Code Plans from engaging in some transactions involving such Plans or
"PLAN ASSETS" of such Plans, unless a statutory or administrative exemption
applies to the transaction. Section 4975 of the Internal Revenue Code of 1986,
as amended and Sections 502(i) and 502(1) of ERISA provide for the imposition of
excise taxes and civil penalties on persons that engage or participate in such
prohibited transactions. The trust depositor, the underwriters, the servicer,
the indenture trustee or the owner trustee or their affiliates may be considered
or may become parties in interest or disqualified persons with respect to a
Plan. If so, the acquisition or holding of the notes by, on behalf of or with
"PLAN ASSETS" of such Plan may be considered to give rise to a "PROHIBITED
TRANSACTION" within the meaning of ERISA and/or Section 4975 of the Internal
Revenue Code, unless an administrative exemption described below or some other
exemption is available.
The notes may not be purchased with the assets of a Plan if the trust
depositor, the underwriters, the servicer, the indenture trustee, or the owner
trustee or any of their affiliates either:
(a) has discretionary authority or control with respect to the investment or
management of such assets; or
(b) has authority or responsibility to give, or regularly gives, investment
advice with respect to such assets pursuant to an agreement or
understanding that such advice will serve as a primary basis for
investment decisions with respect to such assets and that such advice
will be based on the particular needs of the Plan; or
(c) is an employer of employees covered under the Plan unless such
investment is made through an insurance company general or pooled
separate account or a bank collective investment fund and an exemption is
available.
Depending on the relevant facts and circumstances, some prohibited
transaction exemptions may apply to the purchase or holding of the notes--for
example, Prohibited Transaction Class Exemption ("PTCE") 96-23, which exempts
transactions effected on behalf of a Plan by an "IN-HOUSE ASSET MANAGER;" PTCE
95-60, which exempts transactions between insurance company general accounts and
parties in interest; PTCE 91-38, which exempts transactions between bank
collective investment funds and parties in interest; PTCE 90-1, which exempts
transactions between insurance company pooled separate accounts and parties in
interest; or PTCE 84-14, which exempts transactions effected on behalf of a Plan
by a "QUALIFIED PROFESSIONAL ASSET MANAGER." There can be no assurance that any
of these exemptions will apply with respect to any Plan's investment in the
notes or, even if an exemption were deemed to apply, that any exemption would
apply to all prohibited transactions that may occur in connection with such
investment.
Due to the complexity of these rules and the penalties imposed, any
fiduciary or other Plan investor who proposes to invest assets of a Plan in the
notes should consult with its counsel with respect to the potential consequences
under ERISA and Section 4975 of the Internal Revenue Code of doing so.
113
<PAGE>
PLAN OF DISTRIBUTION
GENERAL
Under the terms of an underwriting agreement dated December , 1999 for the
sale of the notes offered by this prospectus, the trust depositor has agreed to
sell to the underwriters and each of the underwriters has separately agreed to
purchase from the trust depositor, the principal amount of the notes set forth
opposite its name below.
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
CLASS A-1 RECEIVABLE-BACKED NOTES, SERIES 1999-2
------------------------------------------------
<S> <C>
First Union Securities, Inc...........................
Credit Suisse First Boston............................
Morgan Stanley & Co. Incorporated.....................
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
CLASS A-2 RECEIVABLE-BACKED NOTES, SERIES 1999-2
------------------------------------------------
<S> <C>
First Union Securities, Inc...........................
Credit Suisse First Boston............................
Morgan Stanley & Co. Incorporated.....................
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
CLASS A-3 RECEIVABLE-BACKED NOTES, SERIES 1999-2
------------------------------------------------
<S> <C>
First Union Securities, Inc...........................
Credit Suisse First Boston............................
Morgan Stanley & Co. Incorporated.....................
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
CLASS A-4 RECEIVABLE-BACKED NOTES, SERIES 1999-2
------------------------------------------------
<S> <C>
First Union Securities, Inc...........................
Credit Suisse First Boston............................
Morgan Stanley & Co. Incorporated.....................
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
CLASS B RECEIVABLE-BACKED NOTES, SERIES 1999-2
----------------------------------------------
<S> <C>
First Union Securities, Inc.............................
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT TO BE PURCHASED
CLASS C RECEIVABLE-BACKED NOTES, SERIES 1999-2
----------------------------------------------
<S> <C>
First Union Securities, Inc.............................
</TABLE>
In the respective underwriting agreements, the underwriters respectively
have agreed, subject to the terms and conditions set forth the agreements, to
purchase all the notes offered by this prospectus if any of the notes are
purchased.
114
<PAGE>
The underwriters of each of the following classes of notes have advised the
trust and the trust depositor that the underwriters propose initially to offer
the notes to the public at the prices set forth on the cover page hereof and to
dealers at those prices less a selling concession not in excess of the following
percentages of the principal amounts of the notes:
<TABLE>
<CAPTION>
SELLING CONCESSION (AS A PERCENTAGE OF THE
CLASS OF NOTES PRINCIPAL AMOUNT OF THE CLASS OF NOTES)
- -------------- ------------------------------------------
<S> <C>
A-1......................................... %
A-2......................................... %
A-3......................................... %
A-4......................................... %
B........................................... %
C........................................... %
</TABLE>
Additionally, the underwriters may allow and the dealers may reallow a
concession not in excess of the following percentages of the principal amounts
of the notes:
<TABLE>
<CAPTION>
REALLOWANCE CONCESSION (AS A PERCENTAGE OF THE
CLASS OF NOTES PRINCIPAL AMOUNT OF THE CLASS OF NOTES)
- -------------- ----------------------------------------------
<S> <C>
A-1..................................... %
A-2..................................... %
A-3..................................... %
A-4..................................... %
B....................................... %
C....................................... %
</TABLE>
The respective underwriting agreements provide that Heller Financial, Inc.
and the trust depositor, jointly and severally, will indemnify the underwriters
of the offered notes against some civil liabilities, including liabilities under
the Securities Act of 1933, as amended, or contribute to payments the respective
underwriters may be required to make.
There is currently no secondary market for the notes and you should not
assume that one will develop. The underwriters currently expect, but are not
obligated to make a market in the offered notes. You should not assume that any
such market will develop, or if one does develop, that it will continue or
provide sufficient liquidity.
Until the distribution of the offered notes is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters and
some selling group members to bid for and purchase the offered notes. As an
exception to these rules, the underwriters are permitted to engage in some
transactions that stabilize the price of the offered notes. These transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the offered notes.
Some of the persons participating in this offering may engage in
transactions that affect the price of the offered notes. These transactions may
include the purchase of the offered notes to cover syndicate short positions. If
the underwriters create a short position in the offered notes in connection with
the offering, I.E., if it sells more notes than are set forth on the cover page
of this prospectus, the underwriters may reduce that short position by
purchasing such classes of notes in the open market. In general, purchases of a
security to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither the originators nor the underwriters make any representations or
prediction as to the direction or magnitude of any effect that the transactions
described above, if engaged in, may have on the prices of the offered notes. In
addition, neither the originators nor the underwriters make any
115
<PAGE>
representation that the underwriters will engage in those transactions or that
those transactions, once commenced, will not be discontinued without notice.
In addition, First Union Securities, Inc. will act as the private placement
agent for the trust depositor in connection with the sale of the Class D Notes
and Class E Notes and will receive compensation therefor.
In the ordinary course of its business, the underwriters and their
affiliates have engaged and may engage in commercial banking and investment
banking transactions with Heller Financial, Inc. and its affiliates, including
the trust depositor and Heller Financial Leasing, Inc.
RATING OF THE NOTES
It is a condition to the issuance of the notes that they receive the
following ratings from the following rating agencies:
<TABLE>
<CAPTION>
CLASS MOODY'S INVESTORS SERVICE FITCH IBCA, INC. DUFF & PHELPS CREDIT RATING CO.
- ----- ------------------------- ---------------- -------------------------------
<S> <C> <C> <C>
Class A-1 Notes................ P-1 F1+/AAA D-1+
Class A-2 Notes................ Aaa AAA AAA
Class A-3 Notes................ Aaa AAA AAA
Class A-4 Notes................ Aaa AAA AAA
Class B Notes.................. Aa3 AA AA
Class C Notes.................. A1 A A
</TABLE>
The rating will reflect only the views of the rating agencies and will be
based primarily on the subordination of some classes of notes to other classes
of notes as described in this prospectus, as well as the value and
creditworthiness of the contracts and equipment. The ratings are not a
recommendation to purchase, hold or sell the notes, since the ratings do not
comment as to market price or suitability for a particular investor. Each rating
may be subject to revision or withdrawal at any time by the assigning rating
agency. There is no assurance that any rating will continue for any period of
time or that it will not be lowered or withdrawn entirely by the rating agency
if, in its judgment, circumstances so warrant. A revision or withdrawal of the
rating may have an adverse affect on the market price of the notes. The rating
of the notes addresses the likelihood of the timely payment of interest and the
ultimate payment of principal on the notes as required by their terms. The
rating does not address the rate of prepayments that may be experienced on the
contracts and, therefore, does not address the effect of the rate of prepayments
on the return of principal to you.
LEGAL MATTERS
Winston & Strawn, Chicago, Illinois will provide a legal opinion relating to
the notes in its capacity as special counsel to the trust, the trust depositor,
the originators, the servicer and the administrator. Other legal matters for the
underwriters will be passed upon by Cadwalader, Wickersham & Taft.
EXPERTS
The balance sheet and footnote of Heller Equipment Asset Receivables Trust
1999-2 as of December 1, 1999 included in this prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report on page 117 and are included in
this prospectus in reliance upon the authority of Arthur Andersen LLP as experts
in giving said reports.
116
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Heller Equipment Asset Receivables Trust 1999-2:
We have audited the accompanying balance sheet of Heller Equipment Asset
Receivables Trust 1999-2 (a Delaware corporation) as of inception, December 1,
1999. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Heller Equipment Asset Receivables
Trust 1999-2 as of inception, December 1, 1999, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Chicago, Illinois
December 3, 1999
117
<PAGE>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
BALANCE SHEET AS OF DECEMBER 1, 1999
<TABLE>
<S> <C>
Assets--Cash................................................ $0
Beneficial Equity........................................... $0
Liabilities................................................. $0
</TABLE>
NOTES TO THE BALANCE SHEET
Heller Equipment Asset Receivables Trust 1999-2 (the "Trust") is limited
purpose business trust established under the laws of the State of Delaware and
was formed on December 1, 1999 by Heller Funding Corporation (the "Trust
Depositor"), and Wilmington Trust Company (the "Owner Trustee") pursuant to the
Trust Agreement dated as of December 1, 1999 between the Trust Depositor and the
Owner Trustee. The activities of the Trust are limited by the terms of the Trust
Agreement to acquiring, owning and managing lease and loan contracts and related
assets, issuing and making payments on notes and subordinate securities and
other activities related thereto. Prior to and including December 1, 1999, the
Trust did not conduct any activities.
The Trust Depositor will pay all fees and expenses related to the
organization and operations of the Trust (including any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States or any other domestic taxing authority upon
the Trust). The Trust Depositor has also agreed to indemnify the Trustees and
certain other persons.
118
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
<S> <C>
Additional Principal........................................ 79
Class A Percentage.......................................... 80
Class A Principal Payment Amount............................ 80
Class A Target Investor Principal Amount.................... 80
Class B Floor............................................... 80
Class B Percentage.......................................... 80
Class B Principal Payment Amount............................ 80
Class B Target Investor Principal Amount.................... 80
Class C Floor............................................... 81
Class C Percentage.......................................... 81
Class C Principal Payment Amount............................ 81
Class C Target Investor Principal Amount.................... 81
Class D Floor............................................... 81
Class D Percentage.......................................... 81
Class D Principal Payment Amount............................ 81
Class D Target Investor Principal Amount.................... 82
Class E Floor............................................... 82
Class E Percentage.......................................... 82
Class E Principal Payment Amount............................ 82
Class E Target Investor Principal Amount.................... 82
Cumulative Loss Amount...................................... 82
Excess Contract............................................. 82
Excluded Amounts............................................ 75
Overcollaterization Balance................................. 82
Required Holders............................................ 86
Required Reserve Amount..................................... 83
</TABLE>
119
<PAGE>
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING
TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER THIS PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$352,428,629
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
$93,311,414[ ]% CLASS A-1 RECEIVABLE-BACKED NOTES, SERIES 1999-2
$77,424,735[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES, SERIES 1999-2
$105,363,377[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES, SERIES 1999-2
$67,198,827[ ]% CLASS A-4 RECEIVABLE-BACKED NOTES, SERIES 1999-2
$4,565,138[ ]% CLASS B RECEIVABLE-BACKED NOTES, SERIES 1999-2
$4,565,138[ ]% CLASS C RECEIVABLE-BACKED NOTES, SERIES 1999-2
HELLER FUNDING CORPORATION,
trust depositor
HELLER FINANCIAL, INC.,
servicer
---------------------
PROSPECTUS
---------------------
FIRST UNION SECURITIES, INC.
CREDIT SUISSE FIRST BOSTON
MORGAN STANLEY DEAN WITTER
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. 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.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 97,680
Printing and Engraving Expenses............................. 45,000
Trustee's Fees and Expenses................................. 20,000
Legal Fees and Expenses..................................... 100,000
Blue Sky Fees and Expenses.................................. 8,000
Accountants' Fees and Expenses.............................. 45,000
Rating Agency Fees.......................................... 200,000
Miscellaneous Fees.......................................... 32,500
Total....................................................... $548,180
</TABLE>
- ------------------------
* All amounts except the SEC Registration Fee are estimates of expenses
incurred or to be incurred in connection with the issuance and distribution
of the offered notes in an aggregate principal amount assumed for these
purposes to be equal to $370,000,000 of Securities registered hereby.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The General Corporation Law of Delaware (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes said corporation to buy director's
and officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
Heller Financial, Inc. has also purchased liability policies which indemnify
the Registrant's officers and directors against loss arising from claims by
reason of their legal liability for acts as officers and directors, subject to
limitations and conditions as set forth in the policies.
Pursuant to agreements which the Registrant may enter into with underwriters
or agents (forms of which will be included as exhibits to this registration
statement), officers and directors of the Registrant, and affiliates thereof,
may be entitled to indemnification by such underwriters or agents against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended, arising from information which has been or will be furnished to the
Registrant by such underwriters or agents that appears in the registration
statement or any prospectus.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
Exhibits
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the trust depositor
3.2 Bylaws of the trust depositor
4.1 Form of Trust Agreement (including form of certificate)
4.2 Form of Indenture (including form of notes)
5.1 Opinion of Winston & Strawn with respect to legality
8.1 Opinion of Winston & Strawn with respect to tax matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23. Consent of Arthur Andersen LLP
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of indenture trustee
</TABLE>
- ------------------------
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a) 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 14
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 act and
will be governed by the final adjudication of such issue.
(b) 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.
(c) 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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois, on December 3, 1999.
<TABLE>
<S> <C> <C>
HELLER EQUIPMENT ASSET RECEIVABLES TRUST
1999-2
By: HELLER FUNDING CORPORATION, AS TRUST
DEPOSITOR
By: /s/ JULIA S. LANDES
-----------------------------------------
Title: VICE PRESIDENT
HELLER FUNDING CORPORATION, AS THE TRUST
DEPOSITOR
By: /s/ JULIA S. LANDES
-----------------------------------------
Title: VICE PRESIDENT
</TABLE>
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints David R. Schmuck and Julia S. Landes and each of
them his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any Registration Statement for the
same offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of
1933, and all post-effective amendments thereto, and to file the same, with all
exhibits thereto and all documents in connection therewith, with the Securities
and Exchange Commission, granting 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 might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this registration statement has
been signed by the following persons in the capacities indicated on July 16,
1999:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ LAURALEE E. MARTIN
------------------------------------------- Chief Executive Officer and Director
Lauralee E. Martin (Principal Executive Officer)
/s/ LAWRENCE G. HUND
------------------------------------------- Chief Financial Officer (Principal Financial
Lawrence G. Hund and Accounting Officer)
/s/ JEFFREY A. HILZINGER
------------------------------------------- Director
Jeffrey A. Hilzinger
/s/ RICHARD L. TAIANO
------------------------------------------- Director
Richard L. Taiano
/s/ DWIGHT JENKINS
------------------------------------------- Director
Dwight Jenkins
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of the trust depositor
3.2 Bylaws of the trust depositor
4.1 Form of Trust Agreement (including form of certificate)
4.2 Form of Indenture (including form of notes)
5.1 Opinion of Winston & Strawn with respect to legality
8.1 Opinion of Winston & Strawn with respect to tax matters
10.1 Form of Sale and Servicing Agreement
10.2 Form of Administration Agreement
23.1 Consent of Winston & Strawn (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Power of Attorney (included on signature page)
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of indenture trustee
</TABLE>
- ------------------------
<PAGE>
HELLER FUNDING CORPORATION (Trust Depositor)
HELLER FINANCIAL, INC. (Servicer)
UNDERWRITING AGREEMENT
December [__], 1999
First Union Securities, Inc.
[ ]
---------------------
[ ]
---------------------
c/o First Union Securities, Inc.
301 South College Street, TW-9
Charlotte, North Carolina 28288-0610
Ladies and Gentlemen:
Heller Funding Corporation, a Delaware corporation (the
"TRUST DEPOSITOR"), proposes to cause the Heller Equipment Asset Receivables
Trust 1999-2 (the "TRUST") to issue the asset backed notes identified in
Schedule I hereto (the "NOTES"). The Notes will be issued pursuant to and
secured by an indenture (the "INDENTURE") to be entered into between the
Trust and Norwest Bank Minnesota, National Association as trustee (the
"INDENTURE TRUSTEE"), the form of which has been filed as an exhibit to the
Registration Statement (as defined below). The Notes identified in Schedule I
hereto will be sold in a public offering through the underwriters listed in
Schedule II hereto, one or more of which may act as representative of such
underwriters (any underwriter through which Notes are sold shall be referred
to herein as an "UNDERWRITER" or, collectively, all such Underwriters may be
referred to as the "UNDERWRITERS"; any representatives thereof may be
referred to herein as a "REPRESENTATIVE"). To the extent not defined herein,
capitalized terms used herein have the meanings assigned to such terms in the
Sale and Servicing Agreement among the Trust Depositor, the Trust, the
Indenture Trustee, Heller Financial, Inc., as servicer (the "SERVICER") and
an originator, and Heller Financial Leasing, Inc., as an originator, dated as
of December [__], 1999.
Section 1. REPRESENTATIONS AND WARRANTIES. The Trust
Depositor and the Servicer, jointly and severally, represent and warrant to
each Underwriter that:
(a) The Trust Depositor has prepared and filed with the
Securities and Exchange Commission (the "COMMISSION") in accordance
with the provisions of the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"SECURITIES ACT"), a registration statement on Form S-1 (registration
number 33-83111), including a form of prospectus, relating to the
Notes.
<PAGE>
The registration statement, and any post-effective amendment
thereto, each in the form heretofore delivered to the Underwriters and,
excluding exhibits thereto, have been declared effective by the
Commission. As used in this Agreement, "EFFECTIVE TIME" means the date
and the time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared effective
by the Commission and "Effective Date" means the date of the Effective
Time. The Trust Depositor has furnished to the Underwriters, for use by
the Underwriters, copies of one or more preliminary prospectuses (each,
a "PRELIMINARY PROSPECTUS"), relating to the Notes. Except where the
context otherwise requires, the registration statement, as amended at
the Effective Time, including all documents filed as a part thereof,
and including any information contained in a prospectus subsequently
filed with the Commission pursuant to Rule 424(b) under the Securities
Act and deemed to be part of the registration statement as of the
Effective Time pursuant to Rule 430A under the Securities Act, is
herein called the "REGISTRATION STATEMENT", and the prospectus, in the
form filed by the Trust Depositor with the Commission pursuant to Rule
424(b) under the Securities Act or, if no such filing is required, the
form of final prospectus included in the Registration Statement at the
time it became effective, is hereinafter called the "PROSPECTUS".
(b) The Registration Statement relating to the Notes, has been
filed with the Commission and such Registration Statement has become
effective. No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Trust Depositor
or Servicer, threatened by the Commission.
(c) The Registration Statement conforms, and any amendments or
supplements thereto and the Prospectus will conform, in all material
respects to the requirements of the Securities Act and the Trust
Indenture Act of 1939, as amended (the "TRUST INDENTURE ACT"), and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto, as of the applicable
filing date as to the Prospectus and any amendment or supplement
thereto, and as of the Closing Date, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
PROVIDED, HOWEVER, that this representation and warranty shall not
apply to (i) that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification (Form T-1) of
the Indenture Trustee under the Trust Indenture Act or (ii) any
Underwriters' Information (as defined in Section 10(d) hereof)
contained therein. The Indenture conforms in all respects to the
requirements of the Trust Indenture Act and the rules and regulations
of the Commission thereunder.
(d) The representations and warranties of the Trust Depositor
in Section 3.01 of the Sale and Servicing Agreement will be true and
correct as of the Closing Date.
(e) The representations and warranties of the Servicer in
Section 3.02 of the Sale and Servicing Agreement will be true and
correct as of the Closing Date.
(f) The Servicer and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective
-2-
<PAGE>
jurisdictions of incorporation, are duly qualified to do business
and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of
property or the conduct of their respective businesses requires such
qualification, and have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in
which they are engaged, except where the failure to so qualify or
have such power or authority could not have, individually or in the
aggregate, a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the
Servicer and its subsidiaries taken as a whole.
(g) All the outstanding shares of capital stock of the Trust
Depositor have been duly authorized and validly issued, are fully paid
and nonassessable and, except to the extent set forth in the
Registration Statement, are owned by the Servicer directly or
indirectly through one or more wholly-owned subsidiaries, free and
clear of any claim, lien, encumbrance, security interest, restriction
upon voting or transfer or any other claim of any third party.
(h) (i) the Sale and Servicing Agreement, when duly executed
by the Trust Depositor and the Servicer and delivered by such parties,
will constitute a valid and binding agreement of the Trust Depositor
and the Servicer enforceable against them in accordance with its terms;
(ii) the Indenture, when duly executed by the Indenture Trustee and
delivered by the Indenture Trustee, will constitute a valid and binding
agreement of the Trust enforceable against the Trust in accordance with
its terms; (iii) the Notes, when duly executed, authenticated, issued
and delivered as provided in the Indenture, will be duly and validly
issued and outstanding and will constitute valid and binding
obligations of the Trust entitled to the benefits of the Indenture and
enforceable in accordance with its terms; and (iv) the Indenture, the
Sale and Servicing Agreement, the Trust Agreement between the Trust
Depositor and Wilmington Trust Company, as Owner Trustee and the
Transfer and Sale Agreement among Heller Financial, Inc. as the
Servicer and a Seller, Heller Financial Leasing, Inc., as a Seller, and
together with Heller Financial, Inc., the "SELLERS", and the Trust
Depositor (collectively, the "TRANSACTION AGREEMENTS") and the Notes
conform to the descriptions thereof contained in the Prospectus.
(i) The execution, delivery and performance of this Agreement,
the Transaction Agreements to which the Servicer or its subsidiary, as
the case may be, is a party and the issuance and sale of the Notes, the
consummation of the transactions contemplated hereby and thereby will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Servicer or any of its subsidiaries is bound or
to which any of the property or assets of the Servicer of any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Servicer or any of
its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Servicer or any of its subsidiaries or any of their properties or
assets; and except for the registration of the Notes under the
Securities Act, the qualification of the Indenture under the Trust
Indenture Act, such consents, approvals, authorizations, registrations
or qualifications as may be required under the Securities
-3-
<PAGE>
Exchange Act of 1934, as amended (the "EXCHANGE ACT") and applicable
state securities laws in connection with the purchase and
distribution of the Notes by the Underwriters and the filing of any
financing statements required to perfect the Trust's interest in the
Trust Assets, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency
or body is required for the execution, delivery and performance of
this Agreement or the Transaction Agreements, the issuance and sale
of the Notes and the consummation of the transactions contemplated
hereby and thereby.
(j) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act and which have not been so
described or filed.
(k) There are no legal or governmental proceedings pending to
which the Servicer or any of its subsidiaries is a party or of which
any property or assets of the Servicer or any of its subsidiaries is
the subject which, individually or in the aggregate, if determined
adversely to the Servicer or any of its subsidiaries, are reasonably
likely to have a material adverse effect on the condition (financial or
otherwise), results of operations, business or prospects of the
Servicer or its subsidiaries taken as a whole; and to the best of the
Servicer's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(l) Neither the Servicer nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material
respect, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its property or assets is subject or (iii) is in violation
in any respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject,
except any violation or default that could not have a material adverse
effect on the condition (financial or otherwise), results of
operations, business or prospects of the Servicer and its subsidiaries
taken as a whole.
(m) This Agreement has been duly authorized, executed and
delivered by each of the Trust Depositor and the Servicer; and
(n) Neither the Trust nor the Trust Depositor is required to
be registered under the Investment Company Act of 1940, as amended.
Section 2. PURCHASE AND SALE. Subject to the terms and
conditions and in reliance upon the covenants, representations and warranties
herein set forth, the Trust Depositor agrees to sell to each Underwriter, and
each Underwriter agrees, severally and not jointly, to purchase from the Trust
Depositor, the principal amount of Notes set forth opposite such Underwriter's
name in Schedule II hereto. The purchase price for the Notes shall be as set
forth in Schedule I hereto.
-4-
<PAGE>
Section 3. DELIVERY AND PAYMENT. Payment for the Notes shall
be made to the Trust Depositor or to its order by wire transfer of same day
funds at the office of Winston & Strawn in Chicago, Illinois at 9:00 A.M.,
Illinois time, on the Closing Date (as hereinafter defined), or at such other
time on the same or such other date as the Representative and the Trust
Depositor may agree upon. The time and date of such payment for the Notes as
specified in Schedule I hereto are referred to herein as the "CLOSING DATE." As
used herein, the term "BUSINESS DAY" means any day other than a day on which
banks are permitted or required to be closed in New York City.
Payment for the Notes shall be made against delivery to the
Representative for the respective accounts of the several Underwriters of the
Notes registered in the name of Cede & Co. as nominee of The Depository Trust
Company and in such denominations as the Representative shall request in writing
not later than two full Business Days prior to the Closing Date. The Trust
Depositor shall make the Notes available for inspection by the Representative in
New York, New York not later than one full Business Day prior to the Closing
Date.
Section 4. OFFERING BY UNDERWRITERS. It is understood that the
several Underwriters propose to offer the Notes for sale to the public, which
may include selected dealers, as set forth in the Prospectus.
Section 5. COVENANTS OF THE TRUST DEPOSITOR. The Trust
Depositor and the Servicer, jointly and severally, covenant and agree with each
Underwriter as follows:
(a) The Trust Depositor will prepare the Prospectus in a form
approved by the Representative and to file such Prospectus pursuant to
Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities Act.
(b) During the period that a prospectus relating to the Notes
is required to be delivered under the Securities Act in connection with
sales of such Notes (such period being hereinafter sometimes referred
to as the "prospectus delivery period"), before filing any amendment or
supplement to the Registration Statement or the Prospectus, the Trust
Depositor will furnish to the Representative a copy of the proposed
amendment or supplement for review and will not file any such proposed
amendment or supplement to which the Representative reasonably objects.
(c) During the prospectus delivery period, the Trust Depositor
will advise the Representative promptly after it receives notice
thereof, (i) when any amendment to the Registration Statement shall
have become effective; (ii) of any request by the Commission for any
amendment or supplement to the Registration Statement or the Prospectus
or for any additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for that purpose, (iv) of the issuance by the Commission of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or the initiation or threatening of any
proceedings for that purpose and (v) of any notification with respect
to any suspension of the qualification of the Notes for offer
-5-
<PAGE>
and sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and will use its best efforts to
prevent the issuance of any such stop order or suspension and, if
any is issued, will promptly use its best efforts to obtain the
withdrawal thereof.
(d) If, at any time during the prospectus delivery period, any
event occurs as a result of which the Prospectus as then supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it shall be necessary to amend or supplement the Prospectus to
comply with the Securities Act, the Trust Depositor promptly will
prepare and file with the Commission, an amendment or a supplement
which will correct such statement or omission or effect such
compliance.
(e) The Trust Depositor will endeavor to qualify the Notes for
offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representative shall reasonably request and will
continue such qualification in effect so long as reasonably required
for distribution of the Notes; provided, however, that the Trust
Depositor shall not be obligated to qualify to do business in any
jurisdiction in which it is not currently so qualified; and provided,
further, that the Trust Depositor shall not be required to file a
general consent to service of process in any jurisdiction.
(f) The Trust Depositor will furnish to the Representative,
without charge, two copies of the Registration Statement (including
exhibits thereto), one of which will be signed, and to each Underwriter
conformed copies of the Registration Statement (without exhibits
thereto) and, during the prospectus delivery period, as many copies of
any Preliminary Prospectus and the Prospectus and any supplement
thereto as the Underwriters may reasonably request.
(g) For a period from the date of this Agreement until the
retirement of the Notes, or until such time as the Underwriters shall
cease to maintain a secondary market in the Notes, whichever first
occurs, the Trust Depositor will deliver to the Underwriters (i) the
annual statements of compliance, (ii) the annual independent certified
public accountants' reports furnished to the Indenture Trustee, (iii)
all documents required to be distributed to Noteholders and (iv) all
documents filed with the Commission pursuant to the Exchange Act or any
order of the Commission thereunder, in each case as provided to the
Indenture Trustee or filed with the Commission, as soon as such
statements and reports are furnished to the Indenture Trustee or filed
or as soon thereafter as practicable.
(h) To the extent, if any, that the rating provided with
respect to the Notes by the rating agency or agencies that initially
rate the Notes is conditional upon the furnishing of documents or the
taking of any other actions by the Trust Depositor, the Trust Depositor
shall furnish such documents and take any such other actions.
(i) The Trust Depositor will cause the Trust to make generally
available to Noteholders and to the Representative as soon as
practicable an earnings statement covering a period of at least twelve
months beginning with the first fiscal quarter of the
-6-
<PAGE>
Trust occurring after the Effective Date of the Registration
Statement, which shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 of the Commission promulgated
thereunder.
(j) [For a period of 90 days from the date hereof, the Trust
Depositor will not offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
for, or announce any offering of, any securities collateralized by, or
evidencing an ownership interest in, any asset-backed securities of the
Trust Depositor or the Trust (other than the Notes purchased hereunder)
without the prior written consent of the Underwriters.]
Section 6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS.
The respective obligations of the several Underwriters hereunder are subject to
the accuracy, when made and on the Closing Date, of the representations and
warranties of the Trust Depositor and the Servicer contained herein and in the
Transaction Agreements, to the accuracy of the statements of the Trust Depositor
and the Servicer made in any certificates pursuant to the provisions hereof, to
the performance by the Trust Depositor and the Servicer of their respective
obligations hereunder and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424 in the manner and within the applicable time
period prescribed for such filing by the rules and regulations of the
Commission under the Securities Act and in accordance with Section 5(a)
of this Agreement; and, prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceedings for such purpose
shall have been initiated or threatened by the Commission; and all
requests for additional information from the Commission with respect to
the Registration Statement shall have been complied with to the
reasonable satisfaction of the Representative.
(b) (i) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Transaction Agreements, the Notes, the Registration Statement, the
Preliminary Prospectus and the Prospectus, and all other legal matters
relating to such agreements and the transactions contemplated hereby
and thereby shall be reasonably satisfactory in all material respects
to counsel for the Underwriters, and the Trust Depositor shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters and (ii)
prior to or contemporaneously with the purchase of Notes hereunder, all
transactions contemplated to be consummated under such Transaction
Agreements on the Closing Date (including, without limitation, the
issuance and placement of any subordinated, privately-placed
securities) shall have been so consummated to the reasonable
satisfaction of the Underwriters.
(c) Winston & Strawn shall have furnished to the
Representative their written opinion, as U.S. counsel to the Trust
Depositor and the Servicer, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters.
-7-
<PAGE>
(d) Charles P. Brissman shall have furnished to the
Representative his written opinion, as Senior Counsel to the Servicer,
addressed to the Underwriters and dated the Closing Date, in form and
substance reasonably satisfactory to the Underwriters.
(e) Winston & Strawn shall have furnished to the
Representative their written opinion, as U.S. counsel to the Trust
Depositor and the Servicer, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters, with respect to the characterization of the transfer of
the Assets by the Sellers to the Trust Depositor pursuant to the
Transfer and Sale Agreement as a sale and the non-consolidation of the
Trust Depositor and the Servicer.
(f) The Representative shall have received from Cadwalader,
Wickersham & Taft, counsel for the Underwriters, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Underwriters may require, and the Trust Depositor shall have furnished
to such counsel such documents as they reasonably request for enabling
them to pass upon such matters.
(g) (i) Victoria E. Gregory shall have furnished to the
Representative here written opinion, as Assistant General Counsel to
the Indenture Trustee, addressed to the Underwriters and dated the
Closing Date, in form and substance reasonably satisfactory to the
Underwriters and (ii) Richards Layton & Finger shall have furnished to
the Representative their written opinion, as counsel to the Owner
Trustee, addressed to the Underwriters and dated the Closing Date, in
form and substance reasonably satisfactory to the Underwriters.
(h) Each of the Trust Depositor and the Servicer shall have
furnished to the Representative a certificate, dated the Closing Date,
of any of its Chairman of the Board, President or Vice President and
its chief financial officer stating that (i) such officers have
carefully examined the Registration Statement and the Prospectus, (ii)
the Prospectus does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (provided that
each of the Trust Depositor and the Servicer may exclude the
Underwriters' Information (as defined in Section 10(d) herein) from
such representation), (iii) the representations and warranties of the
Servicer or the Trust Depositor, as the case may be, contained in this
Agreement and the Transaction Agreements are true and correct in all
material respects on and as of the Closing Date, (iv) the Servicer or
the Trust Depositor, as the case may be, has complied in all material
respects with all agreements and satisfied in all material respects all
conditions on its part to be performed or satisfied hereunder and under
such agreements at or prior to the Closing Date, (v) no stop order
suspending the effectiveness of the Registration Statement has been
issued and is outstanding and no proceedings for that purpose have been
instituted and not terminated or, to the best of his or her knowledge,
are contemplated by the Commission, and (vi) since the date of its most
recent financial statements, there has been no material adverse change
in the financial position or results of operations of the Servicer or
the Trust Depositor, as applicable, or the Trust or any change, or any
development including a prospective change, in or affecting the
condition (financial or otherwise), results of
-8-
<PAGE>
operations or business of the Servicer, the Trust Depositor or the
Trust except as set forth in or contemplated by the Registration
Statement and the Prospectus.
(i) Subsequent to the date of this Agreement, there shall not
have occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or
properties of the Trust Depositor or the Servicer which materially
impairs the investment quality of the Notes; (ii) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market shall have been suspended or limited, or
minimum prices shall have been established on either of such exchanges
or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, or
trading in securities of the Trust Depositor or the Servicer on any
exchange or in the over-the-counter market shall have been suspended or
(iii) a general moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (iv) an
outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or such a material adverse change
in general economic, political or financial conditions (or the effect
of international conditions on the financial markets in the United
States shall be such) as to make it, in the judgment of the
Representative, impracticable or inadvisable to proceed with the public
offering or the delivery of the Notes on the terms and in the manner
contemplated in the Prospectus.
(j) With respect to the letter of Arthur Andersen LLP,
delivered to the Underwriters concurrently with the execution of this
Agreement (the "initial letter"), the Trust Depositor shall have
furnished to the Underwriters a letter (the "bring-down letter") of
such accountants, addressed to the Underwriters and dated the Closing
Date (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualifications of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date of the bring-down letter (or with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of
a date not more than five days prior to the date of such bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by its initial letter
and (iii) confirming in all material respects the conclusions and
findings set forth in its initial letter.
(k) The Underwriters shall receive evidence satisfactory to
them that, on or before the Closing Date, UCC-1 financing statements
have been or are being filed in each office in each jurisdiction in
which such financing statements are required to perfect the first
priority security interests created by the Sale and Servicing Agreement
reflecting the interest of the Trust Depositor in the Contract Assets
and the proceeds thereof.
(l) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any (i) downgrade, withdrawal
or qualification with respect to the rating accorded the Notes [or any
of the Trust Depositor's other debt securities by any "nationally
recognized statistical rating organization", as that term is defined by
the Commission for purposes of Rule 436(g)(2) of the Securities Act] or
(ii) public
-9-
<PAGE>
announcement by any such organization that it has under surveillance
or review (other than an announcement with positive implications of
a possible upgrading), its rating of the Notes or any of the Trust
Depositor's other debt securities.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
Section 7. TERMINATION. The obligations of the Underwriters
hereunder may be terminated by the Representative, in its absolute discretion,
by notice given to and received by the Trust Depositor and the Servicer prior to
delivery of and payment for the Notes if, prior to that time, any of the events
described in Section 6(i) or Section 6(l) shall have occurred.
Section 8. DEFAULTING UNDERWRITERS. (a) If, on the Closing
Date, any Underwriter or Underwriters default in the performance of its or their
obligations under this Agreement, the Representative may make arrangements for
the purchase of such Notes by other persons satisfactory to the Trust Depositor
and the Representative, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, then each remaining non-defaulting
Underwriter shall be severally obligated to purchase the Notes which the
defaulting Underwriter or Underwriters agreed but failed to purchase on the
Closing Date in the respective proportions which the principal amount of Notes
set forth opposite the name of each remaining non-defaulting Underwriter in
Schedule I hereto bears to the aggregate principal amount of Notes set forth
opposite the names of all the remaining non-defaulting Underwriters in Schedule
I hereto; PROVIDED, HOWEVER, that the remaining non-defaulting Underwriters
shall not be obligated to purchase any of the Notes on the Closing Date if the
aggregate principal amount of Notes which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds one-eleventh of
the aggregate principal amount of the Notes to be purchased on the Closing Date,
and any remaining non-defaulting Underwriter shall not be obligated to purchase
in total more than 110% of the principal amount of the Notes which it agreed to
purchase on the Closing Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded and the remaining Underwriters or other
underwriters satisfactory to the Representative and the Trust Depositor do not
elect to purchase the Notes which the defaulting Underwriter or Underwriters
agreed but failed to purchase, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter or the Trust Depositor, except
that the provisions of Sections 9 and 13 shall not terminate and shall remain in
effect. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context otherwise requires, any party not
listed in Schedule I hereto who, pursuant to this Section 8, purchases Notes
which a defaulting Underwriter agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Underwriter of any liability it may have for damages caused by its
default. If other Underwriters are obligated or agree to purchase the
Notes of a defaulting Underwriter, either the Representative or the
Trust Depositor may postpone the Closing Date for up to seven full
business days in order to effect any changes that in the opinion of
counsel for the Trust Depositor or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other
document or arrangement, and the Trust
-10-
<PAGE>
Depositor agrees to file promptly any amendment or supplement to the
Registration Statement or the Prospectus that effects any such
changes.
Section 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If (i) the
Trust Depositor shall fail to tender the Notes for delivery to the Underwriters
for any reason not permitted under this Agreement or (ii) the Underwriters shall
decline to purchase the Notes for any reason permitted under this Agreement, the
Trust Depositor shall reimburse the Underwriters for the fees and expenses of
their counsel and for such other out-of-pocket expenses as shall have been
reasonably incurred by them in connection with this Agreement and the proposed
purchase of the Notes, and upon demand the Trust Depositor shall pay the full
amount thereof to the Representative. If this Agreement is terminated pursuant
to Section 8 by reason of the default of one or more Underwriters, the Trust
Depositor shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.
Section 10. INDEMNIFICATION. (a) The Servicer and the Trust
Depositor shall, jointly and severally, indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act (collectively referred to for the purposes of this
Section 10 as the Underwriter) against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which that Underwriter
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement as originally filed or in any amendment thereof or
supplement thereto, or in any Preliminary Prospectus or the Prospectus or in any
amendment thereof or supplement thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and shall reimburse each Underwriter
for any legal or other expenses reasonably incurred by that Underwriter directly
in connection with investigating or preparing to defend or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER,
that neither the Servicer nor the Trust Depositor shall be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any Registration Statement as originally filed
or in any amendment thereof or supplement thereto, or in any Preliminary
Prospectus or the Prospectus or in any amendment thereof or supplement thereto
in reliance upon and in conformity with the Underwriters' Information (as
defined in Section 10(d) herein).
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Trust Depositor, each of its directors,
each officer of the Trust Depositor who signed the Registration
Statement and each person, if any, who controls the Trust Depositor
within the meaning of the Securities Act (collectively referred to for
the purposes of this Section 10 as the Trust Depositor), against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Trust Depositor may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement as originally filed or in any amendment
thereof or supplement thereto, or in any Preliminary Prospectus or the
Prospectus or in any amendment thereof or supplement thereto or (ii)
-11-
<PAGE>
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with the
Underwriters' Information (as defined in Section 10(d) herein), and
shall reimburse the Trust Depositor for any legal or other expenses
reasonably incurred by the Trust Depositor in connection with
investigating or preparing to defend or defending against or appearing
as third party witness in connection with any such loss, claim, damage
or liability (or any action in respect thereof) as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 10, notify the
indemnifying party in writing of the claim or the commencement of that
action; PROVIDED, HOWEVER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 10 except to the extent it has been materially prejudiced
by such failure; and, PROVIDED, FURTHER, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 10. If
any such claim or action shall be brought against an indemnified party,
and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that
it wishes, jointly with any other similarly notified indemnifying
party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not
be liable to the indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; PROVIDED, HOWEVER, that the Representative shall have
the right to employ counsel to represent jointly the Representative and
the other Underwriters (and their respective controlling persons who
may be subject to liability arising out of any claim in respect of
which indemnity may be sought under this Section 10) if, in the
reasonable judgment of the Representative, it is advisable for the
Representative and the other Underwriters and controlling persons to be
jointly represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the Trust Depositor
and the Servicer. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 10(a) and 10(b), shall use
all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with its written consent or if there be a final judgment of
the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) The Underwriters confirm that the information (such
information, the "UNDERWRITERS' INFORMATION") set forth in the first
and third paragraphs under the caption "Plan of Distribution" in the
Prospectus is correct and constitutes the only information
-12-
<PAGE>
furnished in writing to the Trust Depositor and the Servicer by or
on behalf of the Underwriters specifically for inclusion in the
Registration Statement and the Prospectus.
(e) The obligations of the Servicer, the Trust Depositor and
the Underwriters in this Section 10 are in addition to any other
liability which the Servicer, the Trust Depositor or the Underwriters,
as the case may be, may otherwise have.
Section 11. CONTRIBUTION. If the indemnification provided for
in this Section 11 is unavailable or insufficient to hold harmless an
indemnified party under Section 10(a) or (b), then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or any action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Servicer
and the Trust Depositor on the one hand and the Underwriters on the other from
the offering of the Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Servicer and the Trust Depositor on the one hand and
the Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or any action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Servicer and the Trust Depositor on the one hand and
the Underwriters on the other with respect to such offering shall be deemed to
be in the same proportion as the total net proceeds from the offering of the
Notes purchased hereunder (before deducting expenses) received by the Trust
Depositor bear to the total underwriting discounts and commissions received by
the Underwriters with respect to the Notes purchased hereunder, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Servicer or the
Trust Depositor on the one hand or the Underwriters on the other, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The Servicer, the Trust
Depositor and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 11 were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability
referred to above in this Section 11 shall be deemed to include for purposes of
this Section 11, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such claim
or any action. Notwithstanding the provisions of this Section 11, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Notes underwritten by it and distributed to the public
were offered to the public less the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to indemnify and
contribute as provided in this Section 11 are several in proportion to their
respective underwriting obligations and not joint.
-13-
<PAGE>
Section 12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Trust Depositor, the Servicer, and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters, the Trust
Depositor and the Servicer and their respective successors and the
controlling persons and officers and directors referred to in Sections 10 and
11 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein.
Section 13. EXPENSES. The Trust Depositor and the Servicer,
jointly and severally, agrees with the Underwriters to pay (i) the costs
incident to the authorization, issuance, sale, preparation and delivery of
the Notes and any taxes payable in that connection; (ii) the costs incident
to the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (iii) the
costs of distributing the Registration Statement as originally filed and each
amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus and the Prospectus, all as
provided in this Agreement; (iv) the costs of reproducing and distributing
this Agreement and any other underwriting and selling group documents by
mail, telex or other means of communications; (v) the fees and expenses of
qualifying the Notes under the securities laws of the several jurisdictions
as provided in Section 5(e) and of preparing, printing and distributing Blue
Sky Memoranda and Legal Investment Surveys (including the related reasonable
and documented fees and expenses of counsel to the Underwriters); (vi) any
fees charged by rating agencies for rating the Notes; (vii) all fees and
expenses of the Indenture Trustee and its counsel; (viii) any transfer taxes
payable in connection with its sale of the Notes pursuant to this Agreement;
and (ix) all other costs and expenses incident to the performance of the
obligations of the Trust Depositor and the Servicer under this Agreement;
PROVIDED that, except as otherwise provided in this Section 13, the
Underwriters shall, pay their own costs and expenses, including, the costs
and expenses of their counsel and the expenses of advertising any offering of
the Notes made by the Underwriters.
Section 14. SURVIVAL. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Trust
Depositor, the Servicer and the Underwriters contained in this Agreement or
made by or on their behalf, respectively, pursuant to this Agreement, shall
survive the delivery of and payment for the Notes and shall remain in full
force and effect, regardless of any termination r cancellation of this
Agreement or any investigation made by or on behalf of any of them or any
person controlling any of them.
Section 15. NOTICES. All communication hereunder shall be
in writing and, (i) if sent to the Underwriters will be mailed, delivered or
telecopied and confirmed to them at First Union Securities, Inc., Asset
Securitization Division, 301 South College Street, TW-9, Charlotte, North
Carolina, 28288-0610, Telecopy Number: (704) 374-3254; PROVIDED, HOWEVER,
that any notice to an Underwriter pursuant to Section 9(c) shall be delivered
or sent by mail, delivery or telecopy to such Underwriter at its address set
forth in its acceptance telex to the Representative, which address will be
supplied to any other party hereto by the Representative upon request; if
sent to the Trust Depositor, will be mailed, delivered or telecopied and
confirmed to them at the address of the Trust Depositor set forth in the
Registration Statement, Attention: Chief Financial Officer; and (iii) if sent
to the Servicer, will be mailed, delivered or telecopied and confirmed to
-14-
<PAGE>
them at the address of the Servicer set forth in the Registration Statement,
Attention: Vice President and Treasurer. Any such statements, requests,
notices or agreements shall take effect at the time of receipt thereof. The
Trust Depositor and the Servicer shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the
Underwriters by the Representative.
Section 16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PROVISIONS OF CONFLICTS OF LAWS.
Section 17. SUBMISSION TO JURISDICTION APPOINTMENT OF AGENT
FOR SERVICE; CURRENCY INDEMNITY. (a) To the fullest extent permitted by
applicable law, each of the Trust Depositor and the Servicer irrevocably
submits to the jurisdiction of any Federal or State court in the City, County
and State of New York, United States of America, in any suit or proceeding
based on or arising under this Agreement, and irrevocably agrees that all
claims in respect of such suit or proceeding may be determined in any such
court. Each of the Trust Depositor and the Servicer hereby irrevocably and
fully waives the defense of an inconvenient forum to the maintenance of such
suit or proceeding. Each of the Trust Depositor and the Servicer hereby
irrevocably designates and appoints CT Corporation (the "PROCESS AGENT"), as
its authorized agent upon whom process may be served in any such suit or
proceeding, it being understood that the designation and appointment of CT
Corporation as such authorized agent shall become effective immediately
without any further action on the part of the Trust Depositor or the
Servicer. Each of the Trust Depositor and the Servicer represents to each
Underwriter that it has notified the Process Agent of such designation and
appointment and that the Process Agent has accepted the same in writing. Each
of the Trust Depositor and the Servicer hereby irrevocably authorizes and
directs the Process Agent to accept such service. Each of the Trust Depositor
and the Servicer further agrees that service of process upon the Process
Agent and written notice of said service to the Trust Depositor or the
Servicer, as the case may be, mailed by first class mail or delivered to the
Process Agent at its principal office, shall be deemed in every respect
effective service of process upon the Trust Depositor or the Servicer, as the
case may be, in any such suit or proceeding. Nothing herein shall affect the
right of any Underwriter or any person controlling any Underwriter to serve
process in any other manner permitted by law. Each of the Trust Depositor and
the Servicer agrees that a final action in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other lawful manner.
(b) The obligation of the parties to make payments hereunder
is in U.S. dollars (U.S. dollars and such other currencies referred to
above being called the "OBLIGATION CURRENCY") and such obligation shall
not be discharged or satisfied by any tender or recovery pursuant to
any judgment expressed in or converted into any currency other than the
Obligation Currency or any other realization in such other currency,
whether as proceeds of set-off, security, guarantee, distributions, or
otherwise, except to the extent to which such tender, recovery or
realization shall result in the effective receipt by the party which is
to receive such payment of the full amount of the Obligation Currency
expressed to be payable hereunder, and the party liable to make such
payment agrees to indemnify the party which is to receive such payment
(as an additional, separate and independent cause of action) for the
amount (if any) by which such effective receipt
-15-
<PAGE>
shall fall short of the full amount of the Obligation Currency
expressed to be payable hereunder and such obligation to indemnify
shall not be affected by judgment being obtained for any other sums
due under this Agreement.
Section 18. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall. together constitute one and the same
instrument.
Section 19. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to
affect the meaning or interpretation of, this Agreement.
Section 20. EFFECTIVENESS. This Agreement shall become
effective upon execution and delivery.
[SIGNATURE PAGE FOLLOWS]
-16-
<PAGE>
If you are in agreement with the foregoing, please sign the
counterpart hereof and return it to the Trust Depositor, whereupon this letter
and your acceptance shall become a binding agreement among the Trust Depositor,
the Servicer and the several Underwriters.
Very truly yours,
HELLER FUNDING CORPORATION
By:
-----------------------------
Name:
Title:
HELLER FINANCIAL, INC.
By:
-----------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date hereof.
FIRST UNION SECURITIES, INC., as
Representative of the Underwriters
named in Section II hereto
By:
-------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<S> <C>
Date of Underwriting Agreement: December [__], 1999
Underwriters: First Union Securities, Inc.
[________________]
[________________]
Representative and Address: First Union Securities, Inc.
One First Union Center, TW-9
301 South College Street
Charlotte, NC 28288-0610
<CAPTION>
Title, Purchase Price and Description of Notes:
<S> <C>
CLASS A-1 NOTES
---------------
Title: $[___________] [___]% Class A-1
Receivable-Backed Notes, Series 1999-2
Price to public: $[___________]
Purchase price: $[___________]
Underwriting discount: $[___________]
Distribution Dates: The [__] calendar day of each month (if such
day is not a Business Day, then next
succeeding Business Day), commencing January
[__], 2000
Maturity: [________] Distribution Date
Redemption provisions: Notes remaining outstanding may
be redeemed in whole, but not in part, on
any Distribution Date at the Trust
Depositor's option if the ADCB of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date.
CLASS A-2 NOTES
---------------
Title: $[__________] [___]% Class A-2
Receivable-Backed Notes, Series 1999-2
Price to public: $[__________]
Purchase price: $[__________]
Underwriting discount: $[__________]
Distribution Dates: The [___] calendar day of each month (if
such day is not a Business Day, then next
succeeding Business Day), commencing January
[___], 2000
Maturity: [_______] Distribution Date
<PAGE>
Redemption provisions: Notes remaining outstanding may
be redeemed in whole, but not in part, on
any Distribution Date at the Trust
Depositor's option if the ADCB of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date.
CLASS A-3 NOTES
---------------
Title: $[__________] [___]% Class A-3
Receivable-Backed Notes, Series 1999-2
Price to public: $[__________]
Purchase price: $[__________]
Underwriting discount: $[__________]
Distribution Dates: The [___] calendar day of each month (if
such day is not a Business Day, then next
succeeding Business Day), commencing January
[___], 2000
Maturity: [___________] Distribution Date
Redemption provisions: Notes remaining outstanding may
be redeemed in whole, but not in part, on
any Distribution Date at the Trust
Depositor's option if the ADCB of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date.
CLASS A-4 NOTES
---------------
Title: $[__________] [___]% Class A-4
Receivable-Backed Notes, Series 1999-2
Price to public: $[__________]
Purchase price: $[__________]
Underwriting discount: $[__________]
Distribution Dates: The [___] calendar day of each month (if
such day is not a Business Day, then next
succeeding Business Day), commencing January
[___], 2000
Maturity: [___________] Distribution Date
Redemption provisions: Notes remaining outstanding may
be redeemed in whole, but not in part, on
any Distribution Date at the Trust
Depositor's option if the ADCB of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date.
CLASS B NOTES
-------------
Title: $[___________] [____]% Class B
Receivable-Backed Notes, Series 1999-2
Price to public: $[___________]
Purchase price: $[___________]
Underwriting discount: $[___________]
-19-
<PAGE>
Distribution Dates: The [___] calendar day of each month (if
such day is not a Business Day, then next
succeeding Business Day), commencing January
[___], 2000
Maturity: [___________] Distribution Date
Redemption provisions: Notes remaining outstanding may
be redeemed in whole, but not in part, on
any Distribution Date at the Trust
Depositor's option if the ADCB of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date.
CLASS C NOTES
-------------
Title: $[___________] [___]% Class C
Receivable-Backed Notes, Series 1999-2
Price to public: $[___________]
Purchase price: $[___________]
Underwriting discount: $[___________]
Distribution Dates: The [___] calendar day of each month (if
such day is not a Business Day, then next
succeeding Business Day), commencing January
[___], 2000
Maturity: [_________] Distribution Date
Redemption provisions: Notes remaining outstanding may
be redeemed in whole, but not in part, on
any Distribution Date at the Trust
Depositor's option if the ADCB of the
Contract Pool at such time is less than 10%
of the initial ADCB of the Contract Pool as
of the Cutoff Date.
Closing Date, Time and Location:
Date: December [__], 1999
Time: 9:00 Chicago Time
Location: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois
</TABLE>
-20-
<PAGE>
SCHEDULE II
UNDERWRITERS
$[___________] Principal Amount of Class A-1 Notes to be Purchased
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
First Union Securities, Inc. $[___________]
[______________________________] $[___________]
[______________________________] $[___________]
</TABLE>
UNDERWRITERS
$[___________] Principal Amount of Class A-2 Notes to be Purchased
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
First Union Securities, Inc. $[___________]
[______________________________] $[___________]
[______________________________] $[___________]
</TABLE>
UNDERWRITERS
$[___________] Principal Amount of Class A-3 Notes to be Purchased
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
First Union Securities, Inc. $[___________]
[______________________________] $[___________]
[______________________________] $[___________]
</TABLE>
UNDERWRITERS
$[___________] Principal Amount of Class A-4 Notes to be Purchased
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
First Union Securities, Inc. $[___________]
[______________________________] $[___________]
[______________________________] $[___________]
</TABLE>
<PAGE>
UNDERWRITERS
$[___________] Principal Amount of Class B Notes to be Purchased
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
First Union Securities, Inc. $[___________]
[______________________________] $[___________]
[______________________________] $[___________]
</TABLE>
UNDERWRITERS
$[___________] Principal Amount of Class C Notes to be Purchased
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
First Union Securities, Inc. $[___________]
[______________________________] $[___________]
[______________________________] $[___________]
</TABLE>
-22-
<PAGE>
CERTIFICATE OF INCORPORATION
OF
HELLER FUNDING CORPORATION
ARTICLE I
NAME
The name of the corporation (hereinafter called the "CORPORATION") is
Heller Funding Corporation.
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
ARTICLE III
CORPORATE PURPOSES
The nature of the business to be conducted or promoted by the
Corporation is to engage in the following activities:
(a) to purchase or otherwise acquire, own, hold, transfer or
sell interests in, or interests in pools of, accounts, drafts, notes
receivable, installment sale agreements, conditional sale agreements,
promissory notes with or without related security agreements, operating
and finance leases, installment payment agreements and similar types of
financing agreements or obligations or rights to payment thereunder or
arising in connection therewith, including monies paid, due or to
become due thereunder or in connection therewith, and together with any
related collateral security or contract rights, whether constituting
real or personal property, securing such agreements or obligations or
supporting the payment thereof (including the acquisition of ownership
interests in real or personal property the subject of leases)
(collectively, any of the foregoing the "ASSETS");
(b) To enter into, and perform its obligations under, any
agreements with affiliates relating to or effecting the transfers and
conveyances of Assets as described above (including issuing promissory
notes or incurring other indebtedness to such affiliates pursuant to
such agreements, which notes or indebtedness are subordinated to the
rights of holders of Securities as defined below);
<PAGE>
(c) To transfer Assets or interests therein (including for the
purpose of establishing, forming or funding one or more trusts
("TRUSTS")), pursuant to one or more indentures, pooling agreements,
pooling and servicing agreements, sale agreements, sale and servicing
agreements or other agreements ("AGREEMENTS") entered into by and
among, among others, the Corporation, any trustee or trustees or
collateral agent named therein (a "TRUSTEE"), and any entity acting as
servicer for the Assets, and to perform its obligations under any such
Agreements;
(d) To issue, sell, authorize and deliver one or more series
and/or classes or certificates, bonds, notes or other evidences of
indebtedness secured or collateralized by, or otherwise representing
interests in, one or more pools of Assets (or by notes or certificates
of any series or class issued by one or more Trusts established or
funded by the Corporation) (collectively, any of the foregoing being
"SECURITIES");
(e) to acquire, hold and enjoy any and all rights and
privileges of any class of any series of Securities, including any
class which may be subordinate to any other class, and, except to the
extent otherwise provided in any Securities, or related Agreement, to
sell, assign, pledge or otherwise transfer any such Securities or any
interest therein; and
(f) To enter into any additional agreements or undertakings,
engage in any further activities, and to exercise any other powers
permitted to corporations organized under the laws of the State of
Delaware, that are related or incidental to the foregoing and
necessary, convenient or advisable to accomplish the foregoing.
ARTICLE IV
COMMON STOCK
The total number of shares of capital stock which the Corporation has
authority to issue is one thousand (1,000) shares, designated as Common
Stock, and all of such shares shall be without par value.
ARTICLE V
DENIAL OF PREEMPTIVE RIGHTS
No holder of any class of capital stock of the Corporation, whether now
or hereafter authorized, shall be entitled, as such, as a matter of right, to
subscribe for or purchase any part of any new or additional issue of capital
stock of the Corporation of any class whatsoever, or of securities
convertible into or exchangeable for capital stock of the Corporation of any
class whatsoever, whether now or hereafter authorized, or whether issued for
cash, property or services.
-2-
<PAGE>
ARTICLE VI
POWERS OF BOARD OF DIRECTORS
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws, except as
otherwise expressly provided in any By-Law made by the holders of the
capital stock of the Corporation entitled to vote thereon. Any By-law
may be altered, amended or repealed by the holders of the capital stock
of the Corporation entitled to vote thereon at any annual meeting or at
any special meeting called for that purpose; PROVIDED, HOWEVER, that no
By-Laws hereafter adopted by the stockholders shall invalidate any
prior act of the Board of Directors which would have been valid if such
By-Laws had not been adopted.
(b) Subject to the provisions of Article III, to take, lease,
purchase or otherwise acquire, and to own, use, hold, sell, convey,
exchange, lease, mortgage or otherwise encumber, work, improve,
develop, divide and otherwise handle, deal in, or dispose of real
estate, real and personal property and any interest or right therein.
(c) To determine the use and disposition of any surplus and net
profits of the Corporation, including the determination of the amount
of working capital required, to set apart out of any of the funds of
the Corporation, whether or not available for dividends, a reserve or
reserves for any proper purpose and to abolish any such reserve in the
manner in which it was created.
(d) To designate, by resolution passed by a majority of the
whole Board of Directors, one or more committees, each committee to
consist of one or more directors of the Corporation, which, to the
extent provided in the resolution designating the committee or in the
By-Laws of the Corporation, shall, subject to the limitations
prescribed by law, have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. Such committee or
committees shall have such name or names as may be determined from time
to time by resolution adopted by a majority of the whole Board of
Directors.
(e) To exercise, in addition to the powers and authorities
hereinbefore or by law conferred upon it, any such powers and
authorities and do all such acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the provisions of the
laws of the State of Delaware and of the Certificate of Incorporation
and of the By-Laws of this Corporation.
-3-
<PAGE>
ARTICLE VII
CORPORATE RESTRICTIONS
(a) At all times that the Corporation has issued and has outstanding,
or any Trust established or funded by the Corporation has issued and has
outstanding, any series or class of Securities which has been rated by a
nationally recognized rating agency, the Board of Directors shall include at
least two individuals who are Independent Directors. As used herein, an
"INDEPENDENT DIRECTOR" shall be an individual who: (i) is not and has not
been employed by Heller Financial, Inc. ("HELLER FINANCIAL") or any of its
subsidiaries or affiliates, as a director, officer or employee within the
five years immediately prior to such individual's appointment as an
Independent Director; (ii) is not (and is not affiliated with a company or a
firm that is) a significant advisor or consultant to Heller Financial or any
of its subsidiaries and affiliates; (iii) is not affiliated with a
significant customer or supplier of Heller Financial or any of its
subsidiaries or affiliates; (iv) is not affiliated with a company of which
Heller Financial or any of its subsidiaries and affiliates is a significant
customer or supplier; (v) does not have significant personal services
contract(s) with Heller Financial or any of its subsidiaries or affiliates;
(vi) is not affiliated with a tax-exempt entity that receives significant
contributions from Heller Financial or any of its subsidiaries or affiliates;
(vii) is not the beneficial owner at the time of such individual's appointment
as an Independent Director, or at any time thereafter while serving as an
Independent Director, of such number of shares of any classes of common stock
of Heller Financial the value of which constitutes more than 5% of the
outstanding common stock of Heller Financial; (viii) does not at any time
hold any beneficial or economic interest in the Corporation; and (ix) is not
a spouse, parent, sibling or child of any person described in clauses (i)
through (viii).
(b) As used in paragraph (a) of this Article VII, the following terms
shall have the meanings:
(i) an "AFFILIATE" of a person, or a person "AFFILIATED WITH," a
specified person, shall mean a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, the specified person.
(ii) The term "CONTROL" (including the terms "CONTROLLING,"
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract, or otherwise; provided,
however, that a person shall not be deemed to control another person
solely because he or she is a director of such other person.
(iii) The term "PERSON" shall mean any individual, partnership,
firm, corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group deemed to be a person
pursuant to Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, as in effect on the date of incorporation of the Corporation.
-4-
<PAGE>
(iv) A "SUBSIDIARY" of Heller Financial shall mean any corporation
a majority of the voting stock of which is owned, directly or indirectly
through one or more other subsidiaries by Heller Financial.
(v) A person shall be deemed to be, or to be affiliated with, a
company or firm that is a "SIGNIFICANT ADVISOR OR CONSULTANT TO HELLER
FINANCIAL OR ANY OF ITS SUBSIDIARIES OR AFFILIATES" if he, she, or it,
as the case may be, received or would receive fees or similar
compensation from Heller Financial or any of its subsidiaries or
affiliates in excess of the lesser of (A) 3% of the consolidated gross
revenues which Heller Financial and its subsidiaries received for the sale
of their products and services during the last fiscal year of Heller
Financial; (B) 5% of the gross revenues of the person during the last
calendar year if such person is a self-employed individual; and (C) 5%
of the consolidated gross revenues received by such company or firm for
the sale of its products and services during its last fiscal year, if
the person is a company or firm; PROVIDED, HOWEVER, that director's fees
and expense reimbursements shall not be included in the gross revenues
of an individual for purposes of this determination.
(vi) A "SIGNIFICANT CUSTOMER OF HELLER FINANCIAL OR ANY OF ITS
SUBSIDIARIES OR AFFILIATES" shall mean a customer from which Heller
Financial and any of its subsidiaries or affiliates collectively in the
last fiscal year of Heller Financial received payments in consideration
for the products and services of Heller Financial and its subsidiaries
or affiliates which are in excess of 3% of the consolidated gross
revenues of Heller Financial and its subsidiaries during such fiscal
year.
(vii) A "SIGNIFICANT SUPPLIER OF HELLER FINANCIAL OR ANY OF ITS
SUBSIDIARIES OR AFFILIATES" shall mean a supplier to which Heller
Financial and any of its subsidiaries or affiliates collectively in the
last fiscal year of Heller Financial made payments in consideration
for the supplier's products and services in excess of 3% of the
consolidated gross revenues of Heller Financial and its subsidiaries
during such fiscal year.
(viii) Heller Financial or any of its subsidiaries and affiliated
shall be deemed a "SIGNIFICANT CUSTOMER" of a company if Heller
Financial and any of its subsidiaries and affiliates collectively were
the direct source during such company's last fiscal year of in excess of
5% of the gross revenues which such company received for the sale of its
products and services during such fiscal year.
(ix) Heller Financial or any of its subsidiaries and affiliates
shall be deemed a "SIGNIFICANT SUPPLIER" of a company if Heller
Financial and any of its subsidiaries and affiliates collectively
received in such company's last fiscal year payments from such company
in excess of 5% of the gross revenues which such company received during
such fiscal year for the sale of its products and services.
(x) A person shall be deemed to have "SIGNIFICANT PERSONAL
SERVICES CONTRACT(S) WHICH HELLER FINANCIAL OR ANY OF ITS SUBSIDIARIES
OR AFFILIATES" if the fees and other compensation received by the person
pursuant to personal services contract(s) with Heller
-5-
<PAGE>
Financial and any of its subsidiaries or affiliates exceed or would
exceed 5% of his or her gross revenues during the last calendar year.
(xi) A tax-exempt entity shall be deemed to receive significant
contributions from Heller Financial or any of its subsidiaries or
affiliates if such tax-exempt entity received during its last fiscal
year contributions from Heller Financial or its subsidiaries or
affiliates in excess of the lesser of (A) 3% of the consolidated gross
revenues of Heller Financial and its subsidiaries during such fiscal
year and (B) 5% of the contributions received by the tax-exempt entity
during such fiscal year.
(c) Notwithstanding any other provision of the Certificate of
Incorporation or any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without (i) the affirmative vote of
100% of the members of the Board of Directors of the Corporation, (ii) the
affirmative vote of shareholders holding at least two-thirds (2/3) of the
total number of outstanding shares of Common Stock of the Corporation, and
(iii) written confirmation, from each nationally recognized rating agency
which has rated Securities issued by the Corporation or by any Trust
established or funded by the Corporation, that the then current ratings on
such Securities will not be reduced or withdrawn as a result thereof, do any
of the following:
(A) engage in any business or activity other than those set forth in
Article III;
(B) incur any indebtedness for borrowed money, or assume or guaranty
any indebtedness of any other entity, other than (x) indebtedness evidenced
by, or incurred in connection with, any issue of Securities, (y) indebtedness
not exceeding 2% of the Corporation's total assets at such time on account of
incidentals or services supplied or furnished to the Corporation, and (z)
indebtedness to Heller Financial or any affiliate thereof incurred in
connection with the acquisition of Assets, which indebtedness shall be
subordinated to all obligations evidenced by Securities;
(C) dissolve or liquidate, in whole or in part; or consolidate or merge
with or into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, or permit any entity to merge
into it or convey, transfer or lease its properties and assets substantially as
an entirety to it, unless:
(y) the entity (if other than the Corporation) formed or surviving
the consolidation or merger or which acquires the properties and assets of
the Corporation is organized and existing under the laws of any State of
the United States or the District of Columbia; expressly assumes the due
and punctual payment of, and all obligations of the Corporation,
including those obligations of the Corporation under any Agreement; and
has a Certificate of Incorporation containing provisions substantially
identical to the provisions of Article III, this Article VII, Article
XIV, and Article XV; and
(z) immediately after giving effect to the transaction, no default
or event of default has occurred and is continuing under any
indebtedness of the Corporation or any agreement relating to such
indebtedness.
-6-
<PAGE>
(d) Notwithstanding any other provision of the Certificate of
Incorporation or any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, for so long as the Corporation is
able to pay its debts generally as they become due, and without the
affirmative vote of 100% of the members of the Board of Directors of the
Corporation, (i) institute proceedings to be adjudicated bankrupt or
insolvent, (ii) consent to the institution of bankruptcy or insolvency
proceedings against it, (iii) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law relating
to bankruptcy, (iv) consent to the appointment of a receiver, liquidator,
assignee, trustee, or sequestrator (or other similar official) of the
Corporation or a substantial part of its property, (v) make any assignment
for the benefit of creditors or admit its inability to pay its debts
generally as they become due, or (vi) authorize or take corporate action in
furtherance of any such action. If there shall not be, as and to the extent
required by this Article VII, Independent Directors then in office and acting
as required by this Article VII, a vote on any matter set forth in this
paragraph (d) shall not be taken unless and until Independent Directors
meeting the requirements of this Article VII shall have been appointed and
qualified.
ARTICLE VIII
DIRECTORS PROTECTED
A member of the Board of Directors of the Corporation, or a member of
any committee designated by the Board of Directors, shall, in the performance
of his/her duties, be fully protected in relying in good faith upon the books
of account or other records of the Corporation and upon such information,
opinions, report or statements as are presented to the Corporation by any of
the Corporation's officers or employees or committees of the Board of
Directors, or by any other person as to matters the member reasonably
believes are within such other person's professional or expert competence and
who has been selected with reasonable care by or on behalf of the
Corporation. Neither the amendment nor repeal of this Article VIII, nor the
adoption of any provision of this Certificate of Incorporation inconsistent
with this Article VIII, shall eliminate or reduce the effect of this Article
VIII in respect of any matter occurring, or any cause of action, suit or
claim that, but for this Article VIII, would accrue or arise prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE IX
CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
-7-
<PAGE>
ARTICLE X
NO LIABILITY OF HOLDERS OF CAPITAL STOCK
FOR CORPORATE DEBTS
The holder or holders of the capital stock of the Corporation shall not
be personally or directly liable for the payment of the Corporation's debts
and the private property of the holders of the capital stock of the
Corporation shall not be subjected to the payment of debts of the Corporation
to any extent whatsoever.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other
corporation, partnership, association or other organization in which one or
more of its directors or officers are directors or officers, or have a
financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because his/her or their votes are counted
for such purpose, if: (1) the material facts as to the relationship or
interest and as to the contract or transaction are disclosed or are known to
the Board of Directors or the committee, and the Board of Directors or
committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of disinterested directors, even though the
disinterested directors be less than a quorum; or (2) the material facts as
to the relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by the vote of
the stockholders; or (3) the contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof or the stockholders. Common or
interested directors may be counted in determining the presence of a quorum
at a meeting of the Board of Directors or of a committee thereof which
authorizes the contract or transaction.
ARTICLE XII
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(a) Any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the Corporation), by reason of the fact that
he/she is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director,
officer, employee or agent (for purposes of this Article, such person shall
include a trustee) of another corporation, partnership, joint venture, trust
or other
-8-
<PAGE>
enterprise, shall be indemnified and held harmless by the Corporation to the
fullest extent legally permissible under the General Corporation Law of the
State of Delaware, as amended from time to time, against all expenses,
liabilities and losses (including attorneys' fees and disbursements),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
he/she acted in good faith and in a manner he/she reasonably believed to be
in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful; PROVIDED, that any amounts payable by the Corporation
in accordance with this subsection (a) of Article XII hereof, shall be
payable solely to the extent of funds actually received by the Corporation in
excess of funds necessary to pay in full all outstanding Securities rated by
a nationally recognized rating agency. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall not, of itself, create a presumption that
the person seeking indemnification did not act in good faith and in a manner
which he/she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his/her conduct was
unlawful. Entry of a judgment by consent as part of a settlement shall not
be deemed a final adjudication of liability for negligence or misconduct in
the performance of duty, nor of any other issue or matter.
(b) To the extent that a director, officer, employee or agent of, or
serving at the request of, the Corporation (as described in clause (a) of
this Article) has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in clause (a), or in defense of
any claim, issue or matter therein, he/she shall be indemnified by the
Corporation against expenses (including attorneys' fees and disbursements)
actually and reasonably incurred by him/her in connection therewith without
the necessity of any action being taken by the Corporation other than the
determination, in good faith, that such defense has been successful. In all
other cases wherein indemnification is provided by this Article, unless
ordered by a court, indemnification shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he/she has met the applicable standard of conduct specified in this
Article. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion, or
(3) by the holders of a majority of the shares of capital stock of the
Corporation entitled to vote thereon.
(c) Expenses (including attorneys' fees and disbursements) incurred by
an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon receipt of any
undertaking by or on behalf of such director or officer to repay such amount
unless it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation. Expenses (including attorneys' fees and
disbursements) incurred by other employees or agents in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
-9-
<PAGE>
(d) No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director
shall be liable to the extent provided by applicable law (i) for breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. No amendment to or repeal
of this clause (d) of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
(e) The indemnification and advancement of expenses provided by this
Article shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement may be entitled under any By-Law,
agreement, vote of stockholders or disinterested directors or otherwise, both
as to action in an official capacity and as to action in another capacity
while holding such office, and shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such person.
(f) By action of the Board of Directors, notwithstanding any interest of
the directors in such action, the Corporation may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate, on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is 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/her and incurred by him/her in any such capacity, or arising out of his/her
status as such, whether or not the Corporation shall have the power to indemnify
him against such liability under the provisions of this Article.
ARTICLE XIII
COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION
AND ITS CREDITORS OR STOCKHOLDERS
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as
the case may be, to be summoned in such a manner as the said court directs.
If a majority in number representing three-fourths in value of the creditors
or class of creditors, and/or of the stockholders or class of stockholders of
this Corporation, as the case may be,
-10-
<PAGE>
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE XIV
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
The Corporation shall not amend, alter, change or repeal Article III,
Article VII, this Article XIV, or Article XV unless it has received (i) prior
written confirmation from each nationally recognized rating agency which has
rated any Securities that the current ratings on such Securities will not be
reduced or withdrawn as a result of such amendment, alteration, change or
repeal, (ii) the affirmative vote of 100% of the members of the Board of
Directors of the Corporation, and (iii) the affirmative vote of shareholders
holding at least two-thirds (2/3) of the total number of outstanding shares
of capital stock of the Corporation entitled to vote thereon. Subject to the
foregoing limitation, the Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by the law of the
State of Delaware, and all the provisions of this Certificate of
Incorporation and all rights and powers conferred in this Certificate of
Incorporation on stockholders, directors and officers are subject to this
reserved power.
ARTICLE XV
CORPORATE PROCEDURES
(a) The Corporation's assets will not be commingled with those of any
direct or ultimate parent of the Corporation; and
(b) The Corporation will maintain separate corporate records and books
of account from those of any subsidiaries, affiliates, or the direct or
ultimate parent of the Corporation.
ARTICLE XVI
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the By-Laws of
the Corporation shall so provide.
-11-
<PAGE>
ARTICLE XVII
RECORDS OUTSIDE STATE
The books and records of the Corporation may, subject to any statutory
requirements, be kept at a location or locations outside the State of Delaware
as may be designated by the Board of Directors or in the By-Laws of the
Corporation.
ARTICLE XVIII
SECTION 203 ELECTION
The Corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware
ARTICLE XIX
INCORPORATOR
The name and the mailing address of the Incorporator are as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
<S> <C>
M. David Galainena Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
</TABLE>
-12-
<PAGE>
The undersigned, being the Incorporator named above, in order to form a
corporation pursuant to the General Corporation Law of the State of Delaware,
does hereby certify that this is my act and deed and that the facts herein
stated are true and accordingly have hereunto set my hand this 25th day of June,
1997.
/s/ M. David Galainena
----------------------------------
M. David Galainena
Sole Incorporator
STATE OF ILLINOIS )
) SS.
COUNTY OF COOK )
On this 25 day of June, 1997 personally appeared before me, a Notary Public
in and for the State and County aforesaid, M. David Galainena, known to me to be
the person who executed the foregoing Certificate of Incorporation, and who
acknowledged to me that he executed the same freely and voluntarily and for the
uses and purposes therein described.
WITNESS my hand and official seal, this 25th day of June, 1997.
/s/ Paige H. Denton
----------------------------------
Notary Public
My commission expires: [SEAL]
-13-
<PAGE>
EXHIBIT C
BY-LAWS
OF
HELLER FUNDING CORPORATION
ARTICLE I
OFFICES
Section 1.1. REGISTERED OFFICE. The registered office of the
Corporation shall be in the City of Washington, County of New Castle, State
of Delaware.
Section 1.2. OTHER OFFICES. The Corporation may also have offices
at such other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
STOCKHOLDERS' MEETING
Section 2.1. PLACE OF MEETINGS. All meetings of the stockholders,
whether annual or special, shall be held in the City of Chicago, State of
Illinois, at such place as may be fixed from time to time by the Board of
Directors, or at such other place either within or without the State of
Delaware as may be designated from time to time by the Board of Directors and
stated in the notice of meeting.
Section 2.2. ANNUAL MEETINGS. An annual meeting of the
stockholders, commencing with the year 1998, shall be held on the second
Monday in June in each year, if not a legal holiday, and if a legal holiday
then on the next secular day following, at 10:00 a.m., or at such other date
and time as shall be designated by the Board of Directors and stated in the
notice of meeting, at which they shall elect a Board of Directors, and
transact such other business as may properly be brought before the meeting.
Section 2.3. NOTICE OF MEETING. Written notice of the annual
meeting stating the place, date and hour of the meeting, shall be given not
less than ten or more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Section 2.4. STOCKHOLDERS' LIST. At least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to
vote at said meeting, arranged in
<PAGE>
alphabetical order and showing the address of each stockholder and the number
of shares registered in the name of each stockholder, shall be prepared by
the Secretary. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting at the place
within the city where the meeting is to be held which place shall be
specified in the notice of meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at
the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
Section 2.5. SPECIAL MEETINGS. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of InCorporation, may be called by the
President and shall be called by the Secretary at the request of a majority
of the Board of Directors, or at the request in writing of stockholders
owning at least a majority of the number of shares of the Corporation issued
and outstanding and entitled to vote. Such request shall state the purpose
or purposes of the proposed meeting. Business transacted at any special
meeting shall be limited to the purposes stated in the notice of special
meeting.
Section 2.6. NOTICE OF SPECIAL MEETING. Written notice of a
special meeting, stating the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called, shall be given not less
than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote at such meeting. If mailed, notice is given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
Section 2.7. QUORUM. The holders of a majority of the shares
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as
otherwise provided by statute, by the Certificate of Incorporation or by
these By-Laws. If, however, such quorum shall not be present or represented
at any meeting of the stockholders, the stockholder entitled to vote
thereat, present in person or represented by proxy, shall have the power to
adjourn the meeting from time to time, without notice other than announcement
at the meeting, of the place, date and hour of the adjourned meeting, until
a quorum shall again be present or represented by proxy. At the adjourned
meeting at which a quorum shall be present or represented by proxy, the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if
after the adjournment, a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 2.8. VOTING. When a quorum is present at any meeting, the
vote of the holders of a majority of the shares having voting power, present
in person or represented by proxy, shall decide any question brought before
such meeting, unless the question is one upon which, by express provision of
the statutes or of the Certificate of Incorporation or of these By-Laws, a
different vote is required in which case such express provision shall govern
and control the decision of such question. Each stockholder shall have one
vote for each share of stock having voting power
2
<PAGE>
registered in his name on the books of the Corporation, except as otherwise
provided in the Certificate of Incorporation.
Section 2.9. PROXIES. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action
in writing without a meeting may authorize another person or persons to act
for him by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
Section 2.10. UNANIMOUS CONSENT. Whenever the vote of stockholders
at a meeting thereof is required or permitted to be taken for or in
connection with any corporate action by any provisions of the statutes or of
the Certificate of Incorporation or these By-Laws, the meeting, notice of the
meeting, and vote of stockholders may be dispensed with if all the
stockholders who would have been entitled to vote upon the action, if such
meeting were held, shall consent in writing to such corporate action being
taken.
ARTICLE III
DIRECTORS
Section 3.1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of
Directors which may exercise all such powers of the Corporation and do all
such acts and things as are not by the Delaware General Corporation Law nor
by the Certificate of Incorporation nor by these By-Laws directed or required
to be exercised or done by the stockholders.
Section 3.2. NUMBER OF DIRECTORS. The number of directors which
shall constitute the whole Board shall be not less than four (4) nor more
than eight (8). Each director shall be elected at the annual meeting of the
stockholders, and shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
Section 3.3. VACANCIES. If the office of a director becomes
vacant by reason of death, resignation, retirement disqualification, removal
from office, or otherwise, or a new directorship is created, the holders of a
plurality of shares issued and outstanding and entitled to vote in elections
of directors, shall choose a successor or successors, or a director to fill
the newly created directorship, who shall hold office for the unexpired term
or until the next election of directors.
Section 3.4. PLACE OF MEETINGS. The Board of Directors may hold
its meetings outside of the State of Delaware, at the office of the
Corporation or at such other places as they may from time to time determine,
or as shall be fixed in the respective notices or waivers of notice of such
meetings.
Section 3.5. COMMITTEES OF DIRECTORS. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board,
designate one or more committees, each
3
<PAGE>
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. Any such committee, to the extent provided in the
resolution of the Board of Directors, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it; but no such
committee shall have the power of authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amendment to the By-Laws, of the Corporation;
and, unless the resolution, By-Laws, or Certificate of Incorporation
expressly so provide, no such committee shall have the power or authority to
declare a dividend or to authorize the issuance of stock. Such committee or
committees shall have such name or names as may be determined from time to
time by resolution adopted by the Board of Directors. The committees shall
keep regular minutes of their proceedings and report the same to the Board of
Directors when required.
Section 3.6. COMPENSATION OF DIRECTORS. Directors, as such, may
receive such stated salary for their services and/or such fixed sums and
expenses of attendance for attendance at each regular or special meeting of the
Board of Directors as may be established by resolution of the Board; provided
that nothing herein contained shall be construed to preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings.
Section 3.7. ANNUAL MEETING. The annual meeting of the Board of
Directors shall be held within ten days after the annual meeting of the
stockholders in each year. Notice of such meeting, unless waived, shall be
given by mail or telegram to each director elected at such annual meeting, at
his address as the same may appear on the records of the Corporation, or in the
absence of such address, at his residence or usual place of business, at least
three days before the day on which such meeting is to be held. Said meeting may
be held at such place as the Board may fix from time to time or as may be
specified or fixed in such notice or waiver thereof.
Section 3.8. Special MEETINGS. Special meetings of the Board of
Directors may be held at any time on the call of the President or at the request
in writing of at least 40% of the directors. Notice of any such meeting, unless
waived, shall be given by mail or telegram to each director at his address as
the same appears on the records of the Corporation not less than one day prior
to the day on which such meeting is to be held if such notice is by telegram,
and not less than two days prior to the day on which the meeting is to be held
if such notice is by mail. If the Secretary shall fail or refuse to give such
notice, then the notice may be given by the officer or any one of the directors
making the call. Any such meeting may be held at such place as the Board may
fix from time to time or as may be specified or fixed in such notice or waiver
thereof. Any meeting of the Board of Directors shall be a legal meeting without
any notice thereof having been given, if all the directors shall be present
thereat, and no notice of a meeting shall be required to be given to any
directors who shall attend such meeting.
4
<PAGE>
Section 3.9. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if a written consent to such action is
signed by all members of the Board or such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors.
Members of the Board of Directors, or any committee designated by the
Board, may participate in a meeting of the Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.
Section 3.10. QUORUM AND MANNER OF ACTING. Except as otherwise
provided in these By-Laws, a majority of the total number of directors as at the
time specified by the By-Laws shall constitute a quorum at any regular or
special meeting of the Board of Directors. Except as otherwise provided by
statute, by the Certificate of Incorporation or by these By-Laws, the vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum, a
majority of the directors present may adjourn the meeting from time to time
until a quorum shall be present. Notice of any adjourned meeting need not be
given, except that notice shall be given to all directors if the adjournment is
for more than thirty days.
ARTICLE IV
OFFICERS
Section 4.1. EXECUTIVE OFFICERS. The executive officers of the
Corporation shall be a President, such number of Vice Presidents, if any, as the
Board of Directors may determine, a Secretary and a Treasurer. One person may
hold any number of said offices.
Section 4.2. ELECTION, TERM OF OFFICE AND ELIGIBILITY. The
executive officers of the Corporation shall be elected annually by the Board
of Directors at its annual meeting or at a special meeting held in lieu
thereof. Each officer, except such officers as may be appointed in
accordance with the provisions of Section 4.3, shall hold office until his
successor shall have been duly chosen and qualified or until his death,
resignation or removal. None of the officers need be members of the Board.
Section 4.3. SUBORDINATE OFFICERS. The Board of Directors may
appoint such Assistant Secretaries, Assistant Treasurers, Controller and other
officers, and such agents as the Board may determine, to hold office for such
period and with such authority and to perform such duties as the Board may from
time to time determine. The Board may, by specific resolution, empower the
chief executive officer of the Corporation or the Executive Committee to appoint
any such subordinate officers or agents.
5
<PAGE>
Section 4.4. REMOVAL. The President, any Vice President, the
Secretary and/or the Treasurer may be removed at any time, either with or
without cause, but only by the affirmative vote of the majority of the total
number of directors as at the time specified by the By-Laws. Any subordinate
officer appointed pursuant to Section 4.3 may be removed at any time, either
with or without cause, by the majority vote of the directors present at any
meeting of the Board or by any committee or officer empowered to appoint such
subordinate officers.
Section 4.5. THE PRESIDENT. The President shall be the chief
executive officer of the Corporation. He shall have executive authority to see
that all orders and resolutions of the Board of Directors are carried into
effect and, subject to the control vested in the Board of Directors by statute,
by the Certificate of Incorporation, or by these By-Laws, shall administer and
be responsible for the management of the business and affairs of the
Corporation. He shall preside at all meetings of the stockholders and the Board
of Directors; and in general shall perform all duties incident to the office of
the President and such other duties incident to the office of the President and
such other duties as from time to time may be assigned to him by the Board of
Directors.
Section 4.6. THE VICE PRESIDENTS. In the event of the absence or
disability of the President, each Vice President, in the order designated, or
in the absence of any designation, then in the order of their election, shall
perform the duties of the President. The Vice Presidents shall also perform
such other duties as from time to time may be assigned to them by the Board
of Directors or by the chief executive officer of the Corporation.
Section 4.7. THE SECRETARY. The Secretary shall:
(a) Keep the minutes of the meetings of the stockholders and of the
Board of Directors;
(b) See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law;
(c) Be custodian of the records and of the seal of the Corporation
and see that the seal or a facsimile or equivalent thereof is affixed to or
reproduced on all documents, the execution of which on behalf of the
Corporation under its seal is duly authorized;
(d) Have charge of the stock record books of the Corporation;
(e) In general, perform all duties incident to the office of
Secretary, and such other duties as are provided by these By-Laws and as
from time to time are assigned to him by the Board of Directors or by the
chief executive officer of the Corporation.
Section 4.7. THE ASSISTANT SECRETARIES. If one or more Assistant
Secretaries shall be appointed pursuant to the provisions of Section 4.3
respecting subordinate officers, then, at the
6
<PAGE>
request of the Secretary, or in his absence or disability, the Assistant
Secretary designated by the Secretary (or in the absence of such
designations, then any one of such Assistant Secretaries) shall perform the
duties of the Secretary and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the Secretary.
Section 4.8 THE TREASURER. The Treasurer shall:
(a) Receive and be responsible for all funds of and securities
owned or held by the Corporation and, in connection therewith, among
other things: keep or cause to be kept full and accurate records and
accounts for the Corporation; deposit or cause to be deposited to the
credit of the Corporation all moneys, funds and securities so received
in such bank or other depositary as the Board of Directors or an officer
designated by the Board may from time to time establish; and disburse or
supervise the disbursement of the funds of the Corporation as may be
properly authorized.
(b) Render to the Board of Directors at any meeting thereof, or
from time to time when ever the Board of Directors or the chief
executive officer of the Corporation may require, financial and other
appropriate reports on the condition of the Corporation;
(c) In general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to
him by the Board of Directors or by the chief executive officer of the
Corporation.
Section 4.9. THE ASSISTANT TREASURERS. If one or more Assistant
Treasurers shall be appointed pursuant to the provisions of Section 4.3
respecting subordinate officers, then, at the request of the Treasurer, or in
his absence or disability, the Assistant Treasurer designated by the
Treasurer (or in the absence of such designation, then any one of such
Assistant Treasurers) shall perform all the duties of the Treasurer and when
so acting shall have all the powers of and be subject to all the restrictions
upon, the Treasurer.
Section 4.10. SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
Section 4.11. BONDS. If the Board of Directors or the chief
executive officer shall so require, any officer or agent of the Corporation
shall give bond to the Corporation in such amount and with such surety as the
Board of Directors or the chief executive officer, as the case may be, may
deem sufficient, conditioned upon the faithful performance of their
respective duties and offices.
Section 4.12. DELEGATION OF DUTIES. In case of the absence of any
officer of the Corporation or for any other reason which may seem sufficient
to the Board of Directors, the Board
7
<PAGE>
of Directors may, for the time being, delegate his powers and duties, or any
of them, to any other officer or to any director.
ARTICLE V
SHARES OF STOCK
Section 5.1. REGULATION. Subject to the terms of any contract of
the Corporation, the Board of Directors may make such rules and regulations
as it may deem expedient concerning the issue, transfer, and registration of
certificates for shares of the stock of the Corporation, including the issue
of new certificates for lost, stolen or destroyed certificates, and including
the appointment of transfer agents and registrars.
Section 5.2. STOCK CERTIFICATES. Certificates for shares of the
stock of the Corporation shall be respectively numbered serially for each
class of stock, or series thereof, as they are issued, shall be impressed
with the corporate seal or a facsimile thereof, and shall be signed by the
President or a Vice President, and by the Secretary or Treasurer, or an
Assistant Secretary or an Assistant Treasurer, provided that such signatures
may be facsimiles on any certificate countersigned by a transfer agent other
than the Corporation or its employee. Each certificate shall exhibit the name
of the Corporation, the class (or series of any class) and number of shares
represented thereby, and the name of the holder. Each certificate shall be
otherwise in such form as may be prescribed by the Board of Directors.
Section 5.3. RESTRICTION ON TRANSFER OF SECURITIES. A restriction
on the transfer or registration of transfer of securities of the Corporation
may be imposed either by the Certificate of Incorporation or by these By-Laws
or by an agreement among any number of security holders or among such holders
and the Corporation. No restriction so imposed shall be binding with respect
to securities issued prior to the adoption of the restriction unless the
holders of the securities are parties to an agreement or voted in favor of
the restriction.
A restriction on the transfer of securities of the Corporation is
permitted by this Section if it:
(a) Obligates the holder of the restricted securities to offer to
the Corporation or to any other holders of securities of the Corporation
or to any other person or to any combination of the foregoing a prior
opportunity, to be exercised within a reasonable time, to acquire the
restricted securities; or
(b) Obligates the Corporation or any holder of securities of the
Corporation or any other person or any combination of the foregoing to
purchase the securities which are the subject of an agreement respecting
the purchase and sale of the restricted securities; or
8
<PAGE>
(c) Requires the Corporation or the holders of any class of
securities of the Corporation to consent to any proposed transfer of the
restricted securities or to approve the proposed transferee of the
restricted securities; or
(d) Prohibits the transfer of the restricted securities to
designated persons or classes of persons; and such designation is not
manifestly unreasonable; or
(e) Restricts transfer or registration of transfer in any other
lawful manner.
Unless noted conspicuously on the security, a restriction, even
though permitted by this Section, is ineffective except against a person with
actual knowledge of the restriction.
Section 5.4. TRANSFER OF SHARES. Subject to the restrictions
permitted by Section 5.3, shares of the capital stock of the Corporation
shall be transferable on the books of the Corporation by the holder thereof
in person or by his duly authorized attorney, upon the surrender or
cancellation of a certificate or certificates for a like number of shares. As
against the Corporation, a transfer of shares can be made only on the books
of the Corporation and in the manner hereinabove provided, and the
Corporation shall be entitled to treat the registered holder of any share as
the owner thereof and shall not be bound to recognize any equitable or other
claim to or interest in such share on the part of any other person, whether
or not it shall have express or other notice thereof, save as expressly
provided by the statutes of the State of Delaware.
Section 5.5. FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF
RECORD. (a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less than ten days before the date of such
meeting. If no record is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
providing, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by the Delaware Corporation Law, shall be the
first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business,
or an officer or agent of the Corporation having custody
9
<PAGE>
of the book in which proceedings of meetings by stockholders are recorded.
Delivery made to a Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the Board of Directors and prior action by the Board of
Directors is required by the Delaware General Corporation Law, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or
allotment of any rights or the stockholders entitled to exercise any rights
in respect to any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted, and which record date shall be not more than
sixty days prior to such action. If no record date is fixed, the record date
for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
Section 5.6 LOST CERTIFICATE. Any stockholder claiming that a
certificate representing shares of stock has been lost, stolen or destroyed
may make an affidavit or affirmation of the fact and, if the Board of
Directors so requires, advertise the same in a manner designated by the
Board, and give the Corporation a bond of indemnity in form and with security
for an amount satisfactory to the Board (or an officer or officers designated
by the Board), whereupon a new certificate may be issued of the same tenor
and representing the same number, class and/or series of shares as were
represented by the certificate alleged to have been lost, stolen or destroyed.
ARTICLE VI
BOOKS AND RECORDS
Section 6.1. LOCATION. The books, accounts and records of the
Corporation may be kept at such place or places within or without the State
of Delaware as the Board of Directors may from time to time determine.
Section 6.2. INSPECTION. The books, accounts, and records of the
Corporation shall be open to inspection by any member of the Board of
Directors at all times; and open to inspection by the stockholders at such
times, and subject to such regulations as the Board of Directors may
prescribe, except as otherwise provided by statute.
ARTICLE VII
DIVIDENDS AND RESERVES
Section 7.1. DIVIDENDS. The Board of Directors of the Corporation,
subject to any restrictions contained in the Certificate of Incorporation and
other lawful commitments of the
10
<PAGE>
Corporation, may declare and pay dividends upon the shares of its capital
stock either out of the surplus of the Corporation, as defined in and
computed in accordance with the Delaware General Corporation Law, or in case
there shall be no such surplus, out of the net profits of the Corporation for
the fiscal year in which the dividend is declared and/or the preceding fiscal
year. If the capital of the Corporation, computed in accordance with the
Delaware General Corporation Law, shall have been diminished by depreciation
in the value of its property, or by losses, or otherwise, to an amount less
than the aggregate amount of the capital represented by the issued and
outstanding stock of all classes having a preference upon the distribution of
assets, the Board of Directors of the Corporation shall not declare and pay
out of such net profits any dividends upon any shares of any classes of its
capital stock until the deficiency in the amount of capital represented by
the issued and outstanding stock of all classes having a preference upon the
distribution of assets shall have been repaired. Dividends may be paid in cash,
in property, or in shares of the Corporation's capital stock.
Section 7.2. RESERVES. The Board of Directors of the Corporation may
set apart, out of any of the funds of the Corporation available for
dividends, a reserve or reserves for any proper purpose and may abolish any
such reserve.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 8.2. DEPOSITORIES. The Board of Directors or an officer
designated by the Board shall appoint banks, trust companies, or other
depositories in which shall be deposited from time to time the money or
securities of the Corporation.
Section 8.3. CHECKS, DRAFTS AND NOTES. All checks, drafts, or other
orders for the payment of money and all notes or other evidence or
indebtedness issued in the name of the Corporation shall be signed by such
officer or officers or agent or agents as shall from time to time be
designated by resolution of the Board of Directors or by an officer appointed
by the Board.
Section 8.4. CONTRACTS AND OTHER INSTRUMENTS. The Board of Directors
may authorize any officer, agent or agents to enter into any contract or
execute and deliver any instrument in the name and on behalf of the
Corporation and such authority may be general or confined to specific
instances.
Section 8.5. INSURANCE. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent
of the Corporation, or is 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 and incurred by him in any such capacity, or arising out of his
status as such, whether or not the
11
<PAGE>
Corporation would have the power to indemnify him against such liability
under the Delaware General Corporation Law.
Section 8.6. NOTICES. Whenever under the provisions of the statutes
or of the Certificate of Incorporation or of these By-Laws notice is required
to be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, by
depositing the same in post office or letter box, in a postpaid sealed
wrapper, or by delivery to a telegraph company, addressed to such director or
stockholder at such address as appears on the records of the Corporation, and
such notice shall be deemed to be given at the time when the same shall be
thus mailed or delivered to a telegraph company. Notice may also be given by
facsimile transmission provided that such notice shall be immediately
confirmed by a telephone call to the recipient at the number specified in the
records of the Corporation and such notice shall be deemed to be given at the
time when the same shall be transmitted by facsimile machine.
Section 8.7. WAIVERS OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors or members of a committee of directors need be
specified in any written waiver of notice.
Section 8.8. STOCK IN OTHER CORPORATIONS. Any shares of stock in any
other Corporation which may be from time to time be held by this Corporation
may be represented and voted at any meeting of shareholders of such
Corporation by the President or a Vice President, or by any other person or
persons thereunto authorized by the Board of Directors, or by any proxy
designated by written instrument of appointment executed in the name of this
Corporation by its President or a Vice President. Shares of stock belonging
to the Corporation need not stand in the name of the Corporation, but may be
held for the benefit of the Corporation in the individual name of the
Treasurer of any other nominee designated for the purpose by the Board of
Directors. Certificates for shares so held for the benefit of the Corporation
shall be endorsed in blank or have proper stock powers attached so that said
certificates are at all times in due form for transfer, and shall be held for
safekeeping in such manner as shall be determined from time to time by the
Board of Directors.
Section 8.9. AMENDMENT OF BY-LAWS. The stockholders, by the
affirmative vote of the holders of a majority of the stock issued and
outstanding and having voting power may, at any annual or special meeting if
notice of such alteration or amendment of the By-Laws is contained in the
notice of such meeting, adopt, amend, or repeal these By-Laws, and
alterations or amendments of By-Laws made by the stockholders shall not be
altered or amended by the Board of Directors.
12
<PAGE>
The Board of Directors, by the affirmative vote of a majority of the
whole Board, may adopt, amend, or repeal these By-Laws at any meeting, except
as provided in the above paragraph. By-Laws made by the Board of Directors may
be altered or repealed by the stockholders.
13
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
by and between
HELLER FUNDING CORPORATION
as Trust Depositor,
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
Dated as of December [ ], 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
ARTICLE I. DEFINITIONS............................................................................................1
SECTION 1.01. CAPITALIZED TERMS................................................................................1
SECTION 1.02. OTHER DEFINITIONAL PROVISIONS....................................................................4
SECTION 1.03. USAGE OF TERMS...................................................................................4
SECTION 1.04. SECTION REFERENCES...............................................................................4
SECTION 1.05. ACCOUNTING TERMS.................................................................................4
ARTICLE II. ORGANIZATION..........................................................................................4
SECTION 2.01. NAME.............................................................................................4
SECTION 2.02. OFFICE...........................................................................................4
SECTION 2.03. PURPOSES AND POWERS..............................................................................4
SECTION 2.04. APPOINTMENT OF OWNER TRUSTEE.....................................................................5
SECTION 2.05. CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE.......................................................5
SECTION 2.06. DECLARATION OF TRUST.............................................................................6
SECTION 2.07. LIABILITY OF TRUST DEPOSITOR.....................................................................6
SECTION 2.08. TITLE TO TRUST PROPERTY..........................................................................6
SECTION 2.09. SITUS OF TRUST...................................................................................6
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE TRUST DEPOSITOR............................................7
SECTION 2.11. FEDERAL INCOME TAX TREATMENT.....................................................................8
SECTION 2.12. COVENANTS OF THE TRUST DEPOSITOR.................................................................8
ARTICLE III. TRUST CERTIFICATE AND TRANSFER OF INTERESTS..........................................................9
SECTION 3.01. OWNERSHIP........................................................................................9
SECTION 3.02. THE TRUST CERTIFICATE...........................................................................10
SECTION 3.03. AUTHENTICATION AND DELIVERY OF TRUST CERTIFICATE................................................10
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST CERTIFICATE......................................10
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST CERTIFICATES.........................................11
SECTION 3.06. PERSONS DEEMED OWNERS...........................................................................11
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDER'S NAME AND ADDRESSES........................................12
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY.................................................................12
SECTION 3.09. TEMPORARY TRUST CERTIFICATE.....................................................................12
SECTION 3.10. APPOINTMENT OF PAYING AGENT.....................................................................12
SECTION 3.11. OWNERSHIP BY TRUST DEPOSITOR OF TRUST CERTIFICATE...............................................13
ARTICLE IV. ACTIONS BY OWNER TRUSTEE.............................................................................13
SECTION 4.01. PRIOR NOTICE TO CERTIFICATEHOLDER WITH RESPECT TO CERTAIN MATTERS...............................13
SECTION 4.02. ACTION BY OWNER WITH RESPECT TO CERTAIN MATTERS.................................................14
SECTION 4.03. ACTION BY OWNER WITH RESPECT TO BANKRUPTCY......................................................14
SECTION 4.04. RESTRICTIONS ON OWNER'S POWER...................................................................14
ARTICLE V. APPLICATION OF TRUST FUNDS; CERTAIN DUTIES............................................................14
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNT..................................................................14
SECTION 5.02. APPLICATION OF TRUST FUNDS......................................................................15
</TABLE>
- i -
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 5.03. METHOD OF PAYMENT...............................................................................15
SECTION 5.04. NO SEGREGATION OF MONEYS; NO INTEREST...........................................................15
SECTION 5.05. ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDER, THE INTERNAL REVENUE SERVICE AND OTHERS........16
SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER.......................................................16
ARTICLE VI. AUTHORITY AND DUTIES OF OWNER TRUSTEE................................................................16
SECTION 6.01. GENERAL AUTHORITY...............................................................................16
SECTION 6.02. GENERAL DUTIES..................................................................................16
SECTION 6.03. ACTION UPON INSTRUCTION.........................................................................17
SECTION 6.04. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN INSTRUCTIONS..............................18
SECTION 6.05. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS......................................18
SECTION 6.06. RESTRICTIONS....................................................................................18
ARTICLE VII. CONCERNING THE OWNER TRUSTEE........................................................................19
SECTION 7.01. ACCEPTANCE OF TRUSTS AND DUTIES.................................................................19
SECTION 7.02. FURNISHING OF DOCUMENTS.........................................................................20
SECTION 7.03. REPRESENTATIONS AND WARRANTIES..................................................................20
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL.....................................................................20
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY...............................................................21
SECTION 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATE, NOTES OR CONTRACTS..............................21
SECTION 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATE AND NOTES...............................................22
ARTICLE VIII. COMPENSATION OF OWNER TRUSTEE......................................................................22
SECTION 8.01. OWNER TRUSTEE'S FEES AND EXPENSES...............................................................22
SECTION 8.02. INDEMNIFICATION.................................................................................22
SECTION 8.03. SECTION 8.03....................................................................................22
ARTICLE IX. TERMINATION OF TRUST AGREEMENT.......................................................................23
SECTION 9.01. TERMINATION OF TRUST AGREEMENT..................................................................23
SECTION 9.02. DISSOLUTION UPON BANKRUPTCY OF TRUST DEPOSITOR OR WITHDRAWAL OR REMOVAL OF TRUST DEPOSITOR......24
ARTICLE X. SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES................................................24
SECTION 10.01. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE.....................................................24
SECTION 10.02. RESIGNATION OR REMOVAL OF OWNER TRUSTEE........................................................24
SECTION 10.03. SUCCESSOR OWNER TRUSTEE........................................................................25
SECTION 10.04. MERGER OR CONSOLIDATION OF OWNER TRUSTEE.......................................................26
SECTION 10.05. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE..................................................26
ARTICLE XI. MISCELLANEOUS........................................................................................27
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS.....................................................................27
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN OWNER........................................................28
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS................................................................28
SECTION 11.04. NOTICES........................................................................................28
SECTION 11.05. SEVERABILITY OF PROVISIONS.....................................................................30
SECTION 11.06. COUNTERPARTS...................................................................................30
SECTION 11.07. SUCCESSORS AND ASSIGNS.........................................................................30
SECTION 11.08. NO PETITION....................................................................................31
SECTION 11.09. NO RECOURSE....................................................................................31
</TABLE>
- ii -
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 11.10. HEADINGS.......................................................................................31
SECTION 11.11. GOVERNING LAW..................................................................................31
SECTION 11.12. TRUST CERTIFICATE TRANSFER RESTRICTIONS........................................................31
SECTION 11.13. TRUST DEPOSITOR PAYMENT OBLIGATION.............................................................31
EXHIBITS
Exhibit A - Form of Certificate of Trust..............................................................A-1
Exhibit B - Form of Trust Certificate.................................................................B-1
</TABLE>
- iii -
<PAGE>
This AMENDED AND RESTATED TRUST AGREEMENT dated as of December [ ],
1999, is between HELLER FUNDING CORPORATION, a Delaware corporation, as Trust
Depositor (the "TRUST DEPOSITOR"), and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as owner trustee (the "OWNER TRUSTEE").
WHEREAS, in connection herewith, the Trust Depositor is willing to
assume certain obligations pursuant hereto; and
WHEREAS, in connection herewith, the Trust Depositor is willing to
purchase the Trust Certificate (as defined herein) to be issued pursuant to
this Agreement and to assume certain obligations pursuant hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 CAPITALIZED TERMS. Except as otherwise provided in this
Agreement, 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 the date hereof, among the Trust, the Trust Depositor, the Indenture
Trustee and Heller Financial, Inc., as administrator.
"AGREEMENT" means this Trust Agreement, as the same may be amended
and supplemented from time to time.
"APPLICANT" shall have the meaning set forth in Section 3.07.
"BENEFIT PLAN" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii)
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the
Delaware Code, 12 DEL. CODE Section 3801 ET SEQ., as the same may be amended
from time to time.
"CERTIFICATE BALANCE" means [ ].
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 5.01.
<PAGE>
"CERTIFICATE OF TRUST" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute,
substantially in the form of EXHIBIT A hereto.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"CERTIFICATEHOLDER" or "HOLDER" means with respect to a Definitive
Trust Certificate the Person in whose name the Trust Certificate is
registered in the Certificate Register.
"CLOSING DATE" means December [ ], 1999.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DEFINITIVE TRUST CERTIFICATE" shall have the meaning set forth in
Section 3.09.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSES" shall have the meaning assigned to such term in Section
8.02.
"FOREIGN PERSON" means any Person other than (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of its source, or (iv) a trust whose
administration is subject to the primary supervision of a court within the
United States and which has one or more U.S. fiduciaries who have authority
to control all substantial decisions of the Trust.
"HELLER FINANCIAL" means Heller Financial, Inc., a Delaware
corporation.
"INDEMNIFIED PARTIES" shall have the meaning assigned to such term
in Section 8.02.
"INDENTURE" means the Indenture dated as of the date hereof between
the Trust and Norwest Bank Minnesota, N.A., as Indenture Trustee.
"NOTE DEPOSITORY AGREEMENT" means the Agreement dated as of the
Closing Date among the Trust, the Indenture Trustee, the Administrator and
DTC, as the Clearing Agency, relating to the Notes, as the same may be
amended and supplemented from time to time.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the
Class D Notes and the Class E Notes in each case issued pursuant to the
Indenture.
"OWNER" means the Holder of the Trust Certificate.
- 2 -
<PAGE>
"OWNER TRUSTEE" means Wilmington Trust Company, a Delaware
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"OWNER TRUSTEE CORPORATE TRUST OFFICE" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be 1100 North Market Street, Wilmington, Delaware 19890,
Attn: Corporate Trust Administration, or such other office at such other
address as the Owner Trustee may designate from time to time by notice to the
Certificateholder, the Servicer, the Indenture Trustee, the Trust Depositor
and Heller Financial.
"PAYING AGENT" means any paying agent or co-paying agent appointed
pursuant to Section 3.10.
"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.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of the date hereof, among the Trust, the Trust Depositor,
Heller Financial, as Servicer and as an Originator and Heller Financial
Leasing, Inc., as an Originator thereunder, and the Indenture Trustee named
therein, as the same may be amended or supplemented from time to time.
"SECRETARY OF STATE" means the Secretary of State of the State of
Delaware.
"TAX MATTERS PARTNER" shall have the meaning provided in Section
5.06(b) hereof.
"TREASURY REGULATIONS" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"TRUST" means the trust established by this Agreement.
"TRUST CERTIFICATE" means the trust certificate evidencing the
beneficial equity interest of an Owner in the Trust, substantially in the
form of EXHIBIT B hereto.
"TRUST DEPOSITOR" means Heller Funding Corporation in its capacity
as Trust Depositor hereunder, and its successors.
"TRUST ESTATE" means all right, title and interest of the Trust in
and to the property and rights assigned to the Trust pursuant to Article Two
of the Sale and Servicing Agreement, all funds on deposit from time to time
in the Trust Accounts and the Certificate Distribution Account and all other
property of the Trust from time to time, including any rights of the Owner
- 3 -
<PAGE>
Trustee and the Trust pursuant to the Sale and Servicing Agreement and the
Administration Agreement.
SECTION 1.02 OTHER DEFINITIONAL PROVISIONS. Capitalized terms used
that are not otherwise defined herein shall have the meanings ascribed
thereto in the Sale and Servicing Agreement or, if not defined therein, in
the Indenture.
SECTION 1.03 Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "WRITING"
include printing, typing, lithography and other means of reproducing words in
a visible form; references to agreements and other contractual instruments
include all amendments, modifications and supplements thereto or any changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "INCLUDING" means "INCLUDING WITHOUT
LIMITATION".
SECTION 1.04 SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.05 ACCOUNTING TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE II.
ORGANIZATION
SECTION 2.01 NAME. The Trust created hereby shall be known as
"HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2", in which name the Owner
Trustee may conduct the activities 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 Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to
the Owner and the Trust Depositor.
SECTION 2.03 PURPOSES AND POWERS.
(a) The sole purpose of the Trust is, and the Trust shall have the
power and authority, to manage the Trust Estate and collect and disburse the
periodic income therefrom for the use and benefit of the Owner, and in
furtherance of such purpose to engage in the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the
Trust Certificate pursuant to this Agreement and to
sell the Notes and the Trust Certificate;
- 4 -
<PAGE>
(ii) with the proceeds of the sale of the Notes and the
Trust Certificate, to purchase the Contracts and
other Trust Assets, and to pay the organizational,
start-up and transactional expenses of the Trust and
to pay the balance to the Trust Depositor pursuant to
the Sale and Servicing Agreement;
(iii) 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 Sale and Servicing Agreement any portion of
the Trust Estate released from the Lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Transaction Documents to which it is to be a party;
(v) 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
(vi) subject to compliance with the Transaction Documents,
to engage in such other activities as may be required
in connection with conservation of the Trust Estate
and the making of distributions to the Owner and the
Noteholders.
The Trust shall not engage in any activities other than in connection with
the foregoing. Nothing contained herein shall be deemed to authorize the
Owner Trustee to engage in any business operations or any activities other
than those set forth in the introductory sentence of this Section.
Specifically, the Owner Trustee shall have no authority to engage in any
business operations, or acquire any assets other than those specifically
included in the Trust Estate under Section 1.01, or otherwise vary the assets
held by the Trust. Similarly, the Owner Trustee shall have no discretionary
duties other than performing those ministerial acts set forth above necessary
to accomplish the purpose of this Trust as set forth in the introductory
sentence of this Section.
SECTION 2.04. APPOINTMENT OF OWNER TRUSTEE. The Trust Depositor
hereby appoints the Owner Trustee as trustee of the Trust effective as of the
date hereof, to have all the rights, powers and duties set forth herein, and
the Owner Trustee hereby accepts such appointment.
SECTION 2.05. CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. The Trust
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Owner Trustee, as of the date hereof, the sum of $1. The Owner Trustee hereby
acknowledges receipt in trust from the Trust Depositor, as of the date
hereof, of the foregoing contribution, which shall constitute the initial
Trust Estate (prior to giving effect to the conveyances described in the Sale
and Servicing Agreement) and shall be deposited in the Certificate
Distribution Account. The Trust Depositor shall pay organizational expenses
of the Trust as they may arise or shall, upon the request of the Owner
- 5 -
<PAGE>
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 Trust Estate in trust upon and subject to the
conditions set forth herein for the sole purpose of conserving the Trust
Estate and collecting and disbursing the periodic income therefrom for the
use and benefit of the Owner, subject to the obligations of the Trust under
the Transaction 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 the Trust be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulation Section 301.7701-3(b)(1)(ii) as in effect for periods after
January 1, 1997. The parties agree not to take any action inconsistent with
such intended federal income tax treatment. 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 for the sole purpose and to the extent
necessary to accomplish the purpose of this Trust as set forth in the
introductory sentence of Section 2.03.
SECTION 2.07. LIABILITY OF TRUST DEPOSITOR.
(a) Pursuant to Section 3803(a) of the Business Trust Statute, the
Trust Depositor shall be liable directly to and will indemnify any injured
party or any other creditor of the Trust for all losses, claims, damages,
liabilities and expenses of the Trust to the extent that the Trust Depositor
would be liable if the Trust were a partnership under the Delaware Revised
Uniform Limited Partnership Act in which Trust Depositor were a general
partner (including any Illinois personal property replacement tax that is
imposed on the Trust as a partnership); PROVIDED, HOWEVER, that Trust
Depositor shall not be liable for any losses incurred by a Certificateholder
in the capacity of an investor in the Trust Certificate or a Noteholder in
the capacity of an investor in the Notes. In addition, any third party
creditors of the Trust (other than in connection with the obligations
described in the immediately preceding sentence for which the Trust Depositor
shall not be liable) shall be deemed third party beneficiaries of this
paragraph. The obligations of the Trust Depositor under this paragraph shall
be evidenced by the Trust Certificate described in Section 3.11.
(b) Other than to the extent set forth in Section 2.07(a), no Owner,
solely by virtue of its being the Holder of the Trust Certificate, shall have
any personal liability for any liability or obligation of the Trust.
SECTION 2.08. TITLE TO TRUST PROPERTY. Legal title to the Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust Estate to be vested in an Owner Trustee or Owner 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 2.09. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware or the State of Illinois. All bank
accounts maintained by the Owner Trustee on behalf
- 6 -
<PAGE>
of the Trust shall be located in the State of Illinois or the State of
Delaware. 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
Minnesota and payments will be made by the Trust only from Delaware or
Minnesota. The only office of the Trust will be at the Owner Trustee
Corporate Trust Office.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE TRUST DEPOSITOR.
The Trust Depositor hereby represents and warrants to the Owner Trustee
that:
(a) The Trust Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to
conduct its business and had at all relevant times, and has, power, authority
and legal right to acquire and own the Contracts.
(b) The Trust Depositor is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications.
(c) The Trust Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Trust Depositor has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Owner Trustee on behalf of the Trust as
part of the Trust Estate and has duly authorized such sale and assignment and
deposit with the Owner Trustee on behalf of the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Trust Depositor 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, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Trust Depositor, or any indenture, agreement
or other instrument to which the Trust Depositor is a party or by which it is
bound; nor result in the creation or imposition of any Lien upon any of the
properties of the Trust Depositor pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Transaction Documents); nor violate any law or any order, rule or regulation
applicable to the Trust Depositor of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Trust Depositor or its properties.
(e) All approvals, authorizations, consents, orders or other actions
of any person or any governmental entity required in connection with the
execution and delivery of this Agreement and the fulfillment of the terms
hereof have been obtained.
(f) There are no proceedings or investigations pending, or to the
Trust Depositor's best knowledge threatened, before any court, regulatory
body, administrative agency or other
- 7 -
<PAGE>
governmental instrumentality having jurisdiction over the Trust Depositor or
its properties: (A) asserting the invalidity of this Agreement, any of the
other Transaction Documents or the Trust Certificate, (B) seeking to prevent
the issuance of the Trust Certificate or the consummation of any of the
transactions contemplated by this Agreement or any of the other Transaction
Documents, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Trust Depositor of its obligations
under, or the validity or enforceability of, this Agreement, any of the other
Transaction Documents or the Trust Certificate or (D) involving the Trust
Depositor and which might adversely affect the federal income tax or other
federal, state or local tax attributes of the Trust Certificate.
SECTION 2.11. FEDERAL INCOME TAX TREATMENT.
(a) It is the intention of the Trust Depositor that the Trust be
disregarded as a separate entity for federal income tax purposes pursuant to
Treasury Regulations Section 301.7701-3(b)(1)(ii) as in effect for periods
after January 1, 1997. The Trust Certificate constitutes the sole equity
interest in the Trust and must at all times be held by either the Trust
Depositor or its transferee as sole owner. The Trust Depositor agrees not to
take any action inconsistent with such intended federal income tax treatment.
Because for federal income tax purposes the Trust will be disregarded as a
separate entity, Trust items of income, gain, loss and deduction for any
month as determined for federal income tax purposes shall be allocated
entirely to the Trust Depositor (or subsequent purchaser of the Trust
Certificate) as the sole Certificateholder.
SECTION 2.12. COVENANTS OF THE TRUST DEPOSITOR. The Trust Depositor
agrees and covenants that during the term of this Agreement, and to the
fullest extent permitted by applicable law, that:
(a) in the event that (i) the Certificate Balance shall be reduced
by realized losses and (ii) any litigation with claims in excess of
$1,000,000 to which the Trust Depositor is a party which shall be reasonably
likely to result in a material judgment against the Trust Depositor that the
Trust Depositor will not be able to satisfy shall be commenced, during the
period beginning immediately following the commencement of such litigation
and continuing until such litigation is dismissed or otherwise terminated
(and, if such litigation has resulted in a final judgment against the Trust
Depositor, such judgment has been satisfied), the Trust Depositor shall not
pay any dividend to the Servicer, or make any distribution on or in respect
of its capital stock to the Servicer, or repay the principal amount of any
indebtedness of the Trust Depositor held by the Servicer, unless (i) after
giving effect to such payment, distribution or repayment, the Trust
Depositor's liquid assets shall not be less than the amount of actual damages
claimed in such litigation or (ii) the Rating Agencies shall not downgrade
the then existing rating on the Certificate with respect to any such payment,
distribution or repayment;
(b) it shall not, for any reason, institute proceedings for the
Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust, or
file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Trust, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of
- 8 -
<PAGE>
the Trust or a substantial part of the property of the Trust or cause or
permit the Trust to make any assignment for the benefit of creditors, or
admit in writing the inability of the Trust to pay its debts generally as
they become due, or declare or effect a moratorium on the debt of the Trust
or take any action in furtherance of any such action;
(c) it shall not create, incur or suffer to exist any indebtedness
or engage in any business, except, in each case, as permitted by its articles
of incorporation, by-laws and the Transaction Documents;
(d) it shall obtain from each other party to each Transaction
Document to which it or the Trust is a party and each other agreement entered
into on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the event
specified in Section 9.01(e) such counterparty shall not institute against,
or join any other Person in instituting against, it or the Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United States
or any state of the United States
(e) it shall not, for any reason, withdraw or attempt to withdraw
from this Agreement, dissolve, institute proceedings for it to be adjudicated
a bankrupt or insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against it, or file a petition seeking or consenting
to reorganization or relief under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of it
or a substantial part of its property, or make any assignment for the benefit
of creditors, or admit in writing its inability to pay its debts generally as
they become due, or declare or effect a moratorium on its debt or take any
action in furtherance of any such action; and
(f) it shall not transfer the Certificate unless the transferee
agrees that it shall comply with the provisions of paragraph (b) above.
ARTICLE III.
TRUST CERTIFICATE AND TRANSFER OF INTERESTS
SECTION 3.01. OWNERSHIP.
(a) Upon the formation of the Trust by the contribution by the Trust
Depositor pursuant to Section 2.05 and until the issuance of the Trust
Certificate, the Trust Depositor shall be the sole beneficiary of the Trust.
The Trust Certificate must at all times be held by either the Trust Depositor
or its transferee as sole owner.
(b) No transfer of the Trust Certificate shall be made unless such
transfer is made in a transaction which does not require registration or
qualification under the Securities Act of 1933 or qualification under any
state securities or "Blue Sky" laws. Neither the Owner Trustee nor the
Certificate Registrar shall effect the registration of any transfer of the
Trust Certificate unless, (i)
- 9 -
<PAGE>
prior to such transfer the Owner Trustee shall have received a Tax Opinion,
and (ii) following such transfer, there would be no more than one holder of
the Trust Certificate and the holder of the Trust Certificate would not be a
Foreign Person, a partnership, Subchapter S corporation or grantor trust.
SECTION 3.02. THE TRUST CERTIFICATE. The Trust Certificate shall be
substantially in the form of EXHIBIT B hereto. The Trust Certificate shall be
issued in an amount equal to the Certificate Balance. The Trust Certificate
shall be executed by the Owner Trustee on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Owner Trustee and shall
be deemed to have been validly issued when so executed. The Trust Certificate
bearing the manual or facsimile signature of individuals who were, at the
time when such signatures were affixed, authorized to sign on behalf of the
Owner Trustee shall be a valid and binding obligation of the Trust,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Trust Certificate
or did not hold such offices at the date of such Trust Certificate. The Trust
Certificate shall be dated the date of its authentication.
SECTION 3.03. AUTHENTICATION AND DELIVERY OF TRUST CERTIFICATE. The
Owner Trustee shall cause to be authenticated and delivered upon the order of
the Trust Depositor, in exchange for the Contracts and the other Trust
Assets, simultaneously with the sale, assignment and transfer to the Trust of
the Contracts and other Trust Assets, and the constructive delivery to the
Owner Trustee of the Contract Files and the other Trust Assets, a Trust
Certificate duly authenticated by the Owner Trustee, in the amount of the
Certificate Balance evidencing the entire ownership of the Trust, and Notes
issued by the Owner Trustee and authenticated by the Indenture Trustee in
aggregate principal amount of, in the case of (i) Class A-1 Notes, $[ ], (ii)
Class A-2 Notes, $[ ], (iii) Class A-3 Notes $[ ], (iv) Class A-4 Notes $[ ],
(v) Class B Notes, $[ ], (vi) Class C Notes, $[ ], (vii) Class D Notes, $[ ]
and (viii) Class E Notes, $[ ]. No Trust Certificate shall be entitled to any
benefit under this Agreement, or be valid for any purpose, unless there
appears on such Trust Certificate a certificate of authentication
substantially in the form set forth in the form of Trust Certificate attached
hereto as EXHIBIT B, executed by the Owner Trustee or its authenticating
agent, by manual signature, and such certificate upon any Trust Certificate
shall be conclusive evidence, and the only evidence, that such Trust
Certificate has been duly authenticated and delivered hereunder. Upon
issuance, authorization and delivery pursuant to the terms hereof, the Trust
Certificate will be entitled to the benefits of this Agreement.
SECTION 3.04. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATE.
(a) The Certificate Registrar shall keep or cause to be kept, a
Certificate Register, subject to such reasonable regulations as it may
prescribe. The Certificate Register shall provide for the registration of
Trust Certificate and transfers and exchanges of the Trust Certificate as
provided herein. The Owner Trustee is hereby initially appointed Certificate
Registrar for the purpose of registering the Trust Certificate and transfers
and exchanges of the Trust Certificate as herein provided. In the event that,
subsequent to the Closing Date, the Owner Trustee notifies
- 10 -
<PAGE>
the Servicer that it is unable to act as Certificate Registrar, the Servicer
shall appoint another bank or trust company, having an office or agency
located in the City of Chicago, Illinois, agreeing to act in accordance with
the provisions of this Agreement applicable to it, and otherwise acceptable
to the Owner Trustee, to act as successor Certificate Registrar hereunder.
(b) Upon surrender for registration of transfer of any Trust
Certificate at the Owner Trustee Corporate Trust Office, the Owner Trustee
shall execute, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver), in the name of the designated transferee,
one new Trust Certificate having the same aggregate principal amount.
(c) Every Trust Certificate presented or surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder thereof or his attorney duly authorized
in writing.
(d) No service charge shall be made for any registration of transfer
or exchange of the Trust Certificate, but the Owner Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer of the Trust Certificate.
(e) All Trust Certificates surrendered for registration of transfer
shall be canceled and subsequently destroyed by the Owner Trustee.
SECTION 3.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
CERTIFICATES. If (i) any mutilated Trust Certificate is surrendered to the
Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate, and
(ii) there is delivered to the Certificate Registrar and the Owner Trustee
such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice that such Trust Certificate has been
acquired by a bona fide purchaser, the Owner Trustee on behalf of the Trust
shall execute and the Owner Trustee or its authenticating agent shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Certificate, a new Trust Certificate of like
tenor and fractional undivided interest. In connection with the issuance of
any new Trust Certificate under this Section, the Owner Trustee may require
the payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. Any duplicate
Trust Certificate issued pursuant to this Section shall constitute complete
and indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found
at any time.
SECTION 3.06. PERSONS DEEMED OWNERS. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the
Certificate Registrar and any of their respective agents may treat the Person
in whose name any Trust Certificate is registered as the owner of such Trust
Certificate for the purpose of receiving distributions pursuant to Section
5.02 and for all other purposes whatsoever, and none of the Owner Trustee,
the Certificate Registrar, any Paying Agent or any of their respective agents
shall be affected by any notice of the contrary.
- 11 -
<PAGE>
SECTION 3.07. ACCESS TO LIST OF CERTIFICATEHOLDER'S NAME AND
ADDRESSES. The Owner Trustee shall furnish or cause to be furnished to the
Servicer and the Trust Depositor, within 15 days after receipt by the
Certificate Registrar of a written request therefor from the Servicer or the
Trust Depositor, the name and address of the Certificateholder as of the most
recent Record Date in such form as the Servicer or the Trust Depositor may
reasonably require. Every Certificateholder, by receiving and holding a Trust
Certificate, agrees with the Servicer, the Trust Depositor and the Owner
Trustee that none of the Servicer, the Trust Depositor or the Owner Trustee
shall be held accountable by reason of the disclosure of any such information
as to the name and address of the Certificateholder hereunder, regardless of
the source from which such information was derived.
SECTION 3.08. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee
shall maintain in Delaware, an office or offices or agency or agencies where
the Trust Certificate may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Owner Trustee in
respect of the Trust Certificate and this Agreement may be served. The Owner
Trustee hereby designates the Owner Trustee Corporate Trust Office as its
office for such purposes. The Owner Trustee shall give prompt written notice
to the Trust Depositor, the Servicer and to the Certificateholder of any
change in the location of the Certificate Register or any such office or
agency.
SECTION 3.09. TEMPORARY TRUST CERTIFICATE. Pending the preparation
of the definitive fully registered Trust Certificate (the "DEFINITIVE TRUST
CERTIFICATE"), the Owner Trustee, on behalf of the Trust, may execute,
authenticate and deliver, a temporary Trust Certificate that is printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the Definitive Trust
Certificate in lieu of which it is issued. If a temporary Trust Certificate
is issued, the Trust Depositor will cause the Definitive Trust Certificate to
be prepared without unreasonable delay. After the preparation of the
Definitive Trust Certificate, the temporary Trust Certificate shall be
exchangeable for the Definitive Trust Certificate upon surrender of the
temporary Trust Certificate at the office or agency to be maintained as
provided in Section 3.08, without charge to the Holder. Upon surrender for
cancellation of the temporary Trust Certificate, the Owner Trustee shall
execute and authenticate and deliver in exchange therefor a like principal
amount of the Definitive Trust Certificate. Until so exchanged, the temporary
Trust Certificate shall in all respects be entitled to the same benefits
hereunder as a Definitive Trust Certificate.
SECTION 3.10. APPOINTMENT OF PAYING AGENT. The Paying Agent shall
make distributions to the Certificateholder from the Certificate Distribution
Account pursuant to Section 5.02(a) and shall report the amounts of such
distributions to the Owner Trustee. Any Paying Agent shall have the revocable
power to withdraw funds from the Certificate Distribution Account for the
purpose of making the distributions referred to above. The Owner Trustee may
revoke such power and remove the Paying Agent if the Owner Trustee determines
in its sole discretion that the Paying Agent shall have failed to perform its
obligations under this Agreement in any material respect. The Paying Agent
initially shall be Norwest Bank Minnesota, National Association, and any
co-paying agent chosen by the Paying Agent that is acceptable to the
- 12 -
<PAGE>
Owner Trustee. Each Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' written notice to the Owner Trustee. In the event that Norwest
Bank Minnesota, National Association shall no longer be the Paying Agent, the
Owner Trustee shall appoint a successor to act as Paying Agent (which shall
be a bank or trust company). The Owner Trustee shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Owner Trustee to
execute and deliver to the Owner Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Owner
Trustee that, as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholder in trust for the benefit of the Certificateholder entitled
thereto until such sums shall be paid to such Certificateholder. The Paying
Agent shall return all unclaimed funds to the Owner Trustee and upon removal
of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Owner Trustee. The provisions of Sections 7.01, 7.03, 7.04
and 8.01 shall apply to the Owner Trustee also in its role as Paying Agent,
for so long as the Owner Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in
this Agreement to the Paying Agent shall include any co-paying agent unless
the context requires otherwise.
SECTION 3.11. OWNERSHIP BY TRUST DEPOSITOR OF TRUST CERTIFICATE.
Trust Depositor shall on the Closing Date purchase from the Trust a Trust
Certificate representing the Certificate Balance.
ARTICLE IV.
ACTIONS BY OWNER TRUSTEE
SECTION 4.01. PRIOR NOTICE TO CERTIFICATEHOLDER WITH RESPECT TO
CERTAIN MATTERS. Subject to the provisions and limitation of Section 4.04,
with respect to the following matters, the Owner Trustee shall not take
action unless at least 30 days before the taking of such action, the Owner
Trustee shall have notified the Certificateholder in writing of the proposed
action, the Indenture Trustee shall have consented to such action in the
event any Notes are outstanding and the Certificateholder shall not have
notified the Owner Trustee in writing prior to the 30th day after such notice
is given that such Certificateholder has withheld consent or provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Contracts) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Contracts);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
- 13 -
<PAGE>
(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 and adversely affects the interest of the Owner;
(e) amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially and
adversely affect the interests of the Owner; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Agreement of
a successor Certificate Registrar, or the consent to the assignment by the
Note Registrar, Paying Agent, Indenture Trustee or Certificate Registrar of
its obligations under the Indenture or the Agreement, as applicable.
SECTION 4.02. ACTION BY OWNER WITH RESPECT TO CERTAIN MATTERS.
Subject to the provisions and limitations of Section 4.04, the Owner Trustee
shall not have the power, except upon the direction of the Owner, to (a)
remove the Administrator pursuant to Section 8 of the Administration
Agreement, (b) appoint a successor Administrator pursuant to Section 8 of the
Administration Agreement, (c) remove the Servicer pursuant to Section 8.01 of
the Sale and Servicing Agreement, (d) except as expressly provided in the
Transaction Documents, sell the Contracts or other Trust Assets after the
termination of the Indenture, (e) initiate any claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against
the Trust, (f) authorize the merger or consolidation of the Trust with or
into any other business trust or entity (other than in accordance with
Section 3.10 of the Indenture) or (g) amend the Certificate of Trust. The
Owner Trustee shall take the actions referred to in the preceding sentence
only upon written instructions signed by the Owner.
SECTION 4.03. ACTION BY OWNER WITH RESPECT TO BANKRUPTCY. Subject
to Sections 2.12(b) and (f), the Owner Trustee shall not have the power to
commence a voluntary proceeding in a bankruptcy relating to the Trust without
the prior approval of the Owner and the delivery to the Owner Trustee by such
Owner of a certificate certifying that such Owner reasonably believes that
the Trust is insolvent.
SECTION 4.04. RESTRICTIONS ON OWNER'S POWER. The Owner shall not
direct the Owner Trustee to take or to 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 Transaction Documents or
would be contrary to the purpose of this Trust as set forth in Section 2.03,
nor shall the Owner Trustee be obligated to follow any such direction, if
given.
ARTICLE V. APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.01. ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee,
for the benefit of the Certificateholder, shall establish and maintain in the
name of the Trust an Eligible Account (the "CERTIFICATE DISTRIBUTION
ACCOUNT"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Certificateholder.
- 14 -
<PAGE>
The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account
and in all proceeds thereof. Except as otherwise expressly provided herein,
the Certificate Distribution Account shall be under the sole dominion and
control of the Owner Trustee for the benefit of the Certificateholder. If, at
any time, the Certificate Distribution Account ceases to be an Eligible
Account, the Owner Trustee (or the Trust Depositor on behalf of the Owner
Trustee, if the Certificate Distribution Account is not then held by the
Owner Trustee or an Affiliate thereof) shall within ten Business Days (or
such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Certificate Distribution Account as an
Eligible Account and shall transfer any cash and/or any investments to such
new Certificate Distribution Account.
SECTION 5.02. APPLICATION OF TRUST FUNDS.
(a) On each Distribution Date, the Paying Agent will deposit in the
Certificate Distribution Account and distribute to the Certificateholder
amounts received pursuant to Section 7.05 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(b) On each Distribution Date, the Paying Agent shall send to the
Certificateholder the statement or statements provided to the Owner Trustee
by the Servicer pursuant to Section 9.01 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocation of income) to the Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. The Paying Agent is hereby authorized and
directed to retain from amounts otherwise distributable to the Owner
sufficient funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Owner Trustee from contesting
any such tax in appropriate proceedings, and withholding payment of such tax,
if permitted by law, pending the outcome of such proceedings). The amount of
any withholding tax imposed with respect to the Certificateholder shall be
treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust and remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution, the Paying Agent may in its sole discretion withhold such
amounts in accordance with the paragraph (c).
SECTION 5.03. METHOD OF PAYMENT. Subject to Section 9.01(c)
respecting the final payment upon retirement of the Certificate,
distributions required to be made to the Certificateholder of record on the
related Record Date shall be made by check mailed to such Certificateholder
at the address of such Holder appearing in the Certificate Register.
SECTION 5.04. NO SEGREGATION OF MONEYS; NO INTEREST. Subject to
Sections 5.01 and 5.02, moneys received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law or the
Sale and Servicing Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
- 15 -
<PAGE>
SECTION 5.05. ACCOUNTING AND REPORTS TO THE CERTIFICATEHOLDER, THE
INTERNAL REVENUE SERVICE AND OTHERS. The Administrator shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and
the accrual method of accounting, (b) deliver to the Owner, as may be
required by the Code and applicable Treasury Regulations, such information as
may be required to enable the Owner to prepare its federal and state income
tax returns, (c) file such tax returns relating to the Trust and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so
as to maintain the federal income tax treatment for the Trust as set forth in
Section 2.11, (d) cause such tax returns to be signed in the manner required
by law and (e) collect or cause to be collected any withholding tax as
described in and in accordance with Section 5.02(c) with respect to income or
distributions to Owner. The Owner Trustee shall elect under Section 1278 of
the Code to include in income currently any market discount that accrues with
respect to the Contracts. If applicable, the Owner Trustee shall not make the
election provided under Section 754 or Section 761 of the Code.
SECTION 5.06. SIGNATURE ON RETURNS; TAX MATTERS PARTNER.
(a) The Trust Depositor shall sign on behalf of the Trust the tax
returns of the Trust.
(b) If Subchapter K of the Code should be applicable to the Trust,
the Certificateholder shall be designated the "TAX MATTERS PARTNER" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
ARTICLE VI.
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.01. GENERAL AUTHORITY. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver the Transaction 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 Transaction Documents to which the Trust is
to be a party and any amendment or other agreement, 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 Transaction Documents. The Owner
Trustee is further authorized from time to time to take such action as the
Administrator recommends with respect to the Transaction Documents.
SECTION 6.02. GENERAL DUTIES. Subject to the provisions and
limitations of Sections 2.03 and 2.06, it shall be the duty of the Owner
Trustee to discharge (or cause to be discharged through the Administrator)
all of its responsibilities pursuant to the terms of this Agreement and the
Transaction Documents to which the Trust is a party and to administer the
Trust in the interest of the Owner, subject to the Transaction Documents and
in accordance with the provisions of this Agreement. Without limiting the
foregoing, the Owner Trustee shall on behalf of the Trust file and prove any
claim or claims that may exist against Heller Financial in connection with
any claims paying procedure as part of an insolvency or receivership
proceeding
- 16 -
<PAGE>
involving Heller Financial. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder
and under the Transaction 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 Transaction Document, and
the Owner Trustee shall not be held liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
SECTION 6.03. ACTION UPON INSTRUCTION.
(a) Subject to Article Four, in accordance with the terms of the
Transaction Documents the Owner may by written instruction direct the Owner
Trustee in the management of the Trust.
(b) Owner Trustee shall not be required to take any action hereunder
or under any other Transaction 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 other Transaction 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 under any other Transaction 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 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 and the other Transaction 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.
(d) In the event that the Owner Trustee is unsure as to the
applicability of any provision of this Agreement or any other Transaction
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 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 ten days of such notice (or
within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action not inconsistent
with this Agreement or the other Transaction
- 17 -
<PAGE>
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.
(e) Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be required to take any action in any jurisdiction
other than in the State of Delaware if the taking of such action will (i)
require the registration with, licensing by or the taking of any other
similar action in respect of, any state or other governmental authority or
agency of any jurisdiction other than the State of Delaware by or with
respect to the Trustee; (ii) result in any fee, tax or other governmental
charge under the laws of any jurisdiction or any political subdivisions
thereof in existence on the date hereof other than the State of Delaware
being payable by the Owner Trustee; or (iii) subject the Owner Trustee to
personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by the Owner Trustee contemplated in this Agreement. In the
event that the Owner Trustee has determined that any action set forth in
clauses (i)-(iii) will result in the consequences stated therein, the
Administrator and the Owner Trustee shall appoint one or more Persons to act
as co-trustee pursuant to Section 10.05.
SECTION 6.04. 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 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 any document or written instruction received
by the Owner Trustee pursuant to Section 6.03; and no implied duties or
obligations shall be read into this Agreement or any other Transaction
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 Commission filing for the Trust or to record this Agreement or any
other Transaction 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 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 Trust Estate.
SECTION 6.05. 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 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 other
Transaction Documents and (iii) in accordance with any document or
instruction delivered to the Owner Trustee pursuant to Section 6.03.
SECTION 6.06. RESTRICTIONS. The Owner Trustee shall not take any
action (i) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (ii) that, to the actual knowledge of a Responsible Officer
of the Owner Trustee, would result in the Trust's becoming
- 18 -
<PAGE>
taxable as a corporation for federal or state income tax purposes. The Owner
shall not direct the Owner Trustee to take actions that would violate the
provisions of this Section.
ARTICLE VII.
CONCERNING THE OWNER TRUSTEE
SECTION 7.01. A CCEPTANCE 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 Trust Estate upon the terms of the Transaction
Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any other Transaction 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 7.03 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 which did not result from
gross negligence on the part of such responsible officer;
(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 other Transaction 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 Transaction 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 Transaction 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 Trust Depositor or for the form, character, genuineness, sufficiency,
value or validity of any of the Trust Estate, or for or in respect of the
validity or sufficiency of the Transaction Documents, other than the
certificate of authentication on the Trust 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 or
expressly agreed to in the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Trust Depositor, the Indenture Trustee
or the Servicer under any of the Transaction Documents or otherwise and the
Owner Trustee shall have no obligation or liability
- 19 -
<PAGE>
to perform the obligations of the Trust under this Agreement or the other
Transaction Documents that are required to be performed by the Administrator
under the Administration Agreement, the Indenture Trustee under the Indenture
or the Servicer, or the Trust Depositor under the Sale 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 the Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Transaction Document, at the request,
order or direction of the Owner, unless such 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 other Transaction 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 7.02. FURNISHING OF DOCUMENTS. The Owner Trustee shall
furnish to the Owner promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Transaction Documents.
SECTION 7.03. REPRESENTATIONS AND WARRANTIES. The Owner Trustee
hereby represents and warrants to the Trust Depositor and the Owner that:
(a) It is a banking corporation 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 bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party
or by which any of its properties may be bound or result in the creation or
imposition of any lien, charge or encumbrance on the Trust Estate resulting
from actions by or claims against the Owner Trustee individually which are
unrelated to this Agreement or the other Transaction Documents.
SECTION 7.04. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other
- 20 -
<PAGE>
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 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
other Transaction Documents, the Owner Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements entered into by any of
them, and the Owner Trustee shall not be liable for the conduct or misconduct
of such agents or attorneys as 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.
SECTION 7.05. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided
in this Article Seven, in accepting the trusts hereby created, Wilmington
Trust Company 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
other Transaction Document shall look only to the Trust Estate for payment or
satisfaction thereof.
SECTION 7.06. OWNER TRUSTEE NOT LIABLE FOR TRUST CERTIFICATE, NOTES
OR CONTRACTS. The recitals contained herein and in the Trust Certificate
(other than the signature and countersignature of the Owner Trustee and the
certificate of authentication on the Trust Certificate) shall be taken as the
statements of the Trust Depositor, 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, any
other Transaction Document or the Trust Certificate (other than the signature
and countersignature of the Owner Trustee and the certificate of
authentication on the Trust Certificate) or the Notes, or of any Contract or
related documents. The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability
of any Contract, or the perfection and priority of any security interest
created by any Contract in any Equipment or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the
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 Equipment; the existence and enforceability of any insurance
thereon; the existence and contents of any Contract on any computer or other
record thereof; the validity of the assignment of any Contract to the Trust
or of any intervening assignment; the completeness of any Contract; the
performance or enforcement of any Contract;
- 21 -
<PAGE>
the compliance by the Trust Depositor or the Servicer with any warranty or
representation made under any Transaction 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 7.07. OWNER TRUSTEE MAY OWN TRUST CERTIFICATE AND NOTES.
The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of the Trust Certificate or Notes and may deal with the
Trust Depositor, 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 VIII.
COMPENSATION OF OWNER TRUSTEE
SECTION 8.01. 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 and which shall be paid consistent with Section
5.19 of the Sale and Servicing Agreement. Additionally, the Owner Trustee
shall be entitled to be reimbursed by the Trust Depositor or Servicer 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.
SECTION 8.02. INDEMNIFICATION. The Trust Depositor shall be liable
as primary obligor for, and shall indemnify the Owner Trustee and its
successors, assigns 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 other Transaction Documents, the Trust Estate, the administration of the
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that the Trust Depositor shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from any of the matters described in the third sentence of Section 7.01. The
indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
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 Trust Depositor, which approval shall not
be unreasonably withheld.
SECTION 8.03. Section 8.03. PAYMENTS TO THE OWNER TRUSTEE. Any
amounts paid to the Owner Trustee pursuant to this Article shall be deemed
not to be a part of the Trust Estate immediately after such payment.
- 22 -
<PAGE>
ARTICLE IX.
TERMINATION OF TRUST AGREEMENT
SECTION 9.01. TERMINATION OF TRUST AGREEMENT.
(a) This Trust shall dissolve upon the earlier of (i) final
distribution by the Owner Trustee of all moneys or other property or proceeds
of the Trust Estate in accordance with the terms of the Indenture, the Sale
and Servicing Agreement and Article Five, (ii) the expiration of 21 years
from the death of the survivor of the descendants of Joseph P. Kennedy, the
late Ambassador of the United States to the Court of St. James's, living on
the date hereof and (iii) the time provided in Section 9.02. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner, other than the
Trust Depositor as described in Section 9.02, shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such 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 Trust Estate or (iii) otherwise affect the rights, obligations
and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Trust
Depositor nor any Holder shall be entitled to revoke or terminate the Trust.
(c) Notice of any dissolution of the Trust, specifying the
Distribution Date upon which the Certificateholder shall surrender its Trust
Certificate to the Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to the
Certificateholder mailed within five Business Days of receipt of notice of
termination from the Servicer given pursuant to Section 10.01 of the Sale and
Servicing Agreement, stating (i) the Distribution Date upon or with respect
to which final payment of the Trust Certificate shall be made upon
presentation and surrender of the Trust Certificate at the office of the
Paying Agent therein designated, (ii) the amount of any such final payment
and (iii) that the Record Date otherwise applicable to such Distribution Date
is not applicable, payments being made only upon presentation and surrender
of the Trust Certificate at the office of the Paying Agent therein specified.
The Owner Trustee shall give such notice to the Certificate Registrar (if
other than the Owner Trustee) and the Paying Agent at the time such notice is
given to the Certificateholder. Upon presentation and surrender of the Trust
Certificates, the Paying Agent shall cause to be distributed to the
Certificateholder amounts distributable on such Distribution Date pursuant to
Section 5.02.
(d) In the event that the Certificateholder shall not surrender its
Trust Certificate for cancellation within six months after the date specified
in the above mentioned written notice, the Owner Trustee shall give a second
written notice to such Certificateholder to surrender its Trust Certificate
for cancellation and receive the final distribution with respect thereto. If
within one year after the second notice the Trust Certificate shall not have
been surrendered for cancellation, the Owner Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
Certificateholder concerning surrender of its Trust Certificates, and the
cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement.
- 23 -
<PAGE>
Any funds remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to the Trust Depositor.
(e) Upon the winding up of the Trust and payment of all liabilities
in accordance with Section 3808 of the Business Trust Statute, 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 at which time
the Trust shall terminate. The Administrator shall be the liquidator of the
Trust.
SECTION 9.02. DISSOLUTION UPON BANKRUPTCY OF TRUST DEPOSITOR OR
WITHDRAWAL OR REMOVAL OF TRUST DEPOSITOR. In the event that an Insolvency
Event shall occur with respect to the Trust Depositor or the Trust Depositor
shall withdraw, liquidate or be removed from the Trust, this Agreement shall
be terminated in accordance with Section 9.01 90 days after the date of such
event, unless within such 90 day period, the Owner Trustee shall have
received written instructions from the Required Holders not to dissolve or
terminate the Trust. Promptly after the occurrence of any Insolvency Event
with respect to the Trust Depositor, the Trust Depositor shall give the
Indenture Trustee and Owner Trustee written notice thereof, and the Indenture
Trustee shall give prompt written notice to the Noteholders thereof. Upon a
termination pursuant to this Section, the Owner Trustee shall direct the
Indenture Trustee promptly to sell the Trust Assets in a commercially
reasonable manner and on commercially reasonable terms. The proceeds of such
a sale of the Trust Assets shall be treated as Collections under the Sale and
Servicing Agreement.
ARTICLE X.
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.01. 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; and (a) 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 that has) a rating of at
least Baa3 by Moody's; or (b) which the Rating Agencies have otherwise
indicated in writing is an entity acceptable to act as Owner Trustee
hereunder. If such corporation shall publish reports of condition at least
annually pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purpose of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section
10.02.
SECTION 10.02. 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. Upon receiving
such notice 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
- 24 -
<PAGE>
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 10.01 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
shall pay 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 10.03 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 Rating Agency.
SECTION 10.03. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.02 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 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section, the Administrator shall mail notice thereof to the
Certificateholder, the Indenture Trustee, the Noteholders and each Rating
Agency. If the Administrator shall fail to mail such notice within ten days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
- 25 -
<PAGE>
SECTION 10.04. 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, 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, that such corporation shall be eligible pursuant
to Section 10.01 and, PROVIDED, FURTHER, that the Owner Trustee shall mail
notice of such merger or consolidation to each Rating Agency.
SECTION 10.05. 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 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 Administrator and Owner Trustee to act as
co-trustee, jointly with the Owner Trustee, or as separate trustee or
separate trustees, of all or any part of the 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 Owner Trustee pursuant to Section
10.01 and no notice of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(a) 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 Estate 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;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement; and
(c) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
- 26 -
<PAGE>
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 as 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 co-trustee or separate trustee.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.01. SUPPLEMENTS AND AMENDMENTS.
(a) The Agreement may be amended by the Trust Depositor, and the
Owner Trustee, 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 to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; PROVIDED, HOWEVER, that
any such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder or the
Certificateholder.
(b) This Agreement may also be amended from time to time by the
Trust Depositor, and the Owner Trustee, with the consent of the Required
Holders, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Noteholders or the
Certificateholder; PROVIDED, HOWEVER, that no such amendment shall increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
(i) collections of payments on Contracts or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholder, or (ii) eliminate the Certificateholder consent or reduce
the aforesaid percentage of the Outstanding Amount of the Notes required to
consent to any such amendment, without the consent of the Holders of all
outstanding Notes and the Trust Certificate.
- 27 -
<PAGE>
(c) Prior to the execution of any such amendment or consent, the
Trust Depositor shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to the Indenture Trustee,
the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of the Certificateholder, 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. The manner of obtaining such consents (and any
other consents of the Certificateholder provided for in this Agreement or in
any other Transaction Document) and of evidencing the authorization of the
execution thereof by the Certificateholder shall be subject to such
reasonable requirements as the Owner Trustee may prescribe.
(e) 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.
(f) 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 that affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
SECTION 11.02. NO LEGAL TITLE TO TRUST ESTATE IN OWNER. The Owner
shall not have legal title to any part of the Trust Estate. The Owner shall
be entitled to receive distributions with respect to its undivided ownership
interest herein only in accordance with Articles Five and Nine. No transfer,
by operation of law or otherwise, of any right, title or interest of the
Owner to and in its ownership interest in the 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
Trust Estate.
SECTION 11.03. LIMITATIONS ON RIGHTS OF OTHERS. Except for Section
2.07, the provisions of this Agreement are solely for the benefit of the
Owner Trustee, the Trust Depositor, the Owner, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders,
and nothing in this Agreement (other than Section 2.07), whether express or
implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect
of this Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.04. NOTICES. All notices, demands, certificates, requests
and communications hereunder ("NOTICES") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt
to be effective the date of delivery indicated on the return receipt, or (b)
one Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an
- 28 -
<PAGE>
Authorized Officer of the party to which sent, or (d) on the date transmitted
by legible telecopier transmission with a confirmation of receipt, in all
cases addressed to the recipient as follows:
(i) If to the Servicer or any Seller:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution & Investments
Fax No.: (312) 441-7170
(ii) If to the Trust Depositor:
Heller Funding Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution & Investments
Fax No.: (312) 441-7170
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, N.A.
Norwest Center
Sixth Street and Marquette Avenue
MAC N9311-161
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services
Fax No.: (612) 667-3539
(iv) If to the Owner Trustee:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
(v) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Fax No.: (212) 553-0344
- 29 -
<PAGE>
(vi) If to Fitch:
Fitch IBCA, Inc.
One State Street Plaza
33rd Floor
New York, New York 10004
Attention: Asset Backed Securities Group
Fax No.: (212) 514-9879
(vii) If to DCR:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Suite 3800
Chicago, Illinois 60603
Attention: Asset-Backed Monitoring Group
(Equipment Leases)
Fax No.: (312) 368-2069
(viii) If to the Underwriter:
First Union Securities, Inc.
One First Union Center, TW-6
301 South College Street
Charlotte, North Carolina 28288-0610
Attention: Asset Securitization Division
Fax No.:
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement or
of the Trust Certificate or the rights of the Holder thereof.
SECTION 11.06. COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
SECTION 11.07. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of
the Trust Depositor, and the Owner Trustee and their respective successors
and permitted assigns and each Owner and its successors
- 30 -
<PAGE>
and permitted assigns, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by an Owner shall
bind the successors and assigns of such Owner.
SECTION 11.08. NO PETITION. The Owner Trustee, by entering into this
Agreement, each Certificateholder, by accepting a Trust Certificate, and the
Indenture Trustee and each Noteholder, by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Trust Depositor or the Trust, or join in any institution against
the Trust Depositor, or 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 Trust Certificate, the Notes, this Agreement
or any of the other Transaction Documents.
SECTION 11.09. No Recourse. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust
Certificate represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Trust Depositor, the Servicer,
the Originators, the Administrator, the Owner Trustee, the Indenture Trustee
or any of the respective Affiliates 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 Trust Certificate or the other Transaction Documents.
The Owner by accepting the Trust Certificate (i) acknowledges that such Trust
Certificate represents a beneficial interest in the Trust and Trust Assets
only and does not represent an interest in or an obligation of the Trust
Depositor, the Servicer, the Administrator, the Owner Trustee or any
Affiliate of the foregoing, and no recourse may be had against any such party
or their assets, except as may be expressly set forth or contemplated in the
Transaction Documents and (ii) enters into the undertakings and agreements
provided for such Certificateholder set forth in Section 13.09 of the Sale
and Servicing Agreement.
SECTION 11.10. 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 11.11. 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.
SECTION 11.12. TRUST CERTIFICATE TRANSFER RESTRICTIONS. The Trust
Certificate may not be acquired by or for the account of a Benefit Plan. By
accepting and holding a Trust Certificate, the Holder thereof shall be deemed
to have represented and warranted that it is not a Benefit Plan nor will it
hold such Trust Certificate for the account of a Benefit Plan. By accepting
and holding a Trust Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
SECTION 11.13. TRUST DEPOSITOR PAYMENT OBLIGATION. The Trust
Depositor shall be responsible for payment of the Administrator's
compensation pursuant to Section 3
- 31 -
<PAGE>
of the Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder.
- 32 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
HELLER FUNDING CORPORATION,
as Trust Depositor
By:_______________________________
Printed Name:_______________
Title:_______________________
WILMINGTON TRUST COMPANY,
as Owner Trustee
By:_______________________________
Printed Name:_______________
Title:_______________________
- 33 -
<PAGE>
EXHIBIT A
FORM OF CERTIFICATE OF TRUST OF
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
This Certificate of Trust of Heller Equipment Asset Receivables Trust
1999-2 (the "TRUST"), dated December [__], 1999, is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as Owner
Trustee, to form a business trust under the Delaware Business Trust Act (12 DEL.
CODE, Section 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is Heller
Equipment Asset Receivables Trust 1999-2.
2. DELAWARE TRUSTEE. The name and business address of the Owner
Trustee of the Trust in the State of Delaware is Wilmington Trust Company,
1100 North Market Street, Wilmington, Delaware 19890 (Attn: Corporate Trust
Administration).
IN WITNESS WHEREOF, the undersigned, being the sole Owner Trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee
By:_______________________________________
Printed Name:________________________
Title:_______________________________
A-1
<PAGE>
EXHIBIT B
FORM OF TRUST CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES TO
THE EXTENT DESCRIBED IN THE SALE AND SERVICING AGREEMENT AND INDENTURE
REFERRED TO HEREIN.
THIS TRUST CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
HELLER FUNDING CORPORATION, HELLER FINANCIAL, INC., HELLER FINANCIAL LEASING,
INC. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH IN THE TRUST
AGREEMENT. THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR PLEDGED UNLESS THE CONDITIONS SET FORTH IN SECTION 3.04 OF THE
TRUST AGREEMENT HAVE BEEN COMPLIED WITH.
THIS CERTIFICATE IS TRANSFERRABLE ONLY IN WHOLE AND NOT IN PART.
THIS TRUST CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS TRUST
CERTIFICATE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2 CERTIFICATE
NO. 1 Trust Certificate
Principal Balance $[__________]
THIS CERTIFIES THAT Heller Funding Corporation is the registered
owner of $[__________] of a nonassessable, fully-paid, fractional undivided
equity interest in the Heller Equipment Asset Receivables Trust 1999-2 (the
"TRUST") formed by Heller Funding Corporation, a Delaware corporation (the
"TRUST DEPOSITOR").
The Trust was created pursuant to a Trust Agreement, dated as of
December [ ], 1999 (as amended, restated and/or supplemented from time to
time, the "TRUST AGREEMENT"), among Heller Funding Corporation, as Trust
Depositor (the "TRUST DEPOSITOR"), and Wilmington Trust Company, as owner
trustee (the "OWNER TRUSTEE"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them
in (i) the Trust Agreement, (ii) the Sale and Servicing Agreement, dated as
of December [ ], 1999 (the "SALE AND SERVICING AGREEMENT"), among the Trust,
Heller Funding Corporation, as depositor (the "TRUST
B-1
<PAGE>
DEPOSITOR"), Heller Financial, Inc. ("HELLER FINANCIAL"), as Servicer (in
such capacity, the "SERVICER" in its capacity as an originator and its
successor and assigns "HELLER LEASING", and together with Heller Financial
the "ORIGINATORS", and each, an "ORIGINATOR"), and Norwest Bank Minnesota,
N.A., as Indenture Trustee (the "INDENTURE TRUSTEE") or (iii) the Indenture,
dated as of December [ ], 1999 (the "INDENTURE"), between the Trust and the
Indenture Trustee.
This Trust Certificate is the duly authorized Trust Certificate
designated as "HELLER EQUIPMENT ASSET RECEIVABLES TRUST RECEIVABLES-BACKED
CERTIFICATE" (the "TRUST CERTIFICATE"). Also issued under the Indenture are
eight classes of notes designated as "[ ]% HELLER EQUIPMENT ASSET RECEIVABLES
TRUST CLASS A-1 RECEIVABLE- BACKED NOTES" and "[ ]% HELLER EQUIPMENT ASSET
RECEIVABLES TRUST CLASS A-2 RECEIVABLE-BACKED NOTES", and "[ ]% HELLER
EQUIPMENT ASSET RECEIVABLES TRUST CLASS A-3 RECEIVABLE-BACKED NOTES", and "[ ]
% HELLER EQUIPMENT ASSET RECEIVABLES TRUST CLASS A-4 RECEIVABLE-BACKED NOTES"
and "[ ]% HELLER EQUIPMENT ASSET RECEIVABLES TRUST CLASS B RECEIVABLE-BACKED
NOTES" and "[ ]% HELLER EQUIPMENT ASSET RECEIVABLES TRUST CLASS C
RECEIVABLE-BACKED NOTES," and "[ ]% HELLER EQUIPMENT ASSET RECEIVABLES TRUST
CLASS D RECEIVABLE-BACKED NOTES" and "[ ]% HELLER EQUIPMENT ASSET RECEIVABLES
TRUST CLASS E RECEIVABLE-BACKED NOTES" (collectively, the "NOTES"). This
Trust Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of
this Trust Certificate by virtue of its acceptance hereof assents and by
which such Holder is bound. The property of the Trust includes, among other
things, all the right, title and interest of the Trust Depositor in and to
the Contracts listed on the List of Contracts delivered on the Closing Date
(including, without limitation, all security interests and all rights to
receive payments which are collected pursuant thereto after the Cutoff Date,
including any liquidation proceeds therefrom, but excluding any rights to
receive payments which were collected pursuant thereto on or prior to the
Cutoff Date) and all interests in the Equipment related thereto.
Under the Trust Agreement, there will be distributed on the [ ] day
of each month or if such day is not a Business Day the next succeeding
Business Day commencing January [ ], 2000 (each, a "DISTRIBUTION DATE"), and
ending no later than the Distribution Date in [ ] to the person in whose name
this Trust Certificate is registered at the close of business on the last day
of the immediately preceding calendar month (each, a "RECORD DATE"), the
amount to be distributed to the Certificateholder pursuant to the Trust
Agreement on such Distribution Date.
The holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders to the extent described in the
Sale and Servicing Agreement and the Indenture.
It is the intent of the Originator, the Servicer, the Trust
Depositor, Owner Trustee, Indenture Trustee and the Certificateholder that,
for purposes of federal income, state and local income and single business
tax and any other income taxes, the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations
Section 301.7701-3(b)(1)(ii) and that all items of income, deduction, gain,
loss or credit of the Trust will be treated as such items of the
Certificateholder. The Trust Depositor and any other
B-2
<PAGE>
Certificateholder, by acceptance of a Trust Certificate, agrees to treat, and
to take no action inconsistent with such treatment of, the Trust for federal
income tax purposes.
Each Certificateholder, by its acceptance of a Trust Certificate or
beneficial interest in a Trust Certificate, covenants and agrees that such
Certificateholder will not at any time institute against the Trust or the
Trust Depositor, or join in any institution against the Trust or the Trust
Depositor 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 Trust Certificate, the Notes, the Trust Agreement or any of
the other Transaction Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Owner Trustee or its Agent by wire transfer or
check mailed to the Certificateholder of record in the Certificate Register
without the presentation or surrender of this Trust Certificate or the making
of any notation hereon. Except as otherwise provided in the Trust Agreement
and notwithstanding the above, the final distribution on this Trust
Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of
this Trust Certificate at the office or agency maintained for that purpose by
the Owner Trustee in the City of Wilmington, State of Delaware.
Reference is hereby made to the further provisions of this Trust
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.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, by manual signature,
this Trust Certificate shall not entitle the holder hereof to any benefit
under the Trust Agreement or any other Transaction Document or be valid for
any purpose.
THIS TRUST CERTIFICATE 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.
B-3
<PAGE>
[REVERSE OF CERTIFICATE]
The Trust Certificate does not represent an obligation of, or an
interest in the Trust Depositor, Heller Financial, as an Originator or
Servicer, the Owner Trustee, the Indenture Trustee or any of their respective
Affiliates and no recourse may be had against such parties or their assets,
except as expressly set forth or contemplated herein or in the Trust
Agreement or the other Transaction Documents. In addition, this Trust
Certificate is not guaranteed by any governmental agency or instrumentality
and is limited in right of payment to certain collections and recoveries with
respect to the Contracts and certain other amounts, in each case as more
specifically set forth herein and in the Sale and Servicing Agreement. A copy
of each of the Sale and Servicing Agreement and the Trust Agreement may be
examined by any Certificateholder upon written request during normal business
hours at the principal office of the Trust Depositor and at such other
places, if any, designated by the Trust Depositor.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Trust Depositor and the rights of the Certificateholder
under the Trust Agreement at any time by the Trust Depositor and the Owner
Trustee with the consent of the Required Holders (as defined in the Sale and
Servicing Agreement). Any such consent shall be conclusive and binding on the
Holder and on all future Holders of this Trust Certificate and of any Trust
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent is made upon this Trust
Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holder of the Trust
Certificate or any Noteholder.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Trust
Certificate for registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in Wilmington,
Delaware, accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar in Chicago,
Illinois executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon a new Trust Certificate evidencing the
same aggregate interest in the Trust will be issued to the designated
transferee. The initial Certificate Registrar appointed under the Trust
Agreement is the Owner Trustee.
Except as provided in the Trust Agreement, the Trust Certificate is
issuable only as a registered Trust Certificate without coupons. No service
charge will be made for any registration of transfer of such Trust
Certificate, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge payable
in connection therewith.
The Owner Trustee, the Certificate Registrar and any of their
respective agents may treat the Person in whose name this Trust Certificate
is registered as the owner hereof for all purposes,
B-4
<PAGE>
and none of the Owner Trustee, the Certificate Registrar or any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholder of all amounts required to be paid to such holder pursuant
to the Trust Agreement and the Sale and Servicing Agreement and the
deposition of all property held as part of the Trust Estate. The Trust
Depositor may at its option purchase the Trust Estate at the times and at the
prices specified in the Sale and Servicing Agreement.
The Trust Certificate may not be acquired by a Benefit Plan. By
accepting and holding this Trust Certificate, the Holder hereof or, in the
case of Book-Entry Trust Certificate, by accepting a beneficial interest in
this Trust Certificate, the related Certificate Owner, shall be deemed to
have represented and warranted that it is not a Benefit Plan and is not
acquiring this Trust Certificate or an interest therein for the account of
such an entity.
B-5
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and
not in its individual capacity, has caused this Trust Certificate to be duly
executed.
Dated: December [__], 1999
HELLER EQUIPMENT ASSET
RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee
By: _______________________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This the Trust Certificate referred to in the within-mentioned Trust
Agreement.
Wilmington Trust Company,
not in its individual capacity but solely
as Owner Trustee
By:_______________________________________
Authorized Signatory
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
- -------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
- -------------------------------------------------------------------------------
to transfer said Trust Certificate on the books of the Certificate Registrar,
will full power of substitution in the premises.
Dated:_______________________
Signature Guaranteed:
<TABLE>
<S> <C>
- --------------------------------------- ----------------------------------------
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this assignment
by an eligible guarantor institution. must correspond with the name of the
registered owner as it appears on the
face of the within Trust Certificate in
every particular, without alteration or
enlargement or any change whatever.
</TABLE>
B-7
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2,
as Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely in its capacity
as Indenture Trustee
-----------------------------------
INDENTURE
Dated as of December [ ], 1999
-----------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE................... 1
SECTION 1.01. DEFINITIONS........................................... 1
SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT..... 7
SECTION 1.03. RULES OF CONSTRUCTION................................. 8
ARTICLE II THE NOTES................................................... 8
SECTION 2.01. FORM.................................................. 8
SECTION 2.02. EXECUTION, AUTHENTICATION AND DELIVERY................ 9
SECTION 2.03. TEMPORARY NOTES....................................... 9
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE;
TRANSFER RESTRICTION.................................. 10
SECTION 2.05. MUTILATED, DESTROYED, LOST OR STOLEN NOTES............ 11
SECTION 2.06. PERSONS DEEMED OWNER.................................. 12
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST. 12
SECTION 2.08. CANCELLATION.......................................... 13
SECTION 2.09. BOOK-ENTRY NOTES...................................... 14
SECTION 2.10. NOTICES TO CLEARING AGENCY............................ 15
SECTION 2.11. DEFINITIVE NOTES...................................... 15
SECTION 2.12. RELEASE OF COLLATERAL................................. 15
SECTION 2.13. TAX TREATMENT......................................... 15
SECTION 2.14. ADDITIONAL RESTRICTIONS ON THE CLASS E NOTES.......... 16
SECTION 2.15. LISTING RESTRICTIONS.................................. 17
ARTICLE III COVENANTS; REPRESENTATIONS AND WARRANTIES.................. 17
SECTION 3.01. PAYMENT OF PRINCIPAL AND INTEREST..................... 17
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY....................... 17
SECTION 3.03. MONEY FOR PAYMENTS TO BE HELD IN TRUST................ 17
SECTION 3.04. EXISTENCE............................................. 19
SECTION 3.05. PROTECTION OF COLLATERAL.............................. 19
SECTION 3.06. [RESERVED]............................................ 20
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.... 20
SECTION 3.08. NEGATIVE COVENANTS.................................... 21
SECTION 3.09. ISSUER MAY CONSOLIDATE, ETC. ONLY ON CERTAIN TERMS.... 22
SECTION 3.10. SUCCESSOR OR TRANSFEREE............................... 24
SECTION 3.11. NO OTHER BUSINESS..................................... 24
SECTION 3.12. NO BORROWING.......................................... 24
SECTION 3.13. NOTICE OF EVENTS OF DEFAULT........................... 24
SECTION 3.14. FURTHER INSTRUMENTS AND ACTS.......................... 24
SECTION 3.15. COMPLIANCE WITH LAWS.................................. 24
SECTION 3.16. AMENDMENTS OF TRUST AGREEMENT......................... 24
SECTION 3.17. REMOVAL OF ADMINISTRATOR.............................. 25
SECTION 3.18. REPRESENTATIONS AND WARRANTIES OF ISSUER.............. 25
ARTICLE IV SATISFACTION AND DISCHARGE.................................. 26
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE............... 26
-i-
<PAGE>
SECTION 4.02. APPLICATION OF TRUST MONEY............................ 27
SECTION 4.03. REPAYMENT OF MONEYS HELD BY PAYING AGENT.............. 27
SECTION 4.04. RELEASE OF COLLATERAL................................. 27
ARTICLE V REMEDIES..................................................... 27
SECTION 5.01. EVENTS OF DEFAULT..................................... 27
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT; NOTICE.................. 28
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE; AUTHORITY OF INDENTURE TRUSTEE.. 29
SECTION 5.04. REMEDIES.............................................. 32
SECTION 5.05. OPTIONAL PRESERVATION OF THE CONTRACTS................ 33
SECTION 5.06. PRIORITIES............................................ 33
SECTION 5.07. LIMITATION OF SUITS................................... 33
SECTION 5.08. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST................................ 34
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES.................... 34
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE........................ 34
SECTION 5.11. DELAY OR OMISSION NOT A WAIVER........................ 34
SECTION 5.12. CONTROL BY NOTEHOLDERS................................ 35
SECTION 5.13. WAIVER OF PAST DEFAULTS............................... 35
SECTION 5.14. UNDERTAKING FOR COSTS................................. 35
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS...................... 36
SECTION 5.16. ACTION ON NOTES....................................... 36
SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.... 36
ARTICLE VI THE INDENTURE TRUSTEE....................................... 37
SECTION 6.01. DUTIES OF INDENTURE TRUSTEE........................... 37
SECTION 6.02. RIGHTS OF INDENTURE TRUSTEE........................... 38
SECTION 6.03. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE................ 39
SECTION 6.04. INDENTURE TRUSTEE'S DISCLAIMER........................ 40
SECTION 6.05. NOTICE OF DEFAULTS.................................... 40
SECTION 6.06. REPORTS BY INDENTURE TRUSTEE TO HOLDERS............... 40
SECTION 6.07. COMPENSATION AND INDEMNITY............................ 40
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE...................... 41
SECTION 6.09. SUCCESSOR INDENTURE TRUSTEE BY MERGER................. 42
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR
SEPARATE INDENTURE TRUSTEE............................ 42
SECTION 6.11. ELIGIBILITY........................................... 44
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER...... 44
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE... 44
ARTICLE VII NOTEHOLDERS'LISTS AND REPORTS.............................. 45
SECTION 7.01. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND
ADDRESSES OF NOTEHOLDERS.............................. 45
SECTION 7.02. PRESERVATION OF INFORMATION: COMMUNICATION
TO NOTEHOLDERS........................................ 46
SECTION 7.03. REPORTS BY ISSUER..................................... 46
SECTION 7.04. REPORTS BY INDENTURE TRUSTEE.......................... 47
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES...................... 47
SECTION 8.01. COLLECTION OF MONEY................................... 47
SECTION 8.02. TRUST ACCOUNTS........................................ 47
-ii-
<PAGE>
SECTION 8.03. GENERAL PROVISIONS REGARDING ACCOUNTS................. 48
SECTION 8.04. RELEASE OF COLLATERAL................................. 49
SECTION 8.05. OPINION OF COUNSEL.................................... 49
ARTICLE IX SUPPLEMENTAL INDENTURES..................................... 49
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS 49
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS... 51
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.................. 52
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURE...................... 52
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT................... 53
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES......... 53
ARTICLE X REDEMPTION OF NOTES.......................................... 53
SECTION 10.01. REDEMPTION............................................ 53
SECTION 10.02. FORM OF REDEMPTION NOTICE............................. 54
SECTION 10.03. NOTES PAYABLE ON REDEMPTION DATE...................... 54
ARTICLE XI MISCELLANEOUS............................................... 54
SECTION 11.01. COMPLIANCE CERTIFICATES AND OPINIONS, ETC............. 54
SECTION 11.02. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE...... 56
SECTION 11.03. ACTS OF NOTEHOLDERS................................... 57
SECTION 11.04. NOTICES............................................... 58
SECTION 11.05. NOTICES TO NOTEHOLDERS; WAIVER........................ 58
SECTION 11.06. ALTERNATE PAYMENT AND NOTICE PROVISIONS............... 58
SECTION 11.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS.............. 59
SECTION 11.08. SUCCESSORS AND ASSIGNS................................ 59
SECTION 11.09. SEPARABILITY.......................................... 59
SECTION 11.10. BENEFITS OF INDENTURE................................. 59
SECTION 11.11. LEGAL HOLIDAYS........................................ 59
SECTION 11.12. GOVERNING LAW......................................... 59
SECTION 11.13. COUNTERPARTS.......................................... 59
SECTION 11.14. RECORDING OF INDENTURE................................ 59
SECTION 11.15. TRUST OBLIGATION...................................... 60
SECTION 11.16. NO PETITION........................................... 60
SECTION 11.17. INSPECTION............................................ 60
SECTION 11.18. CONFLICT WITH TRUST INDENTURE ACT..................... 60
SECTION 11.19. COMMUNICATION BY NOTEHOLDERS WITH OTHER NOTEHOLDERS... 60
SECTION 11.20. LISTING RESTRICTIONS.................................. 61
-iii-
<PAGE>
EXHIBITS
Exhibit A - [Reserved]....................................... A-1
Exhibit B - Form of Class A-1 Note........................... B-1
Exhibit C - Form of Class A-2 Note........................... C-1
Exhibit D - Form of Class A-3 Note........................... D-1
Exhibit E - Form of Class A-4 Note........................... E-1
Exhibit F - Form of Class B Note............................. F-1
Exhibit G - Form of Class C Note............................. G-1
Exhibit H - Form of Class D Note............................. H-1
Exhibit I - Form of Class E Note............................. I-1
Exhibit J - Form of Note Assignment.......................... J-1
Exhibit K - Form of Note Depository Agreement................ K-1
Exhibit L - Form of Investment Representation Letter......... L-1
-iv-
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture
Act of 1939 Indenture
Section Section
- --------------- ---------
310(a)................................................................ 6.11
310(b)................................................................ 6.11
310(c)................................................................ N.A.
311(a)................................................................ 6.12
311(b)................................................................ 6.12
311(c)................................................................ N.A.
312(a).......................................................... 7.01, 7.02
312(b)................................................................ 7.02
312(c)................................................................ 7.02
313(a)................................................................ 7.04
313(b)................................................................ 7.04
313(c).......................................................... 7.03, 7.04
314(a)................................................................ 7.03
314(b)................................................................ 3.06
314(c)......................................................... 4.04, 11.01
314(d)......................................................... 8.04, 11.01
314(e)............................................................... 11.01
314(f)............................................................... N.A.
315(a)............................................................... 6.01
315(b)............................................................... 6.05
315(c)............................................................... 6.01
315(d)............................................................... 6.01
315(e)............................................................... 5.14
316(a)......................................................... 2.07, 5.04
316(b)............................................................... 9.02
316(c)............................................................... 1.01
317(a)............................................................... 5.03
317(b)............................................................... 3.03
318(a)............................................................... 11.18
-v-
<PAGE>
This Indenture, dated as of December [ ], 1999 (this "INDENTURE"),
is between Heller Equipment Asset Receivables Trust 1999-2, a Delaware
business trust (the "ISSUER") and Norwest Bank Minnesota, National
Association, in its capacity as indenture trustee (the "INDENTURE TRUSTEE")
and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Issuer's [ ]%
Class A-1 Receivable-Backed Notes (the "CLASS A-1 NOTES"), [ ]% Class A-2
Receivable-Backed Notes (the "CLASS A-2 NOTES"), [ ]% Class A-3
Receivable-Backed Notes (the "CLASS A-3 NOTES"), [ ]% Class A-4
Receivable-Backed Notes (the "CLASS A-4 NOTES"), [ ]% Class B
Receivable-Backed Notes (the "CLASS B NOTES"), [ ]% Class C Receivable-Backed
Notes (the "CLASS C NOTES"), [ ]% Class D Receivable-Backed Notes (the "CLASS
D NOTES") and [ ]% Class E Receivable-Backed Notes ( the "CLASS E NOTES" and,
together with the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes, Class B Notes, Class C Notes and Class D Notes, the "NOTES"):
GRANTING CLAUSE
The Issuer hereby grants, transfers, assigns and otherwise conveys
to the Indenture Trustee on the Closing Date, on behalf of and for the
benefit of the Holders of the Notes, without recourse, all of the Issuer's
right, title and interest in, to and under the Contract Assets as may be held
from time to time by the Issuer (as each such defined term is defined in
Section 1.01) (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 all
other sums owing by the Issuer hereunder or under any other Transaction
Document, and to secure compliance with the provisions of this Indenture, all
as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders
of the Notes, acknowledges such Grant, accepts the trust under this Indenture
in accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that
the interests of the Holders of the Notes may be adequately and effectively
protected.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
(a) 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.
-1-
<PAGE>
"ACT" shall have the meaning specified in Section 11.03(a).
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated
as of the date hereof, among the Administrator, the Issuer, the Trust
Depositor and the Indenture Trustee.
"ADMINISTRATOR" means Heller Financial, Inc. or any successor
Administrator under the Administration Agreement.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer
of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of
Authorized Officers delivered by the Owner Trustee to the 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 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).
"BOOK ENTRY NOTES" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.09.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which banking institutions in the city of Chicago, Illinois,
Wilmington, Delaware, Minneapolis, Minnesota or New York, New York are
authorized or obligated by law, executive order or governmental decree to be
closed.
"CERTIFICATE OF TRUST" means the Class F Certificate of the Issuer
substantially in the form of EXHIBIT B to the Trust Agreement.
"CLASS" means all Notes whose form is identical except for variation
in denomination, principal amount or owner.
"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.
"COLLATERAL" means the Collateral Granted to the Indenture Trustee
under this Indenture, including all proceeds thereof.
"CONTRACT ASSETS" has the same meaning given such term in the Sale
and Servicing Agreement.
-2-
<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 date of the execution of this Indenture is
located at Norwest Center, 16th Floor, Sixth and Marquette, Minneapolis, MN
55479-0070, Attention: Corporate Trust Services/Asset Backed Administration;
or at such other address as the Indenture Trustee may designate from time to
time by notice to the Noteholders and the Issuer, 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 Issuer).
"DEFAULT" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"DEFINITIVE NOTES" shall have the meaning specified in Section 2.09.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"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.
"GENERAL PARTNER" means each Certificateholder obligated to pay the
expenses of the Issuer pursuant to Section 2.07 of the Trust Agreement.
"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 do and receive anything that the granting party is
or may be entitled to do or receive thereunder or with respect thereto.
-3-
<PAGE>
"HOLDER" means (i) with respect to a Certificate, the Person in
whose name such Certificate is registered in the Certificate Register, and
(ii) with respect to a Note, the Person in whose name such Note is registered
in the Note Register.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE SECURITY HOLDER" means a Noteholder.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National
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 (i) is in fact independent of the Issuer, any other obligor
upon the Notes, the Trust Depositor, the Originator and any of their
respective Affiliates, (ii) does not have any direct financial interest or
any material indirect financial interest in the Issuer, any such other
obligor, the Originators or any of their respective Affiliates, and (iii) is
not connected with the Issuer, any such other obligor, the Originators 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.
"INTEREST RATE" means, as the context may require, the Class A-1
Interest Rate, the Class A-2 Interest Rate, the Class A-3 Interest Rate, the
Class A-4 Interest Rate, the Class B Interest Rate, the Class C Interest
Rate, Class D Interest Rate and the Class E Interest Rate or any of them, in
each case as defined in the Sale and Servicing Agreement.
"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.
"MAJORITY IN INTEREST" has the same meaning given the term Required
Holders in the Sale and Servicing Agreement.
"NOTE DEPOSITORY AGREEMENT" means the agreement dated as of the
Closing Date, among the Issuer, the Administrator, the Indenture Trustee and
DTC, as the initial Clearing Agency, relating to the Notes, substantially in
the form of EXHIBIT K hereto.
"NOTEHOLDER" 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
-4-
<PAGE>
Clearing Agency) and with respect to a Definitive Note the Person in whose
name a Note is registered on the Note Register.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.04.
"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 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 the Issuer and who shall be satisfactory to the
Indenture Trustee and which 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 for such notice has been made, 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, HOWEVER, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Transaction Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Trust
Depositor, any Originator or any of their respective Affiliates 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. 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
-5-
<PAGE>
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Trust Depositor, any Originator
or any of their respective Affiliates.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all
Notes of one Class or of all Classes, as the case may be, Outstanding at the
date of determination.
"OWNER TRUSTEE" means Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.
"PAYING AGENT" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make the distributions from
the Note Distribution Account, including payment of principal of or interest
on the Notes on behalf of the Issuer.
"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.
"REDEMPTION DATE" means in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Distribution Date specified by the Servicer or the Issuer
pursuant to Section 10.01(a) or 10.01(b), as the case may be.
"REDEMPTION DATE AMOUNT" means (i) in the case of a redemption of
the Notes pursuant to Section 10.01(a), an amount equal to the unpaid
principal amount of the Notes redeemed plus accrued and unpaid interest
thereon at the weighted average of the Interest Rate for each Class of Notes
being so redeemed to but excluding the Redemption Date, or (ii) in the case
of a payment made to Noteholders pursuant to Section 10.01(b), the amount on
deposit in the Note Distribution Account, but not in excess of the amount
specified in clause (i) above.
"REGISTERED HOLDER" means the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"RESPONSIBLE OFFICER" means, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office (or any successor group of the
Indenture Trustee), including any Vice President, assistant secretary or
other officer or assistant officer of the Indenture Trustee customarily
performing functions similar to those performed by the people who at such
time shall be officers, respectively, or to whom any corporate trust matter
is referred at the Corporate
-6-
<PAGE>
Trust Office of the Indenture Trustee because of his knowledge of and
familiarity with the particular subject.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of the date hereof, among the Issuer, the Trust
Depositor, Heller Financial, Inc. as the Servicer and as an Originator,
Heller Financial Leasing, Inc. and the Indenture Trustee.
"STATE" means any one of the 50 states of the United States, or the
District of Columbia or any of its territories.
"TARGETED HOLDER" means any holder of a right to receive interest or
principal with respect to the Notes or other interests in the Trust (other
than a Note or other interest with respect to which an opinion is or has been
rendered that such interest will be treated as debt for federal income tax
purposes) and any holder of a right to receive any amount in respect of the
Certificate; PROVIDED, that any Person holding more than one interest each of
which would cause such Person to be a Targeted Holder shall be treated as a
single Targeted Holder.
"TERMINATION DATE" means the date on which the Indenture Trustee
shall have received payment and performance of all amounts and obligations
which the Issuer may owe to or on behalf of the Indenture Trustee for the
benefit of the Noteholders under this Indenture or the Notes.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement,
dated as of the date hereof, between the Trust Depositor and the Owner
Trustee.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939.
"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) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise
defined shall have the meanings ascribed thereto in the Sale and Servicing
Agreement.
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.
-7-
<PAGE>
"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. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "OR" is not exclusive;
(iv) "INCLUDING" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular;
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; references to a Person
are also to its permitted successors and assigns; and
(vii) the words "HEREOF," "HEREIN" and "HEREUNDER" and
words of similar import when used in this Indenture shall refer to
this Indenture as a whole and not to any particular provision of
this Indenture; Section, subsection and Schedule references
contained in this Indenture are references to Sections, subsections
and Schedules in or to this Indenture unless otherwise specified.
ARTICLE II
THE NOTES
SECTION 2.01. FORM. The Notes, in each case together with the
Indenture Trustee's certificate of authentication, shall be in substantially
the forms set forth as EXHIBITS B, C, D, E, F,
-8-
<PAGE>
G, H AND I to this Indenture 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.
Each Note shall be dated the date of its authentication. The terms
of the Notes set forth in Exhibits hereto 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 receipt of an Issuer Order,
authenticate and deliver for original issue (i) Class A-1 Notes in an
aggregate principal amount of $[ ], (ii) Class A-2 Notes in an aggregate
principal amount of $[ ], (iii) Class A-3 Notes in an aggregate principal
amount of $[ ], (iv) Class A-4 Notes in an aggregate principal amount of $[ ],
(v) Class B Notes in an aggregate principal amount of $[ ], (vi) Class C
Notes in an aggregate principal amount of $[ ], (vii) Class D Notes in an
aggregate principal amount of $[ ] and (viii) Class E Notes in an aggregate
principal amount of $[ ]. The aggregate principal amount of such Classes of
Notes Outstanding at any time may not exceed such respective amounts, except
as otherwise 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 of $1,000 in excess thereof with respect to the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes and Class C Notes and in the minimum denomination of $500,000 and in
integral multiples of $1,000 in excess thereof with respect to the Class D
Notes and the Class E Notes.
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
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 Book-Entry
Notes or Definitive Notes, the Issuer may execute, and upon receipt of an
Issuer Order the Indenture Trustee shall authenticate and deliver, temporary
Notes that are printed, lithographed, typewritten, mimeographed or otherwise
produced, of the tenor of the definitive Notes in lieu of
-9-
<PAGE>
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 Book-Entry
Notes or Definitive Notes to be prepared without unreasonable delay. After
the preparation of Book-Entry Notes or Definitive Notes, the temporary Notes
shall be exchangeable for Book-Entry Notes or 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 Notes, the Issuer shall execute and the
Indenture Trustee shall authenticate and deliver in exchange therefor a like
tenor and 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 Book-Entry Notes or Definitive
Notes.
SECTION 2.04. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE;
TRANSFER RESTRICTION.
(a) 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 "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 the amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.02,
the Issuer shall execute, and the 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
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
-10-
<PAGE>
from the Indenture Trustee, the Notes which the Noteholder making the
exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes
surrendered upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in form satisfactory to the 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 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 or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 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.
Neither the Indenture Trustee nor the Registrar shall have any
responsibility to monitor or restrict the transfer of beneficial ownership in
any Note an interest in which is transferable through the facilities of the
Clearing Agency.
(b) Notwithstanding any other provision of this Indenture, no
transfer of the Class D Notes or the Class E Notes shall be made or shall be
valid or effective hereunder unless such transfer is made in a transaction
which does not require registration or qualification under the Securities Act
of 1933 or qualification under any state securities or "Blue Sky" laws. In
addition, neither the Indenture Trustee nor the Note Registrar shall effect
the registration of any transfer of the Class E Notes if, following such
transfer, there would be more than 99 Targeted Holders.
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 them to hold the Issuer and the
Indenture Trustee, 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, the Issuer shall
-11-
<PAGE>
execute and upon its written 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.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Indenture Trustee may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Indenture Trustee or the Note
Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost of 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 of their respective agents may treat the Person in whose name any Note is
registered in the Note Register (as of the day of determination) as the owner
of such Note for the purpose of receiving payments of principal of and
interest, if any, on such Note and for all other purposes whatsoever, whether
or not such Note be overdue, and none of the Issuer, the Indenture Trustee
nor any of their respective agents shall be affected by notice to the
contrary.
SECTION 2.07. PAYMENT OF PRINCIPAL AND INTEREST; DEFAULTED INTEREST.
(a) Each Class of Notes shall accrue interest at the related
Interest Rate, and such interest shall be payable on each Distribution Date
as specified therein, subject to Section 3.01.
-12-
<PAGE>
Any installment of interest or principal, if any, payable on any Note which
is punctually paid or duly provided for by the Issuer on the applicable
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 wire transfer
in immediately available funds to the account designated by such nominee and
except for the final installment of principal payable with respect to such
Note on a Distribution Date or on the related Final Distribution Date, as the
case may be (and except for the Redemption Price for any Note called for
redemption pursuant to Section 10.01(a)), 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 on each Distribution
Date to the extent provided in the form of the related Note set forth as an
Exhibit hereto. 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,
unless the Required Holders have waived such Event of Default in the manner
provided in Section 5.02. All principal payments on each Class of Notes shall
be made PRO RATA to the Noteholders of such Class entitled thereto. 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 within five
Business Days of receipt of notice of termination of the Trust pursuant to
Section 9.01(c) of the Trust Agreement 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 at the applicable Interest Rate in
any lawful manner. The Issuer may pay such defaulted interest to the Persons
who are Noteholders on any Distribution Date in the manner and to the extent
provided in the Sale and Servicing Agreement.
(d) All payments to be made by the Issuer under this Indenture shall
be made only from the income and proceeds from the Trust Estate and only to
the extent that the Issuer shall have sufficient income or proceeds from the
Trust Estate to enable the Issuer to make payments in accordance with the
terms hereof. The Indenture Trustee is not personally liable for any amounts
payable under this Indenture, except as expressly provided herein.
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
-13-
<PAGE>
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. BOOK-ENTRY NOTES. The Notes (except for the Class D
Notes and the Class E Notes as specified in Section 2.11 below), upon
original issuance, will be issued in the form of a typewritten Note or Notes
representing the Book-Entry Notes, to be delivered to DTC, the initial
Depository, 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 Noteholder of such Notes will receive a
Definitive Note representing such Noteholder's interest in such Note, except
as provided in Section 2.11. Unless and until definitive, fully registered
Notes (the "DEFINITIVE NOTES") have been issued to Noteholders pursuant to
Section 2.11:
(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
Noteholders;
(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 Noteholders shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Noteholders and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Note Depository
Agreement, unless and until Definitive Notes are issued pursuant to
Section 2.11, the 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 Noteholders evidencing a
specified percentage of the Outstanding Amount, the Clearing Agency
shall be deemed to represent such percentage only to the extent that it
has received instructions to such effect from Noteholders 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.
-14-
<PAGE>
SECTION 2.10. 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 Noteholders pursuant to
Section 2.11, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Noteholders of the Notes to
the Clearing Agency, and shall have no obligation to the Noteholders.
SECTION 2.11. DEFINITIVE NOTES. The Class D Notes and the Class E
Notes shall be initially issued in the form of Definitive Notes. With respect
to the other Classes of Notes, if (i)(A) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities as described in the Note
Depository Agreement, and (B) the Indenture Trustee or 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, Noteholders for such Notes representing not less than
66 2/3% of the Outstanding Amount of such Class of Notes advise the Indenture
Trustee and the Clearing Agency through the Clearing Agency Participants in
writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the related Noteholders, then
the Indenture Trustee shall notify all Noteholders of the related Class or
Classes of Notes, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Notes of the related Class of
Notes to Noteholders requesting the same. Upon surrender to the Indenture
Trustee of the 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 of a Class, the Indenture Trustee shall recognize the holders of the
Definitive Notes as Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee
or the Administrator is unable to locate a qualified successor Clearing
Agency. 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.
SECTION 2.12. RELEASE OF COLLATERAL. Subject to Section 11.01 and
the terms of the Transaction Documents, 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.
SECTION 2.13. TAX TREATMENT. The Issuer and the purchasers of the
Notes intend, and will take all actions consistent with the intention, that
the Notes be treated as indebtedness which is solely secured by the assets of
the Trust for all federal, state, local, and foreign income and franchise tax
purposes and that, pursuant to Treasury Regulations Section
301.7701-3(b)(1)(ii) as in effect for periods after January 1, 1997, the
Trust be disregarded as a separate entity from the Trust Depositor for
federal income tax purposes. The Issuer, by entering into this Indenture, and
-15-
<PAGE>
each Noteholder, by its acceptance of its Note agree to treat the Notes for
federal, state and local income, single business and franchise tax purposes
as indebtedness.
SECTION 2.14. ADDITIONAL RESTRICTIONS ON THE CLASS E NOTES. Each
purchaser of Class E Notes (a "CLASS E PURCHASER") from the Trust Depositor
and the Placement Agent, by acceptance thereof, will be required to provide a
certificate representing to and agreeing with the Trust Depositor, the
Servicer and the Placement Agent as indicated on Exhibit L hereto, including
without limitation:
(a) The Class E Purchaser is a U.S. Person and the sole legal and
beneficial owner of the Class E Note. The term "U.S. Person" means a citizen
or resident of the United States, a corporation, or partnership (unless, in
the case of a partnership, Treasury regulations are adopted that provide
otherwise) created or organized in or under the laws of the United States,
any state thereof or the District of Columbia, including an entity treated as
a corporation or partnership for federal income tax purposes, an estate whose
income is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust, and one or more
such U.S. Persons have the authority to control all substantial decisions of
such trust (or, to the extent provided in applicable Treasury regulations,
certain trusts in existence on August 20, 1996 which are eligible to elect to
be treated as U.S. Persons).
(b) The Class E Purchaser is not and will not become a partnership,
Subchapter S corporation or grantor trust for United States federal income
tax purposes or, if it is or becomes such an entity, less than 50 percent of
the aggregate value of the assets of such entity are and at all times will be
attributable to interests in the Issuer.
(c) The Class E Purchaser understands that no subsequent sale or
transfer (each such act, a "TRANSFER") of a Class E Note is permitted unless
(i) such Transfer is of a Class E Note with a denomination of at least
$500,000 and (ii) the Trust Depositor and the Servicer each consent in
writing to the proposed Transfer, which consent shall be granted unless
either the Trust Depositor or the Servicer, acting pursuant to advice of
counsel, determines that such Transfer would create a material risk that the
Issuer would be classified for federal or any applicable state tax purposes
as an association or publicly traded partnership taxable as a corporation;
provided, that an attempted Transfer that would cause the number of Targeted
Holders to exceed one hundred shall be void.
Class E Notes shall be delivered to such Class E Purchaser only upon
the execution and delivery to the Placement Agent, the Issuer and the
Indenture Trustee of a letter, substantially in the form of the letter
attached as Exhibit L to this Indenture. Any purported Transfer of any Class
E Note in contravention of the restrictions and conditions in Annex A hereto
(including any violation of the representation in paragraph (b) above by an
investor who continues to hold a Class E Note occurring any time after the
Transfer in which it acquired such Class E Note) shall be null and void and
the purported transferee shall not be recognized by the Trust or any other
person as a Class E Noteholder for any purpose.
-16-
<PAGE>
SECTION 2.15. LISTING RESTRICTIONS. Neither the Issuer nor the Owner
Trustee acting on behalf of the Issuer will (i) list or cause the Class E
Notes to be listed or traded on an established securities market (within the
meaning of Treasury Regulation Section 1.7704-1(b)), or (ii) cooperate in, or
facilitate, the establishment of such a market
ARTICLE III
COVENANTS; REPRESENTATIONS AND WARRANTIES
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, subject to Section 8.02(c), the Issuer and the
Indenture Trustee will cause to be deposited into the Note Distribution
Account amounts allocated pursuant to Section 7.05 of the Sale and Servicing
Agreement, and cause to be distributed all such amounts on a Distribution
Date as deposited therein (i) for the benefit of the Class A-1 Notes, to the
Class A-1 Noteholders, (ii) for the benefit of the Class A-2 Notes, to the
Class A-2 Noteholders, (iii) for the benefit of the Class A-3 Notes, to the
Class A-3 Noteholders, (iv) for the benefit of the Class-A-4 Notes, to the
Class A-4 Noteholders, (v) for the benefit of the Class B Notes, to the Class
B Noteholders, (vi) for the benefit of the Class C Notes, to the Class C
Noteholders, (vii) for the benefit of the Class D Notes, to the Class D
Noteholders and (viii) for the benefit of the Class E Notes, to the Class E
Noteholders, in each case as further specified herein. Amounts properly
withheld under the Code by any Person from a payment to any Noteholder of
interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer will
maintain in Wilmington, Delaware, 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 Indenture Trustee 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, 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(b) 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.
-17-
<PAGE>
On or before the Business Day immediately preceding each
Distribution Date and Redemption Date, the Issuer shall deposit or cause to
be deposited in the Note Distribution Account an aggregate sum sufficient to
pay the amounts then becoming due, such sum to be held in trust for the
benefit of the Persons entitled thereto and (unless the Paying Agent is the
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 (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
-18-
<PAGE>
to any Note and remaining unclaimed for two years after such amount has
become due and payable shall be discharged from such trust and upon receipt
of an Issuer Request shall be deposited by the Indenture Trustee in the
Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and
all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; PROVIDED, HOWEVER, that if such money
or any portion thereof had been previously deposited by the Issuer with the
Indenture Trustee for the payment of principal or interest on the Notes, and
PROVIDED, FURTHER, that the Indenture Trustee or such Paying Agent, before
being required to make any such repayment, may at the expense of the Issuer
cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in The
City of New York, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to or for the account of the Issuer. The Indenture Trustee may also
adopt and employ, at the expense of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice
of such repayment to Holders whose Notes have been called but not 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,
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 Collateral.
SECTION 3.05. PROTECTION OF COLLATERAL. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the
Indenture Trustee on behalf of the Noteholders to be prior to all other liens
in respect of the Collateral, and the Issuer shall take all actions necessary
to obtain and maintain, for the benefit of the Indenture Trustee on behalf of
the Noteholders, a first lien on and a first priority, perfected security
interest in the Collateral. In connection therewith, pursuant to Section 2.06
of the Sale and Servicing Agreement, the Issuer shall cause to be delivered
into the possession of the Indenture Trustee as pledgee hereunder, indorsed
in blank, any "instruments" (within the meaning of the UCC), not constituting
part of chattel paper, evidencing any Contract which is part of the
Collateral. The Indenture Trustee agrees to maintain continuous possession of
such delivered instruments as pledgee hereunder until this Indenture shall
have terminated in accordance with its terms or until, pursuant to the terms
hereof or of the Sale and Servicing Agreement, the Indenture Trustee is
otherwise authorized to release such instrument from the Collateral. The
Issuer will from time to time execute and deliver all such supplements and
amendments hereto and all such financing statements, continuation
-19-
<PAGE>
statements, instruments of further assurance and other instruments, all as
prepared by the Servicer and delivered to the Issuer, and will take such
other action necessary or advisable to:
(i) Grant more effectively all or any portion of the
Collateral;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and the
rights of the Indenture Trustee and the Noteholders in such
Collateral against the claims of all persons and parties; and
(vi) pay all taxes or assessments levied or assessed upon
the Collateral when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements
or other instruments required to be executed pursuant to this Section.
SECTION 3.06. [Reserved].
SECTION 3.07. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.
(a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any such Person's material covenants or obligations under any
instrument or agreement included in the Collateral 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 the Transaction Documents or such other
instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties and obligations under this Indenture, and any
performance of such duties by a Person identified to the Indenture Trustee in
an Officer's Certificate shall be deemed to be action taken by the Issuer.
The Indenture Trustee shall not be responsible for the action or inaction of
the Servicer or the Administrator. Initially, the Issuer has contracted with
the Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture.
-20-
<PAGE>
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and in the instruments and agreements included in the Collateral,
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 Sale 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 Transaction Document or any provision thereof
without the consent of the Indenture Trustee or the Required Holders.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default, the Issuer shall promptly notify the Indenture Trustee and
each Rating Agency thereof. Upon any termination of the Servicer's rights and
powers pursuant to the Sale 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 and the Rating
Agencies of such appointment (to the extent such party has not already been
notified pursuant to the Sale and Servicing Agreement), specifying in such
notice the name and address of such Successor Servicer.
(e) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Originators of their respective duties
under the Transaction Documents if the effect thereof would adversely affect
the Holders of the Notes.
SECTION 3.08. NEGATIVE COVENANTS. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by the Transaction
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the
Collateral, 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 Collateral;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by this Indenture
to be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenant; 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 Collateral or any part thereof or any
-21-
<PAGE>
interest therein or the proceeds thereof (other than Permitted
Liens), (C) permit the lien created by this Indenture not to
constitute a valid first priority (other than with respect to any
such tax, mechanics' or other lien) security interest in the
Collateral, or (D) amend, modify or fail to comply with the
provisions of the Transaction Documents without the prior written
consent of the Indenture Trustee, except where the Transaction
Documents allow for amendment or modification without the consent or
approval of the Indenture Trustee; or
(iv) dissolve or liquidate in whole or in part.
SECTION 3.09. 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 or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee, in form and substance 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 and each other Transaction
Document on the part of the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture
Trustee to the effect that such transaction will not have any material
adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no
such actions will be taken) each stating that such consolidation or
merger and such supplemental indenture comply with this Article Three
and that all conditions precedent herein provided for relating to such
transaction have been complied with; and
-22-
<PAGE>
(vii) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (A) greater than zero and
(B) not less than the net worth of the Issuer immediately prior to
giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Collateral, to any
Person (except as expressly permitted by the Transaction Documents), unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the United
States or any State, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form and
substance 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 and each other Transaction Document on the part of the Issuer
to be performed or observed, all as provided herein, (C) expressly
agree by means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate to
the rights of Holders of the Notes and (D) unless otherwise provided in
such supplemental indenture, expressly agree to indemnify, defend and
hold harmless the Issuer against and from any loss, liability or
expense arising under or related to this Indenture and the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture
Trustee to the effect that such transaction will not have any material
adverse tax consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate and an Opinion of Counsel (which shall
describe the actions taken as required by clause (v) above or that no
such actions will be taken) each stating that such conveyance or
transfer and such supplemental indenture comply with this Article Three
and that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filings required by
Exchange Act); and
-23-
<PAGE>
(vii) the Issuer has a net worth, immediately after such
conveyance or transfer, that is (A) greater than zero and (B) not less
than the net worth of the Issuer immediately prior to giving effect to
such conveyance or transfer.
SECTION 3.10. SUCCESSOR OR TRANSFEREE.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.09(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for,
and may exercise every right and power of, the Issuer under this Indenture
with same effect as if such Person has been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.09(b), the Issuer
will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery of written notice to the Indenture Trustee
stating that the Issuer is to be so released.
SECTION 3.11. NO OTHER BUSINESS. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other
Transaction Documents and activities incidental thereto.
SECTION 3.12. NO BORROWING. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness
permitted by or arising under the other Transaction Documents. The proceeds
of the Notes and the Certificates shall be used exclusively to fund the
Issuer's purchase of the Contracts and the other assets specified in the Sale
and Servicing Agreement, to fund the Reserve Fund and to pay the
transactional expenses of the Issuer.
SECTION 3.13. NOTICE OF EVENTS OF DEFAULT. The Issuer agrees to give
the Indenture Trustee and each Rating Agency prompt written notice of each
Event of Default hereunder and of a Servicer Default under the Sale and
Servicing Agreement.
SECTION 3.14. 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.
SECTION 3.15. COMPLIANCE WITH LAWS. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability
of the Issuer to perform its obligations under the Notes, this Indenture or
any other Transaction Document.
SECTION 3.16. AMENDMENTS OF TRUST AGREEMENT. The Issuer shall not
agree to any amendment to Section 11.01 of the Trust Agreement to eliminate
the requirements thereunder
-24-
<PAGE>
that the Indenture Trustee or the Holders of the Notes consent to amendments
thereto as provided therein.
SECTION 3.17. REMOVAL OF ADMINISTRATOR. So long as any Notes are
issued and 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. REPRESENTATIONS AND WARRANTIES OF ISSUER. The Issuer
represents and warrants as follows:
(a) POWER AND AUTHORITY. It has full power, authority and legal
right to execute, deliver and perform its obligations as Issuer under this
Indenture and the Notes (the foregoing documents, the "ISSUER DOCUMENTS").
(b) DUE AUTHORIZATION. The execution and delivery of the Issuer
Documents and the consummation of the transactions provided for therein have
been duly authorized by all necessary action on its part.
(c) NO CONFLICT. The execution and delivery of the Issuer Documents,
the performance of the transactions contemplated thereby and the fulfillment
of the terms thereof will not conflict with, result in any breach of any of
the materials terms and provisions of, or constitute (with or without notice
or lapse of time or both) a default under, any indenture, contract,
agreement, mortgage, deed of trust, or other instrument to which the Issuer
is a party or by which it or any of its property is bound.
(d) NO VIOLATION. The execution and delivery of the Issuer
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof will not conflict with or violate, in any
material respect, any Requirements of Law applicable to the Issuer.
(e) ALL CONSENTS REQUIRED. All approvals, authorizations, consents,
orders or other actions of any Person or any Governmental Authority required
in connection with the execution and delivery of the Issuer Documents, the
performance of the transactions contemplated thereby and the fulfillment of
the terms thereof have been obtained.
(f) LOCATION. The Issuer has its chief executive office and place of
business (as such terms are used in Article 9 of the UCC) in Wilmington,
Delaware. The Issuer agrees that it will not change the location of such
office to a location outside of Wilmington, Delaware, without at least 30
days prior written notice to the Originators, the Servicer, the Indenture
Trustee and the Rating Agencies.
-25-
<PAGE>
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.01, 3.03, 3.04, 3.05,
3.07, 3.08, 3.10, 3.12, 3.13, 3.15 and 3.16, (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, 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
(i) 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
(ii) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
[1] have become due and payable, or
[2] will become due and payable at the applicable
Maturity Date within one year, or
[3] 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 [1], [2] or [3] 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 (which will mature
prior to the date such amounts are payable), in trust in an
Eligible Deposit Account (which shall be the Collection
Account or Note Distribution Account) for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness
on such Note not theretofore delivered to the Indenture
Trustee for
-26-
<PAGE>
cancellation when due to the final scheduled Distribution
Date (if Notes shall have been called for redemption pursuant
to Section 10.01(a)), as the case may be;
(b) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on
behalf of the Indenture Trustee for the benefit of the Noteholders under this
Indenture or the Notes; and
(c) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate and 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, subject to Section 11.02, stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with and the Rating Agency Condition has been satisfied.
SECTION 4.02. APPLICATION OF TRUST MONEY. All moneys deposited with
the Indenture Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as
the 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; but such moneys need not be segregated from other
funds except to the extent required herein or in the Sale 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.
SECTION 4.04. RELEASE OF COLLATERAL. Subject to Section 11.01 and
the terms of the Transaction Documents, 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 and an Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 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.
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
-27-
<PAGE>
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):
(a) failure to pay on each Distribution Date the full amount of
accrued interest on any Note;
(b) failure to pay the then outstanding principal amount of any
Note, if any, on its related Maturity Date;
(c) (i) failure on the part of any Originator to make any payment or
deposit required under the Sale and Servicing Agreement within three Business
Days after the date the payment or deposit is required to be made, or (ii)
failure on the part of any Originator, the Trust Depositor, the Issuer or the
Owner Trustee to observe or perform any other covenants or agreements of such
entity set forth in the Sale and Servicing Agreement or the Indenture, which
failure has a material adverse effect on the Noteholders and which continues
unremedied for a period of 60 days after written notice; PROVIDED, that no
such 60-day cure period shall apply in the case of a failure by the
Originators to perform their joint and several agreement to repurchase or
substitute for Ineligible Contracts, and FURTHER PROVIDED, that only a five
day cure period shall apply in the case of a failure by any Originator or the
Owner Trustee to observe their respective covenants not to grant a security
interest in or otherwise intentionally create a lien on the Contracts;
(d) any representation or warranty made by any Originator, the Trust
Depositor, the Indenture Trustee or the Owner Trustee in the Sale and
Servicing Agreement or the Indenture or any information required to be given
by any Originator or the Trust Depositor to the Indenture Trustee to identify
the Contracts proves to have been incorrect in any material respect when made
and continues to be incorrect in any material respect for a period of 60 days
after written notice and as a result of which the interests of the
Noteholders are materially and adversely affected; PROVIDED, HOWEVER, that an
Event of Default shall not be deemed to occur thereunder if the Originator
has repurchased the related Contracts through the Trust Depositor during such
period in accordance with the provisions of the Sale and Servicing Agreement;
(e) the occurrence of an Insolvency Event relating to any
Originator, the Trust Depositor, the Issuer or the Servicer; or
(f) the Issuer becomes an "INVESTMENT COMPANY" within the meaning of
the Investment Company Act of 1940, as amended.
SECTION 5.02. RIGHTS UPON EVENT OF DEFAULT; NOTICE.
-28-
<PAGE>
If an Event of Default referred to in subparagraph (e) of Section
5.01 has occurred, then and in every such case the unpaid principal of the
Notes, together with interest accrued but unpaid thereon, and all other
amounts due to the Noteholders under the Indenture, shall immediately and
without further act become due and payable.
In the case of any event described in clause (a), (b), (c), (d),
or (f) above, an Event of Default with respect to the Notes will be deemed to
have occurred provided such Event of Default may be waived if the Required
Holders provide written notice to the Trust Depositor, Indenture Trustee and
the Servicer of such waiver. In the event the Indenture Trustee has actual
knowledge of an Event of Default, it shall give written notice thereof to the
Trust Depositor, each Originator, the Servicer, the Owner Trustee and the
Rating Agencies.
If an Insolvency Event relating to the Trust Depositor occurs,
pursuant to the Trust Agreement and the Sale and Servicing Agreement, on the
day of such Insolvency Event, the Trust Depositor shall promptly give notice
to the Indenture Trustee of the Insolvency Event, and the Indenture Trustee
shall, unless notified to the contrary by the Required Holders, promptly act
pursuant to and in accordance with the terms thereof to sell, dispose of or
otherwise liquidate the Collateral in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from any such sale, disposition
or liquidation of Contracts shall be deposited in the Collection Account and
allocated as described in the Sale and Servicing Agreement and herein.
Promptly following its receipt of notice hereunder or under any
other Transaction Document of any Event of Default, the Indenture Trustee
shall send a copy thereof to the Issuer and each Rating Agency.
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY INDENTURE TRUSTEE; AUTHORITY OF INDENTURE TRUSTEE.
(a) The Issuer covenants that if the Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand 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 Interest Rate and in addition
thereto such further amount as shall be sufficient to cover costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and
counsel.
(b) The Indenture Trustee following the occurrence of an Event of
Default, shall have full right, power and authority to take, or defer from
taking, any and all acts with respect to the administration, maintenance or
disposition of the Collateral.
-29-
<PAGE>
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may in its discretion (except as provided in Section 5.03(d)),
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) Notwithstanding anything to the contrary contained in this
Indenture if an Event of Default shall have occurred and be continuing, and
if the Issuer fails to perform its obligations under Section 10.01(b) when
and as due, the Indenture Trustee may 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 specific performance 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, provided that
the Indenture Trustee shall only be entitled to take any such actions to the
extent such actions (i) are taken only to enforce the Issuer's obligations to
redeem the principal amount of Notes, and (ii) are taken only against the
Collateral, any investments therein and any proceeds thereof.
(e) 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 Collateral, 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;
-30-
<PAGE>
(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.
(f) 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 compensation 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.
(g) 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.
(h) In any Proceedings brought by the Indenture Trustee (including
any Proceedings involving the interpretation of any provision of this
Indenture), the Indenture Trustee shall be held to represent all of the
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
-31-
<PAGE>
SECTION 5.04. REMEDIES. If an Event of Default shall have occurred
and be continuing the Indenture Trustee (subject to Section 5.05) may, and
shall if so directed by the Required Holders in writing:
(i) institute Proceedings in its own name and as or on behalf
of a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the
Collateral;
(iii) exercise any remedies of a secured party under the UCC
and any other remedy available to the Indenture Trustee and take any
other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee on behalf of the Noteholders under this
Indenture or the Notes; and
(iv) direct the Owner Trustee to sell the Collateral 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 Collateral following an Event of Default, other than an
Event of Default described in Section 5.01(a) or (b), unless (A) the
Holders of 100% of the Principal 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 Collateral 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 (i.e., a sale of the Collateral would be
economically beneficial for each Class of Noteholders), and the
Indenture Trustee provides prior written notice to each Rating Agency
and obtains the consent of the Required Holders. In determining such
sufficiency or insufficiency with respect to clauses (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 Collateral for such purpose; PROVIDED, HOWEVER, upon
the occurrence of an Event of Default described in Section 5.01(e),
caused solely from an event described in such subparagraph occurring
with respect to the Trust Depositor, the Collateral will be liquidated
by the Indenture Trustee and the Trust will be terminated 90 days after
the date of such Insolvency Event, unless, before the end of such
90-day period, the related Trustee shall have received written
instructions from the Required Holders, to the effect that such
Required Holders disapprove of the liquidation of such Collateral and
termination of such Trust.
-32-
<PAGE>
SECTION 5.05. OPTIONAL PRESERVATION OF THE CONTRACTS. Following an
Event of Default and if such Event of Default has not been rescinded and
annulled, and except as otherwise provided above, the Indenture Trustee may,
but need not, elect to maintain possession of the Collateral. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal 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 Collateral. In determining
whether to maintain possession of the Collateral, 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 Collateral for such
purpose.
SECTION 5.06. PRIORITIES.
(a) If the Indenture Trustee collects any money or property pursuant
to this Article Five, it shall pay out the money or property in the order and
priority set forth in Section 7.05(b) of the Sale and Servicing Agreement.
(b) 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 5.07. LIMITATION OF SUITS. No Holder of any Note shall have
any right to institute any Proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless (and in all events subject to Section 11.16
hereof):
(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
-33-
<PAGE>
(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, voting
together as a single class.
It is 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.
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 5.08. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE
PRINCIPAL AND INTEREST. Notwithstanding any other provisions in the
Indenture, the Holder of any Note shall have the right, which is absolute and
unconditional, to receive payment of the principal of and interest on such
Note on or after the respective due dates thereof expressed in such Note or
in this Indenture (or, in the case of redemption, on or after the 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 5.09. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture
Trustee or any Noteholders 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 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 5.10. 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 5.11. 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 of 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 Five or by law to the Indenture Trustee or to the Noteholders may be
exercised from time to
-34-
<PAGE>
time, and as often as may be deemed expedient, by the Indenture Trustee or by
the Noteholders, as the case may be.
SECTION 5.12. CONTROL BY NOTEHOLDERS. The Required Holders 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
(in all events subject to Section 6.02(f)); PROVIDED that:
(i) such direction shall not be in conflict with any rule of
law or with any other provision of this Indenture;
(ii) subject to the terms of Section 5.04, any direction to
the Indenture Trustee to sell or liquidate the Collateral 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 Collateral
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 Collateral 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.
Notwithstanding the rights of Noteholders set forth in this Section, subject
to Section 6.01, the Indenture Trustee need not take any action that it
determines might involve it in liability or might materially and adversely
affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. WAIVER OF PAST DEFAULTS. In the case of any waiver of
an Event of Default, the Issuer, the Indenture Trustee and the Holders of the
Notes shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other
Event of Default or impair any right consequent thereto. Upon any such
waiver, such Event of Default shall cease to exist and be deemed to have been
cured and not to have occurred, for every purpose of this Indenture.
SECTION 5.14. UNDERTAKING FOR COSTS. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall
be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or
in any suit against the 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;
but the
-35-
<PAGE>
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) 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 (iii) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in
this Indenture (or, in the case of redemption, on or after the Redemption
Date).
SECTION 5.15. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time
insist upon, or plead or in any manner whatsoever, claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at any
time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantages of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 5.16. ACTION ON NOTES. The 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 Collateral 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 5.06.
SECTION 5.17. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do so
and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the
performance and observance by the Trust Depositor and the Servicer as
applicable, of each of their obligations to the Issuer under or in connection
with the Sale and Servicing Agreement in accordance with the terms thereof,
and to exercise any and all rights, remedies, powers and privileges lawfully
available to the Issuer under or in connection with the Sale 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 Trust
Depositor or the Servicer thereunder and the institution of legal of
administrative actions or proceedings to compel or secure performance by the
Trust Depositor or the Servicer of each of their obligations under the Sale
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, including facsimile) of the Required Holders shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the
Trust Depositor or the Servicer under or in connection with the Sale and
Servicing
-36-
<PAGE>
Agreement, including the right or power to take any action to compel or
secure performance or observance by the Trust Depositor or the Servicer of
each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Sale and
Servicing Agreement, and any right of the Issuer 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 in 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 factual
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; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture and the other Transaction Documents to which the Indenture
Trustee is a party.
(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 Section
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
-37-
<PAGE>
(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 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(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 Sale 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) The Indenture Trustee shall have no discretionary duties other
than those explicitly set forth in this Indenture.
(i) 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 (with respect to factual matters) or an
Opinion of Counsel, as applicable. 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.
-38-
<PAGE>
(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.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of any of the Holders of Notes,
pursuant to the provisions of this Indenture, unless such Holders of Notes
shall have offered to the Indenture Trustee reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred therein or
thereby; PROVIDED, HOWEVER, that the Indenture Trustee shall, upon the
occurrence of an Event of Default (that has not been cured), exercise the
rights and powers vested in it by this Indenture in a manner consistent with
Section 6.01.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless so
requested by the Holders of Notes evidencing not less than 25% of the
Outstanding Amount of the Notes; PROVIDED, HOWEVER, that if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Indenture Trustee, not reasonably assured to the
Indenture Trustee by the security afforded to it by the terms of this
Indenture or the Sale and Servicing Agreement, the Indenture Trustee may
require reasonable indemnity against such cost, expense or liability as a
condition to so proceeding; the reasonable expense of every such examination
shall be paid by the Person making such request, or, if paid by the Indenture
Trustee, shall be reimbursed by the Person making such request upon demand.
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
-39-
<PAGE>
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 is required to comply with Section 6.11.
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 this Indenture, the Collateral 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 this 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 redemption of such Notes), 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, including without
limitation, IRS Form 1099, as may be required to enable such holder to
prepare its federal and state income tax returns.
SECTION 6.07. COMPENSATION AND INDEMNITY. The Issuer shall pay or
shall cause the Administrator or Servicer 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 or shall cause the
Administrator or Servicer 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 indemnify or shall cause the Administrator or Servicer to
indemnify the Indenture Trustee against any and all loss, liability or
expense (including attorneys' fees) 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 defend or
shall cause the Administrator or Servicer to defend any such claim, and the
Indenture Trustee may have separate counsel and the Issuer shall pay or shall
cause the Administrator or Servicer to pay the fees and expenses of such
counsel. Neither the Issuer nor the Administrator or Servicer need reimburse
any expense or indemnify against any loss, liability or expense incurred by
the Indenture Trustee through the Indenture Trustee's own willful misconduct,
negligence or bad faith.
-40-
<PAGE>
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.
SECTION 6.08. REPLACEMENT OF INDENTURE TRUSTEE. The Indenture
Trustee may resign at any time by so notifying the Issuer and the Servicer.
The Issuer may remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official) for
the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs, provided any such decree or order shall
have continued unstayed and in effect for a period of 30 consecutive
days;
(iii) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator or other similar official for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due
or takes any corporate action in furtherance of any of the foregoing;
or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
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
Issuer or 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
-41-
<PAGE>
of 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.
Any resignation or removal of the Indenture Trustee and appointment
of a successor Indenture Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor Indenture Trustee pursuant to this Section and payment of all fees
and expenses owed to the outgoing Indenture Trustee. Notwithstanding the
replacement of the Indenture Trustee pursuant to this Section, the retiring
Indenture Trustee shall be entitled to payment or reimbursement of such
amounts as such Person is entitled pursuant to Section 6.07.
SECTION 6.09. SUCCESSOR 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 without any further act shall be the successor Indenture Trustee;
provided, that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall
provide each Rating Agency prompt notice of any such transaction.
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 Indenture
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.
SECTION 6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE
INDENTURE TRUSTEE.
(a) Notwithstanding any other provision of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee and the Administrator acting jointly shall have the power and may
execute and deliver all instruments to appoint one or more Persons to act as
a co-Indenture Trustee or co-Indenture Trustees, jointly with the Indenture
Trustee, or separate Indenture Trustee or separate Indenture 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
Collateral, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee and the Administrator may consider
-42-
<PAGE>
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
Indenture Trustee alone shall have the power to make such appointment. No
co-Indenture Trustee or separate Indenture Trustee hereunder shall be
required to meet the terms of eligibility of a successor Indenture Trustee
under Section 6.11 and no notice to Noteholders of the appointment of any
co-Indenture Trustee or separate Indenture Trustee shall be required under
Section 6.08
(b) Every separate Indenture Trustee and co-Indenture 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
Indenture Trustee or co-Indenture Trustee jointly (it being understood
that such separate Indenture Trustee or co-Indenture 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 Collateral or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate Indenture Trustee or co-Indenture Trustee, but
solely at the direction of the Indenture Trustee;
(ii) no Indenture Trustee hereunder shall be personally liable
by reason of any act or omission of any other Indenture Trustee
hereunder; and
(iii) the Indenture Trustee and the Administrator may at any
time accept the resignation of or remove any separate Indenture Trustee
or co-Indenture 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
Indenture Trustees and co-Indenture Trustees, as effectively as if given to
each of them. Every instrument appointing any separate Indenture Trustee or
co-Indenture Trustee shall refer to this Agreement and the conditions of this
Article. Each separate Indenture Trustee and co-Indenture Trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of co-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 and a copy thereof given to the
Administrator.
-43-
<PAGE>
(d) Any separate Indenture Trustee or co-Indenture 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, to do any
lawful act under or in respect of this Agreement on its behalf and in its
name. If any separate Indenture Trustee or co-Indenture 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 Indenture Trustee. Notwithstanding anything to the
contrary in this Indenture, the appointment of any separate Indenture Trustee
or co-Indenture Trustee shall not relieve the Indenture Trustee of its
obligations and duties under this Indenture.
SECTION 6.11. ELIGIBILITY. The Indenture Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Indenture Trustee
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any state,
authorized under such laws to exercise corporate trust powers, whose long
term unsecured debt is rated at least Baa3 by Moody's and shall have a
combined capital and surplus of at least $50,000,000 or shall be a member of
a bank holding system the aggregate combined capital and surplus of which is
$50,000,000 and subject to supervision or examination by federal or state
authority, provided that the Trustee's separate capital and surplus shall at
all times be at least the amount required by Section 310(a)(2) of the TIA. If
such Person publishes reports of condition at least annually, pursuant to law
or to the requirements of a supervising or examining authority, then for the
purposes of this Section 6.ll, the combined capital and surplus of such
Person 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
Trustee shall cease to be eligible in accordance with the provisions of this
Section 6.ll, the Trustee shall resign immediately in the manner and with the
effect specified in Section 6.08. The Indenture Trustee shall comply with TIA
Section 310(b); PROVIDED, HOWEVER, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 6.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUER. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
SECTION 6.13. REPRESENTATIONS AND WARRANTIES OF INDENTURE TRUSTEE.
The Indenture Trustee in its individual capacity and as Indenture Trustee
represents and warrants as follows:
(a) ORGANIZATION AND CORPORATE POWER. It is a duly organized and
validly existing national banking association in good standing under the laws
of each jurisdiction where its business so requires. It has full corporate
power, authority and legal right to execute, deliver and perform its
obligations as Indenture Trustee under this Indenture and the Sale and
Servicing Agreement (the foregoing documents, the "INDENTURE TRUSTEE
DOCUMENTS") and to authenticate the Notes.
-44-
<PAGE>
(b) DUE AUTHORIZATION. The execution and delivery of the Indenture
Trustee Documents, the consummation of the transactions provided for therein
and the authentication of the Notes have been duly authorized by all
necessary corporate action on its part, either in its individual capacity or
as Indenture Trustee, as the case may be.
(c) NO CONFLICT. The execution and delivery of the Indenture Trustee
Documents, the performance of the transactions contemplated thereby and the
fulfillment of the terms thereof (including the authentication of the Notes),
will not conflict with, result in any breach of any of the material terms and
provisions of, or constitute (with or without notice or lapse of time or
both) a default under, any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Indenture Trustee is a party or by
which it or any of its property is bound.
(d) NO VIOLATION. The execution and delivery of the Indenture
Trustee Documents, the performance of the transactions contemplated thereby
and the fulfillment of the terms thereof (including the authentication of the
Notes), will not conflict with or violate, in any material respect, any
Requirements of Law applicable to the Indenture Trustee.
(e) ALL CONSENTS REQUIRED. All approvals, authorizations, consents,
orders or other actions of any Person or any Governmental Authority
applicable to the Indenture Trustee, required in connection with the
execution and delivery of the Indenture Trustee Documents, the performance by
the Indenture Trustee of the transactions contemplated thereby and the
fulfillment by the Indenture Trustee of the terms thereof (including the
authentication of the Notes), have been obtained.
(f) VALIDITY, ETC. Each Indenture Trustee Document constitutes a
legal, valid and binding obligation of the Indenture Trustee, enforceable
against the Indenture Trustee in accordance with its terms, except as such
enforceability may be limited by Insolvency Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity) or by an implied covenant of good
faith and fair dealing.
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 (i) not more than five days after the earlier of (a)
each Record Date and (b) 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 Noteholders as of such Record Date and (ii) 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
-45-
<PAGE>
form and content as of a date not more than ten 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: COMMUNICATION TO
NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained
in the most recent list furnished to the Indenture Trustee as provided in
Section 7.01 and the names and addresses of Noteholders received by the
Indenture Trustee in its capacity as Note Registrar and shall otherwise
comply with TIA Section 312(a). 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 Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under
the Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
SECTION 7.03. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required (if at all) 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) that 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;
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) and by rules and regulations prescribed
from time to time by the Commission.
-46-
<PAGE>
(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
Section 313(a), within 60 days after January 31 beginning with January 31,
2000, the Indenture Trustee shall mail to each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing to Noteholders
shall be filed by the 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 and the
Sale and Servicing Agreement. The 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 Collateral, 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 Five.
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 and the Certificateholders, the Trust Accounts
as provided in Section 7.01 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, all amounts required to be
disbursed to the Indenture Trustee with respect to the preceding Collection
Period pursuant to Section 7.01 of the Sale and Servicing Agreement will be
transferred from the Collection Account and/or the Reserve Fund and deposited
by the Indenture Trustee upon receipt to the Note Distribution Account.
-47-
<PAGE>
(c) On each Distribution 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 as follows and in the order and
priority set forth in Section 7.05(a) of the Sale and Servicing Agreement.
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 accordance with the provisions of Section 7.03 of the Sale and
Servicing Agreement. Except as otherwise provided in Section 7.03 of the Sale
and Servicing Agreement, all income or other gain from investments of moneys
deposited in such Trust Accounts shall be deposited by the Indenture Trustee
in the Collection Account, and any loss resulting from such investments shall
be charged to the related Trust 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, in either case without any further
action by any Person, 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 failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as Indenture Trustee, in
accordance with their terms.
(c) If (i) the Issuer shall have failed to give written investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 a.m., New York City 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 (iii) if such Notes shall have been
declared due and payable following an Event of Default, but amounts collected
or receivable from the Collateral 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 described in clause (vi) of the
definition thereof in the Sale and Servicing Agreement.
-48-
<PAGE>
SECTION 8.04. RELEASE OF COLLATERAL.
(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 or the Sale and Servicing Agreement 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 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 Collateral 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 as so stated in the Opinion of Counsel) Independent
Certificates in accordance with TIA Sections 314(c) and 314(d)(1) and in each
case meeting the applicable requirements of Section 11.01.
SECTION 8.05. OPINION OF COUNSEL. The Indenture Trustee shall
receive at least seven days prior written 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 for this Indenture; PROVIDED, HOWEVER, that such Opinion of
Counsel shall not be required to express an opinion as to the fair value of
the Collateral. 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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
Without the consent of the Holders of any Notes and with prior
notice to each Rating Agency, the Issuer and the Indenture Trustee, when
authorized by an Issuer Order, and the other parties hereto at any time from
time to time, may enter into one or more indentures supplemental
-49-
<PAGE>
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 created by this Indenture, or to
subject to the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the 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 the Transaction Documents 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
adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Indenture 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 Indenture Trustee, pursuant to the
requirements of Article Six;
(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; and
(viii) to elect into the FASIT provisions of the Code,
provided an Opinion of Counsel to the effect that such election will
not adversely affect the Noteholders, is delivered to the Issuer and
Indenture Trustee.
The Indenture Trustee is hereby authorized to join in the exemption
of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
-50-
<PAGE>
SECTION 9.02. Supplemental Indentures With Consent of Noteholders.
The Issuer and the Indenture Trustee, when authorized by an Issuer Order,
may, with the consent of a Majority in Interest, 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, no such modification may be
made if it would result in a reduction or withdrawal of the then current
ratings of the Outstanding Notes. Notwithstanding the foregoing, 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 Date Amount with respect
thereto, change the provisions of this Indenture relating to the
application of collections on, or the proceeds of the sale of, the
Collateral 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 Five, 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 second 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 sell or liquidate the
Collateral pursuant to Section 5.04 or amend the provisions of this
Article which specify the percentage of the Outstanding Amount of the
Notes required to amend this Indenture or the other Transaction
Documents;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Transaction Documents cannot
be modified or waived without the consent of the Holder of each
Outstanding Note affected thereby; or
(vi) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part
of the Collateral or, except as
-51-
<PAGE>
otherwise permitted or contemplated herein, terminate the lien created
by this Indenture on any property at any time subject hereto or deprive
the Holder of any Note of the security provided by the lien created by
this Indenture.
Neither the Issuer, the Indenture Trustee nor any of their
respective affiliates shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any
Noteholder for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Indenture, the Sale and Servicing
Agreement or the Notes unless such consideration is offered to be paid to all
Noteholders that so consent, waive or agree to amend in the time frame set
forth in solicitation documents relating to such consent, waiver or agreement.
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 the 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 parties hereto 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 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 under this Indenture of the parties hereto 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.
-52-
<PAGE>
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT. Every amendment
of this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 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. 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.
(a) In the event that the Originators pursuant to Section 11.03 of
the Sale and Servicing Agreement purchase (through the Trust Depositor) the
corpus of the Trust, the Notes are subject to redemption in whole, but not in
part, on the Distribution Date on which such repurchase occurs, for a
purchase price equal to the outstanding principal, and accrued interest on
the Notes; PROVIDED, HOWEVER, that the Issuer has available funds sufficient
to pay such amounts. The Originators, the Servicer or the Issuer shall
furnish each Rating Agency notice of such redemption. If the Notes are to be
redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer shall
furnish notice of such election to the Indenture Trustee not later than 20
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.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.02 of the Trust Agreement or Section 5.02(b) of this Indenture, the
proceeds of such sale shall be distributed as provided in Section 5.06. If
amounts are to be paid to Noteholders pursuant to this Section 10.01(b), the
Servicer or the Issuer shall, to the extent practicable, furnish notice of
such event to the Indenture Trustee not later than 20 days prior to the
Redemption Date whereupon all such amounts shall be payable on the Redemption
Date.
-53-
<PAGE>
SECTION 10.02. FORM OF REDEMPTION NOTICE. Notice of redemption under
Section 10.01(a) 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:
(i) the Redemption Date;
(ii) the Redemption Date Amount; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Date Amount (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 (if
any) as required by Section 10.02, on the Redemption Date become due and
payable at the Redemption Date Amount and (unless the Issuer shall default in
the payment of the Redemption Date Amount) no interest shall accrue on the
Redemption Date Amount for any period after the date to which accrued
interest is calculated for purposes of calculating the Redemption Date Amount.
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
as so stated in the Opinion of Counsel) an Independent Certificate from a
firm of certified public accountants meeting the applicable requirements of
this Section and TIA Sections 314(c) and 314(d)(1), 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.
-54-
<PAGE>
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for
authentication and delivery of the Notes or the release of any property
subject to the lien created by this Indenture, the Issuer shall, in addition
to any obligation imposed in Section 11.01(a) or elsewhere in this Indenture,
furnish to the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of the signer thereof 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 named matters, if the fair value to
the Issuer of the property to be so deposited and of all other such
property made the basis of any such withdrawal or release since the
commencement of the then-current fiscal year of the Issuer, as set
forth in the certificates delivered pursuant to clause (i) above and
this clause (ii), is 10% or more of the Outstanding Amount of the
Notes, but such a certificate need not be furnished with respect to any
property so deposited, if the fair value thereof to the Issuer as set
forth in the related 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 any release described in
clause (A) or (B) of Section 11.01(b)(v), whenever any property or
securities are to be released from the lien created by this Indenture,
the Issuer shall also furnish to the Indenture Trustee an
-55-
<PAGE>
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 created by 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 or securities (other
than property described in clauses (A) or (B) of Section 11.01(b)(v))
released from the lien created by this Indenture since the commencement
of the then current fiscal year, as set forth in the certificates
required by clause (iii) above and this clause (iv), equals 10% or more
of the Outstanding Amount of the Notes, but such certificate need not
be furnished in the case of any release of property or securities if
the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent of the then
Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this
Section, (A) collect, liquidate, sell or otherwise dispose of the
Contracts as and to the extent permitted or required by the Transaction
Documents, (B) make cash payments out of the Trust Accounts as and to
the extent permitted or required by the Transaction Documents, so long
as the Issuer shall deliver to the Indenture Trustee every six months,
commencing [______________], an Officer's Certificate stating that all
the dispositions of Collateral described in clauses (A) or (B) that
occurred during the preceding six calendar months were in the ordinary
course of the Issuer's business and that the proceeds thereof were
applied in accordance with the Transaction 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 Person as to other matters, and any such Person may certify
or given 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
-56-
<PAGE>
representations by, an officer or officers of the Servicer, the Originator or
the Issuer, stating that the information with respect to such factual matters
is in the possession of the Servicer, the Originator or the Issuer, unless
such counsel knows, or in the exercise of reasonable care should know, that
the certificate or opinion or representations with respect to such matters
are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, 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 Six.
SECTION 11.03. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the 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,
-57-
<PAGE>
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. All notices, demands, certificates, requests
and communications hereunder ("NOTICES") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt
to be effective the date of delivery indicated on the return receipt, or (b)
one Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or
(d) on the date transmitted by legible telecopier transmission with a
confirmation of receipt, in all cases addressed to the recipient at the
address specified in the Sale and Servicing Agreement for such recipient.
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
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 his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Noteholders is given by
mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Noteholder shall affect the sufficiency of such
notice with respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have been duly
given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the
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 of 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 provisions of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods
-58-
<PAGE>
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. 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 11.08. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee
in this Indenture shall bind its successors, co-Indenture Trustees and agents.
SECTION 11.09. 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 11.10. 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 Collateral, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 11.11. 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 11.12. GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS,
RIGHTS, AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.13. COUNTERPARTS. This Indenture may be executed in
several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
SECTION 11.14. 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 secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
-59-
<PAGE>
SECTION 11.15. 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 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 beneficiary 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 Six, Seven and Eight of the Trust Agreement.
SECTION 11.16. NO PETITION. The parties hereto, by entering into
this Indenture, and each Noteholder, by accepting a Note or a beneficial
interest in a Note, hereby covenant and agree that they will not at any time
institute against the Originator, the Issuer or any General Partner, or join
in any institution against the Originators, the Issuer or any General Partner
thereof, 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 other Transaction
Documents.
SECTION 11.17. 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 11.18. CONFLICT WITH TRUST INDENTURE ACT. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this Indenture by any of the provisions of the
Trust Indenture Act, such required provision shall control.
SECTION 11.19. COMMUNICATION BY NOTEHOLDERS With Other Noteholders.
Noteholders may communicate with other Noteholders with respect to their
rights under this Indenture or the Notes pursuant to Section 312(b) of the
TIA. Every Noteholder, by receiving and holding the
-60-
<PAGE>
same, agrees with the Issuer and the Indenture Trustee that none of the
Issuer and the Indenture Trustee nor any agent of the Issuer and the
Indenture Trustee shall be deemed to be in violation of any existing law, or
any law hereafter enacted which does not specifically refer to Section 312 of
the TIA, by reason of the disclosure of any such information as to the names
and addresses of the Noteholders in accordance with Section 312 of the TIA,
regardless of the source from which such information was derived, and that
the Indenture Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under Section 312(b) of the TIA.
SECTION 11.20. LISTING RESTRICTIONS. Neither the Issuer nor the
Owner Trustee acting on behalf of the Issuer will (i) list or cause the Class
D Notes or the Class E Notes to be listed or traded on an established
securities market (within the meaning of Treasury Regulation Section
1.7704-1(b)), or (ii) cooperate in, or facilitate, the establishment of such
a market.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not physically contained herein.
-61-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed and delivered as of the day and year first above written.
HELLER EQUIPMENT ASSET RECEIVABLES
TRUST 1999-2
By: Wilmington Trust Company, not
in its individual capacity but
solely on behalf of the Issuer as
Owner Trustee under the Trust
Agreement
By: ___________________________________
Printed Name: _____________________
Title: ____________________________
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: ___________________________________
Printed Name: _____________________
Title: ____________________________
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF )
On _________________________________________________________________
[insert date] [Here insert name and title of notary]
personally appeared _________________________________________________________
/ / personally known to me, or
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature _________________________________ [Seal]
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF __ )
On _________________________________________________________________
[insert date] [Here insert name and title of notary]
personally appeared _________________________________________________________,
/ / personally known to me, or
/ / proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are subscribed to the within instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature _________________________________ [Seal]
<PAGE>
EXHIBIT A
[RESERVED]
A-1
<PAGE>
EXHIBIT B
FORM OF CLASS A-1 NOTE
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.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS A-1 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS A-1 MATURITY DATE") and the
Redemption Date, if any, pursuant to Sections 10.01 of the Indenture referred
to on the reverse hereof.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in Section 3.01 of the Indenture. Interest on
this Note will accrue for each Distribution Date from the most recent
Distribution Date on which interest has been paid to but
B-1
<PAGE>
excluding such Distribution Date or, if no interest has yet been paid, from
the Closing Date. Interest will be computed on the basis of a 360-day year
and actual days elapsed. 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.
B-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by an Authorized Officer, as of the date
set forth below.
Date: [ ] HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely on behalf
of the Issuer as Owner Trustee, under the
Trust Agreement
By: ____________________________________
Printed Name: ______________________
Title: _____________________________
B-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By: _____________________________________
Authorized Signatory
B-4
<PAGE>
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-1 Receivable- Backed Notes (the "CLASS A-1
NOTES"), all issued under an Indenture, dated as of December [ ], 1999 (the
"INDENTURE"), among the Issuer and Norwest Bank Minnesota, National
Association, as Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class A-1
Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented
or amended.
The Class A-1 Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class A-1 Notes will be payable on the earlier of
the Class A-1 Maturity Date and the Redemption Date, if any, selected
pursuant to the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class A-1 Notes shall be due and payable on the date
on which an Event of Default shall have occurred and be continuing unless the
Required Holders have waived such Event of Default.
Payments of interest on this Note due and payable on each
Distribution Date shall be made by wire transfer to the account of 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 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) affected
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
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 Corporate Trust Office of the Indenture Trustee or at the office of the
Indenture Trustee's agent appointed for such purposes located in the City of
Chicago, Illinois.
B-5
<PAGE>
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 an
eligible guarantor institution which is a participant in the Securities
Transfer Agent's Medallion Program (STAMP) or similar signature guarantee
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new program, 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 by acceptance of a Note or 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in
a Note covenants and agrees that by accepting the benefits of the Indenture
and such Note that such Noteholder will not at any time institute against the
Trust Depositor or the Issuer, or join in any institution against the Trust
Depositor or the Issuer 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness which is
solely secured by the Collateral and that the Trust will be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulations Section 301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of
a Note or of a beneficial interest in a Note, agrees to treat the Notes for
federal, state and local income, single business and franchise tax purposes
as indebtedness.
B-6
<PAGE>
Prior to the due presentment for registration of transfer of this
Note, the Issuer and the Indenture Trustee and any agent of the Issuer and
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 Noteholders under the Indenture at any time
by the Issuer and the consent of the Required Holders. The Indenture also
contains provisions permitting the Noteholders representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the
Noteholders, 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 Noteholder (or any one of
more Predecessor Notes) shall be conclusive and binding upon such Holders and
upon all future Noteholders 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 Noteholders issued
thereunder.
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, and the obligations, rights and remedies
of the parties hereunder and thereunder shall be determined in accordance
with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
B-7
<PAGE>
EXHIBIT C
FORM OF CLASS A-2 NOTE
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.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS A-2 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS A-2 MATURITY DATE") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class A-2 Notes
shall be made until the principal on the Class A-1 Notes have been paid in
full.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution
C-1
<PAGE>
Date from the most recent Distribution Date on which interest has been paid
to but excluding such Distribution Date or, if no interest has yet been paid,
from the Closing 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.
C-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [___________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely
on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By: ______________________________________
Printed Name: ________________________
Title: _______________________________
C-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Indenture Trustee
By: ______________________________
Authorized Signatory
C-4
<PAGE>
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-2 Receivable-Backed Notes (the "CLASS A-2
NOTES"), all issued under an Indenture, dated as of December [ ], 1999 (the
"INDENTURE"), among the Issuer and Norwest Bank Minnesota, National
Association, as Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class A-2 Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class A-2 Notes will be payable on the earlier of
the Class A-2 Maturity Date and the Redemption Date, if any, pursuant to
Section 10.01 of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Class A-2 Notes shall be due and payable on
the date on which an Event of Default shall have occurred and be continuing
unless the Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each
Distribution Date shall be made by wire transfer to the account of 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 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) affected
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
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 Chicago, Illinois.
C-5
<PAGE>
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 an
eligible guarantor institution which is a participant in the Securities
Transfer Agent's Medallion Program (STAMP) or similar signature guarantee
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new program, and such other documents as the Indenture
Trustee may require, and thereupon one or more new Class A-2 Notes of
authorized denomination 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, by acceptance of a Note or 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 their individual capacities,
(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 their individual capacities, 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 their individual capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in
a Note covenants and agrees that by accepting the benefits of the Indenture
and such Note that such Noteholder will not at any time institute against the
Trust Depositor or the Issuer, or join in any institution against the Trust
Depositor or the Issuer, 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness which is
solely secured by the Collateral and that the Trust will be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulations Section 301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of
a Note or of a beneficial interest in a Note, agrees to treat the Notes for
the federal, state and local income, single business and franchise tax
purposes as indebtedness.
C-6
<PAGE>
Prior to the due presentment for registration of transfer of this
Note, the Issuer and the Indenture Trustee and any agent of the Issuer and
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 Required Holders. 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 Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the 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 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, and the obligations, rights and remedies
of the parties hereunder and thereunder shall be determined in accordance
with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
C-7
<PAGE>
EXHIBIT D
FORM OF CLASS A-3 NOTE
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.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS A-3 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS A-3 MATURITY DATE") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class A-3 Notes
shall be made until the principal on the Class A-1 Notes have been paid in
full.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution
D-1
<PAGE>
Date from the most recent Distribution Date on which interest has been paid
to but excluding such Distribution Date or, if no interest has yet been paid,
from the Closing 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-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [___________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely
on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By: _______________________________
Printed Name: _________________
Title: ________________________
D-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Indenture Trustee
By: _____________________________
Authorized Signatory
D-4
<PAGE>
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-3 Receivable-Backed Notes (the "CLASS A-3
NOTES"), all issued under an Indenture, dated as of December [ ], 1999 (the
"INDENTURE"), among the Issuer and Norwest Bank Minnesota, National
Association, as Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class A-3 Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class A-3 Notes will be payable on the earlier of
the Class A-3 Maturity Date and the Redemption Date, if any, pursuant to
Section 10.01 of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Class A-3 Notes shall be due and payable on
the date on which an Event of Default shall have occurred and be continuing
unless the Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each
Distribution Date shall be made by wire transfer to the account of 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 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) affected
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
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 Chicago, Illinois.
D-5
<PAGE>
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 an
eligible guarantor institution which is a participant in the Securities
Transfer Agent's Medallion Program (STAMP) or similar signature guarantee
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new program, and such other documents as the Indenture
Trustee may require, and thereupon one or more new Class A-3 Notes of
authorized denomination 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, by acceptance of a Note or 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 their individual capacities,
(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 their individual capacities, 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 their individual capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in
a Note covenants and agrees that by accepting the benefits of the Indenture
and such Note that such Noteholder will not at any time institute against the
Trust Depositor or the Issuer, or join in any institution against the Trust
Depositor or the Issuer, 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness which is
solely secured by the Collateral and that the Trust will be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulations Section 301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of
a Note or of a beneficial interest in a Note, agrees to treat the Notes for
the federal, state and local income, single business and franchise tax
purposes as indebtedness.
D-6
<PAGE>
Prior to the due presentment for registration of transfer of this
Note, the Issuer and the Indenture Trustee and any agent of the Issuer and
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 Required Holders. 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 Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the 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 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, and the obligations, rights and remedies
of the parties hereunder and thereunder shall be determined in accordance
with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
D-7
<PAGE>
EXHIBIT E
FORM OF CLASS A-4 NOTE
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.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS A-4 RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS A-4 MATURITY DATE") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class A-4 Notes
shall be made until the principal on the Class A-1 Notes have been paid in
full.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution
E-1
<PAGE>
Date from the most recent Distribution Date on which interest has been paid
to but excluding such Distribution Date or, if no interest has yet been paid,
from the Closing 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.
E-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [__________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely
on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By: ________________________________
Printed Name: __________________
Title: _________________________
E-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By: __________________________________
Authorized Signatory
E-4
<PAGE>
[REVERSE OF CLASS A-4 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class A-4 Receivable-Backed Notes (the "CLASS A-4
NOTES"), all issued under an Indenture, dated as of December [ ], 1999 (the
"INDENTURE"), among the Issuer and Norwest Bank Minnesota, National
Association, as Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class A-4 Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class A-4 Notes will be payable on the earlier of
the Class A-4 Maturity Date and the Redemption Date, if any, pursuant to
Section 10.01 of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Class A-4 Notes shall be due and payable on
the date on which an Event of Default shall have occurred and be continuing
unless the Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each
Distribution Date shall be made by wire transfer to the account of 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 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) affected
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
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 Chicago, Illinois.
E-5
<PAGE>
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 an
eligible guarantor institution which is a participant in the Securities
Transfer Agent's Medallion Program (STAMP) or similar signature guarantee
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new program, and such other documents as the Indenture
Trustee may require, and thereupon one or more new Class A-4 Notes of
authorized denomination 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, by acceptance of a Note or 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 their individual capacities,
(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 their individual capacities, 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 their individual capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in
a Note covenants and agrees that by accepting the benefits of the Indenture
and such Note that such Noteholder will not at any time institute against the
Trust Depositor or the Issuer, or join in any institution against the Trust
Depositor or the Issuer, 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness which is
solely secured by the Collateral and that the Trust will be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulations Section 301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of
a Note or of a beneficial interest in a Note, agrees to treat the Notes for
the federal, state and local income, single business and franchise tax
purposes as indebtedness.
E-6
<PAGE>
Prior to the due presentment for registration of transfer of this
Note, the Issuer and the Indenture Trustee and any agent of the Issuer and
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 Required Holders. 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 Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the 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 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, and the obligations, rights and remedies
of the parties hereunder and thereunder shall be determined in accordance
with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
E-7
<PAGE>
EXHIBIT F
FORM OF CLASS B NOTE
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.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS B RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS B MATURITY DATE") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class B Notes shall
be made until the principal on all the Class A-1 Notes has been paid in full.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution
F-1
<PAGE>
Date from the most recent Distribution Date on which interest has been paid
to but excluding such Distribution Date or, if no interest has yet been paid,
from the Closing 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.
F-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [___________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee,
under the Trust Agreement
By: _________________________________
Printed Name: ___________________
Title: __________________________
F-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Indenture Trustee
By: _____________________________
Authorized Signatory
F-4
<PAGE>
[REVERSE OF CLASS B NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class B Receivable- Backed Notes (the "CLASS B
NOTES"), all issued under an Indenture, dated as of December [ ], 1999 (the
"INDENTURE"), among the Issuer and Norwest Bank Minnesota, National
Association, as Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class B Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class B Notes will be payable on the earlier of the
Class B Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class B Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each
Distribution Date shall be made by wire transfer to the account of 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 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) affected
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
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 Chicago, Illinois.
F-5
<PAGE>
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 an
eligible guarantor institution which is a participant in the Securities
Transfer Agent's Medallion Program (STAMP) or similar signature guarantee
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new program, and such other documents as the Indenture
Trustee may require, and thereupon one or more new Class B Notes of
authorized denomination 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, by acceptance of a Note or 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 their individual capacities,
(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 their individual capacities, 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 their individual capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in
a Note covenants and agrees that by accepting the benefits of the Indenture
and such Note that such Noteholder will not at any time institute against the
Trust Depositor or the Issuer, or join in any institution against the Trust
Depositor or the Issuer, 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness which is
solely secured by the Collateral and that the Trust will be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulations Section 301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of
a Note or of a beneficial interest in a Note, agrees to treat the Notes for
the federal, state and local income, single business and franchise tax
purposes as indebtedness.
F-6
<PAGE>
Prior to the due presentment for registration of transfer of this
Note, the Issuer and the Indenture Trustee and any agent of the Issuer and
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 Required Holders. 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 Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the 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 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, and the obligations, rights and remedies
of the parties hereunder and thereunder shall be determined in accordance
with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
F-7
<PAGE>
EXHIBIT G
FORM OF CLASS C NOTE
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.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS C RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
Cede & Co., or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS C MATURITY DATE") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class C Notes shall
be made until the principal on all the Class A-1 Notes has been paid in full.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution
G-1
<PAGE>
Date from the most recent Distribution Date on which interest has been paid
to but excluding such Distribution Date or, if no interest has yet been paid,
from the Closing 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.
G-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [___________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely
on behalf of the Issuer as Owner Trustee,
under the Trust Agreement
By: ______________________________________
Printed Name: ________________________
Title: _______________________________
G-3
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Indenture Trustee
By: _____________________________
Authorized Signatory
G-4
<PAGE>
[REVERSE OF CLASS C NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class C Receivable-Backed Notes (the "CLASS C
NOTES"), all issued under an Indenture, dated as of December [ ], 1999 (the
"INDENTURE"), among the Issuer and Norwest Bank Minnesota, National
Association, as Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class C Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class C Notes will be payable on the earlier of the
Class C Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class C Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each
Distribution Date shall be made by wire transfer to the account of 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 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) affected
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
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 Chicago, Illinois.
G-5
<PAGE>
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 an
eligible guarantor institution which is a participant in the Securities
Transfer Agent's Medallion Program (STAMP) or similar signature guarantee
program, and such other documents as the Indenture Trustee may require, and
thereupon one or more new program, and such other documents as the Indenture
Trustee may require, and thereupon one or more new Class C Notes of
authorized denomination 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, by acceptance of a Note or 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 their individual capacities,
(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 their individual capacities, 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 their individual capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in
a Note covenants and agrees that by accepting the benefits of the Indenture
and such Note that such Noteholder will not at any time institute against the
Trust Depositor or the Issuer, or join in any institution against the Trust
Depositor or the Issuer 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued
with the intention that, for federal, state and local income, single business
and franchise tax purposes, the Notes will qualify as indebtedness which is
solely secured by the Collateral and that the Trust will be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury
Regulations Section 301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of
a Note or of a beneficial interest in a Note, agrees to treat the Notes for
the federal, state and local income, single business and franchise tax
purposes as indebtedness.
G-6
<PAGE>
Prior to the due presentment for registration of transfer of this
Note, the Issuer and the Indenture Trustee and any agent of the Issuer and
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 Required Holders. 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 Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note. The Indenture also permits the 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 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, and the obligations, rights and remedies
of the parties hereunder and thereunder shall be determined in accordance
with such laws.
No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this
Note at the times, place, and rate, and in the coin or currency herein
prescribed.
G-7
<PAGE>
EXHIBIT H
FORM OF CLASS D NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT
INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY 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 SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH HELLER FUNDING
CORPORATION (THE "TRUST DEPOSITOR") OR ANY AFFILIATE OF THE TRUST DEPOSITOR
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY), ONLY
(A) TO THE TRUST DEPOSITOR, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES 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, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN ACCREDITED INVESTOR WITHIN THE MEANING OF
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN
INSTITUTIONAL INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $500,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE TRUST DEPOSITOR'S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
H-1
<PAGE>
SATISFACTORY TO THE TRUST DEPOSITOR. THIS LEGEND WILL BE REMOVED UPON THE
REQUEST OF THE HOLDER, AFTER THE RESALE RESTRICTION TERMINATION DATE.
IN ADDITION THIS NOTE MAY NOT BE SOLD OR TRANSFERRED UNLESS THE
CONDITIONS SET FORTH IN SECTION 2.04(b) OF THE INDENTURE HAVE BEEN COMPLIED
WITH.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS D RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein
referred to as the "ISSUER"), for value received, hereby promises to pay to
[ ], or its registered assigns, the principal sum of [ ] Dollars ($[ ])
payable on the earlier of [ ] (the "CLASS D MATURITY DATE") and the
Redemption Date, if any, pursuant to Section 10.01 of the Indenture referred
to on the reverse hereof. No payments of principal of the Class D Notes shall
be made until the principal on all the Class A-1 Notes has been paid in full.
The Issuer will pay interest on this Note at the rate per annum
shown above 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 the preceding Distribution Date), subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date from the most recent Distribution Date on
which interest has been paid to but excluding such Distribution Date or, if
no interest has yet been paid, from the Closing 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.
H-2
<PAGE>
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.
H-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer.
Date: [___________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely
on behalf of the Issuer as Owner Trustee,
under the Trust Agreement
By: ______________________________________
Printed Name: ________________________
Title: _______________________________
H-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its
individual capacity but solely
as Indenture Trustee
By: _____________________________
Authorized Signatory
H-5
<PAGE>
[REVERSE OF CLASS D NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class D Receivable-Backed Notes (the "CLASS D
NOTES"), all issued under an Indenture, dated as of [ ] (the "INDENTURE"),
among the Issuer and Norwest Bank Minnesota, National Association, as
Indenture Trustee (the "INDENTURE TRUSTEE"), 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 Class D Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and
principal payments as described therein and in the Sale and Servicing
Agreement.
Principal of the Class D Notes will be payable on the earlier of the
Class D Maturity Date and the Redemption Date, if any, pursuant to Section
10.01 of the Indenture. Notwithstanding the foregoing, the entire unpaid
principal amount of the Class D Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing unless the
Required Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date 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 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) affected 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 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 Chicago, Illinois.
H-6
<PAGE>
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 an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class D Notes of authorized denomination 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, by acceptance of a Note or 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 their individual capacities, (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 their individual capacities, 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 their individual
capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
H-7
<PAGE>
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer and 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 Required Holders. 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 Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
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 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, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
H-8
<PAGE>
EXHIBIT I
FORM OF CLASS E NOTE
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY 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 SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH HELLER FUNDING CORPORATION
(THE "TRUST DEPOSITOR") OR ANY AFFILIATE OF THE TRUST DEPOSITOR WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY), ONLY (A) TO THE TRUST
DEPOSITOR, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES 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, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL INVESTOR ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
SECURITIES OF $500,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE TRUST DEPOSITOR'S RIGHTS
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F)
TO REQUIRE THE DELIVERY OF AN
I-1
<PAGE>
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
THE TRUST DEPOSITOR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER, AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT
WILL NOT SELL, TRADE, ASSIGN OR OTHERWISE DISPOSE OF THIS SECURITY (OR ANY
INTEREST HEREIN) OR CAUSE THIS SECURITY (OR ANY INTEREST HEREIN) TO BE MARKETED
ON OR THROUGH (I) AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING OF
SECTION 7704(B)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), INCLUDING, WITHOUT LIMITATION, AN OVER-THE-COUNTER MARKET OR AN
INTERDEALER QUOTATION SYSTEM THAT REGULARLY DISSEMINATES FIRM BUY OR SELL
QUOTATIONS OR (II) A "SECONDARY MARKET" WITHIN THE MEANING OF SECTION 7704(B)(2)
OF THE CODE, INCLUDING A MARKET WHEREIN ANY PERSON REGULARLY MAKES AVAILABLE BID
OR OFFER QUOTES WITH RESPECT TO THE CLASS E NOTES AND STANDS READY TO EFFECT BUY
OR SELL TRANSACTIONS AT THE QUOTED PRICES FOR ITSELF OR ON BEHALF OF OTHERS.
IN ADDITION THIS NOTE MAY NOT BE SOLD OR TRANSFERRED UNLESS THE
CONDITIONS SET FORTH IN SECTION 2.04(b) OF THE INDENTURE HAVE BEEN COMPLIED
WITH.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE 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.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
[ ]% CLASS E RECEIVABLE-BACKED NOTES
REGISTERED $[ ]
No. R-1
Heller Equipment Asset Receivables Trust 1999-2, a business trust
organized and existing under the laws of the State of Delaware (herein referred
to as the "ISSUER"), for value received, hereby promises to pay to [ ], or its
registered assigns, the principal sum of [ ] Dollars ($[ ]) payable on the
earlier of [ ] (the "CLASS E MATURITY DATE") and the Redemption Date, if any,
pursuant to Section 10.01 of the Indenture referred to on the reverse hereof. No
payments of principal of the Class E Notes shall be made until the principal on
all the Class A-1 Notes has been paid in full.
I-2
<PAGE>
The Issuer will pay interest on this Note at the rate per annum shown
above 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 the preceding Distribution Date), subject to certain limitations
contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from the Closing 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.
I-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: [___________], 1999 HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee, under the Trust Agreement
By:
------------------------------
Printed Name:
-----------------
Title:
------------------------
I-4
<PAGE>
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture Trustee
By:
-------------------------------------
Authorized Signatory
I-5
<PAGE>
[REVERSE OF CLASS E NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [ ]% Class E Receivable-Backed Notes (the "CLASS E NOTES"),
all issued under an Indenture, dated as of [ ] (the "INDENTURE"), among the
Issuer and Norwest Bank Minnesota, National Association, as Indenture Trustee
(the "INDENTURE TRUSTEE"), 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 Class E Notes and the other Classes of Notes described in the
Indenture (collectively, the "NOTES") are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture subject to the priorities of allocations as to interest and principal
payments as described therein and in the Sale and Servicing Agreement.
Principal of the Class E Notes will be payable on the earlier of the
Class E Maturity Date and the Redemption Date, if any, pursuant to Section 10.01
of the Indenture. Notwithstanding the foregoing, the entire unpaid principal
amount of the Class E Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing unless the Required
Holders waive such Event of Default.
Payments of interest on this Note due and payable on each Distribution
Date 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. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any 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 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 Chicago,
Illinois.
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
I-6
<PAGE>
Indenture Trustee duly executed by, the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by an eligible guarantor
institution which is a participant in the Securities Transfer Agent's Medallion
Program (STAMP) or similar signature guarantee program, and such other documents
as the Indenture Trustee may require, and thereupon one or more new program, and
such other documents as the Indenture Trustee may require, and thereupon one or
more new Class E Notes of authorized denomination 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, by acceptance of a Note or 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 their individual capacities, (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 their individual capacities, 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 their individual
capacities, 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.
Each Noteholder, by acceptance of a Note or a beneficial interest in a
Note covenants and agrees that by accepting the benefits of the Indenture and
such Note that such Noteholder will not at any time institute against the Trust
Depositor or the Issuer, or join in any institution against the Trust Depositor
or the Issuer 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 Transaction Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness which is solely
secured by the Collateral and that the Trust will be disregarded as a separate
entity for federal income tax purposes pursuant to Treasury Regulations Section
301.7701-3 (b)(1)(ii). Each Noteholder, by acceptance of a Note or of a
beneficial interest in a Note, agrees to treat the Notes for the federal, state
and local income, single business and franchise tax purposes as indebtedness.
Prior to the due presentment for registration of transfer of this Note,
the Issuer and the Indenture Trustee and any agent of the Issuer, 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
I-7
<PAGE>
Note be overdue, and neither the Issuer and 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 Required Holders. 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 Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
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 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, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
I-8
<PAGE>
EXHIBIT J
FORM OF NOTE ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip code, of assignee)
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
--------------------
Signature Guaranteed:
- ----------------------------------------
Signature must be guaranteed by an eligible guarantor institution which is a
participant in the Securities Transfer Agent's Medallion Program (STAMP) or
similar signature guarantee program.
- -----------------------------------------
Notice: The signature(s) on this assignment must correspond with the name(s) as
it appears on the face of the within Note in every particular, without
alteration or enlargement or any change whatsoever.
J-1
<PAGE>
EXHIBIT K
FORM OF NOTE DEPOSITORY AGREEMENT
K-1
<PAGE>
EXHIBIT L
Investment Representation Letter
Norwest Bank Minnesota, National Association
- -------------------------------
- -------------------------------
Heller Funding Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention:
Ladies and Gentlemen:
In connection with our proposed purchase of $____________ aggregate principal
amount of ___% Class [D] [E] Receivable-Backed Notes, Series 1999-2, Due
[_______] (the "NOTES"), issued pursuant to the Indenture, dated as of December
[__], 1999 (the "INDENTURE"), between Heller Equipment Asset Receivables Trust
1999-2 (the "TRUST") and Norwest Bank Minnesota, National Association, as
Indenture Trustee, we represent and agree as follows:
[[For Institutional Accredited Investors only] 1. We are an institutional
"accredited investor" (an entity meeting the requirements of Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act of 1933, as amended
(the "SECURITIES ACT")) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment. We are acquiring
the Notes purchased by us for our own account or for one or more accounts (each
of which is an "institutional accredited investor") as to each of which we
exercise sole investment discretion.]
[[For Qualified Institutional Buyers only] 1. The Purchaser is a "qualified
institutional buyer" within the meaning of Rule 144A ("RULE 144A") promulgated
under the Securities Act of 1933, as amended (the "SECURITIES ACT"). The
Purchaser is aware that the transfer is being made in reliance on Rule 144A, and
the Purchaser has had the opportunity to obtain the information required to be
provided pursuant to paragraph (d)(4)(i) or Rule 144A.]
2. The Purchaser's intention is to acquire the Notes (a) for investment
for the Purchaser's own account or (b) for resale to (i) "qualified
institutional buyers" in transactions under Rule 144A, or (ii) to institutional
"accredited investors" meeting the requirements of Rule 501(a)(1), (2), (3) or
(7) of Regulation D promulgated under the Securities Act, pursuant to any other
exemption from the registration requirements of the Securities Act, subject in
the case of this clause (ii) to (a) the receipt by the Note Registrar of a
letter substantially in the form hereof, and (b) the receipt by the Note
Registrar of such other evidence acceptable to the Note
L-1
<PAGE>
Registrar that such reoffer, resale, pledge or transfer is in compliance with
the Securities Act and other applicable laws. It understands that the Notes
have not been registered under the Securities Act, by reason of a specified
exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the Purchaser's
investment intent (or intent to resell to only certain investors in certain
exempted transactions) as expressed herein.
3. The Purchaser acknowledges that the Notes (and any Note issued on
transfer or exchange thereof) have not been registered or qualified under the
Securities Act or the securities laws of any State or any other jurisdiction,
and that the Notes cannot be resold unless they are registered or qualified
thereunder or unless an exemption from such registration or qualification is
available.
4. The Purchaser has received and reviewed the Private Placement
Memorandum dated December [__], 1999, relating to the Notes (the "PRIVATE
PLACEMENT MEMORANDUM") and the agreements and other materials referred to
therein and has had the opportunity to ask questions and receive answers
concerning the terms and conditions of the transactions contemplated by the
Private Placement Memorandum.
5. The Purchaser will not sell or otherwise transfer (any such act, a
"TRANSFER") any portion of the Note, except in compliance with the Indenture.
6. Check one of the following:*
___ The Purchaser is a "U.S. Person" and it has attached hereto an Internal
Revenue Service ("IRS") Form W-9 (or successor form).
___ The Purchaser is not a "U.S. Person" and under applicable law in effect
on the date hereof, no taxes will be required to be withheld by the
Note Registrar (or its Agent) with respect to distributions to be made
on the Note(s). The Purchaser has attached hereto either (i) a duly
executed IRS Form W-8 (or successor form), which identifies such
Purchaser as the beneficial owner of the Note(s) and states that such
Purchaser is not a U.S. Person or (ii) two duly executed copies of IRS
Form 4224 (or successor form), which identify such Purchaser as the
beneficial owner of the Note(s) and state that interest on the Note is,
or is expected to be, effectively connected with a U.S. trade or
business. The Purchaser agrees to provide to the Note Registrar updated
IRS Forms W-8 or IRS Forms 4224, as the case may be, any applicable
successor IRS forms, or such other certificates as the Note Registrar
may reasonably request, on or before the date that any such IRS form or
certification expires or becomes obsolete, or promptly after the
occurrence of any event requiring a change in the most recent IRS form
of certification furnished by it to the Note Registrar.
- --------
*Each Purchaser must include one of the two alternative certifications.
L-2
<PAGE>
For this purpose, "U.S. Person" means a citizen or resident of the United
States, a corporation, or partnership (unless, in the case of a partnership,
Treasury regulations are adopted that provide otherwise) created or organized in
or under the laws of the United States, any state thereof or the District of
Columbia, including an entity treated as a corporation or partnership for
federal income tax purposes, an estate whose income is subject to United States
federal income tax regardless of its source, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
such trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to elect to be treated as U.S. Persons).
7. The Purchaser represents and warrants that either:(i) it is not
purchasing the Notes with the assets of an employee benefit plan subject to
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or a plan subject to Section 4975 of the Internal Revenue Code of
1986, as amended, or (ii) (in the case of the Class C Notes only) part of the
assets to be used to purchase the Notes constitutes assets of any such plan and
one or more exemptions from the prohibited transaction rules of ERISA, including
but not limited to Prohibited Transaction Class Exemptions ("PTCE") 84-14, PTCE
90-1, PTCE 95-60, PTCE 91-38, and PTCE 96-23 applies such that use of such
assets to acquire and hold the Notes does not and will not constitute a
non-exempt prohibited transaction for purposes of ERISA.
8. The Purchaser will treat the Notes as indebtedness for tax and U.S.
GAAP purposes
[Paragraphs 9 through 15 apply for Purchasers of Class E Notes only]
9. The Purchaser has neither acquired nor will it Transfer any Class E
Note it acquires (or any interest therein) or cause any Class E Note (or any
interest therein) to be marketed on or through an "established securities
market" within the meaning of Section 7704(b)(1) of the Internal Revenue Code of
1986, as amended (the "CODE") and any Treasury regulation thereunder, including,
without limitation, an over-the-counter-market or an interdealer quotation
system that regularly disseminates firm buy or sell quotations. The Purchaser
understands that any transfer effected through an established securities market
shall be void.
10. The Purchaser is a U.S. Person and the sole legal and beneficial
owner of the Class E Note.
11. The Purchaser is not and will not become a partnership, Subchapter
S corporation or grantor trust for United States federal income tax purposes or,
if it is or becomes such an entity, less than 50 percent of the aggregate value
of the assets of such entity are and at all times will be attributable to
interests in the Trust.
12. The Purchaser understands that no subsequent Transfer of a Class E
Note is permitted unless (i) such Transfer is of a Class E Note with a
denomination of at least $250,000 and (ii) the Trust and the Servicer each
consent in writing to the proposed Transfer, which
L-3
<PAGE>
consent shall be granted unless either the Trust or the Servicer, acting
pursuant to advice of counsel, determines that such Transfer would create a
material risk that the Trust would be classified for federal or any
applicable state tax purposes as an association or publicly traded
partnership taxable as a corporation; provided, that an attempted Transfer
that would cause the number of Targeted Holders to exceed one hundred shall
be void. For these purposes, the term "TARGETED HOLDER" means any holder of a
right to receive interest or principal with respect to the Class E Notes;
provided, that any Person holding more than one interest each of which would
cause such Person to be a Targeted Holder shall be treated as a single
Targeted Holder.
13. The Purchaser understands that the opinion of tax counsel to the
Trust that the Trust is not a publicly traded partnership taxable as a
corporation is dependent in part on the accuracy of the representations in
paragraphs 8, 9, 10, 11 and 12 and that in addition to its being subject to
having its purchase rescinded, it will be liable for damages.
14. The Purchaser understands that any purported Transfer of any Class
E Note in contravention of the restrictions and conditions in the paragraphs
above (including any violation of the representation in paragraph 11 by an
investor who continues to hold a Class E Note occurring any time after the
Transfer in which it acquired such Class E Note) shall be null and void and the
purported transferee shall not be recognized by the Trust or any other person as
a Class E Noteholder for any purpose.
15. The Purchaser further understands that, on any proposed resale,
pledge or Transfer of any Class E Notes, it will be required to furnish to the
Indenture Trustee and other appropriate parties as required, such certification
and other information as the Indenture Trustee or such other party may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions and with the restrictions and conditions of the Class E Notes, and
the Indenture pursuant to which the Class E Notes were issued and it agrees that
if it determines to Transfer any Class E Note, it will cause its proposed
transferee to provide the Trust Depositor, the Servicer and the Indenture
Trustee with a letter substantially in the form of this letter subject to the
qualification set forth in the Private Placement Memorandum related to
paragraphs 1 and 3 hereof. The Purchaser further understands that Class E Notes
purchased by it will bear a legend to the foregoing effect.
L-4
<PAGE>
Terms used but not defined herein shall have the meanings ascribed
thereto in the Indenture.
Very truly yours,
[Purchaser]
By: ______________________________
Name:
Title:
L-5
<PAGE>
December __, 1999
Heller Funding Corporation
c/o Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinios 60661
Re: CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4, CLASS B AND CLASS
C RECEIVABLE-BACKED NOTES
Ladies and Gentlemen:
We have acted as special counsel to the Heller Equipment
Asset Receivables Trust 1999-2 (the "TRUST") in connection with the filing by
Heller Funding Corporation (the "COMPANY"), as trust depositor of the Trust,
of the registration statement on Form S-1 (File No. 333-83111) (such
registration statement, together with the exhibits and any amendments
thereto, the "REGISTRATION STATEMENT"), registering the receivable-backed
notes (the "NOTES"). The Registration Statement has been filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "SECURITIES ACT"). As described in the Registration Statement,
the Notes will be issued under and pursuant to the terms of a Sale and
Servicing Agreement, Trust Agreement and Indenture (collectively, the
"AGREEMENTS" and each, individually, an "AGREEMENT"). Capitalized terms used
but not defined herein have the meanings given to them in the Registration
Statement.
This opinion letter is being delivered to you pursuant to
the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
We are familiar with the proceedings to date with respect
to the proposed issuance and delivery of the Notes and have examined copies
of the Certificate of Incorporation and By-Laws of the Company, the
Registration Statement and the Prospectus included therein, the form of each
Agreement and such other documents, records and questions of law, and
satisfied ourselves as to such matters of fact, as we have considered
relevant and necessary as a basis for this opinion letter.
In our examination, we have assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies
and the authenticity of the originals of such latter documents. In making our
examination of documents that will be executed in connection with the
issuance of the Notes, we have assumed that the parties to such documents
will have at the time of execution of such documents, the power, corporate or
other, to enter into and perform all obligations thereunder and have also
<PAGE>
December ___, 1999
Page 2
assumed the due authorization by all requisite action, corporate or other,
and execution and delivery by such parties of such documents and the validity
and binding effect of such documents. As to any facts material to the
opinions expressed herein which we did not independently establish or verify,
we have relied upon oral and written statements and representations of
officers and other representatives of the Company and others. In addition, we
have also relied upon the accuracy and completeness of all certificates and
other statements, representations, documents, records, financial statements
and papers reviewed by us, and the accuracy and completeness of all
representations, warranties, schedules and exhibits contained in such
documents, with respect to the factual matters set forth therein.
Based on the foregoing, we are of the opinion that when (i)
the Registration Statement, as finally amended, has become effective under
the Securities Act, (ii) the price and interest rate of the Notes have been
duly approved by Board of Directors of the Company, (iii) the applicable
Agreements relating to such Notes have been duly executed and delivered by
the parties thereto in substantially the form filed as exhibits to the
Registration Statement, (iv) with respect to the Trust, the Certificate of
Trust has been duly executed and filed by the Owner Trustee with the
Secretary of State of the State of Delaware, (v) the Indenture has been
qualified under the Trust Indenture Act of 1939, as amended, and (vi) the
Notes have been duly executed and authenticated in accordance with the
applicable Agreements, the Notes will constitute legally valid and binding
obligations of the Trust as issuer thereof enforceable in accordance with
their terms, and entitled to the benefits of the applicable Agreements
(subject to the effect of bankruptcy, fraudulent conveyance or transfer,
insolvency, reorganization, arrangement, liquidation, conservatorship and
moratorium laws and subject to the limitations imposed by other laws and
judicial decisions relating to or affecting the rights of creditors
generally, to general principles of equity, regardless of whether enforcement
is considered in proceedings in equity or at law, and to an implied covenant
of good faith and fair dealing).
We do not find it necessary for the purposes of this
opinion letter to cover, and accordingly we express no opinion as to, the
application of the securities or blue sky laws of the various states to the
offering of the Notes.
This opinion letter is limited to the laws of the United
States of America, the State of Illinois, New York and Delaware, and we
express no opinion with respect to the laws of any other state or
jurisdiction.
Our opinions set forth in this letter are based on the
facts in existence and the laws in effect on the date hereof and we expressly
disclaim any obligation to update our opinions herein, regardless of whether
changes in such facts or laws come to our attention after the delivery hereof.
We hereby consent to the filing of this opinion letter as
an Exhibit to the Registration Statement and to all references to our firm
included in or made a part of the Registration Statement. In giving such
consent, we do not concede that we are experts within the meaning of the
Securities Act or the rules and regulations thereunder or that this consent
is required by Section 7 of the Securities Act.
Very truly yours,
-2-
<PAGE>
December __, 1999
Page 3
/s/ Winston & Strawn
-3-
<PAGE>
Exhibit A
Form of Opinion of Winston & Strawn
With respect to Tax Matters
December __, 1999
Re: Heller Funding Corporation
REGISTRATION STATEMENT ON FORM S-1 (REG. NO. )
--------------------------------------------------------
Ladies and Gentlemen:
We have acted as special federal tax counsel to Heller Funding
Corporation, a Delaware corporation (the "Registrant"), in connection with
the proposed issuance and sale of its Class A-1 Receivable-Backed Notes,
Series 1999-2, Class A-2 Receivable-Backed Notes, Series 1999-2, Class A-3
Receivable-Blacked Notes, Series 1999-2, Class A-4 Receivable-Backed Notes,
Series 1999-2, Class B Receivable-Backed Notes, Series 1999-2, and Class C
Receivable-Backed Notes, Series 1999-2 (collectively the "Notes") to be
issued from the Heller Equipment Asset Receivables Trust, 1999-2, a limited
purpose Delaware business trust (the "Trust"). The property of the Trust will
include certain conditional sale agreements, leases, finance leases, secured
promissory notes, installment payment agreements and other financing
agreements with respect to business equipment and computer software and other
property. The Notes will be issued pursuant to an indenture (the "Indenture")
between the Trust and an indenture trustee.
As special tax counsel to the Registrant, we have expressed our
opinion regarding the material United States federal income tax consequences
of the proposed issuance of the Notes to the holders thereof. Our opinion is
contained in the section of the prospectus relating to the Notes (the
"Prospectus") titled "Federal Income Tax Consequences", which is a part of
the Registration Statement on Form S-1 (the "Registration Statement) filed
with the Securities and Exchange Commission (the "Commission") initially on
July 16, 1999, under the Securities Act of 1933, as amended (the "Act"), for
the registration of the Notes under the Act.
Based on current United States federal income tax law and
regulations and on current authoritative interpretations, we are of the
opinion that the statements contained in the section of the Prospectus under
the headings "Summary of Terms--Federal Income tax Considerations" and
"Federal Tax Consequences", to the extent that they concern matters of United
States federal income tax law, are correct in all material respects.
Our opinion is based upon the current provision of the Code,
Treasury Regulations promulgated thereunder, current administrative rulings,
judicial decisions, and other applicable authorities, all as in effect on the
date of such opinions. All of the foregoing authorities are subject to change
or new interpretation, both prospectively and retroactively, and such changes
or interpretation, as well as the changes in the facts as they have been
represented to us or assumed by us, could affect our opinions. Our opinion
does not foreclose the possibility of a contrary determination by the
Internal Revenue Service (the "IRS") or by a court of competent
<PAGE>
jurisdiction, or of a contrary position by the IRS or Treasury Department in
regulations or rulings issued in the future. Furthermore, our opinion assumes
that all the transactions contemplated by the Prospectus will be consummated
in accordance with the terms of the Prospectus, including without limitation,
that holders of Notes will treat such Notes as indebtedness.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to a reference to this firm (as counsel to the
Registrant) under the headings "Summary of Terms--Federal Income Tax
Considerations," "Federal Income Tax Consequences", and "Legal Matters" in
the Prospectus forming a part of the Registration Statement, without implying
or admitting that we are "experts" within the meaning of the Act of the rules
and regulations of the Commission issued thereunder, with respect to any part
of the Registration Statements, including this exhibit.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
Exhibit 10.1
SALE AND SERVICING AGREEMENT
among
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2,
as Issuer,
HELLER FUNDING CORPORATION,
as Trust Depositor,
HELLER FINANCIAL, INC.,
as Servicer and as an Originator,
HELLER FINANCIAL LEASING, INC.,
as an Originator
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
Dated as of December [ ], 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
SECTION 1.01. DEFINITIONS...............................................................................1
SECTION 1.02. USAGE OF TERMS...........................................................................31
SECTION 1.03. SECTION REFERENCES.......................................................................32
SECTION 1.04. CALCULATIONS.............................................................................32
SECTION 1.05. ACCOUNTING TERMS.........................................................................32
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACT ASSETS..................................................32
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER OF CONTRACT ASSETS...............................32
SECTION 2.02. CONDITIONS TO TRANSFER OF TRUST ASSETS TO TRUST..........................................34
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE..............................................................36
SECTION 2.04. CONVEYANCE OF SUBSTITUTE CONTRACTS.......................................................36
SECTION 2.05. RELEASE OF RELEASED AMOUNTS..............................................................38
SECTION 2.06. DELIVERY OF INSTRUMENTS..................................................................39
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................................39
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE ORIGINATORS.................................40
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT AND
AS TO CERTAIN CONTRACTS IN THE AGGREGATE.................................................42
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL CONTRACTS
IN THE AGGREGATE.........................................................................42
SECTION 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACT FILES..............................43
SECTION 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS
OF INITIAL CONTRACTS.....................................................................43
SECTION 3.06. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST DEPOSITOR.............................43
SECTION 3.07. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER....................................45
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS..........................................47
SECTION 4.01. CUSTODY OF CONTRACTS.....................................................................47
SECTION 4.02. FILING...................................................................................48
SECTION 4.03. NAME CHANGE OR RELOCATION................................................................48
SECTION 4.04. CHIEF EXECUTIVE OFFICE...................................................................49
SECTION 4.05. COSTS AND EXPENSES.......................................................................49
SECTION 4.06. SALE TREATMENT...........................................................................49
SECTION 4.07. SEPARATENESS FROM TRUST DEPOSITOR........................................................49
ARTICLE V SERVICING OF CONTRACTS................................................................................50
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY FOR
CONTRACT ADMINISTRATION..................................................................50
SECTION 5.02. GENERAL DUTIES...........................................................................50
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 5.03. CONSENT TO ASSIGNMENT OR REPLACEMENT.....................................................51
SECTION 5.04. DISPOSITION UPON TERMINATION OF CONTRACT.................................................51
SECTION 5.05. SUBSERVICERS.............................................................................51
SECTION 5.06. FURTHER ASSURANCE........................................................................51
SECTION 5.07. NOTICE TO OBLIGORS.......................................................................51
SECTION 5.08. COLLECTION EFFORTS; MODIFICATION OF CONTRACTS............................................52
SECTION 5.09. PREPAID CONTRACT.........................................................................52
SECTION 5.10. ACCELERATION.............................................................................53
SECTION 5.11. TAXES AND OTHER AMOUNTS..................................................................53
SECTION 5.12. [RESERVED]...............................................................................53
SECTION 5.13. REMITTANCES..............................................................................53
SECTION 5.14. SERVICER ADVANCES........................................................................53
SECTION 5.15. REALIZATION UPON DEFAULTED CONTRACT......................................................54
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES........................................................54
SECTION 5.17. OTHER SERVICER COVENANTS.................................................................55
SECTION 5.18. SERVICING COMPENSATION...................................................................55
SECTION 5.19. PAYMENT OF CERTAIN EXPENSES BY SERVICER..................................................56
SECTION 5.20. RECORDS..................................................................................56
SECTION 5.21. INSPECTION...............................................................................56
SECTION 5.22. TRUSTEES TO COOPERATE IN RELEASES........................................................56
ARTICLE VI COVENANTS OF THE TRUST DEPOSITOR.....................................................................57
SECTION 6.01. CORPORATE EXISTENCE......................................................................57
SECTION 6.02. CONTRACTS NOT TO BE EVIDENCED BY PROMISSORY NOTES........................................57
SECTION 6.03. SECURITY INTERESTS.......................................................................57
SECTION 6.04. DELIVERY OF COLLECTIONS..................................................................57
SECTION 6.05. REGULATORY FILINGS.......................................................................57
SECTION 6.06. COMPLIANCE WITH LAW......................................................................58
SECTION 6.07. ACTIVITIES...............................................................................58
SECTION 6.08. INDEBTEDNESS.............................................................................58
SECTION 6.09. GUARANTEES...............................................................................58
SECTION 6.10. INVESTMENTS..............................................................................58
SECTION 6.11. MERGER; SALES............................................................................58
SECTION 6.12. DISTRIBUTIONS............................................................................59
SECTION 6.13. OTHER AGREEMENTS.........................................................................59
SECTION 6.14. SEPARATE CORPORATE EXISTENCE.............................................................59
SECTION 6.15. LOCATION; RECORDS........................................................................60
SECTION 6.16. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES................................................60
SECTION 6.17. BANKRUPTCY LIMITATIONS...................................................................61
SECTION 6.18. LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS....................................62
SECTION 6.19. CHIEF EXECUTIVE OFFICE...................................................................62
ARTICLE VII ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND..............................................62
SECTION 7.01. TRUST ACCOUNTS; COLLECTIONS..............................................................62
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 7.02. RESERVE FUND DEPOSIT.....................................................................63
SECTION 7.03. TRUST ACCOUNT PROCEDURES.................................................................63
SECTION 7.04. SECURITYHOLDER DISTRIBUTIONS.............................................................64
SECTION 7.05. ALLOCATIONS AND DISTRIBUTIONS............................................................64
ARTICLE VIII SERVICER DEFAULT; SERVICER TRANSFER................................................................72
SECTION 8.01. SERVICER DEFAULT.........................................................................72
SECTION 8.02. SERVICER TRANSFER........................................................................73
SECTION 8.03. APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE;
SUCCESSOR SERVICER TO ACT................................................................73
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS..........................................................75
SECTION 8.05. EFFECT OF TRANSFER.......................................................................75
SECTION 8.06. DATABASE FILE............................................................................75
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION.......................................................75
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER...............................................76
SECTION 8.09. RATING AGENCY CONDITION FOR SERVICER TRANSFER............................................76
ARTICLE IX REPORTS..............................................................................................76
SECTION 9.01. MONTHLY REPORTS..........................................................................76
SECTION 9.02. OFFICER'S CERTIFICATE....................................................................77
SECTION 9.03. OTHER DATA...............................................................................77
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.............................................................77
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.............................................78
SECTION 9.06. ANNUAL SUMMARY STATEMENT.................................................................78
ARTICLE X TERMINATION...........................................................................................78
SECTION 10.01. SALE OF TRUST ASSETS....................................................................78
ARTICLE XI REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION...................................................79
SECTION 11.01. REPURCHASES OF, OR SUBSTITUTION FOR, CONTRACTS FOR BREACH
OF REPRESENTATIONS AND WARRANTIES.......................................................79
SECTION 11.02. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED CONTRACTS....................................79
SECTION 11.03. ORIGINATORS'AND TRUST DEPOSITOR'S REPURCHASE OPTION.....................................80
ARTICLE XII ORIGINATOR INDEMNITIES..............................................................................80
SECTION 12.01. ORIGINATORS'INDEMNIFICATION.............................................................80
SECTION 12.02. LIABILITIES TO OBLIGORS.................................................................81
SECTION 12.03. TAX INDEMNIFICATION.....................................................................81
SECTION 12.04. ADJUSTMENTS.............................................................................81
SECTION 12.05. OPERATION OF INDEMNITIES................................................................82
ARTICLE XIII MISCELLANEOUS......................................................................................82
SECTION 13.01. AMENDMENT...............................................................................82
SECTION 13.02. PROTECTION OF TITLE TO TRUST............................................................83
SECTION 13.03. GOVERNING LAW...........................................................................84
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 13.04. NOTICES.................................................................................85
SECTION 13.05. SEVERABILITY OF PROVISIONS..............................................................86
SECTION 13.06. THIRD PARTY BENEFICIARIES...............................................................87
SECTION 13.07. COUNTERPARTS............................................................................87
SECTION 13.08. HEADINGS................................................................................87
SECTION 13.09. NO BANKRUPTCY PETITION; DISCLAIMER......................................................87
SECTION 13.10. JURISDICTION............................................................................88
SECTION 13.11. TAX CHARACTERIZATION....................................................................88
SECTION 13.12. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST.......................................88
SECTION 13.13. MERGER OR CONSOLIDATION OF ORIGINATORS..................................................89
SECTION 13.15. ASSIGNMENT OR DELEGATION BY THE ORIGINATORS.............................................89
SECTION 13.16. LIMITATION OF LIABILITY OF OWNER TRUSTEE................................................89
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Assignment ...............................................................A-1
Exhibit B Form of Closing Certificate of Trust Depositor ...................................B-1
Exhibits C-1, C-2 Form of Closing Certificate of Servicer/Originators...............................C-1
Exhibit D Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion) .........................D-1
Exhibit E Form of Opinion of Counsel for Trust Depositor regarding
the "TRUE SALE" nature of the transaction ........................................E-1
Exhibit F Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation ................................................................F-1
Exhibit G Form of Certificate Regarding Repurchased Contracts...............................G-1
Exhibit H List of Contracts.................................................................H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholders......................I-1
Exhibit J [Reserved]........................................................................J-1
Exhibit K Form of Contract Stamp............................................................K-1
Exhibit L Form of Subsequent Transfer Agreement.............................................L-1
Exhibit M Form of Subsequent Purchase Agreement.............................................M-1
</TABLE>
v
<PAGE>
This SALE AND SERVICING AGREEMENT, dated as of December [ ], 1999, is
among Heller Equipment Asset Receivables Trust 1999-2 (together with its
successors and assigns, the "TRUST"), Heller Funding Corporation, (together with
its successor and assigns, the "TRUST DEPOSITOR"), Norwest Bank Minnesota,
National Association (solely in its capacity as Indenture Trustee, together with
its successors and assigns, the "INDENTURE TRUSTEE"), Heller Financial, Inc.
(together with its successors and assigns, "HFI", in its capacity as Servicer,
together with its successor and assigns, the "SERVICER" and in its capacity as
an originator) and Heller Financial Leasing, Inc. (together with its successor
and assigns "HELLER LEASING", and together with HFI, the "ORIGINATORS", and
each, an "ORIGINATOR").
WHEREAS, in the regular course of their business, the Originators
originate and purchase Contracts (as defined herein);
WHEREAS, the Trust Depositor acquired the Initial Contracts from the
Originators and may acquire from time to time thereafter certain Substitute
Contracts (such Initial Contracts and Substitute Contracts, together with
certain related property as more fully described herein, being the Contract
Assets as defined herein);
WHEREAS, it was a condition to the Trust Depositor's acquisition of the
Initial Contracts from the Originators that the Originators make certain
representations and warranties regarding the Contract Assets for the benefit of
the Trust Depositor as well as the Trust;
WHEREAS, on the Closing Date the Trust Depositor will fund the Trust by
selling, conveying and assigning all its right, title and interest in such
Contract Assets and certain other assets to the Trust;
WHEREAS, the Trust is willing to purchase and accept assignment of the
Trust Assets from the Trust Depositor pursuant to the terms hereof; and
WHEREAS, the Servicer is willing to service the Contracts for the
benefit and account of the Trust pursuant to the terms hereof;
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:
"ACCOUNTANT'S REPORT" has the meaning assigned such term in Section
9.04.
1
<PAGE>
"ACCRUAL PERIOD" means, with respect to any Distribution Date, the
period from and including the most recent Distribution Date to but excluding the
following Distribution Date, PROVIDED, that the initial Accrual Period following
the Closing Date shall be the period from and including the Closing Date to but
excluding the first Distribution Date following the Closing Date.
"ADCB" means, with respect to any date of determination thereof, the
sum of the Discounted Contract Balances of each Contract included in the group
of Contracts for which an ADCB determination is being made, as of the date of
such determination. For purposes of calculating such sum on any date other than
the last day of a Collection Period, the Discounted Contract Balance of a
Contract shall be as of the last day of the preceding Collection Period or, with
respect to any Substitute Contract transferred to the Trust after such last day,
the Discounted Contract Balance on the applicable Subsequent Cutoff Date for
such Contract. The ADCB of the Contracts Pool as of December 1, 1999 was
$[______________].
"ADDITION NOTICE" means, with respect to any transfer of Substitute
Contracts to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Contracts from the applicable Originator),
a notice, which shall be given at least 3 days prior to the related Subsequent
Transfer Date, identifying the Substitute Contracts to be transferred, the ADCB
of such Substitute Contracts and the related Substitution Event (with respect to
an identified Contract or Contracts then in the Contracts Pool) to which such
Substitute Contract relates, with such notice to be signed both by the Trust
Depositor, and the Originators jointly and severally (including the Originator
which owns such Substitute Contract which is to be transferred by such
Originator to the Trust Depositor and by the Trust Depositor to the Trust on the
related Subsequent Transfer Date).
"ADDITIONAL PRINCIPAL" means, with respect to a Distribution Date
(i) if the Class B Target Investor Principal Amount, Class C Target Investor
Principal Amount, Class D Target Investor Principal Amount and Class E Target
Investor Principal Amount exceed the Class B Floor, Class C Floor, Class D Floor
and Class E Floor, respectively, an amount of $0; or
(ii) if any of the conditions in clause (i) are not satisfied, an amount equal
to the excess, if any, of
(a) the Monthly Principal Amount over
(b) the sum of the Class A Principal Payment Amount, Class B Principal
Payment Amount, Class C Principal Payment Amount, Class D Principal
Payment Amount and Class E Principal Payment Amount for such
Distribution Date.
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition,
2
<PAGE>
"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" or "CONTROLLED" have meanings correlative to the
foregoing.
"AGREEMENT" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"AGGREGATE PRINCIPAL AMOUNT" means, with respect to any group of Notes
or the Certificate, at any date of determination, the sum of the Principal
Amounts of such Notes or the Certificate on such date of determination.
"APPLICABLE SECURITY" means, with respect to a Vendor Loan, any (i)
Secondary Contract securing such Vendor Loan and (ii) Equipment securing such
Vendor Loan or a related Secondary Contract.
"ASSIGNMENT" means each Assignment, substantially in the form of
EXHIBIT A relating to an assignment, transfer and conveyance of Contracts and
related property by the Trust Depositor to the Trust.
"AVAILABLE AMOUNTS" means, as of any Distribution Date, the sum of (i)
all amounts on deposit in the Collection Account as of the immediately preceding
Determination Date on account of Scheduled Payments due on or before, and
Prepayments received on or before, the last day of the Collection Period
immediately preceding such Distribution Date (other than Excluded Amounts), (ii)
Recoveries on account of previously Defaulted Contracts received as of the
immediately preceding Determination Date; (iii) Investment Earnings credited to
the Collection Account or the Reserve Fund, (iv) Late Charges received on or
before the last day of such Collection Period (provided such late charges were
included in the Contract's terms as of the applicable Cutoff Date), (v) proceeds
from any repurchased Contracts and (vi) proceeds of any of the foregoing. In the
event the Originators exercise their option to terminate the Trust pursuant to
Section 11.03, Available Amounts shall include the repurchase price deposited in
the Collection Account pursuant to Section 11.03. In the event amounts are
withdrawn from the Reserve Fund pursuant to Section 7.05(a) or (b), such
withdrawn amounts will be considered Available Amounts for such purpose only.
"BUSINESS DAY" means any day which is neither a Saturday or a Sunday,
nor another day on which banking institutions in the city of Chicago, Illinois,
Wilmington, Delaware or New York, New York are authorized or obligated by law,
executive order, or governmental decree to be closed.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del Code 3801 ET SEQ., as the same may be amended from time to time.
"CALCULATION DATE" means, with respect to any Distribution Date, the
first day of each calendar month.
3
<PAGE>
"CASUALTY LOSS" means, with respect to any item of Equipment, the
loss, theft, damage beyond repair or governmental condemnation or seizure of
such item of Equipment.
"CERTIFICATE" means the Heller Equipment Asset Receivables Trust
Certificate, Series 1999-2 representing a beneficial equity interest in the
Trust and issued pursuant to the Trust Agreement having an initial certificate
balance of $[______________].
"CERTIFICATEHOLDER" means the holder of the Certificate.
"CERTIFICATE REGISTER" has the meaning specified in the Trust
Agreement.
"CLASS" means any of the group of Notes or the Certificate identified
herein as, as applicable, the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes or the Certificate.
"CLASS A NOTES" means the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes.
"CLASS A PERCENTAGE" means approximately [____]%, which is the ratio of
(a) the Initial Principal Amount of the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes and Class A-4 Notes to (b) the ADCB of the Contracts as of the Initial
Cutoff Date.
"CLASS A PRINCIPAL PAYMENT AMOUNT" means, with respect to a
Distribution Date, the amount necessary to reduce the sum of the Principal
Amounts of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes to the Class A Target Investor Principal Amount.
"CLASS A TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class A Percentage
and (ii) the ADCB of the Contracts as of the last day of the related Collection
Period.
"CLASS A-1 INTEREST RATE" means [_____]% per annum (calculated on the
basis of a year of 360 days and actual days elapsed).
"CLASS A-1 MATURITY DATE" means the [______________] Distribution Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"CLASS A-1 NOTES" means the $[______________] aggregate initial
principal amount Heller Equipment Asset Receivables Trust, Class A-1
Receivable-Backed Notes, Series 1999-2, issued pursuant to the Indenture.
"CLASS A-2 INTEREST RATE" means [________]% per annum (calculated on
the basis of a year of 360 days and twelve 30-day months).
"CLASS A-2 MATURITY DATE" means the [______________] Distribution Date.
4
<PAGE>
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"CLASS A-2 NOTES" means the $[______________] aggregate initial
principal amount Heller Equipment Asset Receivables Trust Class A-2
Receivable-Backed Notes, Series 1999-2, issued pursuant to the Indenture.
"CLASS A-3 INTEREST RATE" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS A-3 MATURITY DATE" means the [______________] Distribution Date.
"CLASS A-3 NOTEHOLDER" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"CLASS A-3 NOTES" means the $[______________] aggregate initial
principal amount Heller Equipment Asset Receivables Trust Class A-3
Receivable-Backed Notes, Series 1999-2, issued pursuant to the Indenture.
"CLASS A-4 INTEREST RATE" means [______]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS A-4 MATURITY DATE" means the [______________] Distribution Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"CLASS A-4 NOTES" means the $[______________] aggregate initial
principal amount Heller Equipment Asset Receivables Trust Class A-4
Receivable-Backed Notes, Series 1999-2, issued pursuant to the Indenture.
"CLASS B FLOOR" means, with respect to a Distribution Date,
(i) [____]% of the initial ADCB of the Contracts plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (a) the Aggregate Principal Amount of the Class C Notes,
Class D Notes and Class E Notes as of the immediately preceding Distribution
Date after giving effect to all principal payments made on such date and (b) the
Overcollateralization Balance as of the immediately preceding Distribution Date.
"CLASS B INTEREST RATE" means [_____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS B MATURITY DATE" means the [______________] Distribution Date.
5
<PAGE>
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS B NOTES" means the $[______________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class B Receivable-Backed Notes,
Series 1999-2, issued pursuant to the Indenture.
"CLASS B PERCENTAGE" means approximately [______________]%, which is
the ratio of (i) the Initial Principal Amount of the Class B Notes to (ii) the
ADCB of the Contracts as of the Initial Cutoff Date.
"CLASS B PRINCIPAL PAYMENT AMOUNT" means, with respect to a
Distribution Date, the amount necessary to reduce the Principal Amount of the
Class B Notes to the greater of (a) the Class B Target Investor Principal Amount
or (b) the Class B Floor.
"CLASS B TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class B Percentage
and (ii) the ADCB of the Contracts as of the last day of the related Collection
Period.
"CLASS C FLOOR" means, with respect to a Distribution Date,
(i) [______]% of the initial ADCB of the Contracts plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (a) the Principal Amount of the Class D Notes and the Class
E Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments made on such date and (b) the Overcollateralization
Balance as of the immediately preceding Distribution Date;
PROVIDED, HOWEVER, that if the Principal Amount of the Class B Notes as of such
Distribution Date is less than or equal to the Class B Floor on such date, the
Class C Floor will be an amount equal to the Principal Amount of the Class C
Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments on such date.
"CLASS C INTEREST RATE" means [____]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS C MATURITY DATE" means the [______________] Distribution Date.
"CLASS C NOTEHOLDER" means the Person in whose name a Class C Note is
registered in the Note Register.
6
<PAGE>
"CLASS C NOTES" means the $[______________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class C Receivable-Backed Notes,
Series 1999-2, issued pursuant to the Indenture.
"CLASS C PERCENTAGE" means approximately [______]%, which is the ratio
of (i) the Initial Principal Amount of the Class C Notes to (ii) the ADCB of the
Contracts as of the Initial Cutoff Date.
"CLASS C PRINCIPAL PAYMENT AMOUNT" means, with respect to a
Distribution Date, the amount necessary to reduce the Principal Amount of the
Class C Notes to the greater of (a) the Class C Target Investor Principal Amount
or (b) the Class C Floor.
"CLASS C TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class C Percentage
and (ii) the ADCB of the Contracts as of the last day of the related Collection
Period.
"CLASS D FLOOR" means, with respect to a Distribution Date,
(i) [______]% of the initial ADCB of the Contracts plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the sum of (A) the Principal Amount of the Class E Notes as of the
immediately preceding Distribution Date after giving effect to all principal
payments made on such date and (B) the Overcollateralization Balance as of the
immediately preceding Distribution Date;
PROVIDED, HOWEVER, that if the Principal Amount of the Class C Notes as of such
Distribution Date is less than or equal to the Class C Floor on such date, the
Class D Floor will be an amount equal to the Principal Amount of the Class D
Notes as of the immediately preceding Distribution Date after giving effect to
all principal payments made on such date.
"CLASS D INTEREST RATE" means [______]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS D MATURITY DATE" means the [______________] Distribution Date.
"CLASS D NOTEHOLDER" means the Person in whose name a Class D Note is
registered in the Note Register.
"CLASS D NOTES" means the $[______________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class D Receivable-Backed Notes,
Series 1999-2, issued pursuant to the Indenture.
7
<PAGE>
"CLASS D PERCENTAGE" means approximately [_____]%, which is the ratio
of the (i) Initial Principal Amount of the Class D Notes to (ii) the ADCB of the
Contracts as of the Initial Cutoff Date.
"CLASS D PRINCIPAL PAYMENT AMOUNT" means, with respect to a
Distribution Date, the amount necessary to reduce the Principal Amount of the
Class D Notes to the greater of (a) the Class D Target Investor Principal Amount
or (b) the Class D Floor.
"CLASS D TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class D Percentage
and (ii) the ADCB of the Contracts as of the last day of the related Collection
Period.
"CLASS E FLOOR" means with respect to a Distribution Date,
(i) [___]% of the initial ADCB of the Contracts plus
(ii) the Cumulative Loss Amount as of such date minus
(iii) the Overcollateralization Balance as of the immediately preceding
Distribution Date;
PROVIDED, HOWEVER, that if the Principal Amount of the Class D Notes is less
than or equal to the Class D Floor on such date, the Class E Floor will an
amount equal to the Principal Amount of the Class E Notes as of the immediately
preceding Distribution Date after giving effect to all principal payments made
on such date.
"CLASS E INTEREST RATE" means [___]% per annum (calculated on the basis
of a year of 360 days and twelve 30-day months).
"CLASS E MATURITY DATE" means the [_________] Distribution Date.
"CLASS E NOTEHOLDER" means the Person in whose name a Class E Note is
registered in the Note Register.
"CLASS E NOTES" means the $[____________] aggregate initial principal
amount Heller Equipment Asset Receivables Trust Class E Receivable-Backed Notes,
Series 1999-2, issued pursuant to the Indenture.
"CLASS E PERCENTAGE" means approximately [___________]%, which is the
ratio of (i) the Initial Principal Amount of the Class E Notes to (ii) the ADCB
of the Contracts as of the Initial Cutoff Date.
"CLASS E PRINCIPAL PAYMENT AMOUNT" means, with respect to a
Distribution Date, the amount necessary to reduce the Principal Amount of the
Class E Notes to the greater of (a) the Class E Target Investor Principal Amount
or (b) the Class E Floor.
8
<PAGE>
"CLASS E TARGET INVESTOR PRINCIPAL AMOUNT" means, with respect to a
Distribution Date, an amount equal to the product of (i) the Class E Percentage
and (ii) the ADCB of the Contracts as of the last day of the related Collection
Period.
"CLOSING DATE" means December [_], 1999.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning given such term in the "granting clause"
of the Indenture.
"COLLECTION ACCOUNT" means the Trust Account so designated established
pursuant to Section 7.01.
"COLLECTION PERIOD" means a period beginning on the second day of a
calendar month and ending on and including, the first day of the next calendar
month, PROVIDED that the first Collection Period shall be the period beginning
on the Initial Cutoff Date and ending on and including the first day of the
calendar month immediately following the calendar month in which the Closing
Date occurs.
"COLLECTIONS" means all payments received on or with respect to the
Contracts in the Contracts Pool or the related Equipment, including, without
limitation, Scheduled Payments, Prepayments, Recoveries, Late Charges and
Expired Lease Proceeds, all as related to amounts attributable to the Contracts
in the Contracts Pool or the related Equipment (including any such amounts
derived from Vendor recourse provisions), but excluding any Excluded Amounts.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the
Originators in selecting the Contracts conveyed to the Trust Depositor pursuant
to Section 2.01 (and any Subsequent Purchase Agreement conveyed to the Trust
Depositor pursuant to Section 2.04), and includes the master file and the
history file as well as servicing information with respect to the Contracts.
"CONTRACT" means each End-User Contract and each Vendor Loan but,
unless otherwise specified herein, shall not refer to any Secondary Contract.
"CONTRACT ASSETS" has the meaning assigned in Section 2.01 (and Section
2.04, as applicable in the case of Substitute Contracts).
"CONTRACT FILE" means, with respect to each Contract, the fully
executed original counterpart (for UCC purposes) of the contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Servicer keeps on file in accordance with its customary procedures, evidencing
ownership of such Equipment (if applicable) and all other documents originally
delivered to the applicable Originator or held by the Servicer with respect to
any Contract.
9
<PAGE>
"CONTRACTS POOL" as of any date means the Initial Contracts and the
Substitute Contracts (if any), other than any such Contracts which (i) have been
reconveyed by the Trust to the Trust Depositor, and concurrently by the Trust
Depositor to the applicable Originator, pursuant to Section 11.02 hereof, or
(ii) have been paid (or prepaid) in full.
"CORPORATE TRUST OFFICE" means, with respect to the Indenture Trustee
or Owner Trustee, as applicable, the office of the Indenture Trustee or Owner
Trustee at which at any particular time its corporate trust business shall be
principally administered, which offices at the date of the execution of this
Agreement are located at the addresses set forth in Section 13.04.
"CUMULATIVE LOSS AMOUNT" means, with respect to a Distribution Date, an
amount equal to the excess, if any, of :
(i) the total of
(a) the Principal Amount of the Notes as of the immediately preceding
Distribution Date after giving effect to all principal payments made on
such date plus
(b) the Overcollateralization Balance as of the immediately preceding
Distribution Date minus
(c) the lesser of: (1) the Monthly Principal Amount and (2) Available
Amounts remaining after payment of amounts owing to the Servicer,
including Servicer Fees if neither HFI nor any of its Affiliates is the
Servicer and after payment of interest on the Notes on such date; over
(ii) the ADCB of the Contracts as of the last day of the related Collection
Period.
"CSA" means each conditional sales agreement, including, as applicable,
schedules, subschedules, supplements and amendments to a master conditional
sales agreement, pursuant to which specified assets were conditionally sold to
an Obligor at specified monthly, quarterly, semi-annual or annual payments.
"CUTOFF DATE" means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date, as applicable to the
Contract or Contracts in question.
"DATE OF PROCESSING" means, with respect to any transaction or
Collection, the date on which such transaction or Collection is first recorded
(and, in the case of a transaction or Collection related to a particular
Contract, identified as to such particular Contract) on the related Originator's
or Servicer's computer master file of Contracts (without regard to the effective
date of such recordation).
"DCR" means Duff & Phelps Credit Rating Co.
"DEFAULTED CONTRACT" means a Contract in the Contracts Pool with
respect to which there has occurred one or more of the following: (i) any
Delinquent Scheduled Payment under the
10
<PAGE>
Contract is 120 days or more delinquent (or, with respect to a Contract for
which there exists available payment recourse to a Vendor to satisfy the
amount in default, and which recourse had not yet been paid by the Vendor
prior to the end of such 120 day period), or such shorter period as the
Originators may determine consistent with their respective collection policy
or (ii) the Servicer has determined in its sole discretion, in accordance
with its usual and customary practices (and taking into account any available
Vendor recourse), that such Contract is not collectible.
"DELINQUENT SCHEDULED PAYMENT" means a Scheduled Payment that is (i)
more than 60 days delinquent and (ii) the delinquent amount is more than the
greater of (a) $10 or (b) 10% of such Scheduled Payment.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
third Business Day prior to such Distribution Date.
"DISCOUNT RATE" means, at any date of determination, [_____]%, which is
equal to the sum of (1) the weighted average of the Class A-1 Interest Rate, the
Class A-2 Interest Rate, the Class A-3 Interest Rate, the Class A-4 Interest
Rate, the Class B Interest Rate, the Class C Interest Rate, the Class D Interest
Rate and the Class E Interest Rate each weighted by (a) the Initial Principal
Amount of each Class of Notes, as applicable, and (b) the weighted average life
of each Class of Notes under a 15% conditional payment rate and no loss
scenario, as applicable, and assuming the repurchase option set forth under
Section 11.03 will be exercised and (2) the Servicing Fee Percentage.
"DISCOUNTED CONTRACT BALANCE" means with respect to any Contract, (i)
as of the related Cutoff Date, the present value of all of the remaining
Scheduled Payments becoming due and not yet received under such Contract after
the applicable Cutoff Date discounted monthly at the Discount Rate, and (ii) as
of any other date of determination, the sum of (x) the present value of all of
the remaining Scheduled Payments becoming due under such Contract after such
date of determination discounted monthly at the Discount Rate and (y) the
aggregate amount of all Scheduled Payments due and payable under such Contract
after the applicable Cutoff Date and prior to such date of determination (other
than Scheduled Payments related to Contracts that have become Defaulted
Contracts or Prepaid Contracts, and have not been replaced with a Substitute
Contract as provided in Section 2.04) that have not then been received by the
Servicer.
The "Discounted Contract Balance" for each Contract shall be calculated
assuming:
(i) all payments due in any Collection period are due on the last day of
the Collection Period;
(ii) payments are discounted on a monthly basis using a 30 day month and a
360 day year; and
(iii) all security deposits and drawings under letters of credit, if any,
issued in support of a Contract are applied to reduce Scheduled Payments in
inverse order of the due date thereof.
11
<PAGE>
"DISTRIBUTION DATE" shall mean the 14th day of each calendar month or,
if such fourteenth day is not a Business Day, the next succeeding Business Day,
with the first such Distribution Date hereunder being January 14, 2000.
"DOLLAR" and "$" means lawful currency of the United States of America.
"ELIGIBLE CONTRACT" means at any date of determination, each Contract
with respect to which each of the following is true (to the extent applicable to
such type of Contract):
(a) the information with respect to the Contract, any Secondary
Contract securing the obligations under such Contract, and the
Equipment, if any, subject to the Contract delivered under this
Agreement is true and correct in all material respects;
(b) immediately prior to the transfer of such Contract and any related
Equipment (or security interest therein) or Applicable Security (or
security interest therein) to the Trust Depositor, and immediately
prior to the Trust Depositor's concurrent transfer thereof to the
Trust, such Contract was owned by the applicable Originator (and by the
Trust Depositor following the transfer by the Originator) free and
clear of any adverse claim, other than with respect to any Residual
Investment;
(c) the Contract did not have any Delinquent Scheduled Payments, and
the Contract is not a Defaulted Contract;
(d) no provision of the Contract has been waived, altered or modified
in any respect, except by instruments or documents contained in the
Contract File (other than payment delinquencies permitted under clause
(c) above);
(e) the Contract is a valid and binding payment obligation of the
Obligor and is enforceable in accordance with its terms (except as may
be limited by applicable Insolvency Laws and the availability of
equitable remedies);
(f) the Contract is not and will not be subject to the rights of
rescission, setoff, counterclaim or defense and, to the Originator's
knowledge, no such rights have been asserted or threatened with respect
to the Contract;
(g) the Contract, at the time it was made, did not violate the laws of
the United States or any state, except for any such violations which
would not materially and adversely affect the collectibility of the
Contracts in the Contracts Pool taken as a whole;
(h) (i) the Contract and any related Equipment or interest therein have
not been sold, transferred, assigned or pledged by the applicable
Originator to any other Person (other than the financed sale of the
Equipment to the End-User effected through the End-User Contract) and
any Equipment related to such Contract is free and clear of any liens
and encumbrances of any third parties other than the applicable
Originator and Permitted Liens, and (ii) either (A) such Contract is
secured by a fully perfected lien of the first
12
<PAGE>
priority in favor of the applicable Originator on the related
Equipment, or, in the case of any Vendor Loan, related Applicable
Security or (B) in the case of such a Contract secured by Title
Registry Equipment, within 30 calendar days of the origination or
acquisition of such Contract by the applicable Originator all
applicable federal registration or recording procedures were
initiated, and such Originator's interest will be so noted or
recorded within 180 days of such acquisition or origination;
(i) if the Contract constitutes an "instrument" or "chattel paper" for
purposes of the UCC, there is not more than one "secured party's
original" counterpart of the Contract;
(j) all filings necessary to evidence the conveyance or transfer of the
applicable Originator's ownership interest in the Contract, and such
Originator's corresponding interest in the related Equipment or
Applicable Security, as applicable, to the Trust Depositor (as well as
the concurrent conveyance of such property hereunder from the Trust
Depositor to the Trust), have been made in all appropriate
jurisdictions; PROVIDED, that (i) UCC financing statement filings with
respect to Equipment or Applicable Security which name such Originator
as secured party have not been amended to indicate either the Trust
Depositor or the Trust as an assignee (although separate UCC filings
were made against the Originator's interest in Applicable Security in
each jurisdiction where a related Vendor is located); and (ii) filings
or registrations with respect to Title Registry Equipment which name
such Originator as either owner or a lienholder have not been amended
to indicate either the Trust Depositor or the Trust as an assignee;
(k) the Obligor is not, to the Originator's knowledge, subject to
bankruptcy or other insolvency proceedings;
(l) the Contract is a U.S. dollar-denominated obligation and the
associated Equipment is located in the United States;
(m) the Contract does not require the prior written consent of an
Obligor or contain any other restriction on the transfer or assignment
of the Contract (other than a consent or waiver of such restriction
that has been obtained prior to the Closing Date, with respect to an
Initial Contract, or the Subsequent Transfer Date, with respect to a
Substitute Contract);
(n) either (x) the obligations of the related Obligor under such
Contract are irrevocable and unconditional and non-cancelable (or, if
prepayable by its terms, such Contract meets the criteria described in
clause (x) below) or (y) with respect to certain Leases with Lessees
that are governmental entities or municipalities, if such Lease is
canceled in accordance with its terms, either (1) the Vendor that
assigned such Lease to the applicable Originator is unconditionally
obligated to repurchase such lease from such Originator for a purchase
price not less than the Discounted Contract Balance of such Lease (as
of the date of purchase) plus interest thereon at the Discount Rate
through the Distribution Date following such date of repurchase, or (2)
pursuant to this Agreement, the Originator that sold such Lease to the
Trust Depositor has indemnified the Trust
13
<PAGE>
Depositor against such cancellation in an amount at least equal to
the Discounted Contract Balance of such Lease (as of the date of
purchase) plus interest thereon at the Discount Rate through the
Distribution Date following such cancellation, less any amounts paid
by the Vendor pursuant to clause (1);
(o) the Contract has an original maturity of not greater than the term
specified in this Agreement;
(p) no adverse selection procedure was used in selecting the Contract
for the Contracts Pool;
(q) the Obligor under the Contract is required to maintain casualty
insurance or to self-insure with respect to the related Equipment in
accordance with the Servicer's normal requirements;
(r) the Contract constitutes chattel paper, an account, an instrument
or a general intangible, in each case as defined under the UCC;
(s) the Contract is not a "consumer lease" as defined in Section
2A-103(1)(e) of the UCC, and if such Contract is a Lease, it is a Lease
intended for security within the meaning of Section 1-201(39) of the
UCC;
(t) if such Contract is a Lease, the Lessee thereunder has represented
to the related Vendor or applicable Originator that such Lessee has
accepted the related Equipment and has had a reasonable opportunity to
inspect and test such Equipment and the Vendor or Originator has not
been notified of any defects therein;
(u) the Contract is not subject to any guarantee by the applicable
Originator, nor has the Originator established any specific credit
reserve with respect to the related Obligor;
(v) if such Contract is a Lease, such Lease is a "triple net lease"
under which the Obligor is responsible for the maintenance of the
related Equipment in accordance with general industry standards
applicable to such item of Equipment;
(w) if such Contract is a Vendor Loan, such Vendor Loan is secured by
an Eligible Secondary Contract having an aggregate Discounted Contract
Balance for such Eligible Secondary Contract equal to the outstanding
principal amount of such Vendor Loan (assuming the interest rate
specified in such Vendor Loan is the "Discount Rate" for purposes of
calculating such Discounted Contract Balance);
(x) no provision of such Contract provides for a Prepayment Amount less
than the amount calculated in accordance with the definition of
Prepayment Amount (unless otherwise indemnified by the Vendor or the
applicable Originator in an amount equal to the excess of the
"Prepayment Amount" as calculated in accordance with the definition
thereof over the amount otherwise payable upon a prepayment under such
Contract); and
14
<PAGE>
(y) the Obligor is not the United States of America or any state or
local government or any agency, department, subdivision or
instrumentality of those governments.
PROVIDED, that Contracts with respect to which any of the statements in clauses
(c), (o) or (x) above are not true shall also be "Eligible Contracts" if the
Trust Depositor shall have received confirmation from each Rating Agency that
such fact will not result in a Ratings Effect.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with a
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a 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 short-term credit rating categories which signifies investment grade.
"ELIGIBLE INVESTMENTS" with respect to any Distribution Date means
negotiable instruments or securities or other investments maturing on or before
such Distribution Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) which,
as of any date of determination, mature by their terms on or prior to the
Distribution Date immediately following such date of determination, and (c)
which evidence:
(i) direct obligations of, and obligations fully guaranteed as to full and
timely payment by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America);
(ii) demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies incorporated under the laws of the United States
of America or any state thereof and subject to supervision and examination by
federal or state banking or depository institution authorities; PROVIDED,
HOWEVER, that at the time of the Trust's investment or contractual commitment to
invest therein, the commercial paper, if any, and short-term unsecured debt
obligations (other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from each Rating Agency
in the Highest Required Investment Category granted by such Rating Agency;
(iii) commercial paper, or other short term obligations, having, at the time of
the Trust's investment or contractual commitment to invest therein, a rating in
Highest Required Investment Category granted by each Rating Agency;
(iv) demand deposits, time deposits or certificates of deposit that are fully
insured by the FDIC;
15
<PAGE>
(v) notes that are payable on demand or bankers' acceptances issued by any
depository institution or trust company referred to in (ii) above;
(vi) investments in money market funds having, at the time of the Trust's
investment or contractual commitment to invest therein, a rating of the Highest
Required Investment Category from each Rating Agency or whose portfolio is
limited to the investments described in clause (i) of this definition;
(vii) time deposits (having maturities of not more than 90 days) by an entity
the commercial paper of which has, at the time of the Trust's investment or
contractual commitment to invest therein, a rating of the Highest Required
Investment Category granted by each Rating Agency;
(viii) Eligible Repurchase Obligations; and
(ix) any negotiable instruments or securities or other investments in which the
investment by the Trust therein has been approved in writing by the Rating
Agency.
The Indenture Trustee may purchase or sell to itself or an Affiliate, as
principal or agent, the Eligible Investments described above.
"ELIGIBLE REPURCHASE OBLIGATIONS" means 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 a depository institution or
trust company (acting as principal) described in clause (c)(ii) of the
definition of Eligible Investments.
"ELIGIBLE SECONDARY CONTRACT" shall mean each Secondary Contract:
(i) that satisfies all the criteria set forth in the definition of "Eligible
Contract" except clauses (b), (h) (with respect to ownership by the applicable
Originator of the Contract) and (w) thereof, and except that the term "Obligor"
shall mean "End-User" in all such criteria;
(ii) with respect to which Secondary Contract and the proceeds thereof the
applicable Originator has a duly perfected first priority lien; and
(iii) the transfer of the Originator's security interest with respect to which
has created a valid first priority Lien in such Secondary Contract and the
proceeds thereof in favor of the Originator which has been duly perfected.
"END-USER" shall mean any party that uses the Financed Item pursuant to
an End-User Contract.
"END-USER CONTRACT" shall mean any CSA, Secured Note, Lease, IPA, or
other Financing Agreement covering Financed Items originated or purchased by
either of the Originators.
16
<PAGE>
"EQUIPMENT" means the tangible assets (including but not limited to
printing, pre-press, machine tool, plastics, computer hardware, restaurant,
transportation, energy related, medical and industrial equipment) financed or
leased by an Obligor pursuant to a Contract and/or, unless the context otherwise
requires, a security interest in such assets.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01 of
the Indenture.
"EXCESS CONTRACT", as of any date of determination, means each Contract
selected by the Servicer in accordance with Section 11.01 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.05, the removal of which pursuant to Section 11.01 hereof
and the applicable Originator's repurchase thereof or substitution of a
Substitute Contract therefor pursuant to Section 11.01, shall remedy such
breach.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.
"EXCLUDED AMOUNTS" means (i) any collections on deposit in the
Collection Account or otherwise received by the Servicer on or with respect to
the Contracts Pool or related Equipment, which collections are attributable to
any taxes, fees or other charges imposed by any Governmental Authority, (ii) any
collections representing reimbursements of insurance premiums or payments for
services that were not financed by the applicable Originator, (iii) any proceeds
from prepayments in excess of the sum of (a) the Discounted Contract Balance of
the Prepaid Contracts on the date such Contracts are prepaid plus any accrued
and unpaid interest and (b) any outstanding Servicer Advances on such Contracts.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"FINANCED ITEMS" means Equipment, Software, Services and other property
and services that are permitted to be financed under Contracts in accordance
with the standard policies and procedures of the Originators.
"FINANCING AGREEMENT" means each financing agreement covering Financed
Items other than a CSA, a Secured Note, a Lease or an IPA.
"FITCH" means Fitch IBCA, Inc. or any successor thereto.
"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.
"HELLER LEASING" has the meaning assigned such term in the preamble
hereto.
"HFI" has the meaning assigned such term in the preamble hereto.
17
<PAGE>
"HIGHEST REQUIRED INVESTMENT CATEGORY" means (i) with respect to
ratings assigned by Fitch, F1+ for short-term instruments and AAA for long-term
instruments, (ii) with respect to ratings assigned by Moody's, A2 or P-1 for one
month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for six
month instruments and Aaa or P-1 for instruments with a term in excess of six
months and (iii) with respect to ratings assigned by DCR, D-1+ for short-term
instruments and AAA for long-term instruments.
"HOLDER" means (i) with respect to a Certificate, the Person in whose
name such Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"INDEBTEDNESS" means, with respect to any Person at any date, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such person has not assumed or
otherwise become liable for the payment thereof.
"INDENTURE" means the Indenture, dated as of the date hereof, between
the Trust and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDEPENDENT", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Trust, the Trust Depositor
or the Servicer, (ii) is not a director, officer or employee of any Affiliate of
the Trust, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Trust, the Trust Depositor or the Servicer or any
of their respective Affiliates, (iv) is not a holder (directly or indirectly) of
more than 10% of any voting securities of the Trust, the Trust Depositor or the
Servicer or any of their respective Affiliates, and (v) is not connected with
the Trust, the Trust Depositor or the Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"INELIGIBLE CONTRACT" has the meaning specified in Section 11.01.
"INITIAL CLASS A-1 PRINCIPAL AMOUNT" means $[______________].
"INITIAL CLASS A-2 PRINCIPAL AMOUNT" means $[______________].
"INITIAL CLASS A-3 PRINCIPAL AMOUNT" means $[______________].
"INITIAL CLASS A-4 PRINCIPAL AMOUNT" means $[______________].
18
<PAGE>
"INITIAL CLASS B PRINCIPAL AMOUNT" means $[______________].
"INITIAL CLASS C PRINCIPAL AMOUNT" means $[______________].
"INITIAL CLASS D PRINCIPAL AMOUNT" means $[______________].
"INITIAL CLASS E PRINCIPAL AMOUNT" means $[______________].
"INITIAL PRINCIPAL AMOUNT" means, when used in the context of a
reference to an individual Class of Notes, the Initial Class Principal Amount
applicable to such Class as defined above, and otherwise means, collectively,
the sum of the Initial Class A-1 Principal Amount, the Initial Class A-2
Principal Amount, the Initial Class A-3 Principal Amount, the Initial Class A-4
Principal Amount, the Initial Class B Principal Amount, the Initial Class C
Principal Amount, the Initial Class D Principal Amount and the Initial Class E
Principal Amount, I.E., $[______________].
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means December 1, 1999.
"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 Insolvency 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 60
consecutive days; or (b) the commencement by such person of a voluntary case
under any applicable Insolvency 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
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of this 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.
"INSOLVENCY LAWS" means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar debtor relief laws from time to time in effect affecting
the rights of creditors generally.
"INSURANCE POLICY" means, with respect to any Contract, an insurance
policy covering physical damage to or loss of the related Equipment.
"INSURANCE PROCEEDS" means, depending on the context, any amounts
payable or any payments made, to the Servicer under any Insurance Policy.
19
<PAGE>
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
"INVESTMENT EARNINGS" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Collection Account and the
Reserve Fund, to be credited to the Collection Account on such Distribution Date
pursuant to Section 7.03.
"IPA" means each installment payment agreement, including as
applicable, schedules, subschedules, supplements and amendments to a software
license agreement, pursuant to which the Originator financed the purchase or
acquisition of specified assets by an Obligor for specified monthly, quarterly,
semiannual or annual payments.
"LATE CHARGES" means any late payment fees paid by Obligors on
Contracts after all sums received have been allocated first to regular
installments due or overdue and all such installments are then paid in full.
"LEASE" means each agreement, including both operating and financing
agreements, and, as applicable, schedules, subschedules, supplements and
amendments to a master lease, pursuant to which the Originator, as lessor,
leased specified assets to a Lessee at a specified monthly, quarterly,
semiannual or annual rental.
"LESSEE" means, with respect to any Lease, the Obligor with respect to
such Lease.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"LIQUIDATION EXPENSES" means, with respect to any Contract, the
aggregate amount of all out-of-pocket expenses reasonably incurred by the
Servicer (including amounts paid to any subservicer) and any reasonably
allocated costs of internal counsel, in each case in accordance with the
Servicer's customary procedures in connection with the repossession,
refurbishing and disposition of any related Equipment upon or after the
expiration or earlier termination of such Contract and other out-of-pocket costs
related to the liquidation of any such Equipment, including the attempted
collection of any amount owing pursuant to such Contract if it is a Defaulted
Contract.
"LIQUIDATION PROCEEDS" means, with respect to a Defaulted Contract,
proceeds from the sale, lease or re-lease of the Equipment, proceeds of the
related Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment, net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
20
<PAGE>
"LIST OF CONTRACTS" means the list identifying each Contract
constituting part of the Trust Assets, which list shall consist of the initial
List of Contracts reflecting the Initial Contracts transferred to the Trust on
the Closing Date, together with any Subsequent List of Contracts amending the
most current List of Contracts reflecting the Substitute Contracts transferred
to the Trust on the related Subsequent Transfer Date (together with a deletion
from such list of the related Contract or Contracts identified on the
corresponding Addition Notice with respect to which an Addition Event or a
Substitution Event has occurred), and which list in each case (a) identifies
each Contract included in the Contracts Pool, and (b) sets forth as to each such
Contract (i) the Discounted Principal Balance as of the applicable Cutoff Date,
and (ii) the maturity date, and which list (as in effect on the Closing Date) is
attached to this Agreement as EXHIBIT H.
"MATERIAL MODIFICATION" means a termination or release, or an
amendment, modification or waiver, or equivalent similar undertaking or
agreement, by the Servicer with respect to a Contract which would not otherwise
be permitted under the standards and criteria set forth in Sections 5.08;
provided, however, a contract with respect to which the Servicer permits
prepayment pursuant to Section 5.09 will not be deemed to be materially
modified.
"MATURITY DATE" means, as applicable, the Class A-1 Maturity Date,
Class A-2 Maturity Date, Class A-3 Maturity Date, Class A-4 Maturity Date, Class
B Maturity Date, Class C Maturity Date, Class D Maturity Date or Class E
Maturity Date.
"MONTHLY PRINCIPAL AMOUNT" means, with respect to a Distribution Date,
the difference between (i) the sum of the Aggregate Principal Amount of the
Notes and the Overcollateralization Balance as of the immediately preceding
Distribution Date (after making any principal payments on such date) and (ii)
the ADCB of the Contracts as of the last day of the related Collection Period.
"MONTHLY REPORT" has the meaning specified in Section 9.01.
"MOODY'S" means Moody's Investors Service, Inc. or any successor
thereto.
"NOTE" means any one of the notes of the Trust of any Class executed
and authenticated in accordance with the Indenture.
"NOTE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 7.01.
"NOTE REGISTER" has the meaning given such term in Section 2.04 of the
Indenture.
"OBLIGOR" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
21
<PAGE>
"OFFICER'S CERTIFICATE" shall mean a certificate signed by any officer
of the Trust Depositor or the Servicer and delivered to the Owner Trustee or the
Indenture Trustee, as the case may be.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel (including internal counsel) for the Trust Depositor or the Servicer and
who shall be reasonably acceptable to the Owner Trustee or the Indenture
Trustee, as the case may be.
"ORIGINATOR" means either of HFI or Heller Leasing, each in the
capacity as an Originator of a Contract under this Agreement (including in
respect of a Substitute Contract pursuant to a Subsequent Purchase Agreement).
"OUTSTANDING" has the meaning given such term in the Indenture.
"OVERCOLLATERALIZATION BALANCE" means, with respect to a Distribution
Date, an amount equal to the excess, if any, of (i) the ADCB of the Contracts as
of the last day of the related Collection Period over (ii) the Aggregate
Principal Amount of the Notes as of such date after giving effect to all
principal payments made to the Noteholders on such date.
"OWNER TRUSTEE" means the Person acting, not in its individual
capacity, but solely as Owner Trustee, under the Trust Agreement, its successors
in interest and any successor owner trustee under the Trust Agreement.
"PAYING AGENT" means as described in Section 6.11 of the Indenture and
Section 3.10 of the Trust Agreement.
"PERMITTED LIENS" means (a) with respect to Contracts in the Contracts
Pool:
(i) Liens for state, municipal or other local taxes if such taxes shall not at
the time be due and payable or if the Trust Depositor shall currently be
contesting the validity thereof in good faith by appropriate proceedings and
shall have set aside on its books adequate reserves with respect thereto, (ii)
Liens in favor of the Trust Depositor created by an Originator and transferred
to the Trust pursuant hereto, (iii) Liens in favor of the Trust created pursuant
to this Agreement, and (iv) Liens in favor of the Indenture Trustee created
pursuant to the Indenture and/or this Agreement;
and (b) with respect to the related Equipment:
(i) materialmen's, warehousemen's, mechanics' and other liens arising by
operation of law in the ordinary course of business for sums not due, (ii) Liens
for state, municipal or other local taxes if such taxes shall not at the time be
due and payable or if the Trust Depositor shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto, (iii) Liens in favor
of the Trust Depositor created by the Originators and transferred by the Trust
Depositor to the Trust pursuant to this Agreement, (iv) Liens in favor of the
Trust created pursuant to this Agreement, (v) Liens
22
<PAGE>
in favor of the Indenture Trustee created pursuant to the Indenture and/or
this Agreement, (vi) subordinated liens which are subordinated to the prior
payment of the Notes and the Certificate on terms described herein, and (vii)
Liens granted by the End-Users which are subordinated to the interest of the
Trust in such Equipment.
"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.
"PLACEMENT AGENCY AGREEMENT" means the Placement Agency Agreement,
dated December [ ], 1999, between First Union Securities, Inc., as Agent
thereunder, the Trust Depositor, and HFI, with respect to the private placement
of the Class D Notes and the Class E Notes.
"PLACEMENT AGENT" means First Union Securities, Inc., as Agent under
the Placement Agency Agreement.
"PREPAID CONTRACT" means any Contract that has terminated or been
prepaid in full prior to its scheduled expiration date (including because of a
Casualty Loss), other than a Defaulted Contract.
"PREPAYMENT AMOUNT" has the meaning specified in Section 5.09.
"PREPAYMENTS" means any and all partial and full prepayments on a
Contract (including, with respect to any Contract and any Collection Period, any
Scheduled Payment (or portion thereof)) which is due in a subsequent Collection
Period which the Servicer has received, and (if such Contract is not otherwise
prepayable by its terms) expressly permitted the related Obligor to make, in
advance of its scheduled due date and which will be applied to such Scheduled
Payment, and any and all cash proceeds or rents realized from the sale, lease,
re-lease or re-financing of Equipment under a Prepaid Contract, net of
Liquidation Expenses), Liquidation Proceeds and amounts received in respect of
Transfer Deposit Amounts.
"PRINCIPAL AMOUNT" means, with respect to a Class of Notes, the
aggregate Initial Principal Amount thereof reduced by (i) the aggregate amount
of any distributions applied in reduction of such principal amount and (ii) the
aggregate amount of any distributions then on deposit in the Note Distribution
Account, if any, for such Class of Notes established in accordance with the
Indenture and to be applied in reduction of such principal amount in accordance
with such Indenture.
"PROGRAM AGREEMENT" means each Vendor finance program agreement
pursuant to which End-User Contracts originated by a Vendor are assigned to an
Originator.
"PROSPECTUS" has the meaning given such term in the Underwriting
Agreement.
23
<PAGE>
"QUALIFIED ELIGIBLE INVESTMENTS" means Eligible Investments acquired by
the Indenture Trustee in its name and in its capacity as Indenture Trustee,
which are held by the Indenture Trustee in the Collection Account or the Reserve
Fund and with respect to which (a) the Indenture Trustee has noted its interest
therein on its books and records, and (b) the Indenture Trustee has purchased
such investments for value without notice of any adverse claim thereto (and, if
such investments are securities or other financial assets or interests therein,
within the meaning of Section 8-102 of the UCC as enacted in Illinois, without
acting in collusion with a securities intermediary in violating such securities
intermediary's obligations to entitlement holders in such assets, under Section
8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of
such entitlement holders), and (c) either (i) such investments are in the
possession of the Indenture Trustee, or (ii) such investments, (A) if
certificated securities and in bearer form, have been delivered to the Indenture
Trustee, or in registered form, have been delivered to the Indenture Trustee and
either registered by the issuer in the name of the Indenture Trustee or endorsed
by effective endorsement to the Indenture Trustee or in blank; (B) if
uncertificated securities, the ownership of which has been registered to the
Indenture Trustee on the books of the issuer thereof (or another person, other
than a securities intermediary, either becomes the registered owner of the
uncertified security on behalf of the Indenture Trustee or, having previously
become the registered owner, acknowledges that it holds for the Indenture
Trustee); or (C) if securities entitlements (within the meaning of Section 8-102
of the UCC as enacted in Illinois) representing interests in securities or other
financial assets (or interests therein) held by a securities intermediary
(within the meaning of said Section 8-102), a securities intermediary indicates
by book entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its Affiliates.
"QUALIFIED INSTITUTION" means (a) the corporate trust department of the
Indenture Trustee, 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 acceptable to the Rating Agencies, or (2)
a short-term unsecured debt rating or certificate of deposit rating acceptable
to the Rating Agencies, (B) the parent corporation of which has either (1) a
long-term unsecured debt rating acceptable to the Rating Agencies, or (2) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies, or (C) is otherwise acceptable to the Rating Agencies, and
(ii) whose deposits are insured by the FDIC.
"RATING AGENCY" means each of Moody's, DCR and Fitch, so long as such
Persons maintain a rating on the Notes and the Certificate; and if either
Moody's, DCR or Fitch no longer maintains a rating on the Notes and the
Certificate, such other nationally recognized statistical rating organization
selected by the Trust Depositor.
"RATING AGENCY CONDITION" means, with respect to any action or series
of related actions or proposed transaction or series of related proposed
transactions, that each Rating Agency shall have notified the Trust Depositor
and the Owner Trustee and the Indenture Trustee in writing
24
<PAGE>
that such action or series of related actions or the consummation of such
proposed transaction or series of related transactions will not result in a
Ratings Effect.
"RATINGS EFFECT" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
"RECORD DATE" means, with respect to a Distribution Date, the calendar
day immediately preceding such Distribution Date (or, with respect to any
Definitive Note the last calendar day of the preceding calendar month).
"RECOVERIES" means any and all recoveries on account of a Defaulted
Contract, including, without limitation, any and all cash proceeds or rents
realized from the sale, lease, re-lease or re-financing of repossessed Equipment
or other property, Insurance Proceeds, amounts representing late fees and
penalties and amounts received pursuant to a Program Agreement (including,
without limitation, amounts received from any "ultimate net loss pool" that may
have been created under such Program Agreement), but in each case net of
Liquidation Expenses.
"RELEASED AMOUNTS" means, with respect to any payment or collection
received with respect to any Contract on any Business Day (whether such payment
or collection is received by the Servicer, the Owner Trustee or the Trust
Depositor), an amount equal to that portion of such payment or collection
constituting Excluded Amounts.
"REQUIRED HOLDERS" means (i) prior to the payment in full of the Class
A Notes Outstanding, Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and/or Class A-4 Noteholders evidencing more than 66 2/3% of the
Aggregate Principal Amount of all Class A Notes Outstanding, (ii) from and after
the payment in full of the Class A Notes Outstanding, Class B Noteholders
evidencing more than 66 2/3% of the Aggregate Principal Amount of all Class B
Notes Outstanding, (iii) from and after the payment in full of the Class B Notes
Outstanding, Class C Noteholders evidencing more than 66 2/3% of the Aggregate
Principal Amount of all Class C Notes Outstanding, (iv) from and after the
payment in full of the Class C Notes Outstanding, Class D Noteholders evidencing
more than 66 2/3% of the Aggregate Principal Amount of all Class D Notes
Outstanding and (v) from and after the payment in full of the Class D Notes
Outstanding, Class E Noteholders evidencing more than 66 2/3% of the Aggregate
Principal Amount of all Class E Notes Outstanding.
"REQUIREMENTS OF LAW" for any Person means the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
order or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
25
<PAGE>
"RESERVE FUND" means the Reserve Fund established and maintained
pursuant to Section 7.01 hereof.
"RESERVE FUND AMOUNT" means, with respect to a Distribution Date, an
amount equal to 0.70% of the aggregate Principal Amount of Notes as of such
Distribution Date.
"RESERVE FUND INITIAL DEPOSIT" means $[______________].
"RESIDUAL INVESTMENT" means, with respect to certain Leases, any funds
that an Originator shall have advanced against all or any portion of the
anticipated residual value of the leased Equipment upon the expiration of such
Lease in accordance with its terms, and in excess of the discounted present
value of the rental payments due under such Lease.
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any
officer in its Corporate Trust Administration Department (or any similar group
of a successor Owner Trustee) and with respect to the Indenture Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Indenture Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"SCHEDULED PAYMENT" means, with respect to any Contract, the monthly or
quarterly or semi-annual or annual rent or financing (whether principal or
principal and interest) payment scheduled to be made by the related Obligor
under the terms of such Contract after the related Cutoff Date; it being
understood that Scheduled Payments do not include any Excluded Amounts.
"SECONDARY CONTRACT" shall mean, with respect to a Vendor Loan, each
End-User Contract securing such Vendor Loan.
"SECURED NOTE" means each promissory note with a related security
interest evidenced by written agreement, pursuant to which the purchase of
specified assets by a Obligor is financed for specified monthly, quarterly,
semiannual or annual payments.
"SECURITIES" means the Notes and the Certificate, or any of them.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SECURITYHOLDERS" means the Holders of the Notes or the Certificate.
26
<PAGE>
"SERVICER" means initially HFI, or its successor, until any Servicer
Transfer hereunder and thereafter means the Successor Servicer appointed
pursuant to Article VIII below with respect to the duties and obligations
required of the Servicer under this Agreement.
"SERVICER ADVANCE" means, with respect to any Distribution Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Distribution Date in respect of Scheduled Payments pursuant to Section 5.14.
"SERVICER DEFAULT" shall have the meaning specified in Section 8.01.
"SERVICES" means, in connection with the financing of Software by an
Originator, the support and consulting services related to such Software, the
procurement of which was also financed by such Originator pursuant to a
Contract.
"SERVICING FEE" has the meaning specified in Section 5.18.
"SERVICING FEE PERCENTAGE" means 0.40%.
"SERVICER TRANSFER" has the meaning assigned in Section 8.02(a).
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.
"SOFTWARE" means the computer software programs financed or leased by
an Obligor pursuant to a Contract.
"SOLVENT" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"STATISTICAL DISCOUNT RATE" means [______________]%.
"SUBSTITUTE CONTRACT QUALIFICATION CONDITIONS" means, with respect to
any Substitute Contract being transferred to the Trust pursuant to Section 2.04,
27
<PAGE>
(i) the accuracy of each of the following statements as of the related Cutoff
Date for such Contract:
(a) the Discounted Contract Balance of such Substitute Contract is not
less than that of the Contract or Contracts identified on the related
Addition Notice as the Contract or Contracts to be released by the
Trust to the Trust Depositor and reconveyed to the Originators in
exchange for such Substitute Contract;
(b) the Discounted Contract Balance of the Substitute Contract is not
less than that of such Contract or Contracts identified on the related
Addition Notice and shall have a similar weighted average life;
(c) if, instead of such Substitute Contract being added to the
Contracts Pool on the related Subsequent Transfer Date, such Substitute
Contract had instead been included in the Contracts Pool as of the
Initial Cutoff Date, and the related Contract or Contracts identified
on the related Addition Notice were not so included (and assuming such
hypothetical inclusion satisfied the criteria set forth in clause (a)
and (b) above that would have been applicable at such time), the
representations of the Originators set forth in Section 3.05 concerning
concentrations would not, as a result of such inclusion, have become
inaccurate or incorrect in any material respect;
(d) no adverse selection procedure shall have been employed in the
selection of such Substitute Contract from the Originators' portfolio;
(e) all actions or additional actions (if any) necessary to perfect the
security interest and assignment of such Substitute Contract to the
Trust Depositor, Trust, and Indenture Trustee shall have been taken as
of or prior to the Subsequent Transfer Date; and
(f) the maturity date for the last Scheduled Payment due under such
Substitute Contract is not later than [______________] or to the extent
that the last Scheduled Payment due under such Substitute Contract is
due after [______________], only Scheduled Payments due on or prior to
[______________] will be included in the Discounted Contract Balance of
such Substitute Contract for purposes of making any calculation under
the Indenture or this Agreement;
and (ii) the ADCB of all Substitute Contracts transferred to the Trust after the
Closing Date in connection with Substitution Events involving Material
Modifications to Contracts does not exceed 10% of the ADCB of the Contracts as
of the Closing Date
"SUBSEQUENT CUTOFF DATE" means the date specified as such for
Substitute Contracts in the related Subsequent Transfer Agreement.
"SUBSEQUENT LIST OF CONTRACTS" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Substitute
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
28
<PAGE>
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Substitute
Contracts, the agreement between the Originators and the Trust Depositor
pursuant to which the applicable Originator will transfer the Substitute
Contracts to the Trust Depositor, the form of which is attached to hereto as
EXHIBIT M.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in
Section 2.04 hereof.
"SUBSEQUENT TRANSFER DATE" means any date on which Substitute Contracts
are transferred to the Trust.
"SUBSTITUTE CONTRACT" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Substitution Event has occurred
with respect to a Contract or Contracts then held in the Contracts Pool and
identified in the related Addition Notice.
"SUBSTITUTION EVENT" shall have occurred if one or more Contracts then
held in the Trust and identified in the related Addition Notice is (a) a Prepaid
Contract, (b) a Contract that has been subjected to a Material Modification or
(c) a Contract that is the subject of a breach of a representation or warranty
under this Agreement or other provision which breach or other provision, in the
absence of a substitution of a Substitute Contract for such Contract or
Contracts pursuant to Section 2.04, would require the payment of a Transfer
Deposit Amount to the Trust in respect of such Contract pursuant to Section
11.01.
"SUCCESSOR SERVICER" has the meaning given such term in
Section 8.02(b).
"TAX OPINION" means, with respect to any action, an opinion of Counsel
to the effect that, for federal income tax purposes, (i) following such action
the Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) following such action the Trust will
be disregarded as a separate entity from the Trust Depositor, and (iii) such
action will not affect the tax characterization as debt of Notes of any
outstanding Class issued by the Trust for which an Opinion of Counsel has been
provided that such Notes are debt.
"TITLE REGISTRY EQUIPMENT" means Equipment in the form of aircraft,
where the transfer of interests in such Equipment is subject to certain federal
title registration statutes, regulations and procedures.
"TRANSACTION DOCUMENTS" means this Agreement, the Indenture, the Trust
Agreement, the Administration Agreement, any Subsequent Transfer Agreement, any
Subsequent Purchase Agreement, the Underwriting Agreements, the Placement Agency
Agreement, and the Note Purchase Agreement (as defined in the Placement Agency
Agreement).
"TRANSFER DATE" means the Business Day immediately preceding each
Distribution Date.
"TRANSFER DEPOSIT AMOUNT" means, with respect to each Ineligible
Contract or Excess Contract, on any date of determination, the sum of the
Discounted Contract Balances of such
29
<PAGE>
Contracts, together with accrued interest thereon through such date of
determination at the Discount Rate, and any outstanding Servicer Advances
thereon.
"TRUST" means the trust created by the Trust Agreement and funded
pursuant to this Agreement, consisting of the Trust Assets.
"TRUST ACCOUNTS" means, collectively, the Collection Account, the
Reserve Fund and the Note Distribution Account, or any of them.
"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 without limitation the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement, dated
as of the date hereof, between the Trust Depositor and the Owner Trustee.
"TRUST ASSETS" has the meaning given to such term in Section 2.01(b)
hereof (and in Section 2.04(a) hereof in respect of Substitute Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).
"TRUST DEPOSITOR" has the meaning assigned such term in the preamble
hereunder, or any successor entity thereto.
"TRUST ESTATE" shall have the meaning specified in the Trust Agreement.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee, or any of
them individually as the context may require.
"UCC" means the Uniform Commercial Code as enacted in Illinois;
PROVIDED, HOWEVER, in the event that, by reason of mandatory provisions of law,
any and all of the attachment, perfection or priority of the Lien of the Trust
in and to the Trust Assets or the Lien of the Indenture Trustee in and to the
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Illinois, the term UCC shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"UCC FILING LOCATIONS" means the States of Illinois, Delaware, each
other State in which the Originator/Servicer maintains the Contract Files
related to Contracts in the Contracts Pool (as of the Closing Date,
[______________]), and each State in which a Vendor which is an Obligor on a
Vendor Loan is located (as defined in the UCC in such State) (as of the Closing
Date, [______________]).
30
<PAGE>
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date
and any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 5.14 which the Servicer has as of such Determination Date determined in
good faith will not be ultimately recoverable by the Servicer.
"UNDERWRITER" means First Union Securities, Inc.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated
December [___], among First Union Securities, Inc. (as an underwriter thereunder
and as Representative of the underwriters), the Trust Depositor, and HFI.
"UNITED STATES" means the United States of America.
"UNREIMBURSED SERVICER ADVANCES" means, at any time, the amount of all
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Sections 7.01 or 7.05 and which
the Servicer has determined in its sole discretion are Uncollectible Advances,
and with respect to which the Servicer has given a written certification to such
effect to each Trustee.
"VENDOR" means, with respect to a Contract, the equipment manufacturer,
dealer or distributor, or software licensor or distributor, or other Person that
provided financing under such Contract in connection with the acquisition or use
by an End-User of such party's Equipment, Software, Services or other products.
"VENDOR AGREEMENTS" means the collective reference to Vendor
Assignments and Program Agreements.
"VENDOR ASSIGNMENT" means each assignment agreement pursuant to which
an individual End-User Contract originated by a Vendor is assigned to an
Originator.
"VENDOR LOAN" means a limited recourse loan agreement payable by a
Vendor and secured by the Vendor's interest in Secondary Contracts and by the
Equipment, if any, related thereto.
"VICE PRESIDENT" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "VICE
PRESIDENT," who is a duly elected officer of such Person.
SECTION 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "WRITING" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references
31
<PAGE>
to Persons include their permitted successors and assigns; and the term
"INCLUDING" means "INCLUDING WITHOUT LIMITATION."
SECTION 1.03. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.04. CALCULATIONS. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
SECTION 1.05. ACCOUNTING TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACT ASSETS
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER OF CONTRACT
ASSETS. (a) The Trust shall be created pursuant to the terms and conditions of
the Trust Agreement, upon the execution and delivery of the Trust Agreement and
the filing by the Owner Trustee of an appropriately completed Certificate of
Trust under the Business Trust Statute. The Trust Depositor, as settlor of the
Trust, shall fund and convey assets to the Trust pursuant to the terms and
provisions hereof. The Trust shall be administered pursuant to the provisions of
this Agreement and the Trust Agreement for the benefit of the Noteholders and
Certificateholder. The Owner Trustee is hereby specifically recognized by the
parties hereto as empowered to conduct business dealings on behalf of the Trust
in accordance with the terms hereof and of the Trust Agreement.
(b) TRANSFER OF CONTRACT ASSETS TO THE TRUST. Subject to and upon the
terms and conditions set forth herein, the Trust Depositor hereby sells,
transfers, assigns, sets over and otherwise conveys to the Trust, for a purchase
price of $[______________] in cash (less underwriting expenses and certain other
expenses associated with the initial offer and sale of the Notes the proceeds of
which represent the consideration paid by the Trust herein), all the right,
title and interest of the Trust Depositor in and to (items (i) - (vi) below,
being collectively referred to herein as the "CONTRACT ASSETS"):
(i) the Initial Contracts, and all monies due or to become due
in payment of such Contracts on and after the Initial Cutoff Date, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the Initial Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other
32
<PAGE>
disposition of such Equipment (but subject to the exclusion and
release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements and under any guarantee or similar
credit enhancement with respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that Contract Assets shall not include any Residual Investment. In
addition to the Contract Assets, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust the remittances, deposits
and payments made into the Trust Accounts from time to time, amounts in the
Trust Accounts from time to time (and any investments of such amounts) and all
proceeds and products of the foregoing, which together with the Contract Assets
constitute the corpus of the Trust and are referred to as the "TRUST ASSETS").
The Originators expressly acknowledge and agree that the Trust Depositor has the
right to assign its interest in the Trust Assets to the Trust.
(c) The Originators and the Trust Depositor acknowledge that the
representations and warranties of the Originators in Section 3.01, 3.02, 3.03,
3.04 and 3.05 will run to and be for the benefit of the Trust and the Trustees
and the Trust and the Trustees may enforce directly without joinder of Trust
Depositor, the repurchase obligations of the Originators with respect to
breaches of such representations and warranties as set forth herein and in
Section 11.01.
(d) The sale, transfer, assignment, set-over and conveyance of the
Trust Assets by the Trust Depositor to the Trust pursuant to this Agreement does
not constitute and is not intended to result in a creation or an assumption by
the Trust Depositor or the Trust of any obligation of the Originators in
connection with the Contract Assets, or any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligor or
End-User, or any other Person in respect of services not financed by the
Originators, or (1) any taxes, fees, or other charges imposed by any
Governmental Authority and (2) any insurance premiums which remain owing with
respect to any Contract at the time such Contract is sold hereunder.
(e) The Originators, Trust Depositor and Trust intend and agree that
(i) the transfer of the Contract Assets to the Trust Depositor and the transfer
of the Trust Assets to the Trust are intended to be a sale, conveyance and
transfer of ownership of the Contract Assets and Trust Assets, as the case may
be, rather than the mere granting of a security interest to secure a borrowing
and (ii) such Contract Assets shall not be part of the applicable Originator's
estate in the event of a filing of a bankruptcy petition or other action by or
against such Person under any Insolvency Law. In the event, however, that
notwithstanding such intent and agreement, such
33
<PAGE>
transfers are deemed to be of a mere security interest to secure
indebtedness, the Originators shall be deemed to have granted the Trust
Depositor and the Trust Depositor shall be deemed to have granted the Trust,
as the case may be, a perfected first priority security interest in such
Contract Assets or Trust Assets respectively and this Agreement shall
constitute a security agreement under applicable law, securing the repayment
of the purchase price paid hereunder and the obligations and/or interests
represented by the Securities, in the order and priorities, and subject to
the other terms and conditions of, this Agreement, the Indenture and the
Trust Agreement, together with such other obligations or interests as may
arise hereunder and thereunder in favor of the parties hereto and thereto.
If any such transfer of the Contract Assets is deemed to be
the mere granting of a security interest to secure a borrowing, the Trust
Depositor may, to secure the Trust Depositor's own borrowing under this
Agreement (to the extent that such transfer of the Contract Assets is deemed to
be a mere granting of a security interest to secure a borrowing) repledge and
reassign to the Trust (1) all or a portion of the Contract Assets pledged to
Trust Depositor by the Originators and with respect to which the Trust Depositor
has not released its security interest at the time of such pledge and
assignment, and (2) all proceeds thereof. Such repledge and reassignment may be
made by Trust Depositor with or without a repledge and reassignment by Trust
Depositor of its rights under any agreement with the Originators, and without
further notice to or acknowledgment from the Originators. The Originators waive,
to the extent permitted by applicable law, all claims, causes of action and
remedies, whether legal or equitable (including any right of setoff), against
Trust Depositor or any assignee of Trust Depositor relating to such action by
Trust Depositor in connection with the transactions contemplated by this
Agreement.
SECTION 2.02. CONDITIONS TO TRANSFER OF TRUST ASSETS TO TRUST. On or
before the Closing Date, the Originators or the Trust Depositor, as applicable,
shall deliver or cause to be delivered to the Owner Trustee and Indenture
Trustee each of the documents, certificates and other items as follows:
(i) A certificate of an officer of each respective Originator
substantially in the form of EXHIBITS C-1 AND C-2 hereto;
(ii) Opinions of counsel for the Originators and the Trust
Depositor substantially in the form of EXHIBITS D hereto (and including
as an addressee thereof each Rating Agency);
(iii) Copies of resolutions of the Board of Directors of the
respective Originator or of the Executive Committee of the Board of
Directors of the respective Originator approving the execution,
delivery and performance of this Agreement and the transactions
contemplated hereunder, certified in each case by the Secretary or an
Assistant Secretary of the respective Originator;
(iv) Officially certified recent evidence of due incorporation
and good standing of the Originators under the laws of Delaware;
34
<PAGE>
(v) The initial List of Contracts, certified by the Chairman
of the Board, President or any Vice President of the Trust Depositor,
together with an Assignment substantially in the form of EXHIBIT A
(along with the delivery of any instruments as required under Section
2.06 below);
(vi) A certificate of an officer of the Trust Depositor
substantially in the form of EXHIBIT B hereto;
(vii) A letter from Arthur Andersen LLP, or another nationally
recognized accounting firm, addressed to the Originators and the Trust
Depositor, stating that such firm has reviewed a sample of the Initial
Contracts and performed specific procedures for such sample with
respect to certain contract terms and which identifies those Initial
Contracts which do not conform;
(viii) Copies of resolutions of the Board of Directors of the
Servicer and the Trust Depositor or of the Executive Committee of the
Board of Directors of the Servicer and the Trust Depositor approving
the execution, delivery and performance of this Agreement and the other
Transaction Documents to which any of them is a party, as applicable,
and the transactions contemplated hereunder and thereunder, certified
in each case by the Secretary or an Assistant Secretary of the Servicer
and the Trust Depositor;
(ix) Officially certified, recent evidence of due
incorporation and good standing of the Trust Depositor under the laws
of Delaware;
(x) Evidence of proper filing with appropriate officers in the
UCC Filing Locations of UCC financing statements executed by each
Originator, as debtor, naming the Trust Depositor as secured party (and
the Owner Trustee as assignee) and identifying the Contract Assets as
collateral; and evidence of proper filing with appropriate officer in
the UCC Filing Locations of UCC financing statements executed by the
Trust Depositor, as debtor, naming the Owner Trustee as secured party
(and the Indenture Trustee as assignee) and identifying the Trust
Assets as collateral; and evidence of proper filing with appropriate
officers in the UCC Filing Locations of UCC financing statements
executed by the Trust and naming the Indenture Trustee as secured party
and identifying the Collateral, as collateral;
(xi) An Officer's Certificate listing the Servicer's Servicing
Officers;
(xii) Evidence of deposit in the Collection Account of all
funds received with respect to the Initial Contracts after the Initial
Cutoff Date to the date two days preceding the Closing Date, together
with an Officer's Certificate from the Servicer to the effect that such
amount is correct;
(xiii) Evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Trust Depositor;
35
<PAGE>
(xiv) A fully executed Trust Agreement;
(xv) A fully executed Administration Agreement;
(xvi) A fully executed Indenture; and
(xvii) An opinion of Winston & Strawn to the effect that (i)
for federal income tax purposes, the Class A Notes, Class B Notes,
Class C Notes and Class D Notes will be characterized as debt and the
Trust will not be characterized as an association (or publicly traded
partnership) taxable as a corporation, and (ii) for State of Illinois
income tax purposes, the characterization of the Trust will correspond
to its characterization for federal income tax purposes.
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE. On the Closing Date, if
the conditions set forth in Section 2.02 have been satisfied, the Trust shall
issue to, or upon the order of, the Trust Depositor the Certificate
representing ownership of a beneficial interest in 100% of the Trust and the
Trust shall issue, and the Indenture Trustee shall authenticate, to, or upon
the order of, the Trust Depositor the Notes secured by the Collateral. The
Owner Trustee hereby acknowledges its acceptance, on behalf of the Trust, of
the Trust Assets, and declares that it shall maintain such right, title and
interest in accordance with the terms of this Agreement and the Trust
Agreement upon the trust herein and therein set forth.
SECTION 2.04. CONVEYANCE OF SUBSTITUTE CONTRACTS.
(a) CONVEYANCE OF SUBSTITUTE CONTRACTS TO THE TRUST DEPOSITOR. Subject
to Section 2.01(d) above and the satisfaction of the conditions set forth in
paragraph (c) below, the Originators may at their option (but shall not be
obligated to) sell, transfer, assign, set over and otherwise convey to the Trust
Depositor (by delivery of an executed Subsequent Purchase Agreement
substantially in the form attached as EXHIBIT M hereto), without recourse other
than as expressly provided herein and therein (and the Trust Depositor shall be
required to purchase through payment by exchange of one or more related
Contracts released by the Trust to the Trust Depositor on the Subsequent
Transfer Date all the right, title and interest of the Originators in and to
(the property in clauses (i) - (vi) below, upon such transfer, becoming part of
the "CONTRACT ASSETS")):
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Substitute Contracts on and after the related Subsequent Cutoff Dates,
any Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Subsequent
Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other
36
<PAGE>
disposition of such Equipment (but subject to the exclusion and
release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that such Contract Assets shall in no case include any Residual
Investment.
(b) CONVEYANCE OF SUBSTITUTE CONTRACTS TO THE TRUST. Subject to Section
2.01(d) above and the conditions set forth in paragraph (c) below, the Trust
Depositor shall sell, transfer, assign, set over and otherwise convey to the
Trust, without recourse other than as expressly provided herein and therein, (i)
all the right, title and interest of the Trust Depositor in and to the
Substitute Contracts purchased pursuant to Section 2.04(a) above, and (ii) all
other rights and property interests consisting of Contract Assets related to
such Substitute Contracts (the property in clauses (i)-(ii) above, upon such
transfer, becoming part of the "TRUST ASSETS").
(c) The Originators and Trust Depositor shall transfer to the Trust the
Substitute Contracts and the other property and rights related thereto described
in paragraphs (a), in the case of the Originators, or (b), in the case of the
Trust Depositor, above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date (and the delivery
of a related Addition Notice by the Trust Depositor shall be deemed a
representation and warranty by the Trust Depositor and of the Originators
jointly and severally, that such conditions have been or will be, as of the
related Subsequent Transfer Date, satisfied):
(i) The Trust Depositor shall have provided the Owner Trustee
and the Indenture Trustee with a timely Addition Notice complying with
the definition thereof contained herein;
(ii) there shall have occurred, with respect to each such
Substitute Contract, a corresponding Substitution Event with respect to
one or more Contracts then in the Contracts Pool;
(iii) the Substitute Contract(s) being conveyed to the Trust,
satisfy the Substitute Contract Transfer Conditions;
(iv) the applicable Originator shall have delivered to the
Trust Depositor a duly executed written assignment in substantially the
form of EXHIBIT M hereto (the
37
<PAGE>
"SUBSEQUENT PURCHASE AGREEMENT"), which shall include a Subsequent List
of Contracts listing the Substitute Contracts;
(v) the Trust Depositor shall have delivered to the Owner
Trustee a duly executed written assignment (including an acceptance by
the Owner Trustee) in substantially the form of EXHIBIT L hereto (the
"SUBSEQUENT TRANSFER AGREEMENT"), which shall include a Subsequent List
of Contracts listing the Substitute Contracts;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all Collections received with
respect to the Substitute Contracts on or after the related Subsequent
Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither the
Originators nor the Trust Depositor were insolvent nor will any of them
have been made insolvent by such transfer nor are any of them aware of
any pending insolvency;
(viii) no selection procedures believed by the Originators or
the Trust Depositor to be adverse to the interests of the Noteholders
or Certificateholder shall have been utilized in selecting the
Substitute Contracts;
(ix) each of the representations and warranties made by the
Originators pursuant to Sections 3.01, 3.02, 3.03, 3.04, and 3.05
applicable to the Substitute Contracts shall be true and correct as of
the related Subsequent Transfer Date, and the Originators shall have
performed all obligations to be performed by them hereunder on or prior
to such Subsequent Transfer Date; and
(x) the applicable Originator shall, at its own expense, on or
prior to the Subsequent Transfer Date, indicate in its Computer Disk
that ownership of the Substitute Contracts identified on the Subsequent
List of Contracts in the Subsequent Transfer Agreement have been sold
to the Trust through the Trust Depositor pursuant to this Agreement.
SECTION 2.05. Release of Released Amounts. (a) The Indenture Trustee
hereby agrees to release to the Trust from the Trust Assets, and the Trust
hereby agrees to release to the Trust Depositor, an amount equal to the Released
Amounts immediately upon identification thereof, which release shall be
automatic and shall require no further act by the Indenture Trustee or the
Trust, PROVIDED that the Indenture Trustee or Owner Trustee shall execute and
deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested by the Trust Depositor. Upon
such release, such Released Amounts shall not constitute and shall not be
included in the Trust Assets.
(b) Immediately upon the release to the Trust Depositor by the Trustee
of the Released Amounts, the Trust Depositor hereby irrevocably agrees to
release to the Originators such Released Amounts, which release shall be
automatic and shall require no further act by the Trust Depositor, PROVIDED,
that the Trust Depositor shall execute and deliver such instruments of
38
<PAGE>
release and assignment, or otherwise confirming the foregoing release of any
Excluded Amounts, as may be reasonably requested by the Originators.
SECTION 2.06. Delivery of Instruments. (a) The Originators and the
Trust Depositor shall deliver possession of all "instruments" (within the
meaning of Article 9 of the UCC) not constituting part of chattel paper (within
the meaning of such Article 9), which evidence any Contract to the Owner Trust
on behalf of the Trust on the Closing Date (or, if applicable, on the relevant
Subsequent Transfer Date), in each case indorsed in blank without recourse.
Pursuant to Section 3.05 of the Indenture, the Trust is required to deliver such
instruments to the Indenture Trustee as pledgee under the Indenture.
Accordingly, the Trust hereby authorizes and directs the Originators and the
Trust Depositor to deliver possession of any such instruments to the Indenture
Trustee on behalf of and for the account of the Trust, and agrees that such
delivery shall satisfy the condition set forth in the first sentence of this
Section 2.06. The Originators and the Trust Depositor shall also identify on the
List of Contracts (including any deemed amendment thereof associated with any
Substitute Contracts), whether by attached schedule or marking or other
effective identifying designation, all Contracts which are or are evidenced by
such instruments.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Originators jointly and severally make, and upon execution of
each Subsequent Purchase Agreement are jointly and severally deemed to make,
the following representations and warranties, on which Trust Depositor will
rely in conveying the Contract Assets on the Closing Date (and on any
Subsequent Transfer Date) to the Trust, and on which the Trust, the
Noteholders and Certificateholder will rely. The Trust Depositor acknowledges
that such representations and warranties are being made by the Originators
for the benefit of the Trust.
Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Contracts to the Trust. The repurchase obligation or substitution obligation of
the Originators set forth in Section 11.01 constitutes the sole remedy available
for a breach of a representation or warranty of the Originators set forth in
Sections 3.02, 3.03, 3.04 or 3.05 of this Agreement. Notwithstanding the
foregoing, the Originators shall not be deemed to be remaking any of the
representations set forth in Section 3.03 or 3.05 on a Subsequent Transfer Date
with respect to the Substitute Contracts, as such representations relate solely
to the composition of the Initial Contracts conveyed on the Closing Date,
PROVIDED, that any inaccurate representation as to concentrations contained in
any Addition Notice shall be subject to the same remedies hereunder as if such
representation were made under Section 3.05 on the Closing Date with respect to
an Initial Contract.
39
<PAGE>
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE ORIGINATORS.
By its execution of this Agreement and each Subsequent Purchase Agreement, each
Originator jointly and severally represents and warrants that:
(a) ORGANIZATION AND GOOD STANDING. Each Originator is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. Each Originator
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the business transacted
by it or properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of each
Originator or Trust Depositor. Each Originator is properly licensed in each
jurisdiction to the extent required by the laws of such jurisdiction in order to
originate, and (if such Originator is to be the Servicer) service the Contracts
in accordance with the terms of this Agreement.
(b) AUTHORIZATION; BINDING OBLIGATION. Each Originator has the power
and authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the respective Originator is a party and all of
the transactions contemplated under this Agreement and the other Transaction
Documents to which the respective Originator is a party, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement and the other Transaction Documents to which the respective
Originator is a party. This Agreement and the other Transaction Documents to
which the respective Originator is a party constitute the legal, valid and
binding obligation of each Originator are enforceable in accordance with their
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) NO CONSENT REQUIRED. Each Originator is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the respective Originator is a party.
(d) NO VIOLATIONS. Each Originator's execution, delivery and
performance of this Agreement and the other Transaction Documents to which the
respective Originator is a party will not violate any provision of any existing
law or regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the respective Originator, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which the
respective Originator is a party or by which the respective Originator or any of
the Originator's properties may be bound.
(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of an Originator
40
<PAGE>
threatened, against an Originator or any of its respective properties or with
respect to this Agreement or any other Transaction Document to which the
respective Originator is a party which, if adversely determined, would in the
opinion of the respective Originator have a material adverse effect on the
business, properties, assets or condition (financial or other) of such
Originator or the transactions contemplated by this Agreement or any other
Transaction Document to which the respective Originator is a party.
(f) PLACE OF BUSINESS; NO CHANGES; NO TRADE NAMES. Each Originator's
sole place of business or chief executive office (within the meaning of Article
9 of the UCC) is as set forth in Section 11.01 below, and each location where a
Originator maintains custody of Contract Files is reflected in the definition of
UCC Filing Location or has otherwise been disclosed with all necessary actions
taken in accordance with Section 4.03 hereof. Each Originator has not changed
its name as set forth herein, whether by amendment of its Certificate of
Incorporation, by reorganization or otherwise, and has not changed the location
of its place of business, within the four months preceding the Closing Date (or
Subsequent Transfer Date, as applicable, except in accordance with the
requirements of Section 4.03). The legal name of each of the Originators is as
set forth in this Agreement and within the five years preceding the Closing Date
neither of the Originators has used, and neither of the Originators currently
does use, any trade names, fictitious names, assumed names, or "doing business
as" names.
(g) NO BULK SALES. The execution, delivery and performance of this
Agreement by the Originators does not require compliance with any "bulk sales"
laws by the Originators.
(h) SOLVENCY. Each Originator on the date of and after giving effect to
the transfer of the Contracts to the Trust Depositor was Solvent.
(i) USE OF PROCEEDS. No proceeds of the sale of any Initial Contract or
Substitute Contract hereunder received by any Originator will be used by such
Originator to purchase or carry any "margin stock" as such term is defined in
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
(j) NOT AN INVESTMENT COMPANY. Neither Originator is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(or such Originator is exempt from all provisions of such Act).
(k) TAXES. To the best of each Originator's knowledge, (i) each
Originator has filed all tax returns required to be filed in the normal course
of its business and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from such Originator or is
contesting any such tax, assessment or other governmental charge in good faith
through appropriate proceedings, (ii) no tax lien has been filed with respect
thereto, and (iii) no claim is being asserted with respect to any such tax, fee
or other charge.
(l) SALE TREATMENT. Each Originator has treated the transfer of
Contract Assets to the Trust Depositor for all purposes (including financial
accounting purposes) as a sale and purchase on all of its relevant books,
records, financial statements and other applicable documents.
41
<PAGE>
(m) MARKING OF FILES. Each Originator has, at its own expense, prior to
the Closing Date, indicated in its Computer Disk that ownership of the Contracts
transferred by it to the Trust Depositor and such Contracts have been identified
on the List of Contracts as having been sold to the Trust Depositor.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT
AND AS TO CERTAIN CONTRACTS IN THE AGGREGATE. Each Originator jointly and
severally represents and warrants (x) with respect to subsections (a)-(c) below,
as to each Contract as of the execution and delivery of this Agreement and as of
the Closing Date, and as of each Subsequent Transfer Date with respect to each
Substitute Contract, and (y) with respect to subsections (d)-(f) below, as to
the Contracts Pool in the aggregate as of the Closing Date, and as of each
Subsequent Transfer Date with respect to Substitute Contracts (after giving
effect to the addition of such Substitute Contracts to the Contracts Pool), that
(calculated using the Statistical Discount Rate):
(a) LIST OF CONTRACTS. The information set forth in the List of
Contracts (as the same may be amended or deemed amended in respect of a
conveyance of Substitute Contracts on a Subsequent Transfer Date) is true,
complete and correct as of the applicable Cutoff Date.
(b) ELIGIBLE CONTRACT. Such Contract satisfies the criteria for the
definition of Eligible Contract set forth in this Agreement as of the date of
its conveyance hereunder.
(c) "TRUE LEASES". No Contract constituting a Lease is a "true lease",
as distinguished from a financing lease, except that Contracts originated by
Vendors constituting not more than [___]% of the Contract Pool may be "true
leases". With respect to any Contract constituting a "true lease", appropriate
UCC financing statements (including, without limitation, all necessary
continuation statements and amendments) have been filed in the appropriate
filing offices naming the appropriate Vendor as debtor and covering the related
Equipment.
(d) CONTRACTS SECURED BY FIXTURES. In the Originators' reasonable
judgment, not more than [____]% of the ADCB of the Contracts Pool consists of
Contracts secured by Equipment constituting fixtures.
(e) CONTRACTS SECURED BY OTHER REAL PROPERTY. None of the Contracts in
the Contracts Pool are secured by real property (exclusive of or in addition to
Equipment constituting fixtures).
(f) CONTRACTS SECURED BY TITLE REGISTRY EQUIPMENT. Not more than
[_____]% of the ADCB of the Contracts Pool consists of Contracts secured by
Equipment constituting Title Registry Equipment.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
CONTRACTS IN THE AGGREGATE. Each Originator jointly and severally represents and
warrants, as of the Closing Date, that:
42
<PAGE>
(a) AMOUNTS. The ADCB of the Contracts as of the Initial Cutoff Date
equals the sum of the principal balance of the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Certificate on the Closing
Date.
(b) CHARACTERISTICS. The Initial Contracts have the following
additional characteristics (calculated using the Statistical Discount Rate): (i)
no Contract has a remaining maturity of more than [___]months; (ii) the final
Scheduled Payment on the Contract with the latest maturity is not later than
[______________; (iii) no Contract was originated after the Initial Cutoff Date;
and (iv) not more than [_____]% of the Initial Contracts (as measured by ADCB)
provide for Scheduled Payments due on a basis other than monthly.
SECTION 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACT
FILES. Each Originator jointly and severally represents and warrants as of the
Closing Date with respect to the Initial Contracts (or as of the Subsequent
Transfer Date, with respect to Substitute Contracts), that (i) immediately prior
to such date (as applicable), the applicable Originator had possession of each
original Contract and the related complete Contract File, and there were no
other custodial agreements relating to the same in effect; (ii) each of such
documents which is required to be signed by the Obligor has been signed by the
Obligor in the appropriate spaces; (iii) all blanks on any form have been
properly filled in and each form has otherwise been correctly prepared; and (iv)
the complete Contract File for each Contract is in the possession of the
Servicer.
SECTION 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS
OF INITIAL CONTRACTS. Each Originator represents and warrants as of the Closing
Date, as to the composition of the Initial Contracts in the Contracts Pool as of
the Initial Cutoff Date, that (calculated using the Statistical Discount Rate):
(i) the ADCB of all End-User Contracts which finance, lease or
are related to Software will not exceed [_____]% of the ADCB of the
Contracts Pool;
(ii) the ADCB of all End-User Contracts with Obligors who
comprise the five (5) largest Obligors (measured by ADCB as of the date
of determination) does not exceed [_____]% of the ADCB of the Contracts
Pool;
(iii) the ADCB of all End-User Contracts with Obligors located
in a single State of the United States does not exceed [_____]% of the
ADCB of the Contracts Pool.
SECTION 3.06. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trust, the
Indenture Trustee, the Noteholders and the Certificateholder that:
(a) ORIGINATORS' REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in Section 3.02, Section 3.03, Section 3.04 and Section
3.05 are true and correct.
43
<PAGE>
(b) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has the corporate power to own its assets and to transact the
business in which it is currently engaged. The Trust Depositor is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Trust Depositor or
the Trust.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust Depositor
has the power and authority to make, execute, deliver and perform this Agreement
and the other Transaction Documents to which it is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which it is a party, and to create the Trust and cause it to make,
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Trust to be created. This Agreement and the related Subsequent
Transfer Agreement, if any, shall effect a valid sale, transfer and assignment
of the Trust Assets, enforceable against the Trust Depositor and creditors of
and purchasers from the Trust Depositor. This Agreement and the other
Transaction Documents to which the Trust Depositor is a party constitute the
legal, valid and binding obligation of the Trust Depositor enforceable in
accordance with their terms, except as enforcement of such terms may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or the other Transaction Documents to which it
is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated hereby
and thereby, will not violate any Requirement of Law applicable to the Trust
Depositor, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Trust Depositor is a party or by which the Trust
Depositor or any of the Trust Depositor's properties may be bound, or result in
the creation or imposition of any security interest, lien, charge, pledge,
preference, equity or encumbrance of any kind upon any of its properties
pursuant to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.
(f) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Trust Depositor
44
<PAGE>
threatened, against the Trust Depositor or any of its properties or with
respect to this Agreement, the other Transaction Documents to which it is a
party or the Securities (1) which, if adversely determined, would in the
reasonable judgment of the Trust Depositor have a material adverse effect on
the business, properties, assets or condition (financial or otherwise) of the
Trust Depositor or the Trust or the transactions contemplated by this
Agreement or the other Transaction Documents to which the Trust Depositor is
a party or (2) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Certificate or Notes.
(g) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" laws by the Trust
Depositor.
(h) SOLVENCY. The Trust Depositor, at the time of and after giving
effect to each conveyance of Trust Assets hereunder, is Solvent on and as of the
date thereof.
(i) TAXES. The Trust Depositor has filed or caused to be filed all tax
returns which, to its knowledge, are required to be filed and has put all taxes
shown to be due and payable on such returns or on any assessments made against
it or any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority (other than any amount
of tax due, the validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
generally accepted accounting principles have been provided on the books of the
Trust Depositor); no tax lien has been filed and, to the Trust Depositor's
knowledge, no claim is being asserted, with respect to any such tax, fee or
other charge.
(j) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole place of
business (within the meaning of Article 9 of the UCC) is as set forth in Section
13.04 below. The Trust Depositor has not changed its name, whether by amendment
of its Certificate of Incorporation, by reorganization or otherwise, and has not
changed the location of its place of business, within the four months preceding
the Closing Date.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Substitute Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
SECTION 3.07. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholder that:
(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 organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Servicer is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would
45
<PAGE>
have a material adverse effect on the business, properties, assets, or
condition (financial or otherwise) of the Servicer or the Trust. The Servicer
is properly licensed in each jurisdiction to the extent required by the laws
of such jurisdiction to service the Contracts in accordance with the terms
hereof.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power and
authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party.
This Agreement and the other Transaction Documents to which the Servicer is a
party constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and by the availability of equitable
remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any Governmental Authority in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement and the other Transaction Documents to which the Servicer is a
party.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party
by the Servicer will not violate any Requirements of Law applicable to the
Servicer, or constitute a material breach of any mortgage, indenture, contract
or other agreement to which the Servicer is a party or by which the Servicer or
any of the Servicer's properties may be bound, or result in the creation of or
imposition of any security interest, lien, pledge, preference, equity or
encumbrance of any kind upon any of its properties pursuant to the terms of any
such mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
(e) LITIGATION. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement, or any other Transaction Document
to which the Servicer is a party which, if adversely determined, would in the
reasonable judgment of the Servicer have a material adverse effect on the
business, properties, assets or condition (financial or otherwise) of the
Servicer or the Trust or the transactions contemplated by this Agreement or any
other Transaction Document to which the Servicer is a party.
(f) YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the Year 2000 of the Servicer's computer systems
will be completed prior to the Year 2000.
46
<PAGE>
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
SECTION 4.01. CUSTODY OF CONTRACTS. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Noteholders, the Certificateholder, the Indenture Trustee, and the Owner Trustee
as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the UCC Filing Locations as shall from time to time be identified to
the Trustees by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; PROVIDED, HOWEVER, that the Servicer will take all
action necessary to maintain the perfection of the Trust's interest in the
Contracts and the proceeds thereof. It is intended that by the Servicer's
agreement pursuant to Section 4.01(a) above and this Section 4.01(b) the
Trustees shall be deemed to have possession of the Contract Files for purposes
of Section 9-305 of the Uniform Commercial Code of the State in which the
Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Noteholders and
the Certificateholder and the Owner Trustee and the Indenture Trustee,
maintain accurate records pertaining to each Contract to enable it to
comply with the terms and conditions of this Agreement, maintain a
current inventory thereof, conduct annual physical inspections of
Contract Files held by it under this Agreement and certify to the Owner
Trustee and the Indenture Trustee annually that it continues to
maintain possession of such Contract Files;
(ii) implement or maintain policies and procedures in writing
and signed by a Servicing Officer with respect to persons authorized to
have access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Noteholders and the
Certificateholder, the Owner Trustee and the Indenture Trustee;
(iv) at all times maintain the original of each fully executed
Contract and store such original Contract in a fireproof vault;
47
<PAGE>
(v) stamp each Contract or Contract File containing the
executed original of such Contract, as of the Closing Date (or
Subsequent Transfer Date, as the case may be), with a legend in the
form attached hereto as EXHIBIT K; and
(vi) within 30 days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to
the Owner Trustee and the Indenture Trustee certifying that as of a
date no earlier than the Closing Date (or Subsequent Transfer Date, as
the case may be) it has conducted an inventory of the Contract Files
(which in the case of Substitute Contracts, need be only of the
Contract Files related to such Substitute Contracts) and that there
exists a Contract File for each Contract and stating all exceptions to
such statement, if any.
(d) In performing its duties under this Section 4.01, the Servicer
agrees to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the financing of Financed Items
owned and/or serviced by it, and in any event with no less degree of skill and
care than would be exercised by a prudent servicer of such Financed Items. The
Servicer shall promptly report to the Owner Trustee and the Indenture Trustee
any failure by it to hold the Contract Files as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer further agrees not to assert any
legal or beneficial ownership interest in the Contracts or the Contract Files,
except as provided in Section 5.06. The Servicer agrees to indemnify the
Noteholders, the Certificateholder, the Owner Trustee and the Indenture Trustee
for any and all liabilities, obligations, losses, damages, payments, costs, or
expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Noteholders, the Certificateholder, the Owner Trustee and the
Indenture Trustee as the result of any act or omission by the Servicer relating
to the maintenance and custody of the Contract Files or any other action or
omission of the Servicer in the performance of its duties and obligations as
Servicer hereunder; PROVIDED, HOWEVER, that the Servicer will not be liable for
any portion of any such amount resulting from the gross negligence or willful
misconduct of any Noteholder, Certificateholder, the Owner Trustee or the
Indenture Trustee. The Trustees shall have no duty to monitor or otherwise
oversee the Servicer's performance as custodian hereunder.
SECTION 4.02. FILING. On or prior to the Closing Date, the Originators,
Trust Depositor and Servicer shall cause the UCC financing statement(s) referred
to in Section 2.02(x) hereof to be filed, and from time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary or desirable or as the Owner Trustee or Indenture Trustee may
reasonably request to perfect and protect the Trust's first priority perfected
interest in the Trust Assets against all other persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, none of the Originators, the Servicer and the Trust Depositor shall
change its name, identity or
48
<PAGE>
structure or relocate its chief executive office, or relocate or establish a
new location where Contract Files are maintained, without first giving at
least 30 days' prior written notice to the Owner Trustee and the Indenture
Trustee.
(b) If any change in either the Servicer's, an Originator's or the
Trust Depositor's name, identity or structure or other action would make any
financing or continuation statement or notice of ownership interest or lien
relating to any Contract Asset seriously misleading within the meaning of
applicable provisions of the UCC or any title statute, the Servicer and/or the
applicable Originator, no later than five days after the effective date of such
change, shall file such amendments as may be required to preserve and protect
the Trust's interests in the Trust Assets and the proceeds thereof. In addition,
neither any Originator, the Servicer nor the Trust Depositor shall change its
place of business (within the meaning of Article 9 of the UCC), or the locations
in which Contract Files are maintained, from the locations specified in Section
13.04 below or the UCC Filing Locations unless it has first taken such action as
is advisable or necessary to preserve and protect the Trust's interest in the
Trust Assets. Promptly after taking any of the foregoing actions, the Servicer
shall deliver to the Owner Trustee and the Indenture Trustee an opinion of
counsel reasonably acceptable to the Owner Trustee stating that, in the opinion
of such counsel, all financing statements or amendments necessary to preserve
and protect the interests of the Owner Trustee in the Trust Corpus have been
filed, and reciting the details of such filing.
SECTION 4.04. CHIEF EXECUTIVE OFFICE. During the term of this
Agreement, and subject to the other terms and provisions herein relating to
changes in location, each Originator will maintain its chief executive office in
one of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
SECTION 4.05. COSTS AND EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trustees' and
Trust's right, title and interest in and to the Contract Assets (including,
without limitation, the security interest in the Equipment related thereto and
the security interests provided for in the Indenture).
SECTION 4.06. SALE TREATMENT. The Trust Depositor shall treat the
transfer of Trust Assets made hereunder for all purposes (including financial
accounting purposes) as a sale and purchase on all of its relevant books,
records, financial statements and other applicable documents. Notwithstanding
the preceding sentence, for federal income tax purposes the transfer of Trust
Assets by the Trust Depositor hereunder shall not be treated as a sale and
purchase for federal income tax purposes so long as the Trust is disregarded as
a separate entity pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii).
SECTION 4.07. SEPARATENESS FROM TRUST DEPOSITOR. Each Originator agrees
to take or refrain from taking or engaging in with respect to the Trust
Depositor, as applicable, each of the actions or activities specified in the
"substantive consolidation" opinion of Winston & Strawn
49
<PAGE>
(including any certificates of such Originator attached thereto) delivered on
the Closing Date, upon which the conclusions therein are based.
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY FOR CONTRACT
ADMINISTRATION. HFI is hereby appointed as Servicer and custodian (as
contemplated in Article IV hereof) pursuant to this Agreement. HFI accepts the
appointment and agrees to act as the Servicer and custodian pursuant to this
Agreement.
The Servicer will have the sole obligation to manage, administer, service and
make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Owner Trustee to enable the Servicer to carry
out its servicing and administrative duties hereunder. The Servicer is hereby
appointed the servicer hereunder until such time as any Servicer Transfer may be
effected under Article VIII.
SECTION 5.02. GENERAL DUTIES. The Servicer will service, administer and
enforce the Contracts in the Contracts Pool on behalf of the Trust and will have
full power and authority to do any and all things in connection with such
servicing and administration which it deems necessary or desirable and as shall
not contravene the provisions of this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in the Contracts Pool
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable contracts that it services for itself
or others. The Servicer's duties will include collection and posting of all
payments, responding to inquiries of Obligors regarding the Contracts in the
Contracts Pool, investigating delinquencies, accounting for collections,
furnishing monthly and annual statements with respect to collections and
payments in accordance with Article Nine hereof, making Servicer Advances, and
using its best efforts to maintain the perfected first priority security
interest of the Indenture Trustee in the Trust Assets. The Servicer will follow
its customary standards, policies, and procedures and will have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration, and collection that it deems necessary or
desirable. If the Servicer commences a legal proceeding to enforce a Defaulted
Contract pursuant to Section 5.15 or commences or participates in a legal
proceeding (including a bankruptcy proceeding) relating to or involving a
Contract in the Contracts Pool, the Trust will be deemed to have automatically
assigned such Contract to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Trust, pursuant to this Section 5.02, to execute
and deliver, on behalf of itself and the Trust, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceedings. If in any
enforcement suit or legal proceeding it is held
50
<PAGE>
that the Servicer may not enforce a Contract on the ground that it is not a
real party in interest or a holder entitled to enforce the Contract, then the
Owner Trustee will, at the Servicer's expense and direction, take steps on
behalf of the Trust to enforce the Contract, including bringing suit in the
Trust's name.
SECTION 5.03. CONSENT TO ASSIGNMENT OR REPLACEMENT. At the request of
an Obligor, the Servicer may in its sole discretion consent to the assignment of
the related Contract or the sublease of a unit of the Equipment relating to a
Contract, so long as such Obligor remains liable for all of its obligations
under such Contract. Upon the request of any Obligor, the Servicer may, in its
sole discretion, provide for the substitution or replacement of any unit of
Equipment for a substantially similar unit of Equipment, so long as such Obligor
remains liable for all of its obligations under such Contract.
SECTION 5.04. DISPOSITION UPON TERMINATION OF CONTRACT. Upon the
termination of a Contract included in the Contracts Pool as a result of a
default by the Obligor thereunder, and upon any such Contract becoming a
Defaulted Contract, the Servicer will use commercially reasonable efforts to
dispose of any related Equipment. Without limiting the generality of the
foregoing, the Servicer may dispose of any such Equipment by purchasing such
Equipment or by selling such Equipment to any of its Affiliates for a purchase
price equal to the fair market value thereof. The Servicer will deposit any
Prepayments in accordance with Section 7.01.
SECTION 5.05. SUBSERVICERS. The Servicer may enter into servicing
agreements with one or more subservicers (including any Affiliate of the
Servicer) to perform all or a portion of the servicing functions on behalf of
the Servicer; PROVIDED that the Servicer shall remain obligated and be liable to
the Trust for servicing and administering the Contracts in the Contracts Pool in
accordance with the provisions of this Agreement without diminution of such
obligation and liability by virtue of the appointment of such subservicer, to
the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering such Contracts. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and its subservicer
and neither the Owner Trustee, the Trust, the Indenture Trustee nor the Holders
will have any responsibility therefor. All actions of a subservicer taken
pursuant to such a subservicer agreement will be taken as an agent of the
Servicer with the same force and effect as though performed by the Servicer.
SECTION 5.06. FURTHER ASSURANCE. The Owner Trustee and the Indenture
Trustee will furnish the Servicer, and the Servicer will furnish any
subservicer, with any powers of attorney and other documents necessary or
appropriate to enable the Servicer or a subservicer, as applicable, to carry out
its servicing and administrative duties under this Agreement.
SECTION 5.07. NOTICE TO OBLIGORS. The Servicer will not be required to
notify any Obligor that such Obligor's Contract or related Equipment, or any
security interest in such Contract or such Equipment, has been sold,
transferred, assigned, or conveyed pursuant to this Agreement; PROVIDED that, in
the event that the Servicer resigns or is replaced, then if the place for
payment pursuant to any Contract is changed, the Successor Servicer must give
each related
51
<PAGE>
Obligor prompt written notice of the appointment of the Successor Servicer
and the place to which such Obligor should make payments pursuant to each
such Contract.
SECTION 5.08. COLLECTION EFFORTS; MODIFICATION OF CONTRACTS.
(a) The Servicer will make reasonable efforts to collect all payments
called for under the terms and provisions of the Contracts in the Contracts Pool
as and when the same become due, and will follow those collection procedures
which it follows with respect to all comparable contracts that it services for
itself or others.
(b) The Servicer may, subject to Sections 5.09 and 5.10, at the request
of an Obligor and at the Servicer's option, waive, modify or otherwise vary any
other provision of a Contract in accordance with its customary and usual
practices; PROVIDED, that no such waiver, modification or variance shall (except
as provided in Sections 5.09, 5.10 and 5.15), without the consent of each Rating
Agency,
(i) have the effect of accelerating, delaying or extending the
date for or the amount of any payment of Scheduled Payments with
respect to such Contract;
(ii) be inconsistent with the servicing standards set forth in
Section 5.02; or
(iii) have a material adverse effect on the interests of any
of the Trust, the Trustees or the Securityholders.
Notwithstanding the foregoing, to the extent consistent with the Servicer's past
practices, the Servicer may on only one occasion with respect to any Contract,
permit a deferment of not more than three consecutive Scheduled Payments
(collectively, a "SKIPPED PAYMENT") under such Contract to the end of the term
of such Contract so long as, as of the Date of Processing for such Skipped
Payment (i) the sum of the Discounted Contract Balances of all Contracts with
respect to which there have been effected Skipped Payment modifications since
the Initial Cutoff Date does not exceed 5% of the ADCB for the Contracts Pool as
of the Initial Cutoff Date, and (ii) such Skipped Payment is not deferred to a
date after [______________]. Additionally, notwithstanding the foregoing, the
Servicer may in its discretion waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing any Contract in the
Contracts Pool.
SECTION 5.09. PREPAID CONTRACT.
(a) The Servicer may, at its option and in accordance with its
customary and usual practices, agree to permit a Contract in the Contracts Pool
that is not otherwise contractually prepayable by its terms to become a Prepaid
Contract (which shall not include a Contract that becomes a Prepaid Contract due
to a Casualty Loss); PROVIDED, that the Servicer will not permit the early
termination or full prepayment of such a Contract unless (i) such early
termination or full prepayment would not result in the Trust receiving an amount
(the "PREPAYMENT AMOUNT") less than the sum of (A) the Discounted Contract
Balance on the date of such prepayment plus
52
<PAGE>
any accrued and unpaid interest payments thereon (at the Discount Rate) and
(B) any outstanding Servicer Advances thereon, or (ii) if such early
termination or full prepayment would result in the Trust receiving a
Prepayment Amount less than the amount set forth in clause (i), either the
Vendor or the Originators shall have agreed to pay the Trust the difference
between the Prepayment Amount actually paid and the amount set forth in
clause (i) (such payment by the Vendor or Originator also to be considered a
"PREPAYMENT AMOUNT"). At the option of the Originators, the Servicer may use
the Prepayment Amount to purchase a Substitute Contract for such Prepaid
Contract from the Originators.
(b) The Servicer may, at its option, permit an Obligor to prepay a
Contract in an amount less than the Required Prepayment Amount only if the
Originator of such Contract pays to the Trust an amount equal to the difference
between the Required Prepayment Amount and the amount paid by such Obligor. With
respect to a Contract, the "REQUIRED PREPAYMENT AMOUNT" is such Contract's
Discounted Contract Balance plus accrued and unpaid interest rate at the
Discount Rate.
SECTION 5.10. ACCELERATION. The Servicer, in its sole discretion, may
accelerate (or elect not to accelerate) the maturity of all or any Scheduled
Payments under any Contract in the Contracts Pool under which a default under
the terms thereof has occurred and is continuing (after the lapse of any
applicable grace period); PROVIDED that the Servicer is required to accelerate
the Scheduled Payments due under any Contract in the Contracts Pool (and take
other action in accordance with the applicable Originator's past practice,
including repossessing or otherwise converting the related Equipment, to realize
upon the value of such Contract and the related Equipment) to the fullest extent
permitted by the terms of such Contract, promptly after such Contract becomes a
Defaulted Contract.
SECTION 5.11. TAXES AND OTHER AMOUNTS. To the extent provided for in
any Contract in the Contracts Pool, the Servicer will make reasonable efforts to
collect (or cause to be collected) all payments with respect to amounts due for
taxes, assessments and insurance premiums relating to such Contracts or the
Equipment and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
SECTION 5.12. [Reserved].
SECTION 5.13. REMITTANCES. The Servicer will service all Collections in
accordance with Section 7.01 hereof.
SECTION 5.14. SERVICER ADVANCES. For each Collection Period, if the
Servicer determines that any Scheduled Payment (or portion thereof) which was
due and payable pursuant to a Contract in the Contracts Pool during such
Collection Period was not received prior to the end of such Collection Period,
the Servicer is required to make a Servicer Advance in an amount up to the
amount of such delinquent Scheduled Payment (or portion thereof), to the extent
that in its sole discretion it determines that it can recoup such amount from
subsequent Collections under the related Contract. Notwithstanding the
foregoing, any Successor Servicer that is not HFI or an Affiliate of HFI
appointed in accordance with Section 8.03 hereof shall not be required to
53
<PAGE>
make any Servicer Advances. The Servicer will deposit any Servicer Advances
into the Collection Account on or prior to 11:00 a.m. (Chicago time) on the
related Transfer Date, in immediately available funds. The Servicer will be
entitled to be reimbursed for Servicer Advances pursuant to Sections 7.05(a)
and 7.05(b).
SECTION 5.15. REALIZATION UPON DEFAULTED CONTRACT. The Servicer will
use its best efforts consistent with its customary and usual practices and
procedures in its servicing of contracts to repossess or otherwise comparably
convert the ownership of any Equipment relating to a Defaulted Contract and will
act as sales and processing agent for Equipment or Applicable Security which it
repossesses. The Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in its servicing of
contracts and other actions by the Servicer in order to realize upon such
Equipment or Applicable Security, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Equipment or Applicable Security at public or private sale in
circumstances other than those described in the preceding sentence. Without
limiting the generality of the foregoing, the Servicer may sell any such
Equipment or Applicable Security to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof. In any case in which
any such Equipment or Applicable Security has suffered damage, the Servicer will
not expend funds in connection with any repair or toward the repossession of
such Equipment or Applicable Security unless it determines in its discretion
that such repair and/or repossession will increase the Liquidation Proceeds by
an amount greater than the amount of such expenses. The Servicer will remit to
the Collection Account the Liquidation Proceeds received in connection with the
sale or disposition of Equipment or Applicable Security relating to a Defaulted
Contract in accordance with Section 7.01 net of any amounts payable to a Vendor.
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES. The Servicer will use
its best efforts to ensure that each Obligor maintains an Insurance Policy with
respect to the related Equipment in an amount at least equal to the sum of the
Discounted Contract Balance of the related Contract in the Contracts Pool;
PROVIDED that the Servicer, in accordance with its customary servicing
procedures, may allow Obligors to self-insure. Additionally, the Servicer will
require that each Obligor maintain property damage liability insurance during
the term of each Contract in the Contracts Pool in amounts and against risks
customarily insured against by the Obligor on equipment owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor. In
connection with its activities as Servicer of the Contracts, the Servicer agrees
to present, on behalf of itself, the Trust, the Indenture Trustee and the
Holders, claims to the insurer under each Insurance Policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract. The Servicer's Insurance
Policies with respect to the related Equipment will insure against liability for
personal injury and property damage relating to such Equipment, will name the
Indenture Trustee as an insured thereunder and will contain a breach of warranty
clause.
54
<PAGE>
SECTION 5.17. OTHER SERVICER COVENANTS. The Servicer hereby covenants
that:
(a) CONTRACT FILES. The Servicer will, at its own cost and expense,
maintain all Contract Files in accordance with its customary procedures. Without
limiting the generality of the preceding sentence, the Servicer will not dispose
of any documents constituting the Contract Files in any manner which is
inconsistent with the performance of its obligations as the Servicer pursuant to
this Agreement and will not dispose of any Contract except as contemplated by
this Agreement.
(b) COMPLIANCE WITH LAW. The Servicer will comply, in all material
respects, with all laws and regulations of any Governmental Authority applicable
to the Servicer or the Contracts in the Contracts Pool and related Equipment and
Contract Files or any part thereof; PROVIDED that the Servicer may contest any
such law or regulation in any reasonable manner which will not materially and
adversely affect the value of (or the rights of the Trust on behalf of the
Holders or the Indenture Trustee on behalf of the Noteholders, with respect to)
the Trust Assets.
(c) OBLIGATIONS WITH RESPECT TO CONTRACTS; MODIFICATIONS. The Servicer
will duly fulfill and comply with, in all material respects, all obligations on
the part of the Trust Depositor to be fulfilled or complied with under or in
connection with each Contract in the Contracts Pool and will do nothing to
impair the rights of the Indenture Trustee and the Holders in, to and under the
Trust Assets. The Servicer will perform such obligations under the Contracts in
the Contracts Pool and will not change or modify the Contracts, except as
otherwise provided herein and except insofar as any such failure to perform,
change or modify would not materially and adversely affect the value of (or the
rights of the Trust, on behalf of the Holders, or the Indenture Trustee, on
behalf of the Noteholders, with respect to) the Contracts or the related
Equipment.
(d) NO BANKRUPTCY PETITION. Prior to the date that is one year and one
day after the payment in full of all amounts owing in respect of all outstanding
Securities, the Servicer will not institute against the Trust Depositor, or the
Trust, or join any other Person in instituting against the Trust Depositor or
the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 5.17(d) will
survive the termination of this Agreement.
(e) LOCATION OF CONTRACT FILES. The Contract Files shall remain at all
times in the possession of the Servicer.
SECTION 5.18. SERVICING COMPENSATION. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in Section
5.19, the Servicer shall be entitled to receive a monthly servicing fee in
respect of any Collection Period (or portion thereof) prior to the termination
of the Trust (with respect to each Collection Period, the "SERVICING FEE") equal
to one-twelfth of the product of (A) the Servicing Fee Percentage and (B) the
ADCB of the Contracts Pool as of the first day of such Collection Period.
55
<PAGE>
SECTION 5.19. PAYMENT OF CERTAIN EXPENSES BY SERVICER. The Servicer
will be required to pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of independent
accountants, the Owner Trustee, the Indenture Trustee, taxes imposed on the
Servicer, expenses incurred in connection with payments and reports pursuant to
this Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Trust or the Trust Depositor, but excluding
Liquidation Expenses incurred as a result of activities contemplated by Section
5.15. The Servicer will be required to pay all reasonable fees and expenses
owing to the Owner Trustee or the Indenture Trustee in connection with the
maintenance of the Trust Accounts. The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment or
reimbursement therefor other than the Servicing Fee.
SECTION 5.20. RECORDS. The Servicer shall, during the period it is
Servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
SECTION 5.21. INSPECTION. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel to
assist in any examination of such records by the Owner Trustee or the Indenture
Trustee, or such authorized agents, and allow copies of the same to be made. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Owner Trustee or the Indenture Trustee may, using generally accepted audit
procedures, verify the status of each Contract and review the Computer Disk and
records relating thereto for conformity to Monthly Reports prepared pursuant to
Article IX and compliance with the standards represented to exist as to each
Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by Securityholders.
SECTION 5.22. TRUSTEES TO COOPERATE IN RELEASES. At the same time as
(i) any Lease in the Contracts Pool becomes an Expired Lease and the Equipment
related to such Lease is sold, (ii) any Contract becomes a Prepaid Contract and
in connection therewith the Equipment related to such Prepaid Contract is sold,
or (iii) the Servicer substitutes or replaces any unit of Equipment as
contemplated in Section 5.03, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee, on behalf of the Noteholders, will to the extent requested by
the Servicer release the Trust's interest in the Equipment relating to such
Expired Lease or Prepaid Contract or such substituted or replaced Equipment, as
the case may be; PROVIDED that such release will not constitute a release of the
Trust's interest in the proceeds of such sale (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
sale of such Equipment, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee will execute and deliver to the Servicer any assignments,
bills of sale, termination statements and any other
56
<PAGE>
releases and instruments as the Servicer may request in order to effect such
release and transfer; PROVIDED that neither the Owner Trustee nor the
Indenture Trustee will make any representation or warranty, express or
implied, with respect to any such Equipment in connection with such sale or
transfer and assignment. Nothing in this Section 5.22 shall diminish the
Servicer's obligations pursuant to Section 7.01 with respect to the proceeds
of any such sale.
ARTICLE VI
COVENANTS OF THE TRUST DEPOSITOR
SECTION 6.01. CORPORATE EXISTENCE. During the term of this
Agreement, the Trust Depositor will keep in full force and effect its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement, the other Transaction Documents and each other instrument or
agreement necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Trust Depositor and its Affiliates will
be conducted on an arm's-length basis.
SECTION 6.02. CONTRACTS NOT TO BE EVIDENCED BY PROMISSORY NOTES. The
Trust Depositor will take no action to cause any Contract not originally
evidenced by an instrument as described in Section 2.06 hereof, to be evidenced
by an instrument (as defined in the UCC), except in connection with the
enforcement or collection of such Contract.
SECTION 6.03. SECURITY INTERESTS. The Trust Depositor will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Contract in the Contracts Pool or related
Equipment, whether now existing or hereafter transferred to the Trust, or any
interest therein. The Trust Depositor will immediately notify the Owner Trustee
and the Indenture Trustee of the existence of any Lien on any Contract in the
Contracts Pool or related Equipment; and the Trust Depositor shall defend the
right, title and interest of the Trust in, to and under the Contracts in the
Contracts Pool and the related Equipment, against all claims of third parties;
PROVIDED, HOWEVER, that nothing in this Section 6.03 shall prevent or be deemed
to prohibit the Trust Depositor from suffering to exist Permitted Liens upon any
of the Contracts in the Contracts Pool or any related Equipment.
SECTION 6.04. DELIVERY OF COLLECTIONS. The Trust Depositor agrees to
pay to the Servicer promptly (but in no event later than two Business Days
following the Date of Processing) all Collections received by the Trust
Depositor in respect of the Contracts in the Contracts Pool, for application in
accordance with Section 7.01.
SECTION 6.05. REGULATORY FILINGS. The Trust Depositor shall make any
filings, reports, notices, applications and registrations with, and seek any
consents or authorizations from, the Commission and any state securities
authority on behalf of the Trust as may be necessary or that
57
<PAGE>
Trust Depositor deems advisable to comply with any federal or state
securities or reporting requirements laws.
SECTION 6.06. COMPLIANCE WITH LAW. Trust Depositor hereby agrees to
comply in all material respects with all Requirements of Law applicable to Trust
Depositor.
SECTION 6.07. ACTIVITIES. The Trust Depositor shall not engage in any
business or activity of any kind, or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other undertaking, which is
not directly related to the transactions contemplated and authorized by this
Agreement or the other Transaction Documents; PROVIDED, HOWEVER, that the Trust
Depositor may purchase and sell (or grant Liens in respect of) assets similar to
the Contract Assets to other Persons in securitization or other non-recourse
financing transactions involving the Originators or any of their Affiliates on
terms and conditions (with respect to liabilities and restrictions on its
activities, as well as restrictions on its interactions with the Originators or
their Affiliates, relevant to the "bankruptcy remoteness" or "substantive
consolidation" analysis relating to the Trust Depositor) substantially similar
to the terms and conditions applicable to the Trust Depositor under the
Transaction Documents.
SECTION 6.08. INDEBTEDNESS. The Trust Depositor shall not create,
incur, assume or suffer to exist any Indebtedness or other liability whatsoever,
except (i) obligations incurred under this Agreement, or (ii) liabilities
incident to the maintenance of its corporate existence in good standing.
SECTION 6.09. GUARANTEES. The Trust Depositor shall not become or
remain liable, directly or contingently, in connection with any Indebtedness or
other liability of any other Person, whether by guarantee, endorsement (other
than endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase, agreement to
supply or advance funds, or otherwise except in connection with the transactions
described in Section 6.07.
SECTION 6.10. INVESTMENTS. The Trust Depositor shall not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Person except (i) for purchases of Contracts
from the Originators, or (ii) for investments in Eligible Investments in
accordance with the terms of this Agreement. Without limiting the generality of
the foregoing, the Trust Depositor shall not: (i) provide credit to any
Securityholder for the purpose of enabling such Securityholder to purchase any
Securities or (ii) lend any money to the Trust.
SECTION 6.11. MERGER; SALES. The Trust Depositor shall not enter into
any transaction of merger or consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution) or acquire or be acquired by any Person,
or convey, sell, lease or otherwise dispose of all or substantially all of its
property or business, except as provided for in this Agreement.
58
<PAGE>
SECTION 6.12. DISTRIBUTIONS. The Trust Depositor shall not declare or
pay, directly or indirectly, any dividend or make any other distribution
(whether in cash or other property) with respect to the profits, assets or
capital of the Trust Depositor or any Person's interest therein, or purchase,
redeem or otherwise acquire for value any of its capital stock now or hereafter
outstanding, except that so long as no Event of Default has occurred and is
continuing and no Event of Default would occur as a result thereof or after
giving effect thereto and the Trust Depositor would continue to be Solvent as a
result thereof and after giving effect thereto, the Trust Depositor may declare
and pay dividends on its capital stock.
SECTION 6.13. OTHER AGREEMENTS. The Trust Depositor shall not become a
party to, or permit any of its properties to be bound by, any indenture,
mortgage, instrument, contract, agreement, lease or other undertaking, except
this Agreement and the other Transaction Documents to which it is a party and
any agreement relating to another securitization transaction permitted by
Section 6.07; nor shall it amend or modify the provisions of its Certificate of
Incorporation or issue any power of attorney except to the Owner Trustee, the
Indenture Trustee or the Servicer except in accordance with the Transaction
Documents.
SECTION 6.14. SEPARATE CORPORATE EXISTENCE. The Trust Depositor shall:
(i) Maintain its own deposit account or accounts, separate
from those of any Affiliate, with commercial banking institutions. The
funds of the Trust Depositor will not be diverted to any other Person
or for other than corporate uses of the Trust Depositor.
(ii) Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or Affiliates,
the salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(iii) Ensure that, to the extent that it jointly contracts
with any of its stockholders or Affiliates to do business with vendors
or service providers or to share overhead expenses, the costs incurred
in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent that
the Trust Depositor contracts or does business with vendors or service
providers when the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between Trust Depositor
and any of its Affiliates shall be only on an arm's length basis.
(iv) To the extent that the Trust Depositor and any of its
stockholders or Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs among
them, and each such entity shall bear its fair share of such expenses.
59
<PAGE>
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate and
customary corporate formalities, including, but not limited to, holding
all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of its meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "substantive consolidation" opinion of
Winston & Strawn, delivered on the Closing Date, upon which the
conclusions expressed therein are based.
SECTION 6.15. LOCATION; RECORDS. The Trust Depositor (x) shall not move
outside the State of Illinois, the location of its chief executive office,
without 45 days' prior written notice to the Owner Trustee and the Indenture
Trustee and (y) shall not move or permit the Servicer to move the location of
the Contract Files from the location(s) thereof on the Closing Date, without 45
days' prior written notice to the Owner Trustee and the Indenture Trustee and
(z) will promptly take all actions required (including, but not limited to, all
filings and other acts necessary or advisable under the UCC of each relevant
jurisdiction in order to continue the first priority perfected security interest
of the Indenture Trustee in all Contracts in the Contracts Pool. The Trust
Depositor will give the Owner Trustee and the Indenture Trustee prompt notice of
a change within the State of Illinois of the location of its chief executive
office.
SECTION 6.16. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES. The Trust
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Trust Depositor under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Servicer from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein and in the other Transaction
Documents, including any sales, gross receipts, general corporation, tangible
personal property, Illinois personal property replacement privilege or license
taxes (but, in the case of the Trust, not including any taxes asserted with
respect to, and as of the date of, the sale of the Contracts to the Trust or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Contracts, or federal or other income taxes arising out of
distributions on the Certificate or the Notes) and costs and expenses in
defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
60
<PAGE>
The Trust Depositor shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, and the Indenture Trustee 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, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee, or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; PROVIDED, HOWEVER, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Certificate or a Noteholder in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the immediately preceding sentence for which the
Trust Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph. The obligations of the Trust Depositor under this paragraph
shall be evidenced by the Certificate described in the Trust Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee from and against any loss, liability or
expense incurred by reason of the Trust Depositor's or Trust's violation of
federal or state securities laws in connection with the offering and sale of the
Notes.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the Trust
Depositor shall have made any indemnity payments pursuant to this Section and
the Person to or on 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 Trust Depositor, without interest.
SECTION 6.17. BANKRUPTCY LIMITATIONS. The Trust Depositor shall not,
without the affirmative vote of a majority of the members of the Board of
Directors of the Trust Depositor (which must include the affirmative vote of at
least two duly appointed Independent directors) (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a substantial
part of its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally as they
become due, or (G) take any corporate action in
61
<PAGE>
furtherance of the actions set forth in clauses (A) through (F) above;
PROVIDED, HOWEVER, that no director may be required by any shareholder of the
Trust Depositor to consent to the institution of bankruptcy or insolvency
proceedings against the Trust Depositor so long as it is Solvent.
SECTION 6.18. LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS.
The Trust Depositor and any director or officer or employee or agent of the
Trust Depositor may rely in good faith on any document of any kind, PRIMA FACIE
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of the Owner Trustee's or the Indenture Trustee's willful
misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder. The Trust
Depositor 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 6.19. CHIEF EXECUTIVE OFFICE. During the term of this
Agreement, the Trust Depositor will maintain its chief executive office in one
of the States of the United States, except Louisiana, Tennessee, Colorado,
Kansas, New Mexico, Oklahoma, Utah or Wyoming.
ARTICLE VII
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND
SECTION 7.01. TRUST ACCOUNTS; COLLECTIONS. (a) On or before the Closing
Date, the Trust Depositor shall establish the Collection Account, Note
Distribution Account and Reserve Fund, each in the name of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholder, respectively. The
Servicer and Indenture Trustee are hereby required to ensure that each of the
Trust Accounts is established and maintained as an Eligible Account with a
Qualified Institution. If any institution with which any of the accounts
established pursuant to this Section 7.01(a) are established ceases to be a
Qualified Institution, the Servicer or the Indenture Trustee (as the case may
be) shall within 10 Business Days establish a replacement account at a Qualified
Institution after notice of such event.
(b) The Servicer shall deposit or cause to be deposited, without
deposit into any intervening account, into the Collection Account as promptly as
practical after the Date of Processing (but in any case not later than the
second Business Day following the Date of Processing thereof, and in all events
not later than five Business Days following actual receipt of such remittance by
the Servicer), all Collections on deposit with the Servicer in the form of
available funds, and all Collections otherwise received by the Servicer.
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or
cause to be deposited, on the Closing Date and on each Subsequent Transfer Date
thereafter, in immediately available funds into the Collection Account, all
Collections received after the applicable Cutoff
62
<PAGE>
Date and through and including the date two days preceding the Closing Date
or Subsequent Transfer Date, as the case may be, in respect of Contracts
being transferred to the Trust on such date.
(d) Notwithstanding Sections 7.01(b) and (c), the Servicer shall not be
required to deposit or cause to be deposited Collections on any Contracts in the
Contracts Pool on which (and to the extent that) the Servicer has previously
made a Servicer Advance which has not been reimbursed, which amounts the
Servicer may retain (as reimbursement of such Servicer Advance).
(e) Notwithstanding Sections 7.01(b) and (c), if (i) the Servicer makes
a deposit into the Collection Account in respect of a Collection of a Contract
in the Contract Pool and such Collection was received by the Servicer in the
form of a check which is not honored for any reason, or (ii) the Servicer makes
a mistake with respect to the amount of any Collection and deposits an amount
that is less than or more than the actual amount of such Collection, the
Servicer shall appropriately adjust the amount subsequently deposited into the
Collection Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not
to have been paid.
SECTION 7.02. RESERVE FUND DEPOSIT. On the Closing Date, the Owner
Trustee, on behalf of the Trust Depositor, shall deposit the Reserve Fund
Initial Deposit into the Reserve Fund from the net proceeds of the Securities.
SECTION 7.03. TRUST ACCOUNT PROCEDURES. If the Servicer so directs, in
writing, the Indenture Trustee shall invest the amounts in the Trust Accounts in
Qualified Eligible Investments of the type specified in such written direction
that mature not later than one Business Day prior to the next succeeding
Distribution Date. Once such funds are invested, the Indenture Trustee shall not
change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Subject
to the restrictions herein, the Indenture Trustee may purchase a Qualified
Eligible Investment from itself or an Affiliate. Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Indenture Trustee or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner which
complies with this Section 7.03. All Investment Earnings on investments of funds
in the Trust Accounts shall be deposited in the Collection Account pursuant to
Section 7.01 and distributed on the next Distribution Date pursuant to Section
7.05. The Trust Depositor and the Trust agree and acknowledge that the Indenture
Trustee is to have "CONTROL" (within the meaning of Section 8-102 of the UCC as
enacted in Illinois) of collateral comprised of "INVESTMENT PROPERTY" (within
the meaning of Section 9-115 of the UCC as enacted in Illinois) for all purposes
of this Agreement. In the absence of timely written direction from the
63
<PAGE>
Servicer, the Indenture Trustee shall invest amounts in the Trust Accounts in
Qualified Eligible Investments of the type specified in clause (vi) of the
definition of Eligible Investments herein.
SECTION 7.04. SECURITYHOLDER DISTRIBUTIONS. (a) Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee, or Owner Trustee, respectively, at least ten days prior to
such Distribution Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and Certificateholder required
hereunder. The Indenture Trustee hereby agrees that all amounts held by it for
payment hereunder will be held in trust for the benefit of the Noteholders and
Certificateholder.
SECTION 7.05. ALLOCATIONS AND DISTRIBUTIONS.
(a) ALLOCATIONS AND DISTRIBUTIONS PRIOR TO AN EVENT OF DEFAULT. On each
Determination Date prior to an Event of Default, the Servicer, pursuant to
written monthly payment instructions and notification, shall instruct the
Indenture Trustee to withdraw, and on the succeeding Distribution Date the
Indenture Trustee acting in accordance with such written instructions shall
withdraw, the amounts required to be withdrawn from the Collection Account
pursuant to this Section and deposited to the Note Distribution Account
(pursuant to Sections 3.01 and 8.02(b) of the Indenture) in order to make the
following payments or allocations from the Available Amounts for the related
Distribution Date (in each case, such payment or transfer to be made only to the
extent funds remain available therefor after all prior payments and transfers
for such Distribution Date have been made), in the following order of priority:
(i) pay to the Servicer, the amount of any Unreimbursed
Servicer Advance;
(ii) pay to the Servicer, if the Servicer is no longer HFI or
an Affiliate of HFI, the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing
Fee that were due in respect of prior monthly periods that remain
unpaid;
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders an amount equal to interest accrued in respect of the
related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate and Class A-4 Interest Rate, respectively, for the
Accrual Period immediately preceding such Distribution Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; PROVIDED that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such remaining
Available
64
<PAGE>
Amounts shall be allocated to each Holder of a Class A Note
PRO RATA based upon the outstanding Principal Amount thereof;
(iv) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the
Class B Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amount shall be paid to each Class B
Noteholder PRO RATA based on the outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the
Class C Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class C
Noteholder PRO RATA based on the outstanding Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to interest accrued thereon at the Class D
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class D
Noteholder PRO RATA based on the outstanding principal amount thereof;
(vii) pay to the Indenture Trustee on behalf of the Class E
Noteholders an amount equal to interest accrued thereon at the Class E
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class E
Noteholder PRO RATA based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class
A-1 Noteholders, the Class A Principal Payment Amount for such
Distribution Date; PROVIDED that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class A-1 Note PRO RATA based on the outstanding
principal amount thereof;
65
<PAGE>
(ix) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, (A) $0 prior to the Distribution Date on which the
Principal Amount of the Class A-1 Notes is reduced to $0; (B) on each
subsequent Distribution Date until the Principal Amount of the Class
A-2 Notes is reduced to $0, the Class A Principal Payment Amount less
the amount needed to reduce the Principal Amount of the Class A-1 Notes
to $0; PROVIDED that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class
A-2 Note PRO RATA based on the outstanding principal amount thereof;
(x) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, (A) $0 prior to the Distribution Date on which the
Principal Amount of the Class A-1 Notes and Class A-2 Notes is reduced
to $0 and (B) on each subsequent Distribution Date until the Principal
Amount of the Class A-3 Notes is reduced to $0, the Class A Principal
Payment Amount less the amount needed to reduce the Principal Amount of
the Class A-1 Notes and Class A-2 Notes to $0; PROVIDED that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so paid, such remaining
Available Amounts shall be allocated to each Class A-3 Note PRO RATA
based on the outstanding principal amount thereof;
(xi) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, (A) $0 prior to the Distribution Date on which the
Principal Amount of the Class A-1 Notes, Class A-2 Notes and Class A-3
Notes is reduced to $0 and (B) on each subsequent Distribution Date
until the Principal Amount of the Class A-4 Notes is reduced to $0, the
Class A Principal Payment Amount less the amount needed to reduce the
Class A-1 Notes, Class A-2 Notes and Class A-3 Notes to $0; PROVIDED
that if the Available Amounts remaining to be allocated pursuant to
this clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be allocated to each Class A-4 Note
PRO RATA based on the outstanding principal amount thereof;
(xii) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, on each Distribution Date until the Principal Amount of
the Class B Notes is reduced to $0, the Class B Principal Payment
Amount; PROVIDED that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class B Note PRO RATA based on the outstanding
principal amount thereof;
(xiii) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, on each Distribution Date until the Principal Amount of
the Class C Notes is reduced to $0, the Class C Principal Payment
Amount; PROVIDED that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class C Note PRO RATA based on the outstanding
principal amount thereof;
66
<PAGE>
(xiv) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, on each Distribution Date until the Principal Amount of
the Class D Notes is reduced to $0, the Class D Principal Payment
Amount; PROVIDED that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class D Note PRO RATA based on the outstanding
principal amount thereof;
(xv) pay to the Indenture Trustee, on behalf of the Class E
Noteholders, on each Distribution Date until the Principal Amount of
the Class E Notes is reduced to $0, the Class E Principal Payment
Amount; PROVIDED that if the Available Amounts remaining to be
allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class E Note PRO RATA based on the outstanding
principal amount thereof;
(xvi) pay to the Indenture Trustee,
(A) on behalf of the Class A-1 Noteholders, the
Additional Principal, if any, on each Distribution Date until
the Principal Amount of the Class A-1 Notes is reduced to $0;
(B) on behalf of the Class A-2 Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes is reduced to $0 and (2) on each
subsequent Distribution Date, the excess of Additional
Principal, if any, over the amount needed to reduce the
Principal Amount of the Class A-1 Notes to $0, on subsequent
Distribution Dates, until the Principal Amount of the Class
A-2 Notes is reduced to $0; PROVIDED, that if the Additional
Principal exceeds the amount needed to reduce the Principal
Amount of the Class A-2 Notes to $0, then such excess shall be
paid to the Class A-3 Noteholders;
(C) on behalf of the Class A-3 Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes and Class A-2 Notes is reduced to $0
and (2) on each subsequent Distribution Date, the excess of
Additional Principal, if any, over the amount needed to reduce
the Principal Amount of the Class A-1 Notes and Class A-2
Notes to $0, on subsequent Distribution Dates, until the
Principal Amount of the Class A-3 Notes is $0; PROVIDED, that
if the Additional Principal exceeds the amount needed to
reduce the Principal Amount of the Class A-3 Notes to $0, then
such excess shall be paid to the Class A-4 Noteholders;
(D) on behalf of the Class A-4 Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes is
reduced to $0 and (2) on each subsequent Distribution Date,
the excess of Additional Principal, if any, over the amount
needed to reduce the Principal Amount of the Class A-1 Notes,
Class A-2 Notes
67
<PAGE>
and Class A-3 Notes to $0, on subsequent Distribution
Dates, until the Principal Amount of the Class A-4 Notes is
$0; PROVIDED, that if the Additional Principal exceeds the
amount needed to reduce the Principal Amount of the Class
A-4 Notes to $0, then such excess shall be paid to the
Class B Noteholders;
(E) on behalf of the Class B Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes is reduced to $0 and (2) on each subsequent
Distribution Date, the excess of Additional Principal, if any,
over the amount needed to reduce the Principal Amount of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class
A-4 Notes to $0, on subsequent Distribution Dates, until the
Principal Amount of the Class B Notes is $0; PROVIDED, that if
the Additional Principal exceeds the amount needed to reduce
the Principal Amount of the Class B Notes to $0, then such
excess shall be paid to the Class C Noteholders;
(F) on behalf of the Class C Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes and Class B Notes is reduced to $0 and (2) on
each subsequent Distribution Date, the excess of Additional
Principal, if any, over the amount needed to reduce the
Principal Amount of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes and Class B Notes to $0, on
subsequent Distribution Dates, until the Principal Amount of
the Class C Notes is $0; PROVIDED, that if the Additional
Principal exceeds the amount needed to reduce the Principal
Amount of the Class C Notes to $0, then such excess shall be
paid to the Class D Noteholders;
(G) on behalf of the Class D Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class B Notes and Class C Notes is reduced to
$0 and (2) on each subsequent Distribution Date, the excess of
Additional Principal, if any, over the amount needed to reduce
the Principal Amount of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class B Notes and Class C
Notes to $0, on subsequent Distribution Date until the
Principal Amount of the Class D Notes is $0; PROVIDED, that if
the Additional Principal exceeds the amount needed to reduce
the Principal Amount of the Class D Notes to $0, then such
excess shall be paid to the Class E Noteholders;
(H) on behalf of the Class E Noteholders, (1) $0
prior to the Distribution Date on which the Principal Amount
of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class B Notes, Class C Notes and Class D
Notes is reduced to $0 and (2) on each subsequent Distribution
Date, the excess of Additional Principal, if any, over the
amount needed to reduce the
68
<PAGE>
Principal Amount of the Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C
Notes and Class D Notes to $0, on subsequent Distribution
Dates until the Principal Amount of the Class E Notes is
$0; PROVIDED, that if the Additional Principal exceeds the
amount needed to reduce the Principal Amount of the Class E
Notes to $0, then such excess shall be paid as provided in
paragraphs (xvii) - (xix) below;
(xvii) pay to the Servicer, if the Servicer is HFI or an
Affiliate of HFI, the monthly Servicing Fee for the preceding monthly
period together with any amounts in respect of the Servicing Fee that
were due in respect of prior monthly periods that remain unpaid;
(xviii) pay to the Indenture Trustee, for deposit into the
Reserve Fund, such remaining Available Amounts up to such amount as may
be required to cause the amounts on deposit in the Reserve Fund to
equal the Reserve Fund Amount; and
(xix) pay any remaining Available Amounts to the Holder of the
Certificate.
Prior to the occurrence of an Event of Default, if the Available
Amounts are less than the amount required to make in full the payments and
allocations set forth in Sections 7.05(a)(ii)-(vii) above, amounts held in the
Reserve Fund shall be withdrawn in order for any of such payments or allocations
to be made and such amounts will be considered as Available Amounts for such
purpose only. Upon full payment of the amounts described in Section
7.05(a)(ii)-(vii), if the Available Amounts are less than the amount required to
make in full the payments and allocations set forth in Sections
7.05(a)(viii)-(xvi), amounts held in the Reserve Fund in excess of the Reserve
Fund Amount shall be withdrawn in order for any of such payments or allocations
to be made and such amounts will be considered as Available Amounts for such
purpose only.
(b) ALLOCATIONS AND PAYMENTS AFTER AN EVENT OF DEFAULT. On each
Determination Date after the occurrence and during the continuance of an Event
of Default, the Servicer, pursuant to monthly payment instructions and
notification, shall instruct the Indenture Trustee to withdraw, and on the
succeeding Distribution Date the Indenture Trustee acting in accordance with
such instructions shall withdraw, the amounts required to be withdrawn from the
Collection Account pursuant to this Section and deposited to the Note
Distribution Account (pursuant to Sections 3.01 and 8.02(b) of the Indenture) in
order to make the following payments or allocations from the Available Amounts
for the related Distribution Date (in each case, such payment or transfer to be
made only to the extent funds remain available therefor after all prior payments
and transfers for such Distribution Date have been made), in the following order
of priority:
(i) pay to the Indenture Trustee the amount of any unpaid fees
and expenses to which the Indenture Trustee is entitled under the
Indenture; and pay to the Owner Trustee the amount of any unpaid fees
and expenses to which the Owner Trustee is entitled under Section 8.01
of the Trust Agreement.
69
<PAGE>
(ii) pay to the Servicer, if the Servicer is no longer HFI or
an affiliate of HFI, the monthly Servicing Fee for the preceding
monthly period together with any amounts in respect of the Servicing
Fee that were due in respect of prior monthly periods that remain
unpaid;
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders an amount equal to interest accrued in respect of the
related Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes at the Class A-1 Interest Rate, Class A-2 Interest Rate, Class
A-3 Interest Rate and Class A-4 Interest Rate, respectively, for the
Accrual Period immediately preceding such Distribution Date, together
with any such amounts that accrued in respect of prior Accrual Periods
for which no allocation was previously made; PROVIDED that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so allocated, such remaining
Available Amounts shall be allocated to each Holder of a Class A Note
PRO RATA based upon the outstanding Principal Amount thereof;
(iv) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the
Class B Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amount shall be paid to each Class B
Noteholder PRO RATA based on the outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the
Class C Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class C
Noteholder PRO RATA based on the outstanding Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class D
Noteholders, an amount equal to the interest accrued thereon at the
Class D Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class D
Noteholder PRO RATA based on the outstanding principal amount thereof;
70
<PAGE>
(vii) pay to the Indenture Trustee on behalf of the Class E
Noteholders, an amount equal to the interest accrued thereon at the
Class E Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in
respect of prior Accrual Periods for which no allocation was previously
made; PROVIDED, that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be paid to each Class E
Noteholder PRO RATA based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class
A-1 Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class
A-4 Noteholders, the Principal Amounts of the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes and Class A-4 Notes; PROVIDED that if the
Available Amounts remaining to be allocated pursuant to this clause are
less than the full amount required to be so paid, such remaining
Available Amounts shall be allocated to each Class A-1 Note, Class A-2
Note, Class A-3 Note and Class A-4 Note PRO RATA based on the
outstanding principal amount of each such Class of Notes;
(ix) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Principal Amount of the Class B Notes for such
Distribution Date; PROVIDED that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class B Note PRO RATA based on the outstanding
principal amount thereof;
(x) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Principal Amount of the Class C Notes for such
Distribution Date; PROVIDED that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class C Note PRO RATA based on the outstanding
principal amount thereof;
(xi) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Principal Amount of the Class D Notes for such
Distribution Date; PROVIDED that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class D Note PRO RATA based on the outstanding
principal amount thereof;
(xii) pay to the Indenture Trustee, on behalf of the Class E
Noteholders, the Principal Amount of the Class E Notes for such
Distribution Date; PROVIDED that if the Available Amounts remaining to
be allocated pursuant to this clause are less than the full amount
required to be so paid, such remaining Available Amounts shall be
allocated to each Class E Note PRO RATA based on the outstanding
principal amount thereof; and
(xiii) pay all other remaining Available Amounts to the Holder
of the Certificates.
71
<PAGE>
Following the occurrence and during the continuance of an Event of
Default, if the Available Amounts are less than the amount required to make in
full the payments and allocations set forth in Sections 7.05(b)(i)-(xii) above,
amounts held in the Reserve Fund shall be withdrawn in order for the payments or
allocations set forth in Sections 7.05(b)(i)-(xii) to be made and such amounts
will be considered as Available Amounts for such purpose only.
ARTICLE VIII
SERVICER DEFAULT; SERVICER TRANSFER
SECTION 8.01. SERVICER DEFAULT. "SERVICER DEFAULT" means the occurrence
of any of the following:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Owner Trustee or the Indenture
Trustee pursuant to this Agreement on or before the date occurring three
Business Days after the date such payment, transfer, deposit, or such
instruction or notice or report is required to be made or given, as the case may
be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement which has a material adverse effect on the Noteholders or
Certificateholder, which continues unremedied for a period of 30 days after the
first to occur of (i) the date on which written notice of such failure requiring
the same to be remedied shall have been given to the Servicer by the Indenture
Trustee or to the Servicer and the Indenture Trustee by the Noteholders or
Certificateholder or the Indenture Trustee on behalf of such Noteholders of
Notes aggregating not less than 25% of the Principal Amount of any Class
adversely affected thereby and (ii) the date on which the Servicer becomes aware
thereof and such failure continues to materially adversely affect such
Noteholders or Certificateholder for such period; or
(c) any representation, warranty or certification made by the Servicer
in this Agreement or in any certificate delivered pursuant to this Agreement
shall prove to have been incorrect when made, which has a material adverse
effect on the Noteholders or Certificateholder and which continues to be
incorrect in any material respect for a period of 30 days after the first to
occur of (i) the date on which written notice of such incorrectness requiring
the same to be remedied shall have been given to the Servicer and the Owner
Trustee by the Indenture Trustee, or to the Servicer, the Owner Trustee and the
Indenture Trustee by Noteholders or Certificateholder or by the Indenture
Trustee on behalf of Noteholders of Notes aggregating not less than 25% of the
Principal Amount of any Class adversely affected thereby and (ii) the date on
which the Servicer becomes aware thereof, and such incorrectness continues to
materially adversely affect such Holders for such period; or
(d) an Insolvency Event shall occur with respect to the Servicer.
72
<PAGE>
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five Business Days or
referred to under clause (b) or (c) for a period of 60 days (in addition to any
period provided in (a), (b) or (c)) shall not constitute a Servicer Default
until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Owner Trustee, the Indenture Trustee and the
Trust Depositor prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee in writing of any Servicer Default.
SECTION 8.02. Servicer Transfer. (a) If a Servicer Default has occurred
and is continuing, (x) the Required Holders, or (y) the Indenture Trustee may,
by written notice (a "TERMINATION NOTICE") delivered to the parties hereto,
terminate all (but not less than all) of the Servicer's management,
administrative, servicing, custodial and collection functions.
(b) Upon delivery of the notice required by Section 8.02(a) (or, if
later, on a date designated therein), and on the date that a successor Servicer
shall have been appointed pursuant to Section 8.03 (such appointment being
herein called a "SERVICER TRANSFER"), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts, the Contract Files or otherwise, shall pass to and be vested
in such successor (the "SUCCESSOR SERVICER") pursuant to and under this Section
8.02; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts. The Servicer
shall transfer to the Successor Servicer all records held by the Servicer
relating to the Contracts in such electronic form as the Successor Servicer may
reasonably request and (ii) any Contract Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Servicer Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer.
SECTION 8.03. APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE;
SUCCESSOR SERVICER TO ACT . Upon delivery of the notice required by Section
8.02(a) (or, if later, on a date designated therein), the Servicer shall
continue to perform all servicing functions under this Agreement until
73
<PAGE>
the date specified in the Termination Notice or, if no such date is
specified, until a date mutually agreed by the Servicer and the Indenture
Trustee. The Indenture Trustee shall as promptly as possible after the giving
of or receipt of a Termination Notice, appoint a Successor Servicer, and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture Trustee and Owner Trustee. If within 60 days
of delivery of a Termination Notice the Indenture Trustee is unable to obtain
any bids from eligible servicers and the Servicer shall have yet to cure the
Servicer Default, then the Indenture Trustee shall offer the Trust Depositor,
and the Trust Depositor shall offer the Originators, the right to accept
retransfer of all the Trust Assets, and such parties may accept retransfer of
such Trust Assets in consideration of the Trust Depositor's delivery to the
Collection Account on or prior to the next upcoming Distribution Date of a
sum equal to the Aggregate Principal Amount of all Securities (other than the
Certificates) then outstanding, together with accrued and unpaid interest
thereon through such date of deposit (provided, that the Indenture Trustee,
if so directed by the Required Holders, need not accept and effect such
reconveyance in the absence of evidence (which may include valuations of an
investment bank or similar entity) reasonably acceptable to such Trustee or
Required Holders that such retransfer would not constitute a fraudulent
conveyance of the Trust Depositor or the Originators).
In the event that a Successor Servicer has not been appointed and has
not accepted its appointment at the time when the then Servicer has ceased to
act as Servicer, the Indenture Trustee without further action shall
automatically be appointed the Successor Servicer. Notwithstanding the
foregoing, if the Indenture Trustee is legally unable or prohibited from so
acting, it shall petition a court of competent jurisdiction to appoint any
established financial institution having a net worth of at least $50,000,000 and
whose regular business includes the servicing of contracts similar to the
Contracts as the Successor Servicer hereunder. On or after a Servicer Transfer,
the Successor Servicer shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the terminated Servicer shall be relieved of such responsibilities,
duties and liabilities arising after such Servicer Transfer; PROVIDED, HOWEVER,
that (i) the Successor Servicer will not assume any obligations of the Servicer
described in Section 8.03 and (ii) the Successor Servicer shall not be liable
for any acts or omissions of the Servicer occurring prior to such Servicer
Transfer or for any breach by the Servicer of any of its representations and
warranties contained herein or in any related document or agreement. As
compensation therefor, the Successor Servicer shall be entitled to receive
reasonable compensation equal to the monthly Servicing Fee. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. To the extent the terminated Servicer has made Servicer
Advances, it shall be entitled to reimbursement of the same notwithstanding its
termination hereunder, to the same extent as if it had continued to service the
Contracts hereunder. In addition, it is understood and agreed that if an Event
of Default has occurred and a Servicer Transfer is being effected by action of
the Indenture Trustee hereunder, any documented expenses reasonably incurred by
the Indenture Trustee in connection with effecting such Servicer
74
<PAGE>
Transfer shall be deemed expenses reimbursable from Available Amounts after
an Event of Default pursuant to Section 7.05(b)(i) hereof.
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS. (a) Promptly following
the occurrence of any Servicer Default, the Servicer shall give written notice
thereof to the Trustees, the Trust Depositor and each Rating Agency at the
addresses described in Section 13.04 hereof and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a
Successor Servicer pursuant to this Article VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Trust Depositor at the
addresses described in Section 13.04 hereof, and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
SECTION 8.05. EFFECT OF TRANSFER. (a) After a Servicer Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section 8.03 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Servicer Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Contracts.
SECTION 8.06. DATABASE FILE. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii) thereafter, as of
the last day of the preceding Collection Period on each Determination Date prior
to a Servicer Default and (iv) on and as of the Business Day before the actual
commencement of servicing functions by the Successor Servicer following the
occurrence of a Servicer Default.
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION. The original Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.07 hereof. The indemnification
provided by this Section 8.07 shall survive the termination of this Agreement.
75
<PAGE>
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. The
Successor Servicer will not be responsible for delays attributable to the
Servicer's failure to deliver information, defects in the information
supplied by the Servicer or other circumstances beyond the control of the
Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Contract information. The current Servicer shall be obligated to
pay the costs associated with the transfer of the servicing files and records to
the Successor Servicer.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Contract with applicable law or the breach
or the inaccuracy of any representation or warrant made with respect to any
Contract.
If the Indenture Trustee or any other Successor Servicer assumes the
role of Successor Servicer hereunder such Successor Servicer shall be entitled
to the benefits of (and subject to the provisions of) Section 5.05 concerning
delegation of duties to subservicers.
SECTION 8.09. RATING AGENCY CONDITION FOR SERVICER TRANSFER.
Notwithstanding the foregoing provisions relating to a Servicer Transfer, no
Servicer Transfer shall be effective hereunder unless prior written notice
thereof shall have been given to the Rating Agencies, and the Rating Agency
Condition shall have been satisfied with respect thereto.
ARTICLE IX
REPORTS
SECTION 9.01. MONTHLY REPORTS. With respect to each Distribution Date
and the related Collection Period, the Servicer will provide to each Trustee,
the Underwriter and each Rating Agency, on the related Determination Date, a
monthly statement (a "MONTHLY REPORT") substantially in the form of EXHIBIT I
hereto.
76
<PAGE>
SECTION 9.02. OFFICER'S CERTIFICATE. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer certifying the accuracy of the Monthly Report and that no Servicer
Default or event that with notice or lapse of time or both would become a
Servicer Default has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 9.03. OTHER DATA. In addition, the Servicer shall, upon the
request of any Trustees, or any Rating Agency, furnish such Trustee or Rating
Agency, as the case may be, such underlying data used to generate a Monthly
Report as may be reasonably requested.
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who
may also render other services to the Servicer or its Affiliates, to deliver to
the Trustees and each Rating Agency, on or before March 31 (or 90 days after the
end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 2001 (i) with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date), a report addressed
to the Board of Directors of the Servicer and to the Trustees, to the effect
that such firm (A) has reviewed certain documents and records relating to the
servicing of the Contracts in the Contracts Pool, and (B) based on such review,
such firm is of the opinion that the Monthly Reports for such year were prepared
in compliance with this Agreement, except for such exceptions as it believes to
be immaterial and such other exceptions as will be set forth in such firm's
report, and (ii) a report with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date) to the effect that
such accountants have applied certain agreed-upon procedures to certain
documents and records relating to the servicing of Contracts under this
Agreement, compared the information contained in the Servicer's certificates
delivered during the period covered by such report with such documents and
records and that no matters came to the attention of such accountants that
caused them to believe that such servicing was not conducted in compliance with
this Agreement, except for such exceptions as such accountants shall believe to
be immaterial and such other exceptions as shall be set forth in such statement.
A copy of such report (the "ACCOUNTANT'S REPORT") may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, in the case of
a Noteholder, or to the Owner Trustee, in the case of a Certificateholder,
addressed to its respective Corporate Trust Office. In the event such firm of
Independent Accountants requires the Indenture Trustee to agree to the
procedures performed by such firm of Independent Accountants, the Servicer shall
direct the Indenture Trustee in writing to so agree; it being understood and
agreed that the Indenture Trustee will deliver such letter of agreement in
conclusive reliance upon the direction of the Servicer, and the Indenture
Trustee has not made any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
(b) The Accountant's Report shall 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.
77
<PAGE>
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER. The
Servicer will deliver to the Trustees, and each of the Rating Agencies, on or
before January 31 of each year commencing January 31, 2001, an Officer's
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer's knowledge, based on such review, the Servicer has fully performed or
cause to be performed in all material respects all its obligations under this
Agreement and no Servicer Default has occurred or is continuing, or, if there
has been a Servicer Default, specifying each such default known to such officer
and the nature and status thereof and the steps being taken or necessary to be
taken to remedy such event. A copy of such certificate may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, with respect to
any Noteholder, or the Owner Trustee, with respect to any Certificateholder.
SECTION 9.06. ANNUAL SUMMARY STATEMENT. On or prior to January 31 of
each year, commencing January 31, 2001, the Servicer shall prepare and provide
to each Trustee, and each Rating Agency, a cumulative summary of the information
required to be included in the Monthly Reports for the Collection Periods ending
during the immediately preceding calendar year.
ARTICLE X
TERMINATION
SECTION 10.01. SALE OF TRUST ASSETS.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "INSOLVENCY PROCEEDS") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to allocate and apply (after the
application on such Distribution Date of Available Amounts and funds on deposit
in the Reserve Fund pursuant to Section 7.04) the Insolvency Proceeds as if (and
in the same order of priority as) the Insolvency Proceeds were Available Amounts
being allocated and distributed on such date pursuant to Section 7.04(b).
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee pursuant
to this Agreement.
78
<PAGE>
ARTICLE XI
REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION
SECTION 11.01. REPURCHASES OF, OR SUBSTITUTION FOR, CONTRACTS FOR
BREACH OF REPRESENTATIONS AND WARRANTIES. Upon a discovery by the Servicer, the
Trust Depositor or the Trustees of a breach of a representation or warranty of
the Originators as set forth in Section 3.02, Section 3.03, Section 3.04, and
Section 3.05 or as made or deemed made in any Addition Notice or any Subsequent
Purchase Agreement relating to Substitute Contracts that materially adversely
affects the Trust's interest in such Contract (without regard to the benefits of
the Reserve Fund) (an "INELIGIBLE CONTRACT"), or of an inaccuracy with respect
to the representations as to concentrations of the Initial Contracts made under
Section 3.05, the party discovering the breach shall give prompt written notice
to the other parties (and the Servicer shall, with respect to an inaccuracy
concerning concentrations, select one or more Contracts, without employing
adverse selection, as the related Excess Contract for purposes of this Section),
PROVIDED, that the Trustees shall have no duty or obligation to inquire or to
investigate the breach by the Originators of any of such representations or
warranties. The Trust Depositor shall repurchase from the Trust, and the
Originators shall contemporaneously repurchase from the Trust Depositor each
such Ineligible Contract or Excess Contract, at a repurchase price equal to the
Transfer Deposit Amount, not later than ninety (90) days following the date the
Originator becomes aware of, or receives written notice from any Trustee, the
Servicer or the Trust Depositor of, any such breach or inaccuracy and which
breach or inaccuracy has not otherwise been cured; PROVIDED, HOWEVER, that if
the Originator is able to effect a substitution for any such Ineligible Contract
or Excess Contract in compliance with Section 2.04, the Originator may, in lieu
of repurchasing such Contract, effect a substitution for such affected Contract
with a Substitute Contract not later than the date a repurchase of such affected
Contract would be required hereunder, and PROVIDED FURTHER that with respect to
a breach of representation or warranty relating to the Contracts in the
aggregate and not to any particular Contract the Originator may select Contracts
(without adverse selection) to repurchase (or substitute for) such that had such
Contracts not been included as part of the Trust Assets (and, in the case of a
substitution, had such Substitute Contract been included as part of the Trust
Assets instead of the selected Contract) there would have been no breach of such
representation or warranty. Notwithstanding any other provision of this
Agreement, the obligation of the Originators described in this Section 11.01
shall not terminate or be deemed released by any party hereto upon a Servicer
Transfer pursuant to Article VIII. The repurchase obligation described in this
Section 11.01 is in no way to be satisfied with monies in the Reserve Fund.
SECTION 11.02. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED CONTRACTS.
Upon receipt by the Indenture Trustee for deposit in the Collection Account of
the amounts described in Section 11.01 or Section 11.03 (or upon the Subsequent
Transfer Date related to a Substitute Contract described in Section 11.01), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as EXHIBIT G, the Indenture Trustee shall assign to the Trust Depositor and the
Trust Depositor shall assign to the original applicable Originator all of the
Trust's (or Trust Depositor's, as applicable) right, title and interest in the
repurchased or substituted Contract and
79
<PAGE>
related Trust Assets without recourse, representation or warranty. Such
reassigned Contract shall no longer thereafter be included in any
calculations of Discounted Contract Balances required to be made hereunder or
otherwise be deemed a part of the Trust.
SECTION 11.03. ORIGINATORS' AND TRUST DEPOSITOR'S REPURCHASE OPTION. On
written notice to the Owner Trustee and the Indenture Trustee at least 20 days
prior to a Distribution Date, and provided that the ADCB of all Contracts in the
Contracts Pool is then less than 10% of the ADCB of such Contracts as of the
Initial Cutoff Date, the Originators, through the Trust Depositor, may (but are
not required to) repurchase from the Trust Depositor (and the Trust Depositor
concurrently from the Trust) on that Distribution Date all outstanding Contracts
at a price equal to the aggregate outstanding Principal Amount of the Securities
(other than the Certificates) as of the current Distribution Date thereon, the
amount of unreimbursed Servicer Advances (if any) as well as accrued and unpaid
monthly Servicing Fees to the date of such repurchase. Such price is to be
deposited in the Collection Account not later than one Business Day before such
Distribution Date, against the Owner Trustee's and Indenture Trustee's and Trust
Depositor's release of the Contracts and the Contract Files to the Originators.
ARTICLE XII
ORIGINATOR INDEMNITIES
SECTION 12.01. ORIGINATORS' INDEMNIFICATION. The Originators will
jointly and severally defend and indemnify Trust Depositor, the Trust, the
Trustees, any agents of the Trustees and the Certificateholder and Noteholders
(any of which, an "INDEMNIFIED PARTY") against any and all costs, expenses,
losses, damages, claims and liabilities, joint or several, including reasonable
fees and expenses of counsel and expenses of litigation (collectively, "COSTS")
arising out of or resulting from (i) this Agreement or the use, ownership or
operation of any Equipment by the respective Originator or the Servicer or any
Affiliate of either, (ii) any representation or warranty or covenant made by the
respective Originator in this Agreement being untrue or incorrect (subject to
the limitations described in the preamble to Article III of this Agreement), and
(iii) any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus or in any amendment thereto or the omission or
alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement was made in conformity with information
furnished to Trust Depositor by the Originators specifically for use therein;
PROVIDED, HOWEVER, that the Originators shall not be required to so indemnify
any such Indemnified Party for such Costs to the extent that such Cost shall be
due to or arise from the willful misfeasance, bad faith or gross negligence of
such Indemnified Party, or the failure of such Indemnified Party to comply with
any express undertaking, agreement or covenant made by such Indemnified Party in
a Transaction Document to which it is a party. Notwithstanding any other
provision of this Agreement, the obligation of the Originators under this
Section 12.01 shall not terminate upon a Servicer Transfer pursuant to Article
VIII of this Agreement and shall survive any termination of that agreement or
this Agreement.
80
<PAGE>
SECTION 12.02. LIABILITIES TO OBLIGORS. No obligation or liability to
any Obligor under any of the Contracts is intended to be assumed by the
Trustees, the Trust, the Noteholders or the Certificateholder under or as a
result of this Agreement and the transactions contemplated hereby.
SECTION 12.03. TAX INDEMNIFICATION.
(a) The Originators jointly and severally agree to pay, and to
indemnify, defend and hold harmless the Trust Depositor, the Trust, the
Trustees, the Noteholders or the Certificateholder from, any taxes which may
at any time be asserted with respect to, and as of the date of, the transfer
of the Contracts to Trust Depositor and the transfer by the Trust Depositor
of the Contracts to the Trust and the further pledge by the Trust to the
Indenture Trustee, including, without limitation, any sales, gross receipts,
general corporation, personal property, privilege or license taxes (but not
including any federal, state or other taxes arising out of the creation of
the Trust and the issuance of the Notes and Certificates) and costs, expenses
and reasonable counsel fees in defending against the same, whether arising by
reason of the acts to be performed by a Originator or the Servicer under this
Agreement or imposed against the Trust, a Noteholder, a Certificateholder or
otherwise. Notwithstanding any other provision of this Agreement, the
obligation of the Originators under this Section 12.03 shall not terminate
upon a Servicer Transfer pursuant to Article VIII of this Agreement and shall
survive any termination of this Agreement.
(b) The Originators jointly and severally agree to pay and to
indemnify, defend and hold harmless the Trust and the Trustees, on an
after-tax basis (as hereinafter defined), from any state or local personal
property taxes, gross rent taxes, leasehold taxes or similar taxes which may
at any time be asserted with respect to the ownership of the Contracts
(including security interests therein) and the receipt of rentals therefrom
by the Trust, and costs, expenses and reasonable counsel fees in defending
against the same, excluding, however, taxes based upon or measured by gross
or net income or receipts (other than taxes imposed specifically with respect
to rentals). As used in this Section, the term "after-tax basis" shall mean,
with respect to any payment to be received by an indemnified person, that the
amount to be paid by the Originators shall be equal to the sum of (i) the
amount to be received without regard to this sentence, plus (ii) any
additional amount that may be required so that after reduction by all taxes
imposed under any federal, state and local law, and taking into account any
current credits or deductions arising therefrom, resulting either from the
receipt of the payments described in both clauses (i) and (ii) hereof, such
sum shall be equal to the amount described in clause (i) above.
SECTION 12.04. ADJUSTMENTS. The Originators jointly and severally agree
that, with respect to each Contract (i) which provides for a Prepayment
Amount less than the amount calculated in accordance with the definition
thereof and (ii) as to which the related Vendor has not agreed to indemnify
the Trust Depositor or any assignee of the Trust Depositor in an amount at
least equal to the excess of the "Prepayment Amount" as calculated in
accordance with the definition thereof over the amount otherwise payable upon
prepayment of such Contract, the Originators shall
81
<PAGE>
indemnify the Trust Depositor or the Trust as assignee thereof, in an amount
equal to the amount specified in the foregoing clause (ii).
The Originators hereby further agree that if any real property
collateral securing any Contract described in Section 3.02(e) hereof becomes
the subject of any claims, proceedings, liens or encumbrances with respect to
any violation or claimed violation of any federal or state environmental laws
or regulations, such Contract shall for all purposes hereunder be, at and
following the time of discovery by any Originator, the Trust Depositor, the
Servicer or any Trustee of such fact, deemed an Ineligible Contract subject
to the same remedial and recourse provisions hereunder as other Contracts
determined to be Ineligible Contracts hereunder.
SECTION 12.05. OPERATION OF INDEMNITIES. Indemnification under this
Article XII shall include, without limitation, reasonable fees and expenses
of counsel and expenses of litigation. If a Originator has made any indemnity
payments to Trust Depositor or the Trustees pursuant to this Article XII and
Trust Depositor or the Trustees thereafter collects any of such amounts from
others, Trust Depositor or the Trustees will repay such amounts collected to
the respective Originator's, except that any payments received by Trust
Depositor or the Trustees from an insurance provider as a result of the
events under which the respective Originator's indemnity payments arose shall
be repaid prior to any repayment of the Originators' indemnity payment.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. AMENDMENT.
(a) This Agreement may be amended by the Originators, the Trust
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on
behalf of the Trust, collectively, without the consent of any
Securityholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions
herein, or to add any other provisions with respect to matters or questions
arising under this Agreement that shall not be inconsistent with the
provisions of this Agreement, PROVIDED, HOWEVER that any such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originators, the Trust Depositor, the Servicer, the Indenture Trustee and the
Owner Trustee on behalf of the Trust, with the consent of the Required
Holders, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying
in any manner the rights of the Noteholders or the Certificateholder;
PROVIDED, HOWEVER, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of (A) Collections of
payments on the Contracts or distributions that shall be required to be made
on any Note or Certificate (including by way of amendment of related
definitions), or (B) the manner in which the Reserve Fund is applied, or (ii)
change in any manner (including through amendment of related definitions),
the Holders which are required to consent to any such
82
<PAGE>
amendment, or (iii) make any Note or Certificate payable in money other than
Dollars, without the consent of the Holders of all Notes and Certificates of
the relevant affected Class then outstanding; PROVIDED, FURTHER, no such
modification may be made if it would result in the reduction or withdrawal of
the then current ratings of the Notes outstanding under the Indenture.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively. It shall not be necessary for
the consent of Noteholders and Certificateholder pursuant to Section 13.01(b)
to approve the particular form of any proposed amendment or consent, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization by
Noteholders and Certificateholder of the execution thereof shall be subject
to such reasonable requirements as the Owner Trustee or the Indenture Trustee
may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and 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. Such Trustee may, but shall not be
obligated to, enter into any such amendment which affects such Trustee's own
rights, duties or immunities under this Agreement or otherwise.
(f) Notwithstanding anything to the contrary in this Section 13.01,
the Trust Depositor or the Servicer, acting on behalf of the Trust Depositor,
may request each Rating Agency to approve a formula for determining the
Reserve Fund Amount that is different from the formula or result determined
from the current definition thereof contained herein so as to result in a
decrease in the amount of the Reserve Fund Amount or the manner by which such
Reserve Fund is funded. If each Rating Agency delivers to the Indenture
Trustee and Owner Trustee a written notice or letter satisfying the Rating
Agency Condition in connection with such change, then the Reserve Fund Amount
will be theretofore determined in accordance with such changed formula or
manner of funding, and an amendment to this Agreement effecting such change
may be executed without the consent of any Securityholders.
SECTION 13.02. PROTECTION OF TITLE TO TRUST.
(a) The Servicer 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 preserve,
maintain and protect the interest of the Trust, the Securityholders, the
Indenture Trustee and the Owner Trustee in the Contracts and in the proceeds
thereof. The Servicer 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.
83
<PAGE>
(b) Neither the Originator, the Trust Depositor 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 Section 4.02(a) seriously misleading within the meaning of
ss. 9-402(7) of thE UCC, unless it shall have given the Trust, the Owner
Trustee and the Indenture Trustee at least 60 days' prior written notice
thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) The Originators, the Trust Depositor and the Servicer shall give
the Trust, the Owner Trustee and the Indenture Trustee at least 60 days'
prior written notice of any relocation of the principal executive office of
any Originator, or the Trust Depositor or the Servicer if, as a result of
such relocation, the applicable provisions of the UCC would require filing of
any amendment of any previously filed financing or continuation statement or
of any new financing statement, and the Servicer shall promptly file or cause
to be filed any such amendment or new financing statement. The Servicer shall
at all times maintain each office from which it shall service Contracts, and
its principal executive office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Contract and the amounts from time to time deposited in or credited to
the Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Trust and the Indenture Trustee in such Contract and that such Contract is
owned by the Trust and has been pledged to the Indenture Trustee. Indication
of the Trust's ownership of and the Indenture Trustee's interest in a
Contract shall be deleted from or modified on the Servicer's computer systems
when, and only when, the related Contract shall have been paid in full or
repurchased or substituted for.
(f) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after the execution and delivery of
this Agreement and of each amendment hereto, an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Owner Trustee and the Indenture
Trustee and reciting the details of each 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 preserve
and protect such interest.
SECTION 13.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Illinois and the obligations,
rights, and remedies of the parties under the
84
<PAGE>
Agreement shall be determined in accordance with such laws, except that the
duties of the Owner Trustee shall be governed by the laws of the State of
Delaware.
SECTION 13.04. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt
to be effective the date of delivery indicated on the return receipt, or (b)
one Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or
(d) on the date transmitted by legible telecopier transmission with a
confirmation of receipt, in all cases addressed to the recipient as follows:
(i) If to the Servicer or Originator:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution and Investments
Fax No.: (312) 441-7170
(ii) If to the Trust Depositor:
Heller Funding Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: President
Fax No.: (312) 441-7170
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, National Association
Norwest Center
Sixth Street and Marquette Avenue
MAC N9311-161
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services/Asset Backed Administration
Fax No.: (612) 667-3539
Telephone No.: (612) 667-8058
85
<PAGE>
(iv) If to the Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-1576
(v) If to DCR:
Duff & Phelps Credit Rating Co.
55 East Monroe, Suite 3800
Chicago, IL 60603
Attention: Asset-Backed Monitoring Group (Equipment Leases)
Fax No.: (312) 368-2069
Telephone No.: (312) 368-3100
(vi) If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: ABS Monitoring Department
Fax No.: (212) 553-0344
(vii) If to Fitch:
Fitch IBCA, Inc.
One State Street Plaza
33rd Floor
New York, New York 10004
Attention: Asset-Backed Securities Group
Fax No.: (212) 514-9879
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 13.05. SEVERABILITY OF PROVISIONS. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such
86
<PAGE>
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Notes or Certificates or the rights of the
Holders thereof.
SECTION 13.06. THIRD PARTY BENEFICIARIES. Except as otherwise
specifically provided herein, the parties hereto hereby manifest their intent
that no third party shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party
beneficiaries of this Agreement.
SECTION 13.07. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
together constitute but one and the same instrument.
SECTION 13.08. 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 13.09. NO BANKRUPTCY PETITION; DISCLAIMER. (a) Each of the
Originators, the Indenture Trustee, the Servicer, the Owner Trustee and each
Holder (by acceptance of the applicable Securities) covenants and agrees
that, prior to the date that is one year and one day after the payment in
full of all amounts owing in respect of all outstanding Securities, it will
not institute against the Trust Depositor, or the Trust, or join any other
Person in instituting against the Trust Depositor or the Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United States
or any state of the United States. This Section 13.09 will survive the
termination of this Agreement.
(b) The Trust acknowledges and agrees that the Certificates represent
a beneficial interest in the Trust and Trust Assets only and the Securities
do not represent an interest in any assets (other than the Trust Assets) of
the Trust Depositor (including by virtue of any deficiency claim in respect
of obligations not paid or otherwise satisfied from the Trust Assets and
proceeds thereof). In furtherance of and not in derogation of the foregoing,
to the extent that the Trust Depositor enters into other securitization
transactions as contemplated in Section 6.07, the Trust acknowledges and
agrees that it shall have no right, title or interest in or to any assets (or
interests therein) other than the Trust Assets conveyed or purported to be
conveyed (whether by way of a sale, capital contribution or by the granting
of a Lien) by the Trust Depositor to any Person other than the Trust (the
"OTHER ASSETS").
To the extent that notwithstanding the agreements contained in this
Section, the Trust or any Securityholder, either (i) asserts an interest in
or claim to, or benefit from any Other Assets, whether asserted against or
through the Trust Depositor or any other Person owned by the Trust Depositor,
or (ii) is deemed to have any interest, claim or benefit in or from any Other
Assets, whether by operation of law, legal process, pursuant to applicable
provisions of Insolvency Laws or otherwise (including without limitation
pursuant to Section 1111(b) of the federal Bankruptcy Code, as amended) and
whether deemed asserted against or through the Trust Depositor or any
87
<PAGE>
other Person owned by the Trust Depositor, then the Trust and each
Securityholder by accepting a Note or Certificate further acknowledges and
agrees that any such interest, claim or benefit in or from the Other Assets
is and shall be expressly subordinated to the indefeasible payment in full of
all obligations and liabilities of the Trust Depositor which, under the terms
of the documents relating to the securitization of the Other Assets, are
entitled to be paid from, entitled to the benefits of , or otherwise secured
by such Other Assets (whether or not any such entitlement or security
interest is legally perfected or otherwise entitled to a priority of
distribution under applicable law, including Insolvency Laws, and whether
asserted against the Trust Depositor or any other Person owned by the Trust
Depositor) including, without limitation, the payment of post-petition
interest on such other obligations and liabilities. This subordination
agreement shall be deemed a subordination agreement within the meaning of
Section 510(a) of the Bankruptcy Code. Each Securityholder is deemed to have
acknowledged and agreed that no adequate remedy at law exists for a breach of
this Section 13.09 and that the terms and provisions of this Section 13.09
may be enforced by an action for specific performance.
(c) The provisions of this Section 13.09 shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination
of this Agreement.
SECTION 13.10. JURISDICTION. Any legal action or proceeding with respect
to this Agreement may be brought in the courts of the United States for the
Northern District of Illinois, and by execution and delivery of this
Agreement, each party hereto consents, for itself and in respect of its
property, to the non-exclusive jurisdiction of those courts. Each such party
irrevocably waives any objection, including any objection to the laying of
venue or based on the grounds of FORUM NON CONVENIENS, which it may now or
hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of this Agreement or any document related hereto.
SECTION 13.11. TAX CHARACTERIZATION. Notwithstanding the provisions of
Section 2.01 and Section 2.04 hereof, the Trust Depositor and Owner Trustee
agree that pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii), the
Trust is to be disregarded as a separate entity from the Trust Depositor for
federal and State of Illinois income tax purposes.
SECTION 13.12. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST. The
Originators shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
(c) Except in its capacity as Servicer as provided in this Agreement,
lend any money to the Trust.
88
<PAGE>
SECTION 13.13. MERGER OR CONSOLIDATION OF ORIGINATORS.
(a) Each of the Originators will keep in full force and effect its
existence, rights and franchise as a Delaware corporation, and each
Originator will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this
Agreement and of any of the Contracts and to perform its duties under this
Agreement.
(b) Any person into which an Originator may be merged or consolidated,
or any corporation resulting from such merger or consolidation to which such
Originator is a party, or any person succeeding to the business of such
Originator shall be the successor to the Originator hereunder, without
execution or filing of any paper or any further act on the part of any of the
parties hereto, notwithstanding anything herein to the contrary.
(c) Upon the merger or consolidation of the Originators as described
in this Section 13.13, the Originators shall provide the Rating Agencies
notice of such merger or consolidation within thirty (30) days after
completion of the same.
SECTION 13.14. ASSIGNMENT OR DELEGATION BY THE ORIGINATORS. Except as
specifically authorized hereunder, the Originators may not convey and assign
or delegate any of its rights or obligations hereunder absent the prior
written consent of the Trust Depositor and the Trustees, and any attempt to
do so without such consent shall be void.
SECTION 13.15. LIMITATION OF LIABILITY OF OWNER TRUSTEE. Notwithstanding
anything contained herein to the contrary, this agreement has been executed
by Wilmington Trust Company not in its individual capacity but solely in its
capacity as Owner Trustee of the Trust and in no event shall Wilmington Trust
Company in its individual capacity or any beneficial owner of the Trust have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Trust hereunder, as to all of which recourse shall
be had solely to the assets of the Trust. For all purposes of this Agreement,
in the performance of any duties or obligations of the Trust hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Articles Six, Seven and Eight of the Trust Agreement.
89
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST
1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By:
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
HELLER FUNDING CORPORATION, as Trust Depositor
By:
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
HELLER FINANCIAL, INC., as Servicer and as an Originator
By:
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
HELLER FINANCIAL LEASING, INC., as an Originator
By:
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
90
<PAGE>
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Indenture Trustee
By:
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
91
<PAGE>
EXHIBIT A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "SALE AND
SERVICING AGREEMENT") dated as of December [___], 1999 made by and between
the undersigned, as Trust Depositor ("TRUST DEPOSITOR"), Heller Financial,
Inc., as Servicer, Heller Financial and Heller Financial Leasing, Inc., as
Originators, Norwest Bank Minnesota, National Association, as Indenture
Trustee and the Heller Equipment Asset Receivables Trust 1999-2 (the
"TRUST"), as assignee thereunder, the undersigned does hereby sell, transfer,
convey and assign, set over and otherwise convey to the Trust (i) all the
right, title and interest of the Trust Depositor in and to the Initial
Contracts listed on the initial List of Contracts delivered on the Closing
Date (including, without limitation, all rights to receive Collections with
respect thereto on or after the Initial Cutoff Date, but excluding any rights
to receive payments which were collected pursuant thereto prior to the
Initial Cutoff Date), and (ii) all other Contract Assets relating to the
foregoing.
Capitalized terms used herein have the meaning given such terms in the
Sale and Servicing Agreement.
This Assignment is made pursuant to and in reliance upon the
representation and warranties on the part of the undersigned contained in
Article III of the Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this __th day of ______________, 1999.
HELLER FUNDING CORPORATION
By:
-------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
A-1
<PAGE>
EXHIBIT B
[Form of Closing Certificate of Trust Depositor]
HELLER FUNDING CORPORATION
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is [________] of Heller Funding
Corporation, a Delaware corporation (the "TRUST DEPOSITOR"), and that as such
is duly authorized to execute and deliver this certificate on behalf of the
Trust Depositor in connection with the Sale and Servicing Agreement (the
"AGREEMENT") dated as of December [___], 1999 (the "EFFECTIVE DATE") by and
among the Trust Depositor, Norwest Bank Minnesota, National Association (the
"INDENTURE TRUSTEE"), as Indenture Trustee, Heller Financial, Inc. ("HFI"),
as Servicer and as Originator, Heller Financial Leasing, Inc., as Originator
and the Heller Equipment Asset Receivables Trust 1999-2 ("TRUST") (all
capitalized terms used herein without definition having the respective
meanings set forth in the Agreement), and further certifies as follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of
the Certificate of Incorporation of the Trust Depositor, together with
all amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of the Trust Depositor since
_____, and no such amendment has been authorized by the Board of
Directors or shareholders of the Trust Depositor.
(3) Attached hereto as EXHIBIT II is a Certificate of the
Secretary of State of the State of Delaware dated December ___, 1999
stating that the Trust Depositor is duly incorporated under the laws of
the State of Delaware and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of
the Bylaws of the Trust Depositor, as amended, which were in full force
and effect on December ___, 1999, and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy of
resolutions adopted pursuant to the unanimous written consent of the
Board of Directors of the Trust Depositor relating to the execution,
delivery and performance of (among other things) the Agreement; the
Trust Agreement dated as of the Effective Date between the Trust
Depositor and Wilmington Trust Company (the "OWNER TRUSTEE"), as Owner
Trustee; the Administration Agreement dated as of the Effective Date
among the Trust Depositor, the Trust, the Indenture Trustee, and HFI, as
Administrator; the Placement Agency Agreement (as defined in the
Agreement); and the Underwriting Agreements (as defined in the
Agreement) (collectively, the "PROGRAM AGREEMENTS"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and
B-1
<PAGE>
effect and are the only resolutions relating to these matters which have
been adopted by the Board of Directors.
(6) No event with respect to the Trust Depositor has occurred
and is continuing which would constitute an Event of Default or an event
that, with notice or the passage of time or both, would become an Event
of Default as defined in the Agreement. To the best of my knowledge
after reasonable investigation, there has been no material adverse
change in the condition, financial or otherwise, or the earnings,
business affairs or business prospects of the Trust Depositor, whether
or not arising in the ordinary course of business since the respective
dates as of which information is given in the Prospectus and except as
set forth therein.
(7) All federal, state and local taxes of the Trust Depositor
due and owing as of the date hereof have been paid.
(8) All representations and warranties of the Trust Depositor
contained in the Program Agreements or any other related documents, or
in any document, certificate or financial or other statement delivered
in connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending or,
to our knowledge, threatened against the Trust Depositor before any
court, administrative agency or other tribunal (a) asserting the
invalidity of the Program Agreements; (b) seeking to prevent the
consummation of any of the transactions contemplated by the Program
Agreements; or (c) which is likely materially and adversely to affect
the Trust Depositor's performance of its obligations under, or the
validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by the Trust Depositor for the
Trust Depositor's consummation of the transactions contemplated by the
Program Agreements, except such as have been obtained or made and such
as may be required under the blue sky laws of any jurisdiction in
connection with the issuance and sale of the Securities.
(11) The Trust Depositor is not a party to any agreements or
instruments evidencing or governing indebtedness for money borrowed or
by which the Trust Depositor or its property is bound (other than the
Program Agreements). Neither the Originators' transfer and assignment of
the Contract Assets to the Trust Depositor, the Trust Depositor's
concurrent transfer and assignment of the Trust Assets to the Trust, nor
the concurrent transfer and assignment of the Collateral by the Trust to
the Indenture Trustee nor the issuance and sale of the Certificates and
the Notes, nor the execution and delivery of the Program Agreements, nor
the consummation of any other of the
B-2
<PAGE>
transactions contemplated therein, will violate or conflict with any
agreement or instrument to which the Trust Depositor is a party or by
which it is otherwise bound.
(12) In connection with the transfer of Contracts and related
collateral contemplated in the Agreement, (a) the Trust Depositor has
not made such transfer with actual intent to hinder, delay or defraud
any creditor of the Trust Depositor, and (b) the Trust Depositor has not
received less than a reasonably equivalent value in exchange for such
transfer, is not on the date thereof insolvent (nor will become
insolvent as a result thereof), is not engaged (or about to engage) in a
business or transaction for which it has unreasonably small capital, and
does not intend to incur or believe it will incur debts beyond its
ability to pay when matured.
(13) Each of the agreements and conditions of the Trust Depositor
to be performed on or before the Closing Date pursuant to the Program
Agreements have been performed in all material respects.
* * * *
B-3
<PAGE>
IN WITNESS WHEREOF, I have affixed my signature hereto this __th day of
[__________], 1999.
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
B-4
<PAGE>
EXHIBIT C-1
[Form of Closing Certificate of Servicer/Originator]
HELLER FINANCIAL, INC.
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is ___________ of Heller
Financial, Inc. ("HFI"), and that as such he/she is duly authorized to
execute and deliver this certificate on behalf of HFI, as Servicer, in
connection with the Sale and Servicing Agreement (the "AGREEMENT") dated as
of December [__], 1999 (the "EFFECTIVE DATE") by and among HFI, as Servicer,
HFI and Heller Financial Leasing, Inc., as Originators, Heller Funding
Corporation ("HFC"), Norwest Bank Minnesota, National Association as
Indenture Trustee, and Heller Equipment Asset Receivables Trust 1999-2
("TRUST"), and as an Originator (all capitalized terms used herein without
definition having the respective meanings set forth in the Agreement), and
further certifies as follows (it being understood that these certifications
are being relied upon by, among others, Winston & Strawn in connection with
its delivery of a legal opinion (the "OPINION") required in connection with
the subject transactions addressing, among other things, enforceability and
UCC perfection issues, and by the Underwriters in connection with their
undertakings in connection with the subject transactions):
(1) Attached hereto as EXHIBIT I is a true and correct copy of
the Certificate of Incorporation of HFI, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFI since [_______], 19__,
and no such amendment has been authorized by the Board of Directors or
shareholders of HFI.
(3) Attached hereto as EXHIBIT II is a Certificate of the
Secretary of State of the State of Delaware dated December ___, 1999
stating that HFI is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of
the Bylaws of HFI which were in full force and effect on [________],
19__ and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy of
resolutions adopted pursuant to a unanimous written consent of the Board
of Directors of HFI and relating to the authorization, execution,
delivery and performance of (among other things) the Agreement; the
Underwriting Agreements (as defined in the Agreement); the Placement
Agency Agreement (as defined in the Agreement); and the Administration
Agreement dated as of the Effective Date among HFI, HFC, the Trust and
Norwest Bank
C-1-1
<PAGE>
Minnesota, National Association as Indenture Trustee (the "INDENTURE
TRUSTEE") (the "ADMINISTRATION AGREEMENT"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to HFI has occurred and is continuing
which would constitute an Event of Default or Servicer Default or an
event that, with notice or the passage of time, would constitute an
Event of Default or Servicer Default as defined in the Sale and
Servicing Agreement. To the best of my knowledge after reasonable
investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of HFI, whether or not arising in the ordinary course
of business, since the respective dates as of which information is given
in the Prospectus and except as set forth therein.
(7) All federal, state and local taxes of HFI due and owing as
of the date hereof have been paid.
(8) All representations and warranties of HFI contained in the
Agreement, the Underwriting Agreements, the Placement Agency Agreement
and the Administration Agreement (collectively, the "PROGRAM
AGREEMENTS") or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(9) There is no action, investigation or proceeding pending or,
to my knowledge, threatened against HFI before any court, administrative
agency or other tribunal (a) asserting the invalidity of any Program
Agreement to which HFI is a party; or (b) which is likely materially and
adversely to affect HFI's performance of its obligations under, or the
validity or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by HFI for HFI's consummation
of the transactions contemplated by the Program Agreements, except such
as have been obtained or made and such as may be required under the blue
sky laws of any jurisdiction in connection with the issuance and sale of
the Notes or Certificates.
(11) Neither HFI's transfer and assignment of the Contract Assets
to HFC, HFC's concurrent transfer and assignment of the Trust Assets to
the Trust, nor the concurrent transfer and assignment by the Trust of
the Collateral to the Indenture Trustee, nor the issuance and sale of
the Notes or Certificates or the entering into of the Program
Agreements, nor the consummation of any other of the transactions
contemplated therein, will violate or conflict with any agreement or
instrument to which HFI is a party or by which it is otherwise bound.
C-1-2
<PAGE>
(12) In connection with the transfers of Contracts and related
assets contemplated in the Agreement, (a) HFI has not made such transfer
with actual intent to hinder, delay or defraud any creditor of HFI, and
(b) HFI has not received less than a reasonably equivalent value in
exchange for such transfer, is not on the date hereof insolvent (nor
will HFI become insolvent as a result thereof), is not engaged (or about
to engage) in a business or transaction for which it has unreasonably
small capital, and does not intend to incur or believe it will incur
debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of HFI to be performed
or satisfied on or before the Closing Date under the Program Agreements
has been performed or satisfied in all material respects.
(14) HFI has not executed for filing any UCC financing statements
listing the Contract Assets as collateral other than financing
statements relating to the transactions contemplated in the Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming HFI as
debtor, HFI has conducted a review of its internal records and
determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not relate
to, Contracts being conveyed by HFI and constituting part of the Initial
Contracts Pool, and HFI further represents that such agreements are
never to be conveyed as a Substitute Contract. In addition, HFI has
conducted a review of its internal records and determined that the
single Contract in the Initial Contracts Pool secured by a mortgage on
real property is not part of either of the fixed mortgage loan pools
described in the financing statements of record with respect to such
pools and referred to in the Opinion, and HFI further represents that no
agreement that is part of any such fixed mortgage loan pool will ever by
conveyed as a Substitute Contract.
* * * * * *
C-1-3
<PAGE>
IN WITNESS WHEREOF, I have affixed my signature hereto this [____]th day
of [_________], 1999.
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
C-1-4
<PAGE>
EXHIBIT C-2
[Form of Closing Certificate of HFLI as Originator]
HELLER FINANCIAL LEASING, INC.
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is ___________ of Heller Financial
Leasing, Inc. ("HFLI"), and that as such he/she is duly authorized to execute
and deliver this certificate on behalf of HFLI, as an Originator in
connection with the Sale and Servicing Agreement (the "AGREEMENT") dated as
of December [__], 1999 (the "EFFECTIVE DATE") by and among Heller Financial
Inc. ("HFI"), as Servicer, and HFI and HFLI, as Originators, Heller Funding
Corporation ("HFC"), Norwest Bank Minnesota, National Association as
Indenture Trustee, and Heller Equipment Asset Receivables Trust 1999-2
("TRUST") (all capitalized terms used herein without definition having the
respective meanings set forth in the Agreement), and further certifies as
follows (it being understood that these certifications are being relied upon
by, among others, Winston & Strawn in connection with its delivery of a legal
opinion (the "OPINION") required in connection with the subject transactions
addressing, among other things, enforceability and UCC perfection issues, and
by the Underwriters in connection with their undertakings in connection with
the subject transactions):
(1) Attached hereto as EXHIBIT I is a true and correct copy of
the Certificate of Incorporation of HFLI, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of HFLI since [_______],
19__, and no such amendment has been authorized by the Board of
Directors or shareholders of HFLI.
(3) Attached hereto as EXHIBIT II is a Certificate of the
Secretary of State of the State of Delaware dated ___________, 1999
stating that HFLI is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of
the Bylaws of HFLI which were in full force and effect on [________],
19__ and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of HFLI and relating to the authorization,
execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated therein. Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and
C-2-1
<PAGE>
effect and are the only resolutions relating to these matters which have
been adopted by the Board of Directors.
(6) To the best of my knowledge after reasonable investigation,
there has been no material adverse change in the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
HFLI, whether or not arising in the ordinary course of business, since
the respective dates as of which information is given in the Prospectus
and except as set forth therein.
(7) All federal, state and local taxes of HFLI due and owing as
of the date hereof have been paid.
(8) All representations and warranties of HFLI contained in the
Agreement or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(9) There is no action, investigation or proceeding pending or,
to my knowledge, threatened against HFLI before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which HFLI is a party; or (b) which is likely
materially and adversely to affect HFLI's performance of its obligations
under, or the validity or enforceability of, the Agreement.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by HFLI for HFLI's consummation
of the transactions contemplated by the Agreement, except such as have
been obtained or made and such as may be required under the blue sky
laws of any jurisdiction in connection with the issuance and sale of the
Notes or Certificates.
(11) Neither HFLI's transfer and assignment of the Contract
Assets to HFC, HFC's concurrent transfer and assignment of the Trust
Assets to the Trust, nor the concurrent transfer and assignment by the
Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or Certificates, nor the consummation of any other of
the transactions contemplated therein, will violate or conflict with any
agreement or instrument to which HFLI is a party or by which it is
otherwise bound.
(12) In connection with the transfers of Contracts and related
assets contemplated in the Agreement, (a) HFLI has not made such
transfer with actual intent to hinder, delay or defraud any creditor of
HFI, and (b) HFLI has not received less than a reasonably equivalent
value in exchange for such transfer, is not on the date hereof insolvent
(nor will HFLI become insolvent as a result thereof), is not engaged (or
about to engage) in a business or transaction for which it has
unreasonably small capital, and does not intend to incur or believe it
will incur debts beyond its ability to pay when matured.
C-2-2
<PAGE>
(13) Each of the agreements and conditions of HFLI to be
performed or satisfied on or before the Closing Date under the Agreement
has been performed or satisfied in all material respects.
(14) HFLI has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming HFLI
as debtor, HFLI has conducted a review of its internal records and
determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not relate
to, Contracts being conveyed by HFLI and constituting part of the
Initial Contracts Pool, and HFLI represents that such agreements are
never to be conveyed as a Substitute Contract.
* * * * * *
C-2-3
<PAGE>
IN WITNESS WHEREOF, I have affixed my signature hereto this [___]th day
of [________], 1999.
-------------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
C-2-4
<PAGE>
EXHIBIT D
[Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)]
D-1
<PAGE>
EXHIBIT E
[Form of Opinion of Counsel for Trust
Depositor Regarding the "TRUE SALE" Nature
of the Transaction]
E-1
<PAGE>
EXHIBIT F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
F-1
<PAGE>
EXHIBIT G
[Form of Certificate Regarding Repurchased Contracts]
Heller Financial, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he/she is a ____________________________
of Heller Financial, Inc., a Delaware corporation (the "SERVICER"), and that
as such he/she is duly authorized to execute and deliver this certificate on
behalf of the Servicer pursuant to Section 11.02 of the Sale and Servicing
Agreement (the "AGREEMENT") dated as of December [__], 1999 by and among
Heller Funding Corporation, as Trust Depositor, the Servicer, Heller
Financial, Inc. and Heller Financial Leasing, Inc., as Originators, Norwest
Bank Minnesota, National Association as Indenture Trustee, and Heller
Equipment Asset Receivables Trust 1999-2 (all capitalized terms used herein
without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased by
the Originator on the date hereof, or substituted for by the
Originator, pursuant to and in accordance with Section 11.01 of
the Agreement.
2. Upon deposit of the Transfer Deposit Amount for such Contracts (or
the effective conveyance of one or more Substitute Contracts
therefor), such Contracts may, pursuant to Section 11.02 of the
Agreement, be assigned by the Owner Trustee to the Originator.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day
of ______, ____.
Heller Financial, Inc.
By:
-------------------------------------
Printed Name:
-----------------------------
Title:
------------------------------------
G-1
<PAGE>
EXHIBIT H
[List of Contracts]
H-1
<PAGE>
EXHIBIT I
[Form of Monthly Report to Noteholders And Certificateholder]
[see attached]
I-1
<PAGE>
EXHIBIT J
[Reserved]
J-1
<PAGE>
EXHIBIT K
[Form of Contract Stamp]
This Contract/Note is subject to a security interest granted to Wilmington
Trust Company, as Owner Trustee for the Heller Equipment Asset Receivables
Trust 1999-2. UCC-1 Financing Statements covering this Contract/Note have
been filed with the Secretary of State of the State of Illinois. Such lien
will be released only in connection with appropriate filings in such offices.
Consequently, potential purchasers of this Contract/Note must refer to such
filings to determine whether such lien has been released.
K-1
<PAGE>
EXHIBIT L
[Form of Subsequent Transfer Agreement]
SUBSEQUENT TRANSFER AGREEMENT (the "AGREEMENT"), dated as of
[________], by and among Heller Equipment Asset Receivables Trust 1999-2 (the
"TRUST"), Heller Funding Corporation, a Delaware corporation (the "TRUST
DEPOSITOR"), Norwest Bank Minnesota, National Association, as Indenture Trustee
(the "INDENTURE TRUSTEE") and Heller Financial, Inc., a Delaware corporation, as
Servicer and as an Originator and Heller Financial Leasing, Inc. a Delaware
corporation, as an Originator, pursuant to the Sale and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust, the Trust Depositor, the Servicer, the Originators
and the Indenture Trustee, are parties to the Sale and Servicing Agreement,
dated as of December [___], 1999 (the "SALE AND SERVICING AGREEMENT");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Trust
Depositor wishes to sell the Substitute Contracts to the Trust, and the Trust
wishes to purchase the same, for the consideration described in the Sale and
Servicing Agreement; and
WHEREAS, the Trust Depositor has timely delivered an Addition Notice
related to such conveyance as required by Section 2.04(c) of the Sale and
Servicing Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"SUBSEQUENT CUTOFF DATE" shall mean, with respect to
the Substitute Contracts transferred hereby, [_____].
"SUBSTITUTE CONTRACTS" shall mean, for purposes of
this Agreement, the Substitute Contracts listed in the
Subsequent List of Contracts attached hereto as EXHIBIT A.
"SUBSEQUENT TRANSFER DATE" shall mean, with respect
to the Substitute Contracts transferred hereby, [______].
SECTION 2. SUBSEQUENT LIST OF CONTRACTS. The Subsequent List of
Contracts attached hereto as Exhibit A is an amendment to the initial List of
Contracts attached as EXHIBIT H to the Sale and Servicing Agreement, as
contemplated in the definition of List of Contracts set forth therein. The
Subsequent List of Contracts separately identifies the Substitute Contracts to
be transferred
L-1
<PAGE>
pursuant to this Agreement on the Subsequent Transfer Date, and also further
separately identifies the related Contract or Contracts with respect to which an
Addition Event or Substitution Event has occurred and which Contracts are being
deleted from the List of Contracts by virtue of the delivery of the Subsequent
List of Contracts.
SECTION 3. TRANSFER OF SUBSTITUTE CONTRACTS. Subject to and upon the
terms and conditions set forth in Section 2.04(c) of the Sale and Servicing
Agreement and this Agreement, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust:
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Contracts on and after the related Subsequent Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi) all rights (but not the obligations) of the Trust
Depositor under the Sale and Servicing Agreement related to such
Contracts (to the extent not already conveyed under Section 2.01(b) of
the Sale and Servicing Agreement), as well as all rights, but not the
obligations, of the Trust Depositor under the Subsequent Purchase
Agreement related to such Contracts; and
(vii) all income from and proceeds of the foregoing;
PROVIDED, that such Contract Assets shall in no case include any Residual
Investment.
It is the intention of the Trust Depositor and Owner Trustee that the transfer
contemplated by this Agreement shall constitute an absolute assignment and sale
of the Substitute Contracts from the Trust Depositor to the Trust, conveying
good title thereto free and clear of any Liens.
L-2
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE TRUST DEPOSITOR. (a)
The Trust Depositor hereby represents and warrants to the Trust that the
representations and warranties of the Trust Depositor set forth in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) The Trust Depositor hereby repeats and remakes with respect to the
Substitute Contracts as of the Subsequent Transfer Date the representations and
warranties set forth in Section 3.05 of the Sale and Servicing Agreement and
deemed to be made with respect to the Substitute Contracts thereunder.
(c) The Trust Depositor hereby represents and warrants that (a) the
ADCB of the Substitute Contracts listed on the Subsequent List of Contracts and
conveyed to the Trust Depositor pursuant to this Agreement is $___________ as of
the Subsequent Cutoff Date, and (b) the conditions set forth in Section 2.04(c)
of the Sale and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
SECTION 5. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
SECTION 6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
SECTION 7. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, 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 8. AUTHORIZATION OF TRUSTEE. By its execution hereof, the Trust
Depositor hereby authorizes and directs the Owner Trustee to execute and deliver
this Agreement on behalf of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
HELLER FUNDING CORPORATION
By:
-------------------------------------------
Printed Name:
Title:
L-3
<PAGE>
HELLER FINANCIAL, INC., as Servicer and as an
Originator
By:
-------------------------------------------
Printed Name:
Title:
HELLER FINANCIAL LEASING, INC., as an Originator
By:
-------------------------------------------
Printed Name:
Title:
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee on behalf of the Trust
By:
-------------------------------------------
Printed Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Indenture Trustee
By:
-------------------------------------------
Printed Name:
Title:
L-4
<PAGE>
Exhibit M
[Form of Subsequent Purchase Agreement]
SUBSEQUENT PURCHASE AGREEMENT (the "AGREEMENT"), dated as of [_____],
[____], by and among Heller Funding Corporation, a Delaware corporation (the
"TRUST DEPOSITOR"), Heller Financial, Inc., a Delaware corporation ("HFI" or an
"ORIGINATOR"), and Heller Financial Leasing, Inc., a Delaware corporation
("HFLI" or an "ORIGINATOR"), pursuant to the Sale and Servicing Agreement
referred to below.
WITNESSETH:
WHEREAS, the Trust Depositor and the Originators are parties to the
Sale and Servicing Agreement, dated as of December [___], 1999 (the "SALE AND
SERVICING AGREEMENT");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Originators
wish to sell the Substitute Contracts to the Trust Depositor, and the Trust
Depositor wishes to purchase the same, for the purchase price set forth in
SECTION 3 below; and
WHEREAS, the Trust Depositor has timely delivered an Addition Notice
related to such conveyance as required in the Sale and Servicing Agreement).
NOW, THEREFORE, the Originators jointly and severally, and the Trust
Depositor, hereby agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"SUBSEQUENT CUTOFF DATE" shall mean, with respect to
the Substitute Contracts transferred hereby, [________].
"SUBSTITUTE CONTRACTS" shall mean, for purposes of
this Agreement, the Substitute Contracts listed in the
Subsequent List of Contracts attached hereto as Exhibit A.
"SUBSEQUENT TRANSFER DATE" shall mean, with respect
to the Substitute Contracts transferred hereby, [________].
SECTION 2. SUBSEQUENT LIST OF CONTRACTS. The Subsequent List of
Contracts attached hereto as Exhibit A is an amendment to the initial List of
Contracts attached as EXHIBIT H to the Sale and Servicing Agreement, as
contemplated in the definition of List of Contracts set forth therein. The
Subsequent List of Contracts separately identifies (by attached schedule, or
marking or other effective identifying designation) the Substitute Contracts to
be transferred pursuant to this Agreement on the Subsequent Transfer Date, and
also further separately
M-1
<PAGE>
identifies (by attached schedule, or marking or other effective identifying
designation) the related Contract or Contracts with respect to which an Addition
Event or Substitution Event has occurred and which Contracts are being deleted
from the List of Contracts by virtue of the delivery of the Subsequent List of
Contracts.
SECTION 3. TRANSFER OF SUBSTITUTE CONTRACTS. Subject to and upon the
terms and conditions set forth in Section 2.04 of the Sale and Servicing
Agreement and this Agreement, the Originators hereby sell, transfer, assign, set
over and otherwise convey to Trust Depositor, in consideration of Trust
Depositor's (x) payment of $__________ as the purchase price therefor,
representing the prepayment proceeds received with respect to the related
Addition Event (if applicable) or (y) release and redelivery to the original
applicable Originator of the related Contract Assets with respect to which a
Substitution Event has occurred (if applicable),
(i) the Substitute Contracts identified in the related
Addition Notice, and all monies due or to become due in payment of such
Contracts on and after the related Subsequent Cutoff Dates, any
Prepayment Amounts, any payments in respect of a casualty or early
termination, and any Recoveries received with respect thereto, but
excluding any Scheduled Payments due prior to the related Cutoff Date
and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case
of any Vendor Loan, related Applicable Security, including all proceeds
from any sale or other disposition of such Equipment (but subject to
the exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with
respect to such Contracts or the Obligor thereunder under any Program
Agreements or Vendor Agreements with the related Originator and under
any guarantee or similar credit enhancement with respect to such
Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
and
(vi) all income from and proceeds of the foregoing;
PROVIDED, that such Contract Assets shall in no case include any Residual
Investment.
It is the intention of the Originators and the Trust Depositor that the transfer
contemplated by this Agreement shall constitute a sale of the Substitute
Contracts from the Originator to the Trust Depositor, conveying good title
thereto free and clear of any Liens, and that the Substitute Contracts shall not
be part of the applicable Originator's estate in the event of the filing of a
bankruptcy petition by or against a Originator under any bankruptcy or similar
law.
M-2
<PAGE>
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR. (a) Each
Originator hereby jointly and severally represents and warrants to the Trust
Depositor that the representations and warranties of Originator in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) Each Originator hereby jointly and severally repeats and remakes
with respect to the Substitute Contracts as of the Subsequent Transfer Date, the
representations and warranties set forth in the Sale and Servicing Agreement and
deemed to be made with respect to such Substitute Contracts thereunder.
(c) Originator hereby represents and warrants that (i) the ADCB of the
Substitute Contracts listed on the Subsequent List of Contracts and conveyed to
the Trust Depositor pursuant to this Agreement is $__________ as of the
Subsequent Cutoff Date, and (ii) the conditions set forth in Section 2.04(c) of
the Sale and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
SECTION 5. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
SECTION 6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
SECTION 7. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Illinois, 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.
[remainder of page intentionally blank]
M-3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
HELLER FUNDING CORPORATION
By:
---------------------------------
Printed Name:
Title:
HELLER FINANCIAL, INC.
By:
---------------------------------
Printed Name:
Title:
HELLER FINANCIAL LEASING, INC.
By:
---------------------------------
Printed Name:
Title:
M-4
<PAGE>
- ------------------------------------------------------------------------------
ADMINISTRATION AGREEMENT
among
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2,
as Issuer,
HELLER FINANCIAL, INC.
as Administrator
HELLER FUNDING CORPORATION,
as Trust Depositor,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
Dated as of December [ ], 1999
- ------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SECTION 1. DUTIES OF THE ADMINISTRATOR.......................................................................2
SECTION 2. RECORDS...........................................................................................6
SECTION 3. COMPENSATION......................................................................................7
SECTION 4. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER..............................................7
SECTION 5. INDEPENDENCE OF THE ADMINISTRATOR.................................................................7
SECTION 6. NO JOINT VENTURE..................................................................................7
SECTION 7. OTHER ACTIVITIES OF ADMINISTRATOR.................................................................7
SECTION 8. TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR.......................................7
SECTION 9. ACTION UPON TERMINATION, RESIGNATION OR REMOVAL...................................................8
SECTION 10. NOTICES...........................................................................................9
SECTION 11. AMENDMENTS.......................................................................................10
SECTION 12. SUCCESSORS AND ASSIGNS...........................................................................10
SECTION 13. GOVERNING LAW....................................................................................11
SECTION 14. HEADINGS.........................................................................................11
SECTION 15. COUNTERPARTS.....................................................................................11
SECTION 16. SEVERABILITY.....................................................................................11
SECTION 17. NOT APPLICABLE TO HELLER FINANCIAL IN OTHER CAPACITIES...........................................11
SECTION 18. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE...................................11
SECTION 19. THIRD-PARTY BENEFICIARY..........................................................................11
SECTION 20. SURVIVABILITY....................................................................................12
</TABLE>
i
<PAGE>
This Administration Agreement, dated as of Decemeber [ ], 1999, is
among Heller Equipment Asset Receivables Trust 1999-2 (the "ISSUER"), Heller
Financial, Inc. ( together with its successors and assigns "HELLER
FINANCIAL") in its capacity as administrator (the "ADMINISTRATOR"), Heller
Funding Corporation (together with its successors and assigns, the "TRUST
DEPOSITOR") and Norwest Bank Minnesota, National Association, not in its
individual capacity but solely as Indenture Trustee (together with its
successors and assigns, the "INDENTURE TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Issuer is issuing [ ]% Class A-1 Receivable-Backed
Notes, [ ]% Class A-2 Receivable-Backed Notes, [ ]% Class A-3
Receivable-Backed Notes, [ ]% Class A-4 Receivable-Backed Notes, [ ]% Class B
Receivable-Backed Notes, [ ]% Class C Receivable-Backed Notes, [ ]% Class D
Receivable-Backed Notes and [ ]% Class E Receivable-Backed Notes
(collectively, the "NOTES") pursuant to the Indenture, dated as of the date
hereof (the "INDENTURE"), between the Issuer and the Indenture Trustee
(capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Sale and Servicing Agreement as defined in
the Indenture);
WHEREAS, the Issuer has entered into certain agreements in
connection with the issuance of the Notes and of certain beneficial ownership
interests of the Issuer, including (i) a Sale and Servicing Agreement, dated
as of the date hereof (the "SALE AND SERVICING AGREEMENT"), among the Issuer,
the Indenture Trustee, the Trust Depositor, Heller Financial and Heller
Financial Leasing, as Originators and Heller Financial, as Servicer
thereunder, and (ii) the Indenture, and (iii) the other Transaction Documents;
WHEREAS, pursuant to the Transaction Documents, the Issuer and the
Owner Trustee are required to perform certain duties in connection with (i)
the Notes and the Collateral therefor pledged pursuant to the Indenture and
(ii) the beneficial ownership interests in the Issuer evidenced by the
Certificates (the registered holders of such interests being referred to
herein as the "OWNERS");
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 Transaction
Documents as the Issuer and the Owner Trustee may from time to time request;
and
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, THEREAFTER, 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 hereto agree as follows:
1
<PAGE>
Section 1. Duties of the Administrator.
(a) Duties with respect to the Indenture.
(i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee
under the Transaction Documents. In addition, the Administrator
shall consult with the Owner Trustee regarding the duties of the
Issuer or the Owner Trustee under the Indenture. The Administrator
shall monitor the performance of the Issuer and shall advise the
Owner Trustee when action is necessary to comply with the respective
duties of the Issuer and the Owner Trustee under the Indenture. The
Administrator shall prepare for execution by the Issuer or shall
cause the preparation by other appropriate persons of, all such
documents, reports, filings, instruments, certificates and opinions
that it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to the Indenture. In furtherance
of the foregoing, the Administrator shall take all appropriate
action that the Issuer or the Owner Trustee is required 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 preparation of or obtaining of the documents and
instruments required for execution and authentication of the Notes
and delivery of the same to the Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the
instruments, opinions and certificates and other documents
required for the release of Collateral (Section 2.12);
(E) the maintenance of an office in Wilmington, Delaware,
or the appointment of the Indenture Trustee as its agent therefor,
for registration of transfer or exchange of Notes (Section 3.02);
(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 the Indenture Trustee to deposit
monies with Paying Agents, if any, other than the Indenture Trustee
(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 Collateral (Section
3.04);
2
<PAGE>
(I) the preparation of all supplements and amendments
to the Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the
taking of such other action as is necessary or advisable to protect
the Collateral other than as prepared by the Servicer (Section 3.05);
(J) the delivery of certain statements as to compliance
with the Indenture (Sections 3.09);
(K) the identification to the Indenture Trustee in an
Officer's 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 each
Rating Agency of a Servicer Default under the Sale and Servicing
Agreement;
(M) the preparation and obtaining of documents and
instruments required for the release of the Issuer from its
obligations under the Indenture (Section 3.10(b));
(N) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of
an Officer's Certificate and the obtaining of the Opinion of Counsel
and the Independent Certificate relating thereto (Section 4.01);
(O) the compliance with any written directive of the
Indenture Trustee with respect to the sale of the Collateral in a
commercially reasonable manner if an Event of Default shall have
occurred and be continuing (Section 5.04);
(P) 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);
(Q) 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 the Indenture Trustee or any co-trustee or
separate trustee (Sections 6.08 and 6.10);
(R) 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);
(S) the opening of one or more accounts in the Indenture
Trustee's name, the preparation and delivery of Issuer Orders,
Officer's 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);
(T) the preparation of an Issuer Request and Officer's
Certificate and the obtaining of an Opinion of Counsel and
Independent Certificates, if necessary, for the release of the
Collateral (Sections 8.04 and 8.05);
3
<PAGE>
(U) 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);
(V) the execution and delivery of new Notes conforming to
any supplemental indenture (Section 9.06);
(W) the duty to notify Noteholders of redemption of the
Notes or to cause the Indenture Trustee to provide such notification
(Section 10.02);
(X) the preparation and delivery of all Officer's
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));
(Y) the preparation and delivery of Officer's Certificates
and the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section
11.01(b));
(Z) the notification of the Rating Agencies, upon the
failure of the Issuer, the Owner Trustee or the Indenture Trustee to
provide notification;
(AA) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate
payment and notice provisions (Section 11.06); and
(BB) the recording of the Indenture, if applicable (Section
11.14).
(ii) The Administrator will:
(A) except as otherwise expressly provided in the Indenture
or the Sale and Servicing Agreement, pay the Indenture Trustee's
fees and 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 counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or
bad faith;
(B) indemnify the Indenture Trustee and its agents for, and
hold them harmless against, any loss, 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
(C) indemnify the Owner Trustee and its agents for, and
hold them harmless against, any loss, 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
4
<PAGE>
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 (and including without limitation, an
indemnity as described above with respect to the Trust Depositor's
obligations in favor of the Owner Trustee under Section 8.02 of the Trust
Agreement).
(b) Additional Duties.
(i) In addition to the duties set forth in Section 1(a)(i),
the Administrator shall perform such calculations and shall prepare
or shall cause the preparation by other appropriate persons of, and
shall execute on behalf of the Issuer or the Owner Trustee, all such
documents, reports, filings, instruments, certificates and opinions
that the Issuer or the Owner Trustee are required to prepare, file
or deliver pursuant to the Transaction Documents or under Section
5.05 of the Trust Agreement, and at the request of the Owner Trustee
shall take all appropriate action that the Issuer or the Owner
Trustee are required to take pursuant to the Transaction Documents.
In furtherance thereof, the Owner Trustee shall, on behalf 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
Issuer for the purpose of executing on behalf of the Owner Trustee
and the Issuer all such documents, reports, filings, instruments,
certificates and opinions. Subject to Section 5, and in accordance
with the directions of the Issuer, the Administrator shall
administer, perform or supervise the performance of such other
activities in connection with the Collateral (including the
Transaction Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer and are
reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Administrator shall be
responsible for promptly notifying the Owner Trustee in the event
that any withholding tax is imposed on the Trust's payments (or
allocations of income) to an Owner as contemplated in Section
5.02(c) of the Trust Agreement. Any such notice shall specify the
amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Administrator shall be
responsible for performance of the duties of the Owner Trustee set
forth in Section 5.05(a), (b), (c) and (d), the penultimate sentence
of Section 5.05 and Section 5.06(a) of the Trust Agreement with
respect to, among other things, accounting and reports to Owners;
PROVIDED, HOWEVER, that the Owner Trustee shall retain
responsibility for the distribution of information forms necessary
to enable each Owner to prepare its federal and state income tax
returns.
(iv) The Administrator shall satisfy its obligations with
respect to clauses (ii) and (iii) above by retaining, at the expense
of the Trust payable by the Administrator, a firm of independent
public accountants (the "ACCOUNTANTS") acceptable to the Owner
Trustee, which shall perform the obligations of the Administrator
thereunder.
5
<PAGE>
(v) The Administrator shall perform the duties of the
Administrator specified in Section 10.02 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.
(vi) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Administrator may enter
into transactions 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.
(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 Contracts);
(C) the amendment, change or modification of any other
Transaction Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of successor Administrators or a
successor Servicer, or the consent to the assignment by the Note
Registrar, Paying Agent or Indenture Trustee of its obligations
under the Indenture; and
(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, (A) make any payments to the Noteholders under the Transaction
Documents, (B) sell the Collateral pursuant to clause (iv) of
Section 5.04 of the Indenture, (C) take any other action that the
Issuer directs the Administrator not to take on its behalf or (D)
take any other action which may be construed as having the effect of
varying the investment of the Holders.
Section 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
6
<PAGE>
accessible for inspection by the Issuer and the Owner Trustee at any time
during normal business hours.
Section 3. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to a monthly
fee which shall be solely an obligation of the Servicer as contemplated in
Section 5.19 of the Sale and Servicing Agreement and which shall be in an
amount as shall be agreeable to the Trust Depositor and the Administrator.
Section 4. Additional Information to be Furnished to the Issuer. The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
Section 5. Independence of the 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.
Section 6. No Joint Venture. Nothing contained in this Agreement (i)
shall 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) shall be construed to
impose any liability as such on any of them or (iii) shall 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.
Section 7. Other Activities of Administrator. Nothing herein shall
prevent the Administrator or its Affiliates from engaging in other business
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.
Section 8. Term of Agreement; Resignation and Removal of
Administrator. This Agreement shall continue in force until the termination
of the Issuer, upon which event this Agreement shall automatically terminate.
(a) Subject to Section 8(d) and Section 8(e), the Administrator
may resign its duties hereunder by providing the Issuer with
at least 60 days' prior written notice.
(b) Subject to Section 8(d) and Section 8(e), the Issuer may
remove the Administrator without cause by providing the
Administrator with at least 60 days' prior written notice.
(c) Subject to Section 8(d) and Section 8(e), 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:
7
<PAGE>
(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
clauses (ii) or (iii) above shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven days after the
occurrence of such event.
(d) 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.
(e) The appointment of any successor Administrator shall be
effective only after the satisfaction of the Rating Agency
Condition with respect to the proposed appointment.
(f) Subject to Section 8(d) and 8(e), the Administrator
acknowledges that upon the appointment of a Successor
Servicer pursuant to the Sale and Servicing Agreement, the
Administrator shall immediately resign (subject to Section
8(d) hereof).
Section 9. Action upon Termination, Resignation or Removal. Promptly
upon the effective date of termination of this Agreement pursuant to Section
8 or the resignation or removal of the Administrator pursuant to Section
8(a), (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 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
8
<PAGE>
the Administrator pursuant to Section (a), (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.
Section 10. Notices. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt
to be effective the date of delivery indicated on the return receipt, or (b)
one Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or
(d) on the date transmitted by legible telecopier transmission with a
confirmation of receipt, in all cases addressed to the recipient as follows:
(i) If to the Administrator:
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Attention: Asset Distribution & Investments
Fax No.: (312) 441-7170
Fax No.: (312) 441-6728
(ii) If to the Trust Depositor:
Heller Funding Corporation
500 West Monroe Street
Chicago, Illinois 60661
Attention: President
Fax No.: (312) 441-7170
(iii) If to the Indenture Trustee:
Norwest Bank Minnesota, National Association
Northwest Center
16th Floor
Sixth Street and Marquette Avenue
MAC N9311-161
Minneapolis, MN 55479-0070
Attention: Corporation Trust Services/Asset-Backed
Administration
Fax No.: (612) 667-3539
9
<PAGE>
(iv) If to the Issuer or the Owner Trustee:
Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 11. Amendments. This Agreement may be amended from time to
time by a written amendment duly executed and delivered by the parties
hereto, with the written consent of the Owner Trustee but without the consent
of the Noteholders and the Certificateholders, 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 Certificateholders; provided that such amendment will not, in the Opinion
of Counsel satisfactory to the Indenture Trustee, materially and adversely
affect the interest of any Noteholder or Certificateholder. This Agreement
may also be amended by the parties hereto with the written consent of the
Owner Trustee and the Required Holders for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of Noteholders or
the Certificateholders; 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 the Contracts or distributions that are
required to be made for the benefit of the Noteholders or Certificateholders
or (ii) reduce the aforesaid percentage of the holders of Notes and
Certificates which are required to consent to any such amendment, without the
consent of the Insurer and the holders of all outstanding Notes and
Certificates. Notwithstanding the foregoing, the Administrator may not amend
this Agreement without the permission of the Trust Depositor, which
permission shall not be unreasonably withheld.
Section 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, the Indenture Trustee 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 form and substance reasonably satisfactory to the Owner Trustee
and the Indenture Trustee, 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.
10
<PAGE>
Section 13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, 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 14. Headings. The section and subsection 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.
Section 15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same agreement.
Section 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.
Section 17. Not Applicable to Heller Financial in Other Capacities.
Nothing in this Agreement shall affect any obligation Heller Financial may
have in any other capacity.
Section 18. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary,
this instrument has been countersigned by Wilmington Trust
Company not in its individual capacity but solely in its
capacity as Owner Trustee of the Issuer and in no event shall
Wilmington Trust Company 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 Six, Seven and Eight of
the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Norwest Bank
Minnesota, National Association not in its individual
capacity but solely as Indenture Trustee and in no event
shall Norwest Bank Minnesota, National Association 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.
Section 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.
11
<PAGE>
Section 20. Survivability. The obligations of the Administrator
described in Section 1(a)(ii) hereof shall survive termination of this
Agreement.
[this portion of page intentionally left blank]
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
By: Wilmington Trust Company, not its individual
capacity but solely as Owner Trustee
By:
---------------------------------------------------
Printed Name:
--------------------------------
Title:
---------------------------------------
HELLER FUNDING CORPORATION, as Trust Depositor
By:
---------------------------------------------------
Printed Name:
--------------------------------
Title:
---------------------------------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not in
its individual capacity but solely as Indenture Trustee
By:
---------------------------------------------------
Printed Name:
--------------------------------
Title:
---------------------------------------
HELLER FINANCIAL, INC., as Administrator
By:
---------------------------------------------------
Printed Name:
--------------------------------
Title:
---------------------------------------
<PAGE>
EXHIBIT A
LIMITED POWER OF ATTORNEY
State of Illinois )
) SS.
County of Cook )
KNOW ALL PERSONS BY THESE PRESENTS, that Wilmington Trust Company, a
Delaware banking corporation (the "OWNER TRUSTEE"), by and through its duly
elected and authorized officer, ________________________, a
___________________, on behalf of Heller Equipment Asset Receivables Trust
1999-2 (the "TRUST") as Issuer under the Administration Agreement, dated as
of December [ ], 1999 (the "ADMINISTRATION AGREEMENT"), among the Trust,
Heller Funding Corporation, Norwest Bank Minnesota, National Association, as
Indenture Trustee, and Heller Financial, Inc., as Administrator, does hereby
nominate, constitute and appoint Heller Financial, Inc., a Delaware
corporation, each of its officers from time to time and each of its employees
authorized by it from time to time to act hereunder, jointly and each of them
severally, together or acting alone, its true and lawful attorney-in-fact,
for the Issuer in their name, place and stead, in the sole discretion of such
attorney-in-fact, to perform such calculations and prepare or cause the
preparation by other appropriate persons of, and to execute on behalf of the
Issuer, all such documents, reports, filings, instruments, certificates and
opinions that the Issuer or the Owner Trustee is required to prepare, file or
deliver pursuant to the Administration Agreement, and to take any and all
other action, as such attorney-in-fact may deem necessary or desirable in
accordance with the directions of the Owner Trustee and in connection with
its duties as Administrator or successor Administrator under the
Administration Agreement. Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the
Administration Agreement.
The Owner Trustee hereby ratifies and confirms the execution,
delivery and performance (whether before or after the date hereof) of the
above-mentioned documents, reports, filings, instruments, certificates and
opinions, by the attorney-in-fact and all that the attorney-in-fact shall
lawfully do or cause to be done by virtue hereof.
The Owner Trustee hereby agrees that no person or other entity
dealing with the attorney-in-fact shall be bound to inquire into such
attorney-in-fact's power and authority hereunder and any such person or
entity shall be fully protected in relying on such power of authority.
This Limited Power of Attorney may not be assigned without the prior
written consent of the Owner Trustee. It is effective immediately and will
continue until it is revoked.
This Limited Power of Attorney shall be governed and construed in
accordance with the laws of the State of Illinois without reference to
principles of conflicts of law.
A-1
<PAGE>
Executed as of this ____ day of [_____________], 1999.
Wilmington Trust Company,
not in its individual capacity but solely as
Owner Trustee,
By:
------------------------------------------
Printed Name:
--------------------------------
Title:
---------------------------------------
A-2
<PAGE>
CERTIFICATE OF ACKNOWLEDGMENT OF
NOTARY PUBLIC
State of Illinois )
) SS.
County of Cook )
On ___________, 1999 before me, _____________________________________
[insert date] [Here insert name and title of notary]
personally appeared ___________________________________________________________
- - personally known to me, or
- - proved to me on the basis of satisfactory evidence to be the person(s)
whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ties), and that by
his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature __________________________________________________ [SEAL]
A-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Heller Equipment Asset Receivables Trust 1999-2:
As independent public accountants, we hereby consent to the use of our report
dated December 3, 1999, on the balance sheet of Heller Equipment Asset
Receivables Trust 1999-2 as of December 1, 1999, included in this
registration statement and to all references to our Firm included in this
registration statement.
Chicago, Illinois
December 3, 1999
<PAGE>
Filing pursuant to Registration
Statement number 333-70507
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------
/ / CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(Address of principal executive offices) (Zip code)
STANLEY S. STROUP, GENERAL COUNSEL
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(Name, address and telephone number of Agent for Service)
--------------------------
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
(Exact name of obligor as specified in its charter)
DELAWARE 36-4165546
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
C/O HELLER FINANCIAL, INC.
500 WEST MONROE STREET
CHICAGO, ILLINOIS
312-441-7246
(Address of principal executive offices) (Zip code)
--------------------------
ASSET BACKED NOTES OF HELLER EQUIPMENT ASSET RECEIVABLES TRUST 1999-2
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1, pursuant to
General Instruction B, because the obligor is not in default as provided
under Item 13.
Item 15. FOREIGN TRUSTEE. Not applicable.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of this
Statement of Eligibility.
Exhibit 1. a. A copy of the Articles of Association of the
trustee now in effect.*
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to The
Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of
the Currency dated January 2, 1934, approving
the consolidation of The Northwestern National
Bank of Minneapolis and The Minnesota Loan and
Trust Company of Minneapolis, with the surviving
entity being titled Northwestern National Bank
and Trust Company of Minneapolis.*
c. A copy of the certificate of the Acting Comptroller
of the Currency dated January 12, 1943, as to
change of corporate title of Northwestern
National Bank and Trust Company of Minneapolis
to Northwestern National Bank of Minneapolis.*
d. A copy of the letter dated May 12, 1983 from the
Regional Counsel, Comptroller of the Currency,
acknowledging receipt of notice of name change
effective May 1, 1983 from Northwestern National
Bank of Minneapolis to Norwest Bank Minneapolis,
National Association.*
<PAGE>
e. A copy of the letter dated January 4, 1988 from
the Administrator of National Banks for the
Comptroller of the Currency certifying approval
of consolidation and merger effective January 1,
1988 of Norwest Bank Minneapolis, National
Association with various other banks under the
title of "Norwest Bank Minnesota, National
Association."*
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued January 2,
1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b)
of the Act.
Exhibit 7. Consolidated Reports of Condition and Income of the
trustee as of September 30, 1999.
Exhibit 8. Not applicable.
Exhibit 9. Not applicable.
* Incorporated by reference to the corresponding numbered exhibits to the
form T-1 filed as Exhibit 25 to registration statement number 33-66026.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 1st day of December, 1999.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Joe Nardi
------------------------
Joe Nardi
Corporate Trust Officer
<PAGE>
EXHIBIT 6
December 1, 1999
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Joe Nardi
---------------------
Joe Nardi
Corporate Trust Officer
<PAGE>
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 2002
Federal Financial Institutions Examination Council
Please refer to page i, 1
Table of Contents, for
the required disclosure
of estimated burden.
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices - FFIEC 031
REPORT AT THE CLOSE OF BUSINESS SEPTEMBER 30, 1999
This report is required by law: 12 U.S.C. 324 (State member banks); 12 U.S.C.
1817 (State nonmember banks); and 12 U.S.C. 161 (National banks).
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National Banks.
I, Constance R. Gahagan, Mgr. Reg. Reporting
-----------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that the Reports of Condition and Income
(including the supporting schedules) for this report date have been prepared
in conformance with the instruction issued by the appropriate Federal
regulatory authority and are true to the best of my knowledge and belief.
/s/ Constance R. Gahagan
- -------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
October 27, 1999
- -------------------------------------------------------------------------------
Date of Signature
(19990930)
(RCR1 9999)
This report form is to be filed by banks with branches and consolidated
subsidiaries in the U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
We, the undersigned directors (trustees), attest to the correctness of the
Report of Condition (including the supporting schedules) for this report date
and declare that it has been examined by us and to the best of our knowledge
and belief has been prepared in conformance with the instructions issued by
the appropriate Federal regulatory authority and is true and correct.
/s/ [ILLEGIBLE]
- ------------------------------------------------------------------------------
Director (Trustee)
/s/ [ILLEGIBLE]
- ------------------------------------------------------------------------------
Director (Trustee)
/s/ [ILLEGIBLE]
- ------------------------------------------------------------------------------
Director (Trustee)
- ------------------------------------------------------------------------------
SUBMISSION OF REPORTS
Each bank must prepare its Reports of Condition and Income either:
(a) in electronic form and then file the computer data file directly with
the banking agencies' collection agent, Electronic Data Systems
Corporation (EDS), by modem or computer diskette; or
(b) in hard-copy (paper) form and arrange for another party to convert the
paper report to electronic form. That party (if other than EDS) must
transmit the bank's computer data file to EDS.
For electronic filing assistance, contact EDS Call Report Services, 2150 N.
Prospect Ave., Milwaukee, WI 53202, telephone (800) 255-1571.
To fulfill the signature and attestation requirement for the Reports of
Condition and Income for this report date, attach this signature page (or a
photocopy or a computer-generated version of this page) to the hard-copy
record of the completed report that the bank places in its files.
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
FDIC Certificate Number: 05208 Norwest Bank Minnesota, N.A.
-------------------- ----------------------------------------------
(RCR1 9050) Legal Title of Bank (TEXT 9010)
http:// www.wellsfargo.com Minneapolis
------------------------------------ -----------------------------------------------
Primary Internet Web Address of Bank City (TEXT 9130)
(Home Page), if any (TEXT 4087)
(Example: www.examplebank.com) MN 55479
------------------------------------------------
State Abbrev. (TEXT 9200) Zip Code. (TEXT 9220)
</TABLE>
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SIGNATURE PAGE COVER REPORT OF CONDITION
<S> <C>
Report of Income Schedule RC - Balance Sheet............................RC-1,2
Schedule RI - Income Statement........................RI-1,2,3 Schedule RC-A - Cash and Balances Due
From Depository Institutions.............................RC-3
Schedule RI-A Changes in Equity Capital...................RI-4
Schedule RC-B - Securities...........................RC-3,4,5
Schedule RI-B - Charge-offs and Recoveries on
Loans and Leases and Changes in Allowance Schedule RC-C - Loans and Lease Financing
for Credit Losses......................................RI-4,5 Receivables:
Part I. Loans and Leases...........................RC-6,7,8
Schedule RI-D - Income from Part II. Loans to Small Businesses and
International Operations.................................RI-6 Small Farms (to be completed for the
June report only; not included in the
Schedule RI-E - Explanations............................RI-7,8 forms for the September and December reports).......RC-8a,8b
Schedule RC-D - Trading Assets and Liabilities
(to be completed only by selected banks)................RC-8
Disclosure of Estimated Burden
Schedule RC-E - Deposit Liabilities................RC-9,10,11
The estimated average burden associated with this information
collection is 34.1 hours per respondent and is estimated to Schedule RC-F - Other Assets............................RC-11
vary from 15 to 400 hours per response, depending
on individual circumstances. Burden estimates include the time Schedule RC-G - Other Liabilities.......................RC-11
for reviewing instructions, gathering and maintaining data in the
required form, and completing the information collection, but Schedule RC-H - Selected Balance Sheet Items
exclude the time for compiling and maintaining business records for Domestic Offices...................................RC-12
in the normal course of a respondent's activities. A Federal
agency may not conduct or sponsor, and an organization (or a Schedule RC-I - Selected Assets and Liabilities
person) is not required to respond to a collection of of IBFs................................................RC-13
information, unless it displays a currently valid OMB control
number. Comments concerning the accuracy of this burden Schedule RC-K - Quarterly Averages......................RC-13
estimate and suggestions for reducing this burden
should be directed to the Office of Information and Schedule RC-L - Off-Balance Sheet
Regulatory Affairs, Office of Management and Budget, Items............................................RC-14,15,16
Washington, D.C. 20503, and to one of the following:
Schedule RC-M - Memoranda............................RC-17,18
Secretary
Board of Governors of the Federal Reserve System Schedule RC-N - Past Due and Nonaccrual
Washington, D.C. 20551 Loans, Leases, and Other Assets.....................RC-19,20
Legislative and Regulatory Analysis Division Schedule RC-O - Other Data for Deposit
Office of the Comptroller of the Currency Insurance and FICO Assessments......................RC-21,22
Washington, D.C. 20219
Schedule RC-R - Regulatory Capital...................RC-23,24
Assistant Executive Secretary
Federal Deposit Insurance Corporation Optional Narrative Statement Concerning
Washington, D.C. 20429 the Amounts Reported in the Reports
of Condition and Income................................RC-25
SPECIAL REPORT (TO BE COMPLETED BY ALL BANKS)
</TABLE>
For information or assistance, National and State nonmember banks should
contact the FDIC's Reports Analysis Quality Control Section, 550 17th Street,
NW, Washington, D.C. 20429, toll free on (800) 688-FDIC(3342), Monday through
Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks
should contact their Federal Reserve District Bank.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-1
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
3
Transit Number: 91000019
Consolidated Report of Income
for the period January 1, 1999 - September 30, 1999
ALL REPORT OF INCOME SCHEDULES ARE TO BE REPORTED ON A CALENDAR YEAR-TO-DATE
BASIS IN THOUSANDS OF DOLLARS.
Schedule RI - Income Statement
<TABLE>
<CAPTION>
I480 < -
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income:
a. Interest and fee income on loans:
(1) In domestic offices: RIAD
----
(a) Loans secured by real estate________________________________________________4011.. 564,469 1.a.1a
(b) Loans to depository institutions____________________________________________4019.. 13,610 1.a.1b
(c) Loans to finance agricultural production and other loans to farmers_________4024.. 482 1.a.1c
(d) Commercial and industrial loans_____________________________________________4012.. 293,123 1.a.1d
(e) Acceptances of other banks__________________________________________________4026.. 127 1.a.1e
(f) Loans to individuals for household, family, and other personal expenditures:
(1) Credit cards and related plans__________________________________________4054.. 17,011 1.a.1f1
(2) Other___________________________________________________________________4055.. 66,787 1.a.1f2
(g) Loans to foreign governments and official institutions______________________4056.. 0 1.a.1g
(h) Obligations (other than securities and leases) of states and political
subdivisions in the U.S.:
(1) Taxable obligations_____________________________________________________4503.. 2,201 1.a.1h1
(2) Tax-exempt obligations__________________________________________________4504.. 582 1.a.1h2
(i) All other loans in domestic offices_________________________________________4058.. 31 1.a.1i
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs___________________4059.. 3,579 1.a.2
b. Income from lease financing receivables:
(1) Taxable leases__________________________________________________________________4505.. 60,495 1.b.1
(2) Tax-exempt leases_______________________________________________________________4307.. 0 1.b.2
c. Interest income on balances due from depository institutions:(1)
(1) In domestic offices_____________________________________________________________4105.. 423 1.c.1
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs___________________4106.. 1,980 1.c.2
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government agency obligations (INCLUDING
MORTGAGE-BACKED SECURITIES ISSUED OR GUARANTEED BY FNMA, FHLMC OR GNMA)_________4027.. 75,104 1.d.1
(2) Securities issued by states and political subdivisions in the U.S:
(a) Taxable securities__________________________________________________________4506.. 119 1.d.2a
(b) Tax-exempt securities_______________________________________________________4507.. 7,073 1.d.2b
(3) Other domestic debt securities (INCLUDING MORTGAGE-BACKED SECURITIES NOT
ISSUED OR GUARANTEED BY FNMA, FHLMC OR GNMA)____________________________________3657.. 7,777 1.d.3
(4) Foreign debt securities_________________________________________________________3658.. 0 1.d.4
(5) Equity securities (including investments in mutual funds)_______________________3659.. 10,580 1.d.5
e. Interest income from trading assets_________________________________________________4069.. 340 1.e
</TABLE>
- ---------------------
(1) Includes interest income on time certificates of deposit not held for
trading.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-2
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
4
Transit Number: 91000019
Schedule RI - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income (continued) RIAD
f. Interest income on federal funds sold and securities ---- Year-to-date
purchased under agreements to resell______________________4020.... 324,124 .......................... 1.f
g. Total interest income (sum of items 1.a through 1.f)______4107.... 1,450,017 .......................... 1.g
2. Interest expense:
a. Interest on deposits:
(1) Interest on deposits in domestic offices:
(a) Transaction accounts (NOW accounts, ATS accounts,
and telephone and preauthorized transfer
accounts)_________________________________________4508.... 3,727 .......................... 2.a.1a
(b) Nontransaction accounts:
(1) Money market deposit accounts (MMDAs)_________4509.... 21,485 .......................... 2.a.1b1
(2) Other savings deposits________________________4511.... 31,155 .......................... 2.a.1b2
(3) Time deposits of $100,000 or more_____________A517.... 5,867 .......................... 2.a.1b3
(4) Time deposits of less than $100,000___________A518.... 54,434 .......................... 2.a.1b4
(2) Interest on deposits in foreign offices, Edge and
Agreement subsidiaries, and IBFs______________________4172.... 219,985 .......................... 2.a.2
b. Expense of federal funds purchased and securities sold
under agreements to repurchase____________________________4180.... 355,324 .......................... 2.b
c. Interest on demand notes issued to the U.S. Treasury,
trading liabilities, and other borrowed money_____________4185.... 41,905 .......................... 2.c
d. Not applicable.
e. Interest on subordinated notes and debentures_____________4200.... 4,339 .......................... 2.e
f. Total interest expense (sum of items 2.a through 2.e)_____4073.... 738,221 .......................... 2.f
3. Net interest income (item 1.g minus 2.f)_____________________4074................... 711,796 3.
4. Provisions:
a. Provision for credit losses_______________________________4230................... 21,446 4.a
b. Provision for allocated transfer risk_____________________4243................... 0 4.b
5. Noninterest income:
a. Income from fiduciary activities__________________________4070.... 241,011 .......................... 5.a
b. Service charges on deposit accounts in domestic offices___4080.... 78,947 .......................... 5.b
c. Trading revenue (must equal Schedule RI, sum of
Memorandum items 8.a through 8.d__________________________A220.... 18,408 .......................... 5.c
d. Not applicable
e. Not applicable
f. Other noninterest income:
(1) Other fee income______________________________________5407.... 102,817 .......................... 5.f.1
(2) All other noninterest income *________________________5408.... 87,384 .......................... 5.f.2
g. Total noninterest income (sum of items 5.a through 5.f)___4079................... 528,567 5.g
6. a. Realized gains (losses) on held-to-maturity securities____3521................... 0 6.a
b. Realized gains (losses) on available-for-sale securities__3196................... 3,313 6.b
7. Noninterest expense:
a. Salaries and employee benefits____________________________4135.... 276,887 .......................... 7.a
b. Expenses of premises and fixed assets (net of rental
income) (excluding salaries and employee benefits and
mortgage interest)________________________________________4217.... 62,918 .......................... 7.b
c. Other noninterest expense *_______________________________4092.... 310,365 .......................... 7.c
d. Total noninterest expense (sum of items 7.a through 7.c)__4093................... 650,170 7.d
8. Income (loss) before income taxes and extraordinary items
and other adjustments (item 3 plus or minus items 4.a, 4.b,
5.g, 6.a, 6.b, and 7.d)______________________________________4301................... 572,060 8.
9. Applicable income taxes (on item 8)__________________________4302................... 207,735 9.
10.Income (loss) before extraordinary items and other
adjustments (item 8 minus 9)_________________________________4300................... 364,325 10.
11.Extraordinary items and other adjustments, net of income
taxes *______________________________________________________4320................... 0 11.
12.Net income (loss) (sum of items 10 and 11)___________________4340................... 364,325 12.
</TABLE>
- ---------
Describe on Schedule RI-E - Explanations.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-3
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
5
Transit Number: 91000019
Schedule RI - Continued
Memoranda
<TABLE>
<CAPTION>
I481 < -
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, RIAD
loans, and leases acquired after August 7, 1986, that is ---- Year-to-date
not deductible for federal income tax purposes__________ 4513.... 40 M.1
2. Income from the sale and servicing of mutual funds and
annuities in domestic offices (included in Schedule RI,
item 8)________________________________________________ 8431.... 1,688 M.2
3. Not applicable
4. Not applicable
Number
5. Number of full-time equivalent employees at end of ------
current period (round to nearest whole number)_________ 4150.... 5,332 M.5
6. Not applicable
7. If the reporting bank has restated its balance sheet as CCYY MM DD
a result of applying push down accounting this calendar
year, report the date of the bank's acquisition (1)____ 9106.... N/A M.7
8. Trading revenue (from cash instruments and off-balance
sheet derivative instruments) (Sum of Memorandum items RIAD
8.a through 8.d must equal Schedule RI, item 5.c): ---- Year-to-date
a. Interest rate exposures_____________________________ 8757.... 17,720 M.8.a
b. Foreign exchange exposures__________________________ 8758.... 15,142 M.8.b
c. Equity security and index exposures_________________ 8759.... 0 M.8.c
d. Commodity and other exposures_______________________ 8760.... ( 14,454) M.8.d
9. Impact on income of off-balance sheet derivatives held
for purposes other than trading:
a. Net increase (decrease) to interest income__________ 8761.... ( 1,470) M.9.a
b. Net (increase) decrease to interest expense_________ 8762.... 14,073 M.9.b
c. Other (noninterest) allocations_____________________ 8763.... 2,321 M.9.c
10.Credit losses on off-balance sheet derivatives (see
instructions)__________________________________________ A251.... 0 M.10
11.Does the reporting bank have a Subchapter S election
in effect for federal income tax purposes for the YES NO
current tax year?______________________________________ A530.... NO M.11
12.Deferred portion of total applicable income taxes
included in Schedule RI, items 9 and 11 (to be reported
with the December Report of Income_____________________ 4772.... 0 M.12
</TABLE>
- ---------
1) For example, a bank acquired on June 1, 1997 would report 19970601
Describe on Schedule RI-E - Explanations.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-4
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
6
Transit Number: 91000019
Schedule RI-A - Changes in Equity Capital
Indicate decreases and losses in parentheses.
<TABLE>
<CAPTION>
I483 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, Reports of RIAD
----
condition and Income __________________________________________________ 3215.. 1,820,815 1.
2. Equity capital adjustments from amended Reports of Income, net * ______ 3216.. 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) __ 3217.. 1,820,815 3.
4. net income (loss) (must equal Schedule R1, item 12) ___________________ 4340.. 364,325 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net_____ 4346.. 0 5.
6. Changes incident to business combinations, net ________________________ 4356.. 138,511 6.
7. LESS: Cash dividends declared on preferred stock ______________________ 4470.. 0 7.
8. LESS: Cash dividends declared on common stock _________________________ 4460.. 200,000 8.
9. Cumulative effect of changes in accounting principles from prior
years * (see instructions for this schedule) __________________________ 4411.. 0 9.
10. Corrections of material accounting errors from prior years *(see
instructions for this schedule) _______________________________________ 4412.. 0 10.
11. a. Change in net unrealized holding gains (loses) on available-for-sale
securities _________________________________________________________ 8433.. (62,926) 11.a.
b. Change in accumulated net gains (losses) on cash flow hedges _______ 4574.. 0 11.b
12. Foreign currency translation adjustments ______________________________ 4414.. 32 12.
13. Other transactions with parent holding company * (not included in
items 5, 7, or 8 above) _______________________________________________ 4415.. 77,029 13.
14. Total equity capital end of current period (sum of items 3 through 13)
(must equal Schedule RC, item 28) _____________________________________ 3210.. 2,137,786 14.
</TABLE>
- -------------
* Describe on Schedule RI-E - Explanations.
Schedule RI-B - Charge-offs and Recoveries on Loans and Leases and Changes in
Allowance for Credit Losses
Part I. Charge-offs and Recoveries on Loans and Leases and Changes in Allowance
for Credit Lossess
Part I excludes charge-offs and recoveries through the allocated transfer risk
reserve.
<TABLE>
<CAPTION>
I486 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
-----------calendar year-to-date---------
(Column A) (Column 8)
Charge-offs Recoveries
----------------- ----------------
<S> <C> <C> <C> <C> <C>
1.Loans secured by real estate: RIAD RIAD
---- ----
a. To U.S. addresses (domicile) ________________________________ 4651.. 1,109 4661.. 367 1.a
b. To non-U.S. addressees (domicile) ___________________________ 4652.. 0 4662.. 0 1.b
2.Loans to depository institutions and acceptances of
other banks:
a. To U.S. banks and other U.S. depository institutions ________ 4653.. 0 4663.. 0 2.a
b. To foreign banks ____________________________________________ 4654.. 0 4664.. 0 2.b
3.Loans to finance agricultural production and other Loans
to farmers _____________________________________________________ 4655.. 6 4665.. 9 3.
4.Commercial and industrial loans:
a. To U.S. addressees (domicile) _______________________________ 4645.. 10,423 4617.. 1,182 4.a
b. To non-U.S. addressees (domicile)____________________________ 4646.. 1,229 4618.. 440 4.b
5.Loans to individuals for household, family, and other
personal expenditures:
a. Credit cards and related plans ______________________________ 4656.. 2,729 4666.. 383 5.a
b. Other (includes single payment, installment, and
all student loans) _____________________________________________ 4657.. 12,986 4667.. 2,226 5.b
6.Loans to foreign governments and official institutions _________ 4643.. 0 4627.. 0 6.
7.All other loans ________________________________________________ 4644.. 1,063 4628.. 66 7.
8.Lease financing receivables:
a. Of U.S. addressees (domicile) _______________________________ 4658.. 0 4668.. 0 8.a
b. Of non-U.S. addresses (domicile) ____________________________ 4659.. 0 4669.. 0 8.b
9.Total (sum of items 1 through 8) _______________________________ 4635.. 29,545 4605.. 4,673 9.
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-5
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
7
Transit Number: 91000019
Schedule RI-B - Continued
Part I. Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------
-------calendar year-to-date---------
(Column A) (Column B)
Charge-offs Recoveries
---------------- ------------------
<S> <C> <C> <C> <C>
3. Not applicable.
4. Loans to finance commercial real estate, construction, RIAD RIAD
---- ----
and land development activities (not secured by real
estate) included in Schedule R1-B, part I, items 4
and 7, above ________________________________________ 5409.. 0 5410.. 0 m.4
5. Loans secured by real estate in domestic offices
(included in Schedule RI-B, part I, item 1, above):
a. Construction and land development ________________ 3582.. 0 3583.. 0 m.5.a
b. Secured by farmland ______________________________ 3584.. 0 3585.. 0 m.5.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4
family residential properties and extended
under lines of credit ________________________ 5411.. 333 5412.. 1 m.5.c1
(2) All other loans secured by 1-4 family
residential properties _______________________ 5413.. 693 5414.. 266 m.5.c2
d. Secured by multifamily (5 or more) residential
properties _______________________________________ 3588.. 0 3589.. 0 m.5.d
e. Secured by nonfarm nonresidential properties _____ 3590.. 83 3591.. 100 m.5.e
</TABLE>
Part II. Changes in Allowance for Credit Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Balance originally reported in the December 31, 1998, Reports of RIAD
----
Condition and Income _____________________________________________ 3124.. 209,787 1.
2. Recoveries (must equal or exceed part 1, item 9, column B above) __ 2419.. 4,673 2.
3. LESS: Charge-offs (must equal or exceed part 1, item 9, column
A above) _________________________________________________________ 2432.. 29,545 3.
4. Provision for credit losses (must equal Schedule RI, item 4.a) ____ 4230.. 21,446 4.
5. Adjustments * (see instructions for this schedule) ________________ 4815.. 5,531 5.
6.Balance end of current period (sum of item 1 through 5) (must equal
or exceed Schedule RC, item 4.b) _________________________________ 4512.. 211,892 6.
</TABLE>
- ----------
Describe on Schedule RI-E - Explanations.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-6
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
8
Transit Number: 91000019
Schedule RI-D - Income from International Operations
FOR ALL BANKS WITH FOREIGN OFFICES, EDGE OR AGREEMENT SUBSIDIARIES, OR IBFS
WHERE INTERNATIONAL OPERATIONS ACCOUNT FOR MORE THAN 10 PERCENT OF TOTAL
REVENUES, TOTAL ASSETS, OR NET INCOME.
Part I. Estimated Income from International Operations
<TABLE>
<CAPTION>
I492 < -
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement
subsidiaries, and IBFs: RIAD Year-to-date
----
a. Interest income booked_________________________________________________________ 4837.. N/A 1.a
b. Interest expense booked________________________________________________________ 4838.. N/A 1.b
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries,
and IBFs (item 1.a minus 1.b)__________________________________________________ 4839.. N/A 1.c
2. Adjustments for booking location of international operations:
a. Net interest income attributable to international operations booked at domestic
offices________________________________________________________________________ 4840.. N/A 2.a
b. Net interest income attributable to domestic business booked at foreign
offices________________________________________________________________________ 4841.. N/A 2.b
c. Net booking location adjustment (item 2.a minus 2.b)___________________________ 4842.. N/A 2.c
3. Noninterest income and expense attributable to international operations:
a. Noninterest income attributable to international operations____________________ 4097.. N/A 3.a
b. Provision for loan and lease losses attributable to international operations___ 4235.. N/A 3.b
c. Other noninterest expense attributable to international operations_____________ 4239.. N/A 3.c
d. Net noninterest income (expense) attributable to international operations
(item 3.a minus 3.b and 3.c)___________________________________________________ 4843.. N/A 3.d
4. Estimated pretax income attributable to international operations before capital
allocation adjustment (sum of items 1.c, 2.c, and 3.d)____________________________ 4844.. N/A 4.
5. Adjustment to pretax income for internal allocations to international operations
to reflect the effects of equity capital on overall bank funding costs____________ 4845.. N/A 5.
6. Estimated pretax income attributable to international operations after capital
allocation adjustment (sum of items 4 and 5)______________________________________ 4846.. N/A 6.
7. Income taxes attributable to income from international operations as estimated in
item 6____________________________________________________________________________ 4797.. N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7)____ 4341.. N/A 8.
</TABLE>
<TABLE>
<CAPTION>
Memoranda Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intracompany interest income included in item 1.a above___________________________ 4847.. N/A M.1
2. Intracompany interest expense included in item 1.b above__________________________ 4848.. N/A M.2
</TABLE>
PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS
REQUIRED BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF THE U.S.
INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND PRODUCT ACCOUNTS
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD Year-to-date
----
1.Interest income booked at IBFs_____________________________________________________ 4849.. N/A 1.
2.Interest expense booked at IBFs____________________________________________________ 4850.. N/A 2.
3.Noninterest income attributable to international operations booked at domestic
offices (excluding IBFs):
a. Gains (losses) and extraordinary items____________________________________________ 5491.. N/A 3.a
b. Fees and other noninterest income_________________________________________________ 5492.. N/A 3.b
4.Provision for loan and lease losses attributable to international operations booked
at domestic offices (excluding IBFs)_________________________________________________ 4852.. N/A 4.
5.Other noninterest expense attributable to international operations booked at
domestic offices (excluding IBFs)____________________________________________________ 4853.. N/A 5.
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-7
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
9
Transit Number: 91000019
Schedule RI-E - Explanations
SCHEDULE RI-E IS TO BE COMPLETED EACH QUARTER ON A CALENDAR
YEAR-TO-DATE BASIS.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other
noninterest income and other noninterest expense in Schedule RI. (See
instructions for details.)
<TABLE>
<CAPTION>
I495 < -
Dollars Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2))
Report amounts that exceed 10% of Schedule RI, item 5.f.(2): RIAD Year-to-date
----
a. Net gains (losses) on other real estate owned__________________________________ 5415.. N/A 1.a
b. Net gains (losses) on sales of loans___________________________________________ 5416.. N/A 1.b
c. Net gains (losses) on sales of premises and fixed assets_______________________ 5417.. N/A 1.c
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 5.f.(2):
TEXT RIAD
---- ----
d. 4461: Gain on sale of loan servicing rights 4461.. 48,626 1.d
e. 4462: Processing fees 4462.. 10,932 1.e
f. 4463: _________________________________________________________________________ 4463.. N/A 1.f
2. Other noninterest expense (from Schedule RI, item 7.c):
a. Amortization expense of intangible assets______________________________________ 4531.. 3,191 2.a
Report amounts that exceed 10% of Schedule RI, item 7.c:
b. Net (gains) losses on other real estate owned__________________________________ 5418.. N/A 2.b
c. Net (gains) losses on sales of loans___________________________________________ 5419.. N/A 2.c
d. Net (gains) losses on sales of premises and fixed assets_______________________ 5420.. N/A 2.d
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 7.c:
TEXT RIAD
---- ----
e. 4464: Processing fees 4464.. 115,007 2.e
f. 4467: _________________________________________________________________________ 4467.. N/A 2.f
g. 4468: _________________________________________________________________________ 4468.. N/A 2.g
3. Extraordinary items and other adjustments and applicable income tax effect
(from Schedule RI, item 11) (itemize and describe all extraordinary items and
other adjustments):
TEXT RIAD
---- ----
a. (1) 6373: Effect of adopting FAS 133, "Accounting
for Derivative Instruments and
Hedging Activities"________________________ . . . . . . . 6373.. 0 3.a.1
(2) Applicable income tax effect_____________________4486.. 0 . . . . . . . 3.a.2
b. (1) 4487: _________________________________________ . . . . . . . 4487.. 0 3.b.1
(2) Applicable income tax effect_____________________4488.. 0 . . . . . . . 3.b.2
c. (1) 4489: _________________________________________ . . . . . . . 4489.. 0 3.c.1
(2) Applicable income tax effect_____________________4491.. 0 . . . . . . . 3.c.2
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A,
Item 2) (itemize and describe all adjustments):
TEXT RIAD
---- ----
a. 4492: _________________________________________________________________________ 4492.. N/A 4.a
b. 4493: _________________________________________________________________________ 4493.. N/A 4.b
5. Cumulative effect of changes in accounting principles from prior years (from
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles):
TEXT RIAD
---- ----
a. 4494: _________________________________________________________________________ 4494.. 0 5.a
b. 4495: _________________________________________________________________________ 4495.. N/A 5.b
6. Corrections of material accounting errors from prior years (from Schedule RI-A,
item 10) (itemize and describe all corrections):
TEXT RIAD
---- ----
a. 4496: _________________________________________________________________________ 4496.. N/A 6.a
b. 4497: _________________________________________________________________________ 4497.. N/A 6.b
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
10
Transit Number: 91000019
Schedule RI-E - Continued
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------
7.- Other transactions with parent holding company (from Schedule RI-A, item
13) (itemize and describe all such transactions):
<TABLE>
<CAPTION>
TEXT RIAD Year-to-date
---- ----
<S> <C> <C> <C> <C> <C>
a. 4498: Capital infusion 4498. . 77,029 7.a
b. 4499: ____________________________ 4499. . N/A 7.b
</TABLE>
8.- Adjustments to allowance for credit losses (from Schedule RI-B, part II,
item 5) (itemize and describe all adjustments):
<TABLE>
<CAPTION>
TEXT RIAD Year-to-date
---- ----
<S> <C> <C> <C> <C> <C>
a. 4521: Eastern Heights merger 4521. . 4,196 8.a
b. 4522: Sale of loans 4522. . 1,335 8.b
</TABLE>
I498 I499 < -
- - Other explanations (the space below is provided for the bank to briefly
describe, at its option, any other significant items affecting the
Report of Income):
No comment: X (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-1
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
11
Transit Number: 91000019
Consolidated Report of Condition for Insured Commercial and State-Chartered
Savings Banks for September 30, 1999
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C400 < -
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1)____________________________________0081. . 1,907,083 1.a
b. Interest-bearing balances (2)_____________________________________________________________0071. . 19,383 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)________________________________1754. . 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)______________________________1773. . 3,424,522 2.b
3. Federal funds sold and securities purchased under agreements to resell_________________________1350. . 11,384,825 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income_______________RCFD
----
(from Schedule RC-C)___________________________________2122 . . 16,544,030 . . . . . . 4.a
b. LESS: Allowance for loan and lease losses______________3123 . . 211,892 . . . . . . 4.b
c. LESS: Allocated transfer risk reserve__________________3128 . . 0 . . . . . . 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c)_______________________________________2125. . 16,332,138 4.d
5. Trading assets (from Schedule RC-D)____________________________________________________________3545. . 48,680 5.
6. Premises and fixed assets (including capitalized leases)_______________________________________2145. . 126,208 6.
7. Other real estate owned (from Schedule RC-M)___________________________________________________2150. . 8,559 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)_________________________________________________________________________________2130. . 0 8.
9. Customers' liability to this bank on acceptances outstanding___________________________________2155. . 22,419 9.
10. Intangible assets (from Schedule RC-M)_________________________________________________________2143. . 119,807 10.
11. Other assets (from Schedule RC-F)______________________________________________________________2160. . 378,858 11.
12. Total assets (sum of items 1 through 11)_______________________________________________________2170. . 33,772,482 12.
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-2
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
12
Transit Number: 91000019
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of RCON
----
columns A and C from schedule RC-E, part I)________________________________ 2200.. 12,595,978 13.a
RCON
----
(1) Noninterest-bearing (1)_______________6631.. 6,833,669 .......... 13.a.1
(2) Interest-bearing______________________6636.. 5,762,309 .......... 13.a.2
RCFN
----
B. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II)__________________________________________________ 2200 6,488,386 13.b
RCFN
----
(1) Noninterest-bearing___________________6631.. 6,478,898 .......... 13.b.1
(2) Interest-bearing______________________6636.. 9,488 .......... 13.b.2
RCFD
----
14. Federal funds purchased and securities sold under agreements to repurchase__________2800.. 9,565,435 14.
RCON
----
15. a. Demand notes issued to the U.S. Treasury__________________________________________2840.. 231,536 15.a
RCFD
----
b. Trading liabilities (from Schedule RC-D)__________________________________________3548.. 33,972 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less_____________________________________2332.. 1,099,624 16.a
b. With a remaining maturity of more than one year through three years_______________A547.. 701,262 16.b
c. With a remaining maturity of more than three years________________________________A548.. 407,068 16.c
17. Not applicable.
18. Bank's liability on acceptances executed and outstanding_____________________________2920.. 22,419 18.
19. Subordinated notes and debentures (2)________________________________________________3200.. 105,000 19.
20. Other liabilities (from Schedule RC-G)_______________________________________________2930.. 384,016 20.
21. Total liabilities (sum of items 13 through 20)_______________________________________2948.. 31,634,696 21.
22. Not applicable.
</TABLE>
<TABLE>
<CAPTION>
EQUITY CAPITAL
<S> <C> <C> <C>
RCFD
----
23. Perpetual preferred stock and related surplus________________________________________3838.. 0 23.
24. Common stock_________________________________________________________________________3230.. 100,000 24.
25. Surplus (exclude all surplus related to preferred stock)_____________________________3839.. 995,532 25.
26. a. Undivided profits and capital reserves____________________________________________3632.. 1,085,814 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities____________8434.. ( 42,967) 26.b
c. Accumulated net gains (losses) on cash flow hedges________________________________4336.. 0 26.c
27. Cumulative foreign currency translation adjustments__________________________________3284.. ( 593) 27.
28. Total equity capital (sum of items 23 through 27)____________________________________3210.. 2,137,786 28.
29. Total liabilities and equity capital (sum of items 21 and 28)________________________3300.. 33,772,482 29.
</TABLE>
<TABLE>
<CAPTION>
MEMORANDUM
<S> <C> <C> <C>
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best describes
the most comprehensive level of auditing work performed for the bank by independent RCFD Number
---- ------
external auditors as of any date during 1998_________________________________________6724.. N/A M.1
</TABLE>
<TABLE>
<S> <C>
= Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
= Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
= Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering
authority)
</TABLE>
- ------
1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
2) Includes limited-life preferred stock and related surplus.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-3
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
13
Transit Number: 91000019
Schedule RC-A - Cash and Balances Due From Depository Institutions
Excludes assets held for trading.
<TABLE>
<CAPTION>
C405 < -
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Consolidated Bank Domestic Offices
-------------------- --------------------
<S> <C> <C> <C> <C> <C>
1. Cash items in process of collection, unposted RCFD RCON
---- ----
debits, and currency and coin_________________________________________0022.. 1,358,298 .............. 1.
a. Cash items in process of collection and unposted
debits_____________________________________________________________ ........... 0020 .. 1,182,177 1.a
b. Currency and coin__________________________________________________ ........... 0080 .. 169,681 1.b
2. Balances due from depository institutions in the U.S._ ........... 0082 .. 248,361 2.
a. U.S. branches and agencies of foreign banks
(including their IBFs)_____________________________________________0083.. 0 .............. 2.a
b. Other commercial banks in the U.S. and other
depository institutions in the U.S. (including
their IBFs)________________________________________________________0085.. 248,460 .............. 2.b
3. Balances due from banks in foreign countries and
foreign central banks_________________________________________________ ........... 0070 .. 8,914 3.
a. Foreign branches of other U.S. banks_______________________________0073.. 0 .............. 3.a
b. Other banks in foreign countries and foreign
central banks______________________________________________________0074.. 11,274 .............. 3.b
4. Balances due from Federal Reserve Banks_______________________________0090.. 308,434 0090 .. 308,308 4.
5. Total (sum of items 1 through 4) (total of column A
must equal Schedule RC, sum of items 1.a and 1.b)_____________________0010.. 1,926,466 0010.. 1,917,441 5.
</TABLE>
<TABLE>
<CAPTION>
MEMORANDUM Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. RCON
----
(included in item 2, column 8 above)_________________________________________________________0050.. 231,129 M.1
</TABLE>
SCHEDULE RC-B - SECURITIES
Exclude assets held for trading.
<TABLE>
<CAPTION>
C410 < -
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
--------------------- ---------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.U.S. Treasury RCFD RCFD RCFD RCFD
---- ---- ---- ----
securities_______ 0211.. 0 0213.. 0 1286.. 1,525,702 1287.. 1,462,761 1.
2.U.S. Government
agency obligations
(exclude mortgage-
backed securities):
a. Issued by U.S.
Government RCFD RCFD RCFD RCFD
---- ---- ---- ----
agencies (2)___ 1289.. 0 1290.. 0 1291.. 0 1293.. 0 2.a
b. Issued by U.S.
Government-
sponsored
agencies (3)__ 1294.. 0 1295.. 0 1297.. 76,494 1298.. 75,076 2.b
</TABLE>
- -------
1) Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
2) Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
3) Includes obligations (other than mortgage-backed securities) issued by
the Farm Credit System, the Federal Home Loan Bank System, the Federal
Home Loan Mortgage Corporation, the Federal National Mortgage Association,
the Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-4
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
14
Transit Number: 91000019
Schedule RC-B - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
-------------------- ---------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by
states and political
subdivisions in the U.S.:
a. General RCFD RCFD RCFD RCFD
---- ---- ---- ----
obligations___ 1676.. 0 1677.. 0 1678.. 118,130 1679.. 115,179 3.a
b. Revenue
obligations___ 1681.. 0 1686.. 0 1690.. 88,875 1691.. 93,748 3.b
c. Industrial
development
and similar
obligations ___ 1694.. 0 1695.. 0 1696.. 35 1697.. 35 3.c
4. Mortgage-backed
securities (MBS):
a. Pass-through
securities:
(1) Guaranteed
by GNMA ____ 1698.. 0 1699.. 0 1701.. 412,565 1702.. 411,013 4a1
(2) Issued by
FNMA and
FHLMC ____ 1703.. 0 1705.. 0 1706.. 222,355 1707.. 217,033 4a2
(3) Other pass-
through
securities___ 1709.. 0 1710.. 0 1711.. 0 1713.. 0 4a3
b. Other mortgage-
backed securities
(include CMOs,
REMICs, and
stripped MBS):
(1) Issued or
guaranteed
by FNMA,
FHLMC, or RCFD RCFD RCFD RCFD
GNMA_______ ---- ---- ---- ----
1714.. 0 1715.. 0 1716.. 4,281 1717.. 4,199 4b1
(2) Collateralized
by MBS issued
or guaranteed
by FNMA, FHLMC, RCFD RCFD RCFD RCFD
or GNMA_______ ---- ---- ---- ----
1718.. 0 1719.. 0 1731.. 0 1732.. 0 4b2
(3) All other
mortgage-
backed
securities ____ 1733.. 0 1734.. 0 1735.. 5 1736.. 5 4b3
5.Other debt securities:
a. Other domestic
debt RCFD RCFD RCFD RCFD
securities _____ ---- ---- ---- ----
1737.. 0 1738.. 0 1739.. 766,522 1741.. 767,334 5.a
b. Foreign debt
securities _____ 1742.. 0 1743.. 0 1744.. 0 1746.. 0 5.b
6.Equity securities:
a. Investments
in mutual RCFD RCFD RCFD RCFD
funds and ---- ---- ---- ----
other equity
securities
with readily
determinable
fair values ____ . . . . . . . . . . . . A510.. 58,729 A511.. 58,010 6.a
b. All other
equity
securities(1) ____ . . . . . . . . . . . . 1752.. 220,129 1753.. 220,129 6.b
7. Total (sum of items
1 through 6) (total
of column A must
equal Schedule RC,
item 2.a)(total
of column 0 must
equal Schedule RC,
item 2.b) _______ 1754.. 0 1771.. 0 1772.. 3,493,822 1773.. 3,424,522 7.
</TABLE>
- ------------
. Includes equity securities without readily determinable fair values at
historical cost in item 6.b, column D.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-5
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
15
Transit Number: 91000019
Schedule RC-B - Continued
Memoranda
<TABLE>
<CAPTION>
C412 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1. Pledged securities (1) ___________________________________________________0416. . 1,218,427 M.1
2. Maturity and repricing data for debt securities (1,2) (excluding
those in nonaccrual status):
a. Securities issued by the U.S. Treasury, U.S. Government agencies,
and states and political subdivisions in the U.S.; other
non-mortgage debt securities; and mortgage pass-through securities
other than those backed by closed-end first lien 1-4 family
residential mortgages with a remaining maturity or repricing frequency
of: (3,4)
(1) Three months or less ______________________________________________A549. . 982,833 M.2.a.1
(2) Over three months through 12 months _______________________________A550. . 10,574 M.2.a.2
(3) Over one year through three years _________________________________A551. . 202,408 M.2.a.3
(4) Over three years through five years _______________________________A552. . 539,512 M.2.a.4
(5) Over five years through 15 years __________________________________A553. . 965,263 M.2.a.5
(6) Over 15 years _____________________________________________________A554. . 152,094 M.2.a.6
b. Mortgage pass-through securities backed by closed-end first lien 1-4
family residential mortgages with a remaining maturity or repricing
frequency of: (3, 5)
(1) Three months or less ______________________________________________A555. . 8,295 M.2.b.1
(2) Over three months through 12 months _______________________________A556. . 17,413 M.2.b.2
(3) Over one year through three years _________________________________A557. . 334 M.2.b.3
(4) Over three years through five years _______________________________A558. . 1,789 M.2.b.4
(5) Over five years through 15 years __________________________________A559. . 14,713 M.2.b.5
(6) Over 15 years _____________________________________________________A560. . 246,951 M.2.b.6
c. Other mortgage backed securities (include CMOs, REMICs and stripped
MBS; exclude mortgage pass-through securities) with an expected
average life of: (6)
(1) Three years or less _______________________________________________A561. . 4,204 M.2.c.1
(2) Over three years __________________________________________________A562. . 0 M.2.c.2
d. debt securities with a REMAINING MATURITY of one year or less
(including in Memorandum items 2.a through 2.c above)__________________A248. . 654,792 M.2.d
3-6. Not applicable.
7. Amortized cost of held-to-maturity securities sold or transferred to
available-for-sale or trading securities during the calendar year-to-date
(report the amortized cost at date of sale or transfer) ___________________1778. . 0 M.7
8. Not applicable.
9. Structured notes (included in the held-to-maturity and available-for-sale
accounts in Schedule RC-B, items 2, 3, and 5):
a. Amortized cost _________________________________________________________8782. . 0 M.9.a
b. Fair value _____________________________________________________________8783. . 0 M.9.b
</TABLE>
- ----------------
1) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
2) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock and preferred stock.
3) Report fixed rate debt securities by remaining maturity and floating rate
debt securities by repricing frequency.
4) Sum of Memorandum items 2.a. (1) through 2.a.(6) plus any nonaccrual debt
securities in the categories of debt securities reported in Memorandum
item 2.a that are included in Schedule RC-N, item 9, column C, must equal
Schedule RC-B, sum of items 1, 2, 3 and 5, columns A and D, plus mortgage
pass-through securities other than those backed by closed-end first lien 1-4
family residential mortgages included in Schedule RC-B, item 4.a, column A
and D.
5) Sum of Memorandum items 2.b. (1), through 2.b.(6) plus any nonaccrual
mortgage pass-through securities backed by closed-end first lien 1-4 family
residential mortgages included in Schedule RC-N, item 9, column C, must equal
Schedule RC-B, item 4.a, sum of columns A and D, less the amount of
mortgage pass-through securities other than those backed by closed-end
first lien 1-4 family residential mortgages included in Schedule RC-B,
item 4.a, columns A and D.
6) Sum of Memorandum items 2.c.(1) and 2.c.(2) plus any nonaccrual "Other
mortgage-backed securities" included in Schedule RC-N, item 9, column C, must
equal Schedule RC-B, item 4.b, sum of columns A and D.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-6
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
16
Transit Number: 91000019
Schedule RC-C - Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts reported
in this schedule. Report total loans and leases, net of unearned income.
Exclude assets held for trading and commercial paper.
<TABLE>
<CAPTION>
C415 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
RCFD Consolidated Bank RCON Domestic Offices
---- ----------------- ---- ----------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate____________________________ 1410 7,858,279 . . . . . . . . . 1.
a. Construction and land development____________________ . . . . . . . . . 1415. . 104,521 1.a
b. Secured by farmland (including farm residential and
other improvements)__________________________________ . . . . . . . . . 1420. . 809 1.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family
residential properties and extended under lines
of credit________________________________________ . . . . . . . . . 1797. . 168,059 1.c1
(2) All other loans secured by 1-4 family residential
properties:
(a) Secured by first liens_______________________ . . . . . . . . . 5367. . 6,703,301 1.c2a
(b) Secured by junior liens______________________ . . . . . . . . . 5368. . 413,265 1.c2b
d. Secured by multifamily (5 or more) residential
properties___________________________________________ . . . . . . . . . 1460. . 59,084 1.d
e. Secured by nonfarm nonresidential properties_________ . . . . . . . . . 1480. . 409,240 1.e
2. Loans to depository institutions:
a. To commercial banks in the U.S.______________________ . . . . . . . . . 1505. . 830,705 2.a
(1) To U.S. branches and agencies of foreign banks___ 1506. . 0 . . . . . . . . . 2.a1
(2) To other commercial banks in the U.S.____________ 1507. . 832,620 . . . . . . . . . 2.a2
b. To other depository institutions in the U.S._________ 1517. . 265 1517. . 265 2.b
c. To banks in foreign countries________________________ . . . . . . . . . 1510. . 0 2.c
(1) To foreign branches of other U.S. banks__________ 1513. . 224 . . . . . . . . . 2.c1
(2) To other banks in foreign countries______________ 1516. . 6,870 . . . . . . . . . 2.c2
3. Loans to finance agricultural production and other
loans to farmers________________________________________ 1590. . 5,181 1590. . 5,181 3.
4. Commercial and industrial loans:
a. To U.S. addresses (domicile)_________________________ 1763. . 4,349,367 1763. . 4,336,497 4.a
b. To non-U.S. addresses (domicile)_____________________ 1764. . 6,204 1764. . 0 4.b
5. Acceptances of other banks:
a. Of U.S. banks________________________________________ 1756. . 0 1756. . 0 5.a
b. Of foreign banks_____________________________________ 1757. . 1,185 1757. . 153 5.b
6. Loans to individuals for household, family, and other
personal expenditures (i.e., consumer loans) (includes
purchased paper)________________________________________ . . . . . . . . . 1975. . 1,423,925 6.
a. Credit cards and related plans (includes check
credit and other revolving credit plans)_____________ 2008. . 199,491 . . . . . . . . . 6.a
b. Other (includes single payment, installment, and
all student loans)___________________________________ 2011. . 1,225,739 . . . . . . . . . 6.b
7. Loans to foreign governments and official institutions
(including foreign central banks)_______________________ 2081. . 5,500 2081. . 5,500 7.
8. Obligations (other than securities and leases) of
states and political subdivisions in the U.S.___________ 2107. . 21,739 2107. . 21,739 8.
9. Other loans_____________________________________________ 1563. . 613,165 . . . . . . . . . 9.
a. Loans for purchasing or carrying securities (secured
and unsecured)_______________________________________ . . . . . . . . . 1545. . 40,171 9.a
b. All other loans (exclude consumer loans)_____________ . . . . . . . . . 1564. . 572,830 9.b
10. Loans financing receivables (net of unearned income)____ . . . . . . . . . 2165. . 1,418,201 10.
a. Of U.S. addresses (domicile)_________________________ 2182. . 1,418,201 . . . . . . . . . 10.a
b. Of non-U.S. addresses (domicile)_____________________ 2183. . 0 . . . . . . . . . 10.b
11. LESS: Any unearned income on loans reflected in
items 1-9 above_________________________________________ 2123. . 0 2123. . 0 11.
12. Total loans and leases, net of unearned income (sum
of items 1 through 10 minus item 11) (total of column A
must equal Schedule RC, item 4.a)_______________________ 2122. . 16,544,030 2122. . 16,513,446 12.
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-7
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
17
Transit Number: 91000019
Schedule RC-C - Continued
Part I. Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------
RCFD
----
<S> <C> <C> <C>
1. Not applicable.
2. Loans and leases restructured and in compliance with
modified terms (included in Schedule RC-C, part 1,
above, and not reported as past due or nonaccrual in
Schedule RC-N, Memorandum item 1):
a. Loans secured by real estate:
(1) To U.S. addresses (domicile)_____________________ 1687. . 0 M.2.a1
(2) To non-U.S. addresses (domicile)_________________ 1689. . 0 M.2.a2
b. All other loans and all lease financing receivables
(exclude loans to individuals for household, family,
and other personal expenditures)_____________________ 8691. . 0 M.2.b
c. Commercial and industrial loans to and lease
financing receivables of non-U.S. addresses
(domicile) included in Memorandum item 2.b above_____ 8692. . 0 M.2.c
3. Maturity and repricing data for loans and leases
(excluding those in nonaccrual status):
a. Closed-end loans secured by first liens on 1-4 family
residential properties in domestic offices (reported
in Schedule RC-C, Part I, line 1.c.2a, column B) with
a remaining maturity or repricing frequency of: (1,2) RCON
----
(1) Three months or less______________________________ A564. . 5,476,464 M.3.a1
(2) Over three months through 12 months_______________ A565. . 507,560 M.3.a2
(3) Over one year through three years_________________ A566. . 21,079 M.3.a3
(4) Over three years through five years_______________ A567. . 25,335 M.3.a4
(5) Over five years through 15 years__________________ A568. . 299,882 M.3.a5
(6) Over 15 years_____________________________________ A569. . 364,007 M.3.a6
b. All loans and leases (reported in Schedule RC-C,
Part I, items 1 through 10, column A) excluding
closed-end loans secured by first liens on 1-4 family
residential properties in domestic offices (reported
in Schedule RC-C, Part I, item 1.c.2a, column B) with
a remaining maturity or repricing frequency of (1,3) RCFD
----
(1) Three months or less_______________________________ A570. . 2,988,157 M.3.b1
(2) Over three months through 12 months________________ A571. . 1,088,641 M.3.b2
(3) Over one year through three years__________________ A572. . 2,959,530 M.3.b3
(4) Over three years through five years________________ A573. . 1,608,559 M.3.b4
(5) Over five years through 15 years___________________ A574. . 962,518 M.3.b5
(6) Over 15 years______________________________________ A575. . 174,982 M.3.b6
c. Loans and leases (reported in Schedule RC-C, Part I,
items 1 through 10, column A) with a REMAINING MATURITY
of one year or less____________________________________ A247. . 8,860,345 M.3.c
d. Loans secured by nonfarm nonresidential properties in
domestic offices (reported in Schedule RC-C, Part I, RCON
item 1.e, column B) with a REMAINING MATURITY of over ----
five years_____________________________________________ A577 174,257 M.3.d
e. Commercial and industrial loans (reported in Schedule
RCFD RC-C, Part I, item 4, column A) with a REMAINING ----
MATURITY of over three years___________________________ A578 2,232,821 M.3.e
</TABLE>
- ----------
1) Report fixed rate loans and leases by remaining maturity and floating rate
loans by repricing frequency.
2) Sum of Memorandum items 3.a.(1) through 3.a.(6) plus total nonaccrual
closed-end loans secured by first liens on 1-4 family residential
properties in domestic offices included in Schedule RC-N, Memorandum item
3.c.(2), column C, must equal total closed-end loans secured by first
liens on 1-4 family residential properties from Schedule RC-C, part 1,
item 1.c.(2)(a), column B.
3) Sum of Memorandum items 3.b.(1) through 3.b.(6) plus total nonaccrual
loans and leases from Schedule RC-N, sum of items 1 through 8, column C,
minus nonaccrual closed-end loans secured by first liens on 1-4 family
residential properties in domestic offices included in Schedule RC-N,
Memorandum item 3.c.(2), column C, must equal total loans and leases from
Schedule RC-C, Part I, sum of items 1 through 10, column A, minus total
closed-end loans secured by first liens on 1-4 family residential
properties in domestic offices from Schedule RC-C, part I, item 1.c.(2)(a),
column B.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
18
Transit Number: 91000019
Schedule RC-C - Continued
Part I. Continued
Memoranda (continued)
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
4. Loans to finance commercial real estate, construction, and land development activities
(not secured by real estate) included in Schedule RC-C, part I, items 4 and 9,
column A, page RC-6 (1)_________________________________________________________________ 2746. . 0 M.4
5. Loans and leases held for sale (included in Schedule RC-C, part I, page RC-6)___________ 5369. . 5,926,117 M.5
6. Adjustable rate closed-end loans secured by first liens on 1-4 family residential
properties in domestic offices (included in Schedule RC-C, part I, item 1.c.(2)(a),
column B, page RC-6)____________________________________________________________________ 5370. . 1,882,371 M.6
</TABLE>
- --------------
1) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, items 1.a through 1.e.
Schedule RC-D - Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in
total assets or with $2 billion or more in par/notional amount of off-balance
sheet derivative contracts (as reported in Schedule RC-L, items 14.a through
14.e, columns A through D).
<TABLE>
<CAPTION>
C420 < -
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
RCON
----
<S> <C> <C> <C>
1. U.S. Treasury securities in domestic offices ___________________________________________ 3531. . 0 1.
2. U.S. Government agency obligations in domestic offices (exclude
mortgage-backed securities)_____________________________________________________________ 3532. . N/A 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic
offices_________________________________________________________________________________ 3533. . N/A 3.
4. Mortgage-backed securities (MBS) in domestic offices:
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA________________ 3534. . 5,002 4.a
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or
GNMA (include CMOs, REMICs, and stripped MBS)________________________________________ 3535. . N/A 4.b
c. All other mortgage-backed securities_________________________________________________ 3536. . N/A 4.c
5. Other debt securities in domestic offices_______________________________________________ 3537. . N/A 5.
6. - 8. Not applicable
9. Other trading assets in domestic offices________________________________________________ 3541. . N/A 9.
10. Trading assets RCFN
----
in foreign offices______________________________________________________________________ 3542. . N/A 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and
equity contracts: RCON
----
a. In domestic offices__________________________________________________________________ 3543. . 43,678 11.a
RCFN
b. In foreign ----
offices______________________________________________________________________________ 3543. . N/A 11.b
RCFD
12. Total trading assets (sum of items 1 through 11) ----
(must equal Schedule RC, item 5)________________________________________________________ 3545. . 48,680 12.
LIABILITIES
13. Liability for short positions___________________________________________________________ 3546. . N/A 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and
equity contracts________________________________________________________________________ 3547. . 33,972 14.
15. Total trading liabilities (sum of items 13 and 14)(must equal Schedule RC,
item 15.b)______________________________________________________________________________ 3548. . 33,972 15.
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-9
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
19
Transit Number: 91000019
Schedule RC-E - Deposit Liabilities
Part I. Deposits in Domestic Offices
<TABLE>
<CAPTION>
C425 < -
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
------------Transaction Accounts-------------------- --Nontransaction Accounts--
(Column A) (Column B) (Column C)
Total transaction Memo: Total demand
accounts (including total deposits (included in Total nontransaction
demand deposits) column A) accounts (including MMDAs)
- --------------------------------------------- ------------------------- --------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Deposits of: RCON RCON RCON
---- ---- ----
1. Individuals, partnerships and corporations_ 2201.. 3,283,279 2240.. 3,077,318 2346.. 8,637,691 1.
2. U.S. Government____________________________ 2202.. 10,241 2280.. 10,241 2520.. 0 2.
3. States and political subdivisions in
the U.S.___________________________________ 2203.. 38,855 2290.. 38,482 2530.. 12,230 3.
4. Commercial banks in the U.S._______________ 2206.. 583,165 2310.. 583,165 2550.. 0 4.
5. Other depository institutions in the U.S.__ 2207.. 14,434 2312.. 14,434 2349.. 0 5.
6. Banks in foreign countries_________________ 2213.. 13,095 2320.. 13,095 2236.. 0 6.
7. Foreign governments and official institu-
tions (including foreign central banks)____ 2216.. 0 2300.. 0 2377.. 0 7.
8. Certified and official checks______________ 2330.. 2,988 2330.. 2,988 . . . . . . 8.
9. Total (sum of items 1 through 8) (sum of
columns A and C must equal Schedule RC,
item 13.a)_________________________________ 2215.. 3,946,057 2210.. 3,739,723 2385.. 8,649,921 9.
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): ----
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts______________________6835.. 431,325 M.1.a
b. Total brokered deposits__________________________________________________________________2365.. 0 M.1.b
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
(1) Issued in denominations of less than $100,000_______________________________________2343.. 0 M.1.c1
(2) Issued either in denominations of $100,000 or in denominations greater than
$100,000 and participated out by the broker in shares of $100,000 or less___________2344.. 0 M.1.c2
d. Maturity data for brokered deposits:
(1) Brokered deposits issued in denominations of less than $100,000
with a remaining maturity of one year or less (included in Memorandum item
1.c.(1) above)______________________________________________________________________A243.. 0 M.1.d1
(2) Brokered deposits issued in denominations of $100,000 or more
with a remaining maturity of one year or less (included in Memorandum item
1.b above)__________________________________________________________________________A244.. 0 M.1.d2
e. Preferred deposits (uninsured deposits of states and political subdivisions in the
U.S. reported in item 3 above which are secured or collateralized as required under
state law) ( TO BE COMPLETED FOR DECEMBER REPORT ONLY ))_________________________________5590.. N/A M.1.e
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
must equal item 9, column C above):
a. Savings deposits:
(1) Money market deposit accounts (MMDAs)_______________________________________________6810.. 2,613,780 M.2.a1
(2) Other savings deposits (excludes MMDAs)_____________________________________________0352.. 4,536,533 M.2.a2
b. Total time deposits of less than $100,000________________________________________________6648.. 1,358,169 M.2.b
c. Total time deposits of $100,000 or more__________________________________________________2604.. 141,439 M.2.c
3. All NOW accounts (included in column A above)________________________________________________2398.. 206,334 M.3
4. Not applicable
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-10
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
20
Transit Number: 91000019
Schedule RC-E - Continued
<TABLE>
<CAPTION>
Memoranda (Continued)
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5. Maturity and repricing data for time deposits of less than $100,000:
a. Time deposits of less than $100,000 with a remaining maturity or repricing RCON
frequency of: (1, 2) ----
(1) Three months or less____________________________________________________________A579. . 341,020 M.5.a1
(2) Over three months through 12 months_____________________________________________A580. . 548,877 M.5.a2
(3) Over one year through three years_______________________________________________A581. . 382,974 M.5.a3
(4) Over three years________________________________________________________________A582. . 85,298 M.5.a4
b. Time deposits of less than $100,000 with a REMAINING MATURITY of one year or less
(included in Memorandum items 5.a.(1) through 5.a.(4) above)_________________________A241. . 889,897 M.5.b
6. Maturity and repricing data for time deposits of $100,000 or more:
a. Time deposits of $100,000 or more with a remaining maturity or repricing
frequency of: (1, 3)
(1) Three months or less____________________________________________________________A584. . 39,192 M.6.a1
(2) Over three months through 12 months_____________________________________________A585. . 53,054 M.6.a2
(3) Over one year through three years_______________________________________________A586. . 33,439 M.6.a3
(4) Over three years________________________________________________________________A587. . 15,754 M.6.a4
b. Time deposits of $100,000 or more with a REMAINING MATURITY of one year or less
(included in Memorandum items 6.a.(1) through 6.a.(4) above)_________________________A242. . 92,246 M.6.b
</TABLE>
- ------------
(1) Report fixed rate time deposits by remaining maturity and floating rate
time deposits by repricing frequency.
(2) Sum of Memorandum items 5.a.(1) through 5.a.(4) must equal Schedule RC-E
Memorandum item 2.b above.
(3) Sum of Memorandum items 6.a.(1) through 6.a.(4) must equal Schedule RC-E
Memorandum item 2.c above.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-11
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
21
Transit Number: 91000019
Schedule RC-E - Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFN
Deposits of: ----
1. Individuals, partnerships, and corporations__________________________________________2621. . 1,570,191 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks)_______________________2623. . 4,913,899 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks,
including their IBFs)________________________________________________________________2625. . 4,182 3.
4. Foreign governments and official institutions (including foreign central banks)______2650. . 0 4.
5. Certified and official checks________________________________________________________2330. . 5 5.
6. All other deposits___________________________________________________________________2668. . 109 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)_________________2200. . 6,488,386 7.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFN
1. Time deposits with a remaining maturity of one year or less (included in Part II, ----
item 7 above)________________________________________________________________________A245. . 6,422,792 M.1
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-F - Other Assets
C430 < -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1. Income earned, not collected on loans________________________________________________2164. . 68,772 1.
2. Net deferred tax assets (1)__________________________________________________________2148. . 0 2.
3. Interest only strips receivable (not in the form of a security)(2) on:
a. Mortgage loans___________________________________________________________________A519. . 0 3.a
b. Other financial assets___________________________________________________________A520. . 0 3.b
4. Other (itemize and describe amounts that exceed 25% of this item)____________________2168. . 310,086 4.
TEXT RCFD
---- ----
a. 3549: Bank-owned life insurance______________3549 . . 133,735 . . . . . . 4.a
b. 3550:_________________________________________3550 . . N/A . . . . . . 4.b
c. 3551:_________________________________________3551 . . N/A . . . . . . 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)___________________2160. . 378,858 5.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1. Deferred tax assets disallowed for regulatory capital purposes_______________________5610. . 0 M.1
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-G - Other Liabilities
C435 < -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
a. Interest accrued and unpaid on deposits in domestic offices (3)__________________3645. . 26,551 1.a
RCFD
b. Other expenses accrued and unpaid (includes accrued ----
income taxes payable)____________________________________________________________3646. . 196,795 1.b
2. Net deferred tax liabilities (1)_____________________________________________________3049. . 141,980 2.
3. Minority interest in consolidated subsidiaries_______________________________________3000. . 135 3.
4. Other (itemize and describe amounts that exceed 25% of this item)____________________2938. . 18,555 4.
TEXT RCFD
---- ----
a. 3552:_________________________________________3552. . N/A . . . . . . 4.a
b. 3553:_________________________________________3553. . N/A . . . . . . 4.b
c. 3554:_________________________________________3554. . N/A . . . . . . 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)___________________2930. . 384,016 5.
- ------------
</TABLE>
(1) See discussion of deferred income taxes in Glossary entry on "income
taxes."
(2) Report interest only strips receivables in the form of a security as
available-for-sale securities in Schedule RC, item 2.b, or as trading
assets in Schedule RC, item 5 as appropriate.
(3) For savings banks, include "dividends" accrued and unpaid on deposits.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-12
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
22
Transit Number: 91000019
Schedule RC-H - Selected Balance Sheet Items for Domestic Offices
<TABLE>
<CAPTION>
C440 < -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------
Domestic Offices
--------------------
RCON
----
<S> <C> <C> <C> <C>
1. Customers' liability to this bank on acceptances outstanding__________________2155. . 6,884 1.
2. Bank's liability on acceptances executed and outstanding______________________2920. . 6,884 2.
3. Federal funds sold and securities purchased under agreements to resell________1350. . 11,384,725 3.
4. Federal funds purchased and securities sold under agreements to repurchase____2800. . 9,565,435 4.
5. Other borrowed money__________________________________________________________3190. . 2,204,494 5.
EITHER
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs___2163. . N/A 6.
OR
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs_____2941. . 6,506,382 7.
8. Total assets (excludes net due from foreign offices Edge and Agreement
subsidiaries, and IBFs)_______________________________________________________2192. . 33,697,956 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement
subsidiaries, and IBFs)_______________________________________________________3129. . 25,053,788 9.
</TABLE>
In items 10-17, report the amortized (historical) cost of both held-to-maturity
and available-for-sale securities in domestic offices.
<TABLE>
<S> <C> <C> <C> <C>
10. U.S. Treasury securities______________________________________________________1039. . 1,525,702 10.
11. U.S. Government agency obligations (excludes mortgage-backed securities)______1041. . 76,494 11.
12. Securities issued by states and political subdivisions in the U.S.____________1042. . 207,040 12.
13. Mortgage-backed securities (MBS):
a. Pass-through securities:
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA___________________________1043. . 296,369 13.a.1
(2) Other pass-through securities__________________________________________1044. . 0 13.a.2
b. Other mortgage-backed securities (included CMOs, REMICs, and stripped MBS):
(1) Issued or guranteed by FNMA, FHLMC, or GNMA____________________________1209. . 4,281 13.b.1
(2) All other mortgage-backed securities___________________________________1280. . 5 13.b.2
14. Other domestic debt securities________________________________________________1281. . 766,522 14.
15. Foreign debt securities_______________________________________________________1282. . 0 15.
16. Equity securities:
a. Investments in mutual funds and other equity securities with readily
determinable fair values___________________________________________________A510. . 18,870 16.a
b. All other equity securities________________________________________________1752. . 220,129 16.b
17. Total amortized (historical) cost of both held-to-maturity and available-for-
sale securities (sum of items 10 through 16)__________________________________1374. . 3,115,412 17.
</TABLE>
Memorandum (to be completed only by banks with IBFs and other
"foreign" offices)
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EITHER
1. Net due from the IBF of the domestic offices of the reporting bank_____________3051. . N/A M.1
OR
2. Net due to the IBF of the domestic offices of the reporting bank_______________3059. . 0 M.2
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-12
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
23
Transit Number: 91000019
Schedule RC-I - Selected Assets and Liabilities of IBFs
To be completed only by banks with ibfs and other "foreign" offices.
<TABLE>
<CAPTION>
C445 < -
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
RCFN
----
<S><C> <C> <C> <C>
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12)______2133. . N/A 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I,
item 12, column A)_________________________________________________________________2076. . N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4,
column A)__________________________________________________________________________2077. . N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21)__________________________2898. . N/A 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule
RC-E, part II, items 2 and 3)______________________________________________________2379. . N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1,4,5,
and 6)_____________________________________________________________________________2381. . N/A 6.
</TABLE>
Schedule RC-K - Quarterly Averages (1)
<TABLE>
<CAPTION>
C455 < -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS RCFD
- ------ ----
<S><C> <C> <C> <C>
1. Interest-bearing balances due from depository institutions_________________________3381. . 13,082 1.
2. U.S. Treasury securities and U.S. Government agency obligations (2) (including
mortgage-backed securities issued or guaranteed by FNMA, FHLMC or GNMA)____________3382. . 1,908,303 2.
3. Securities issued by states and political subdivisions in the U.S (2)______________3383. . 205,357 3.
4. a. Other debt securities (2) (including mortgage-backed securities not issued or
guaranteed by FNMA, FHLMC or GNMA)______________________________________________3647. . 462,478 4.a
b. Equity securities (3)(includes investments in mutual funds and Federal Reserve
stock)__________________________________________________________________________3648. . 237,165 4.b
5. Federal funds sold and securities purchased under agreements to resell_____________3365. . 11,158,465 5.
6. Loans:
a. Loans in domestic offices: RCON
----
(1) Total loans_________________________________________________________________3360. . 16,103,434 6.a.1
(2) Loans secured by real estate________________________________________________3385. . 9,181,530 6.a.2
(3) Loans to finance agricultural production and other loans to farmers_________3386. . 4,275 6.a.3
(4) Commercial and industrial loans_____________________________________________3387. . 4,851,306 6.a.4
(5) Loans to individuals for household, family, and other personal expenditures_3388. . 1,413,951 6.a.5
b. Total loans in foreign offices, Edge and Agreement subsidiaries, RCFN
----
and IBFs________________________________________________________________________ 3360 50,314 6.b
7. Trading RCFD
----
assets_____________________________________________________________________________3401. . 5,323 7.
8. Lease financing receivables (net of unearned income)_______________________________3484. . 1,401,231 8.
9. Total assets(4)____________________________________________________________________3368. . 33,697,496 9.
LIABILITIES
10.Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS
accounts, and telephone and preauthorized transfer accounts)(exclude demand RCON
----
deposits)__________________________________________________________________________3485. . 214,818 10.
11.Nontransaction accounts in domestic offices:
a. Money market deposit accounts (MMDAs)___________________________________________3486. . 2,582,102 11.a
b. Other savings deposits__________________________________________________________3487. . 2,580,963 11.b
c. Time deposits of $100,000 or more_______________________________________________A514. . 151,661 11.c
d. Time deposits of less than $100,000_____________________________________________A529. . 1,403,432 11.d
12.Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, RCFN
----
and IBFs___________________________________________________________________________3404. . 5,307,790 12.
RCFD
----
13.Federal funds purchased and securities sold under agreements to repurchase_________3353. . 11,768,048 13.
14.Other borrowed money (includes mortgage indebtness and obligations under
capitalized leases)________________________________________________________________3555. . 946,737 14.
</TABLE>
- ----------------------
(1) For all items, banks have the option of reporting either (1) an average
of daily figures for the quarter, or (2) an average of weekly figures
(i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on
historical cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-14
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
24
Transit Number: 91000019
Schedule RC-L - Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported on Schedule RC-L are registered as volume
indicators and are not necessarily as measures of risk.
<TABLE>
<CAPTION>
C460 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Unused commitments: RCFD
a. Revolving, open-end lines secured by 1-4 family residential properties, ----
e.g., home equity lines_____________________________________________________________3814. . 380,452 1.a
b. Credit card lines___________________________________________________________________3815. . 0 1.b
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate________________________________3816. . 193,148 1.c.1
(2) Commitments to fund loans not secured by real estate____________________________6550. . 0 1.c.2
d. Securities underwriting_____________________________________________________________3817. . 0 1.d
e. Other unused commitments____________________________________________________________3818. . 4,916,551 1.e
2. Financial standby letters of credit and foreign office guarantees______________________3819. . 1,121,915 2.
RCFD
a. Amount of financial standby letters of credit ----
conveyed to others_________________________________3820 . . 629,804 . . . . . . 2.a
3. Performance standby letters of credit and foreign office guarantees____________________3821 176,477 3.
RCFD
a. Amount of financial standby letters of credit ----
conveyed to others_________________________________3822 . . 48,166 . . . . . . 3.a
4. Commercial and similar letters of credit_______________________________________________3411. . 196,149 4.
5. Participations in acceptances (as described in the instructions) conveyed to others
by the reporting bank__________________________________________________________________3428. . 0 5.
6. Participation in acceptances (as described in the instructions) acquired by the
reporting (nonaccepting) bank__________________________________________________________3429. . 0 6.
7. Securities borrowed____________________________________________________________________3432. . 4,650,838 7.
8. Securities lent (including customers' securities lent where the customer is
indemnified against loss by the reporting bank)________________________________________3433. . 205,145 8.
9. Financial assets transferred with recourse that have been treated as sold for
Call Report purposes:
a. First Lien 1-to-4 family residential mortgage loans:
(1) Outstanding principal balance of mortgages transferred as of the report date____A521. . 9,332 9.a.1
(2) Amount of recourse exposure on these mortgages as of the report date____________A522. . 9,332 9.a.2
b. Other financial assets (excluding small business obligations reported in item 9.c):
(1) Outstanding principal balance of assets transferred as of the report date_______A523. . 0 9.b.1
(2) Amount of recourse exposure on these assets as of the report date_______________A524. . 0 9.b.2
c. Small business obligations transferred with recourse under section 208 of the
Riegle Community Development and Regulatory Improvement Act of 1994:
(1) Outstanding principal balance of small business obligations transferred
as of the report date___________________________________________________________A249. . 0 9.c.1
(2) Amount of retained recourse on these obligations as of the report date__________A250. . 0 9.c.2
10. Notional amount of credit derivatives:
a. Credit derivatives on which the reporting bank is the guarantor_____________________A534. . 0 10.a
b. Credit derivatives on which the reporting bank is the beneficiary___________________A535. . 25,000 10.b
11. Spot foreign exchange contracts________________________________________________________8765. . 270,009 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives)
(itemize and describe each component of this item over 25% of Schedule RC, item 28,
"Total equity capital")________________________________________________________________3430. . 0 12.
TEXT RCFD
---- ----
a. 3555: _________________________________3555 . . N/A . . . . . . 12.a
b. 3556: _________________________________3556 . . N/A . . . . . . 12.b
c. 3557: _________________________________3557 . . N/A . . . . . . 12.c
d. 3558: _________________________________3558 . . N/A . . . . . . 12.d
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-15
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
25
Transit Number: 91000019
Schedule RC-L - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives)
(itemize and describe each component of this item over 25% of Schedule RC, item 28,
"Total equity capital")________________________________________________________________5591. . 0 13.
TEXT RCON
---- ----
a. 5592: _________________________________5592 . . N/A . . . . . . 13.a
b. 5593: _________________________________5593 . . N/A . . . . . . 13.b
c. 5594: _________________________________5594 . . N/A . . . . . . 13.c
d. 5595: _________________________________5595 . . N/A . . . . . . 13.d
</TABLE>
<TABLE>
<CAPTION>
C461 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-balance Sheet Equity Commodity
Derivatives Interest Rate Foreign Exchange Derivative And Other
Position Indicators Contracts Contracts Contracts Contracts
- ---------------------------------------------------- ------------------- ------------------ ----------------------------------
<S> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional
amounts)(for each column, sum
of items 14.a through 14.e must
equal sum of items 15, 16.a,
and 16.b):
a. Futures contracts________ 0 0 0 0 14.a
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
b. Forward contracts________ 0 985,040 0 0 14.b
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
c. Exchange-traded option
contracts:
(1) Written options______ 0 0 0 0 14.c1
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
(2) Purchased options____ 0 0 0 0 14.c2
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
d. Over-the-counter option
contracts:
(1) Written options______ 301,622 2,239 0 37,722 14.d1
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
(2) Purchased options____ 198,532 2,695 0 37,725 14.d2
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
e. Swaps____________________ 2,348,264 0 0 113,519 14.e
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
15. Total gross notional amount
of derivative contracts held
for trading_________________ 2,271,115 989,974 0 188,966 15.
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
16. Total gross notional amount
of derivative contracts held
for purposes other than
trading:
a. Contracts marked to
market___________________ 0 0 0 0 16.a
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
b. Contracts not marked to
market___________________ 0 0 0 0 16.b
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
c. Interest rate swap where
the bank has agreed to pay
a fixed rate_____________ 202,303. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.c
RCFD A589
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
26
Transit Number: 91000019
Schedule RC-L - Continued
<TABLE>
<CAPTION>
C462 < -
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-balance Sheet Equity Commodity
Derivatives Position Interest Rate Foreign Exchange Derivative And Other
Indicators Contracts Contracts Contracts Contracts
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17. Gross fair values
of derivative
contracts:
a. Contracts held
for trading: RCFD RCFD RCFD RCFD
---- ---- ---- ----
(1) Gross
positive
fair value_______8733.. 16,813 8734.. 11,273 8735.. 0 8736.. 11,347 17.a1
(2) Gross
negative
fair value_______8737.. 12,979 8738.. 9,895 8739.. 0 8740.. 10,644 17.a2
b. Contracts held
for purposes
other than
trading that
are marked to
market:
(1) Gross
positive
fair
value___________8741.. 0 8742.. 0 8743.. 0 8744.. 0 17.b2
(2) Gross
negative
fair value______8745.. 0 8746.. 0 8747.. 0 8748.. 0 17.b2
c. Contracts held
for purposes
other than
trading that
are not marked
to market:
(1) Gross
positive
fair value______8749.. 626 8750.. 0 8751.. 0 8752.. 0 17.c1
(2) Gross
negative
fair value______8753.. 7,500 8754.. 0 8755.. 0 8756.. 0 17.c2
</TABLE>
<TABLE>
<CAPTION>
Memoranda
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------
RCFD
----
<C> <S> <C> <C> <C>
1.-2. Not applicable_________________________________________ . . . . . . . .
3. Unused commitments with an original maturity exceeding
one year that are reported in Schedule RC-L, items 1.a
through 1.e, above (report only the unused portions of
commitments that are fee paid or otherwise legally
binding__________________________________________________ 3833.. 4,485,660 M.3
RCFD
a. Participations in commitments with an original ----
maturity exceeding one year conveyed to others_________3834.. 444,511 ...... M.3a
4. To be completed only by banks with $1 billion or more in
total assets:
Standby letters of credit and foreign office guarantees
(both financial and performance) issued to non-U.S.
addressees (domicile) included in Schedule RC-L, items 2
and 3, above_____________________________________________ 3377.. 569 M.4
5. Loans to individuals for household, family, and other
personal expenditures that have been securitized and
sold (with servicing retained), amounts outstanding by
type of loan:
a. Loans to purchase private passenger automobiles (to
be completed for the September report only)___________ 2741.. 27,805 M.5.a
b. Credit cards and related plans (TO BE COMPLETED
QUARTERLY)____________________________________________ 2742.. 0 M.5.b
c. All other consumer credit (including mobile home
loans)(to be completed for the September report only)__2743.. 0 M.5.c
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC - 17
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
27
Transit Number: 91000019
Schedule RC-M - Memoranda
<TABLE>
<CAPTION>
C465 < -
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------
RCFD
----
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive
officers, directors, principal shareholders, and their
related interests as of the report date:
a. Aggregate amount of all extensions of credit to all
executive officers, directors, principal shareholders,
and their related interests__________________________________6164.. 6,949 1.a
b. Number of executive officers, directors, and principal
shareholders to whom the amount of all extensions of
credit by the reporting bank (including extensions of
credit to related interests) equals or exceeds the
lesser of $500,000 or 5 percent of RCFD Number
total capital as defined for this ---- ------
purpose in agency regulations_______________6165.. 4 ............... 1.b
2. Federal funds sold and securities purchased under
agreements to resell with U.S. branches and agencies
of foreign banks (1) (included in Schedule RC,
items 3.a and 3.b)______________________________________________3405.. 0 2.
3. Not applicable.
4. Outstanding principal balance of 1-4 family residential
mortgage loans serviced for others (include both retained
servicing and purchased servicing):
a. Mortgages serviced under a GNMA contract_____________________5500.. 0 4.a
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer_______________________5501.. 0 4.b.1
(2) Serviced without recourse to servicer____________________5502.. 0 4.b.2
c. Mortgages serviced under a FNMA contract:
(1) Serviced under a regular option contract_________________5503.. 0 4.c.1
(2) Serviced under a special option contract_________________5504.. 0 4.c.2
d. Mortgages serviced under other servicing contracts___________5505.. 449,028 4.d
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptances outstanding
(sum of items 5.a and 5.b must equal Schedule RC, item 9):
a. U.S. addressees (domicile)___________________________________2103.. 12,058 5.a
b. Non-U.S. addressees (domicile)_______________________________2104.. 10,361 5.b
6. Intangible assets:
a. Mortgage servicing rights____________________________________3164.. 0 6.a
(1) Estimated fair value of mortgage servicing assets________A590.. 0 6.a.1
b. Other identifiable intangible assets:
(1) Purchased credit card relationships and nonmortgage
servicing assets_________________________________________8026.. 0 6.b.1
(2) All other identifiable intangible assets_________________5507.. 2,760 6.b.2
c. Goodwill_____________________________________________________3163.. 117,047 6.c
d. Total (sum of items 6.a, 6.b.1, 6.b.2, and 6.c) (must equal
Schedule RC, item 10)________________________________________2143.. 119,807 6.d
e. Amount of intangible assets (included in item 6.b.(2) above)
that have been grandfathered or are otherwise qualifying for
regulatory capital purposes__________________________________6442.. 0 6.e
Mandatory convertible debt, net of common or perpetual
preferred stock dedicated to redeem the debt____________________3295.. 0 7.
</TABLE>
- ---------------
( ) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-18
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
28
Transit Number: 91000019
Schedule RC-M - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8. a. Other real estate owned: RCFD
----
(1) Direct and indirect investments in real estate ventures________________________5372. . 0 8.a.1
(2) All other real estate owned: RCON
----
(a) Construction and land development in domestic offices______________________5508. . 0 8.a.2a
(b) Farmland in domestic offices_______________________________________________5509. . 0 8.a.2b
(c) 1-4 family residential properties in domestic offices______________________5510. . 8,538 8.a.2c
(d) Multifamily (5 or more) residential properties in domestic offices_________5511. . 0 8.a.2d
(e) Nonfarm nonresidential properties in domestic offices______________________5512. . 21 8.a.2e
RCFN
(f) In foreign ----
offices____________________________________________________________________5513. . 0 8.a.2f
RCFD
(3) Total (sum of items 8.a.(1) and 8.a.(2)) ----
(must equal Schedule RC, item 7)_______________________________________________2150. . 8,559 8.a.3
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ventures________________________5374. . 0 8.b.1
(2) All other investments in unconsolidated subsidiaries and associated companies__5375. . 0 8.b.2
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)______2130. . 0 8.b.3
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC,
item 23, "Perpetual preferred stock and related surplus"_________________________________3778. . 0 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include
proprietary, private label, and third party mutual funds):
RCON
----
a. Money market funds__________________________________________________________________6441. . 89,193 10.a
b. Equity securities funds_____________________________________________________________8427. . 0 10.b
c. Debt securities funds_______________________________________________________________8428. . 0 10.c
d. Other mutual funds__________________________________________________________________8429. . 75,543 10.d
e. Annuities___________________________________________________________________________8430. . 19,070 10.e
f. Sales of proprietary mutual funds and annuities (included in items 10.a through
10.e above)_________________________________________________________________________8784. . 101,799 10.f
RCFD
11. Net unamortized realized deferred gains (losses) on off-balance sheet derivative ----
contracts included in assets and liabilities reported in Schedule RC_____________________A525. . 27,549 11.
12. Amount of assets netted against nondeposit liabilities and deposits in foreign
offices (other than insured branches in Puerto Rico and U.S. territories and
possessions) on the balance sheet (Schedule RC) in accordance with generally
accepted accounting principles (1)_______________________________________________________A526. . 0 12.
13. Outstanding principal balance of loans other than 1-4 family residential mortgage
mortgage loans that are serviced for others (to be completed if this balance is
more than $10 million and exceeds ten percent of total assets)___________________________A591. . 0 13.
</TABLE>
<TABLE>
<CAPTION>
Memorandum
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(to be completed for the December report only) Reciprocal holdings of banking
organizations' capital instruments_______________________________________________________3836. . N/A M.1.
</TABLE>
- -------------
(1) Exclude netted on-balance sheet amounts associated with off-balance
sheet derivative contracts, deferred tax assets netted against deferred
tax liabilities, and assets netted in accounting for pensions.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-19
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
29
Transit Number: 91000019
Schedule RC-N - Past Due and Nonaccrual Loans, Leases, and Other Assets
The FFIEC regards the information reported in all of Memorandum item 1, in
items 1 through 10, column A, and in Memorandum items 2 through 4, column A,
as confidential.
<TABLE>
<CAPTION>
C470 < -
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
-------(Column A)------ --------(Column B)------- -----(Column C)-----
Past due 30 through 89 Past due 90 days or more Nonaccrual
days and still accruing and still accruing
----------------------- ------------------------- --------------------
RCFD RCFD RCFD
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Loans secured by real estate:
a. To U.S. addressees (domicile)___________1245.. 7,589 1246.. 3,708 1247.. 10,023 1.a
b. To non-U.S. addressees (domicile)_______1248.. 0 1249.. 0 1250.. 0 1.b
2. Loans to depository institutions and
acceptances of other banks:
a. To U.S. banks and other U.S.
depository institutions_________________5377.. 0 5378.. 0 5379.. 0 2.a
b. To foreign banks________________________5380.. 0 5381.. 0 5382.. 0 2.b
3. Loans to finance agricultural production
and other loans to farmers___________________1594.. 47 1597.. 17 1583.. 0 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)___________1251.. 38,241 1252.. 0 1253.. 35,949 4.a
b. To non-U.S. addressees (domicile)_______1254.. 0 1255.. 0 1256.. 0 4.b
5. Loans to individuals for household,
family, and other personal expenditures:
a. Credit cards and related plans__________5383.. 1,878 5384.. 381 5385.. 0 5.a
b. Other (includes single payment,
installment, and all student loans)_____5386.. 7,091 5387.. 766 5388.. 572 5.b
6. Loans to foreign governments and
official institutions________________________5389.. 0 5390.. 0 5391.. 0 6.
7. All other loans______________________________5459.. 2,362 5460.. 294 5461.. 0 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile)___________1257.. 0 1258.. 0 1259.. 20,772 8.a
b. Of non-U.S. addressees (domicile)_______1271.. 0 1272.. 0 1791.. 0 8.b
9. Debt securities and other assets (exclude
other real estate owned and other
repossessed assets)__________________________3505.. 0 3506.. 0 3507.. 0 9.
=================================================================================================================================
</TABLE>
Amounts reported in items 1 through 8 above include guaranteed and
unguaranteed portions of past due and nonaccrual loans and leases. Report in
item 10 below certain guaranteed loans and leases that have already been
included in the amounts reported in items 1 through 8.
<TABLE>
<CAPTION>
RCFD RCFD RCFD
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10. Loans and leases reported in items 1
through 8 above which are wholly or
partially guaranteed by the U.S.
Government___________________________________5612.. 787 5613.. 178 5614.. 498 10.
a. Guaranteed portion of loans and leases
included in item 10 above_______________5615.. 600 5616.. 157 5617.. 301 10.a
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-20
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
30
Transit Number: 91000019
Schedule RC-N - Continued
<TABLE>
<CAPTION>
Memoranda C473 < -
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
-------(Column A)------- -------(Column B)------- -------(Column C)-------
Past due 30 through 89 Past due 90 days or more Nonaccrual
days and still accruing and still accruing
------------------------ ------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Restructured Loans and Leases included in
Schedule RC-N, items 1 through 8, above
(and not reported in Schedule RC-C, RCFD RCFD RCFD
---- ---- ----
Part 1, Memorandum item 2)________________ 1658.. 0 1659.. 0 1661.. 0 M.1
2. Loans to finance commercial real estate,
construction, and land development
activities (not secured by real estate)
included in Schedule RC-N, items 4 and
7, above__________________________________ 6558.. 0 6559.. 0 6560.. 0 M.2
3. Loans secured by real estate in domestic
offices (included in Schedule RC-N, item
1, above): RCON RCON RCON
---- ---- ----
a. Construction and Land development______ 2759.. 207 2769.. 244 3492.. 413 M.3a
b. Secured by farmland____________________ 3493.. 0 3494.. 0 3495.. 0 M.3b
c. Secured by 1-4 family residential
properties:
(1) Revolving, open-end Loans secured
by 1-4 family residential properties
and extended under lines of credit_ 5398.. 668 5399.. 294 5400.. 20 M.3c1
(2) All other loans secured by 1-4
family residential properties______ 5401.. 5,693 5402.. 2,409 5403.. 8,974 M.3c2
d. Secured by multifamily (5 or more)
residential properties_________________ 3499.. 3 3500.. 0 3501.. 0 M.3d
e. Secured by nonfarm nonresidential
properties_____________________________ 3502.. 1,018 3503.. 761 3504.. 616 M.3e
<CAPTION>
-------(Column A)------- -------(Column B)-------
Past due 30 through 89 Past due 90 days or more
days
------------------------ ------------------------
<S> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and
other commodity and equity contracts:
a. Book value of amounts carried as RCFD RCFD
---- ----
assets________________________________ 3522.. 0 3528.. 0 M.4.a
b. Replacement cost of contracts with a
positive replacement cost_____________ 3529.. 0 3530.. 0 M.4.b
</TABLE>
C477 < -
- ------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and income should be
directed:
<TABLE>
CONNIE GAHAGAN, MANAGER OF REGULATORY REPORTING
- ----------------------------------------------------------------------------------------------------------------------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
<S> <C>
(612) 316-2345 00000 (612) 667-3659 00000
- ------------------------------------------------ -----------------------------------------------
Tel: Area code/phone number/extension (TEXT 8902) Fax: Area code/phone number (TEXT 9116)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-21
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
31
Transit Number: 91000019
Schedule RC-O Other Data for Deposit Insurance and FICO Assessments
<TABLE>
<CAPTION>
C475 < -
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1.Unposted debits (see instructions): RCON
----
a. Actual amount of all unposted debits__________________________________________________ 0030.. N/A 1.a
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits_______________________________ 0031.. 0 1.b1
(2) Actual amount of unposted debits to time and savings deposits (1)_________________ 0032.. 0 1.b2
2.Unposted credits (see instructions):
a. Actual amount of all unposted credits_________________________________________________ 3510.. N/A 2.a
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits______________________________ 3512.. 0 2.b1
(2) Actual amount of unposted credits to time and savings deposits (1)________________ 3514.. 0 2.b2
3.Uninvested trust funds (cash) held in bank's own trust department (not included in
total deposits in domestic offices)_______________________________________________________ 3520.. 0 3.
4.Deposits of consolidated subsidiaries in domestic offices and in insured branches in
Puerto Rico and U.S. territories and possessions (not included in total deposits):
a. Demand deposits of consolidated subsidiaries__________________________________________ 2211.. 41,350 4.a
b. Time and savings deposits (1) of consolidated subsidiaries____________________________ 2351.. 0 4.b
c. Interest accrued and unpaid on deposits of consolidated subsidiaries__________________ 5514.. 0 4.c
5.Deposits in insured branches in Puerto Rico and U.S. territories and possessions:
a. Demand deosits in insured branches (included in Schedule RC-E, Part II)_______________ 2299.. 0 5.a
b. Time and savings deposits (1) in insured branches (included in Schedule RC-E,
Part II)______________________________________________________________________________ 2383.. 0 5.b
c. Interest accrued and unpaid on deposits in insured branches (included in
Schedule RC-G, item 1.b)______________________________________________________________ 5515.. 0 5.c
6.Item 6 is not applicable to state nonmember banks that have not been authorized by the
Federal Reserve to Act as pass-through correspondents.
Reserve balances actually passed through to the Federal Reserve by the reporting bank on
behalf of its respondent depository institutions that are also reflected as deposit
liabilities of the reporting bank:
a. Amount reflected in demand deposits (included in Schedule RC-E, Part 1, item RCON
----
4 or 5, column B)_____________________________________________________________________ 2314.. 0 6.a
b. Amount reflected in time and savings deposits (1) (included in Schedule RC-E,
Part I, item 4 or 5, column A or C, but not column B)_________________________________ 2315.. 0 6.b
7.Unamortized premiums and discounts on time and savings deposits: (1,2)
a. Unamortized premiums__________________________________________________________________ 5516.. 20,266 7.a
b. Unamortized discounts_________________________________________________________________ 5517.. 0 7.b
8.To be completed by banks with "Oaker deposits."
a. Deposits purchased or acquired from other FDIC-insured institutions during the quarter
(exclude sales or transfers by the reporting bank of deposits in foreign offices
other than insured branches in Puerto Rico and U.S. territories and possessions):
(1) Total deposits purchased or acquired from other FDIC-insured institutions
during the quarter_______________________________________________________________ A531.. N/A 8.a.1
(2) Amount of purchased or acquired deposits reoprted in item 8.a.(1) above
attributable to a secondary fund (i.e., BIF members report deposits
attributable to SAIF; SAIF members reports deposits attributable to BIF)_________ A532.. N/A 8.a.2
b. Total deposits sold or transferred to other FDIC-insured institutions during the quarter
(exclude sales or transfers by the reporting bank of deposits in foreign offices
other than insured branches in Puerto Rico and U.S. territories and possessions)______ A533.. N/A 8.b
- -------------
</TABLE>
<TABLE>
<S><C>
(1) For FDIC and FICO insurance assessment purposes, "time and savings deposits" consists
of nontransaction accounts and all transaction accounts other than demand deposits.
(2) Exclude core deposit intangibles.
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC- 22
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
32
Transit Number: 91000019
Schedule RC-O - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
RCON
----
9. Deposits in lifeline accounts _______________________________________________________ 5596. . 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total
deposits in domestic offices) ______________________________________________________ 8432. . 0 10.
11. Adjustments to demand deposits reported in Schedule RC-E for certain reciprocal
demand balances:
a. Amount by which demand deposits would be reduced if the reporting bank's
reciprocal demand balances with the domestic offices of U.S. banks and savings
associations and insured branches in Puerto Rico and U.S. territories and
possessions that were reported on a gross basis in Schedule RC-E had been
reported on a net basis __________________________________________________________ 8785 0 11.a
b. Amount by which demand deposits would be increased if the reporting bank's
reciprocal demand balances with foreign banks and foreign offices of other U.S.
banks (other than insured branches in Puerto Rico and U.S. territories and
possessions) that were reported on a net basis in Schedule RC-E had been reported
on a gross basis _________________________________________________________________ A181 0 11.b
c. Amount by which demand deposits would be reduced if cash items in process of
collection were included in the calculation of the reporting bank's net
reciprocal demand balances with the domestic offices of U.S. banks and savings
associations and insured branches in Puerto Rico and U.S. territories and
possessions in Schedule RC-E _____________________________________________________ A182 0 11.c
12. Amount of assets netted against deposit liabilities on the balance sheet (Schedule
RC) in accordance with generally accepted accounting principles (exclude amounts
related to reciprocal demand balances):
a. Amount of assets netted against demand deposits __________________________________ A527 0 12.a
b. Amount of assets netted against time and savings deposits ________________________ A528 0 12.b
</TABLE>
Memoranda
<TABLE>
<CAPTION>
(to be completed each quarter except as noted) Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C>
1. Total deposits in domestic offices of the bank
(sum of Memorandum items 1.a.(1) and 1.b.(1) must equal Schedule RC, item 13.a): RCON
a. Deposit accounts of $ 100,000 or less: ----
(1) Amount of deposit accounts of $ 100,000 or less _______________________________ 2702. . 4,666,761 M.1a1
(2) Number of deposit accounts of $ 100,000 or less RCON Number
---- ------
(to be completed for the June report only) ____ 3779. . N/A . . . . . . M.1a2
b. Deposit accounts of more than $ 100,000:
(1) Amount of deposit accounts of more than $ 100,000 _____________________________ 2710. . 7,929,217 M.1b1
(2) Number of deposit accounts of more than RCON Number
---- ------
$ 100,000 _____________________________________ 2722. . 8,476 . . . . . . M.1b2
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the number of
deposit accounts of more than $ 100,000 reported in Memorandum item 1.b.(2) above by $ 100,000
and subtracting the result from the amount of deposit accounts of more than $ 100,000 reported
in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or RCON YES NO
procedure for determining a better estimate of uninsured deposits than the ----
estimate described above __________________________________________________________ 6861. . X M.2.a
b. If the box marked YES has been checked, report the estimate of uninsured deposits
determined by using your bank's method or procedure _______________________________ 5597. . N/A M.2.b
3. Has the reporting institution been consolidated with a parent bank or savings
association in that parent bank's or parent savings association's Call Report
or Thrift Financial Report?
If so, report the legal title and FDIC Certificate Number of the parent bank
or parent savings association: FDIC Cert No
TEXTA545: ____________________________________________________________________________ A545. . N/A M.3
</TABLE>
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC- 23
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
33
Transit Number: 91000019
Schedule RC-R - Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1998,
must complete items 2 through 9 and Memoranda items 1 and 2. BANKS WITH ASSETS
OF LESS THAN $1 BILLION MUST COMPLETE ITEMS 1 THROUGH 3 BELOW OR SCHEDULE RC-R
IN ITS ENTIRETY, DEPENDING ON THEIR RESPONSE TO ITEM 1 BELOW.
<TABLE>
<S><C>
1. TEST FOR DETERMINING THE EXTENT TO WHICH SCHEDULE RC-R MUST BE COMPLETED. TO BE C480 < -
COMPLETED ONLY BY BANKS WITH TOTAL ASSETS OF LESS THAN $1 BILLION. Indicate in the RCFD YES NO
appropriate box at the right whether the bank has total capital greater than or equal ---- --- --
to eight percent of adjusted total assets _____________________________________________ 6056 N/A 1.
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency
obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and
selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has
been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent
or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
NOTE: ALL BANKS ARE REQUIRED TO COMPLETE
ITEMS 2 AND 3 BELOW. SEE OPTIONAL
WORKSHEET FOR ITEMS 3.a THROUGH 3.f.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
2. Portion of qualifying limited-life capital instruments (original weighted average ----
maturity of at least five years) that is includible in Tier 2 capital:
a. Subordinated debt (1) and intermediate term preferred stock ______________________ A515. . 105,000 2.a
b. Other limited-life capital instruments ___________________________________________ A516. . 0 2.b
3. Amounts used in calculating regulatory capital ratios (report amounts determined by
the bank for its own internal regulatory capital analyses consistent with applicable
capital standards):
a. 1. Tier 1 capital ________________________________________________________________ 8274. . 2,061,081 3.a.1
2. Tier 2 capital ________________________________________________________________ 8275. . 316,892 3.a.2
3. Tier 3 capital ________________________________________________________________ 1395. . 0 3.a.3
b. Total risk-based capital _________________________________________________________ 3792. . 2,377,973 3.b
c. Excess allowance for loan and lease losses (amount that exceeds 1.25% of gross
risk-weighted assets) ____________________________________________________________ A222. . 0 3.c
d. 1. Net risk-weighted assets (gross risk-weighted assets, including market risk
equivalent assets, less excess allowance reported in item 3.c above and all
other deductions) _____________________________________________________________ A223. . 19,275,854 3.d.1
2. Market risk equivalent assets (included in item 3.d.1 above) __________________ 1651. . 0 3.d.2
e. Maximum contractual dollar amount of recourse exposure in low level recourse
transactions (to be completed only if bank uses the "direct reduction method"
to report these transactions in Schedule RC-R ____________________________________ 1727. . 0 3.e
f. "Average total assets" (quarterly average reported in Schedule RC-K, less
all assets deducted from Tier 1 capital) (2) _____________________________________ A224. . 33,577,689 3.f
</TABLE>
ITEMS 4-9 AND MEMORANDA ITEMS 1 AND 2 ARE TO BE COMPLETED
BY BANKS THAT ANSWERED NO TO ITEM 1 ABOVE AND BY BANKS
WITH TOTAL ASSETS OF $1 BILLION OR MORE.
<TABLE>
<CAPTION>
(Column A) (Column B)
Assets Recorded on the Credit Equivalent Amount
Balance Sheet of Off-Balance Sheet Items (3)
---------------------- ------------------------------
<S> <C> <C>
4. Assets and credit equivalent amounts of off-balance RCFD RCFD
sheet items assigned to the Zero percent risk category ---- ----
a. Assets recorded on the balance sheet _______________ 5163. . 2,457,506 . . . . . . 4.a
b. Credit equivalent amount of off-balance sheet items_ . . . . . . 3796. . 0 4.b
</TABLE>
- ----------
(1) Exclude mandatory convertible debt reported in Schedule RC-H, item 7.
(2) Do not deduct excess allowance for loan and lease losses.
(3) Do not report in column B the risk-weighted amount of assets reported in
column A.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-24
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
34
Transit Number: 91000019
Schedule RC-R - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Assets Recorded on the Credit Equivalent Amount
Balance Sheet of Off-Balance Sheet Items (1)
---------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance RCFD RCFD
sheet items assigned to the 20 percent risk category ---- ----
a. Assets recorded on the balance sheet ________________5165 ... 15,086,551 ............... 5.a
b. Credit equivalent amount of off-balance sheet items__ ............... 3801 .... 1,096,326 5.b
6. Assets and credit equivalent amounts of off-balance
sheet items assigned to the 50 percent risk category:
a. Assets recorded on the balance sheet ________________3802 ... 5,769,195 ............... 6.a
b. Credit equivalent amount of off-balance sheet items__ ............... 3803 .... 247,787 6.b
7. Assets and credit equivalent amounts of off-balance
sheet items assigned to the 100 percent risk category:
a. Assets recorded on the balance sheet ________________3804 ... 10,592,013 ............... 7.a
b. Credit equivalent amount of off-balance sheet items__ ............... 3805 .... 2,438,775 7.b
8. On-balance sheet asset values excluded from and
deducted in the calculation of the risk-based capital
ratio(2) ________________________________________________3806 ... 79,109 ............... 8.
9. Total assets recorded on the balance sheet (sum of
items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal
Schedule RC, item 12 plus items 4.b and 4.c)_____________3807 ... 33,984,374 ............... 9.
Memoranda
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
1. Current credit exposure across all off-balance sheet derivative contracts covered by ----
the risk-based capital standards ____________________________________________________ 8764 .... 36,557 M.1.
<CAPTION>
------------------------ With a remaining maturity of --------------------------
(Column A) (Column B) (Column C)
Over one year
One year or less through five years Over five years
------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2. Notional principal amounts
of off-balance sheet
derivative contracts:(3) RCFD RCFD RCFD
a. Interest rate ---- ---- ----
contracts __________________ 3809 ... 869,127 8766 ... 1,252,749 8767 ... 424,920 M.2a
b. Foreign exchange
contracts __________________ 3812 ... 942,966 8769 ... 18,568 8770 ... N/A M.2b
c. Gold contracts _____________ 8771 ... N/A 8772 ... N/A 8773 ... N/A M.2c
d. Other precious metals
contracts __________________ 8774 ... N/A 8775 ... N/A 8776 ... N/A M.2d
e. Other commodity
contracts __________________ 8777 ... 69,715 8778 ... 81,529 8779 ... N/A M.2e
f. Equity derivative
contracts __________________ A000 ... N/A A001 ... N/A A002 ... N/A M.2f
</TABLE>
- ----------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
available-for-sale debt securities in item 8 and report the amortized
cost of these debt securities in items 4 through 7 above. Item 8 also
includes on-balance sheet asset values (or portions thereof) of
off-balance sheet interest rate, foreign exchange rate, and commodity
contracts and those contracts (e.g. future contracts) not subject to
risk-based capital. Exclude from item 8 margin accounts and accrued
receivables not included in the calculation of credit equivalent amounts
of off-balance sheet derivatives as well as any portion of the allowance
for loan and lease losses in excess of the amount that may be included in
Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days
or less and all futures contracts.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-25
Minneapolis, MN 55479 Vendor ID: D CERT: 05208
35
Transit Number: 91000019
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on September 30, 1999
Norwest Bank Minnesota, N.A. Minneapolis MN
- ------------------------------- --------------------- ------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief
narrative statement on the amounts reported in the Reports of Condition and
Income. This optional statement will be made available to the public, along
with the publicly available data in the Reports of Condition and Income, in
response to any request for individual bank report data. However, the
information reported in column A and in all of Memorandum item 1 of Schedule
RC-N is regarded as confidential and will not be released to the public.
BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE
STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL
BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS
IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE
MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks
choosing not to make a statement may check the "No comment" box below and
should make no entries of any kind in the space provided for the narrative
statement; i.e., DO NOT enter in this space such phrases as "No statement,"
"Not applicable," "N/A," "No comment," and "None."
The optional statement must be entered on this sheet. The statement should
not exceed 100 words. Further, regardless of the number of words, the
statement must not exceed 750 characters, including punctuation, indentation,
and standard spacing between words and sentences. If any submission should
exceed 750 characters, as defined, it will be truncated at 750 characters
with no notice to the submitting bank and the truncated statement will appear
as the bank's statement both on agency computerized records and in
computer-file releases to the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who
thereby attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing
narrative statement will be deleted from the files, and from disclosure; the
bank, at its option, may replace it with a statement, under signature,
appropriate to the amended data.
The optional narrative statement will appear in agency records and in release
to the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- -------------------------------------------------------------------------------
C471 C472 < -
No comment: X (RCON 6979)
BANK MANAGEMENT STATEMENT (please type or print clearly) (TEXT 6980):
-------------------------------------- -----------------
Signature of Executive Officer of Bank Date of Signature
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 09/30/1999 ST-BK: 27-4095 FFIEC
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vender ID: D CERT: 05208 Page
36
Transit Number: 91000019 Transmitted to EDS as 0039779 on 10/27/99 at
14:50:57 CST
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- -------------------------------------------------------------------------------
OMB No. For OCC: 1557-0081
OMB No. For FDIC: 3064-0052
OMB No. For Federal Reserve: 7100-0036
Expiration Date: 03/31/2002
SPECIAL REPORT
(Dollar Amounts in Thousands)
CLOSE OF BUSINESS DATE: FDIC Certificate Number:
September 30, 1999 05208 C700 < -
- -------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- -------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but
does not constitute a part of the Report of Condition. With each Report of
Condition, these Laws require all banks to furnish a report of all loans or
other extensions of credit to its executive officers made since the date of
the previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions
of credit were made during the period, insert "none" against subitem (a).
(Exclude the first $15,000 of indebtedness of each executive officer under
bank credit card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code
of Federal Regulations (Federal Reserve Board Regulation O) for the
definitions of "executive officer" and "extension of credit," respectively.
Exclude loans and other extensions of credit to directors and principal
shareholders who are not executive officers.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RCFD
----
<S> <C> <C> <C>
a Number of loans made to executive officers since the previous Call Report date_______3561.. 2 a.
b Total dollar amount of above loans (in thousands of dollars)_________________________3562.. 1,097 b.
c Range of interest charged on above loans (example: 9-3/4% = 9.75)_______________7701/7702.. 6.50% to 7.50% c.
</TABLE>
- -------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT DATE (Month, Day,
Year)
/s/ Constance R. Gahagan
Constance R. Gahagan, Mgr. Regulatory Reporting 10/27/99
- -------------------------------------------------------------------------------
[Illegible]:8040/53 (3-98)
